Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Jun. 30, 2019 | |
Cover [Abstract] | ||
Entity Registrant Name | I-ON Digital Corp. | |
Entity Central Index Key | 0001580490 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Public Float | $ 7.3 | |
Entity Common Stock, Shares Outstanding | 35,030,339 | |
Document Type | 10-K | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | FY | |
Entity Address, Country | KR |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 1,337,741 | $ 1,709,210 |
Restricted cash | 1,641,043 | 1,699,331 |
Short-term financial instruments | 716,013 | 741,417 |
Short-term loans | 197,741 | 25,000 |
Accounts receivables, net of allowance for doubtful accounts $674,129 and $725,389, respectively | 2,875,384 | 2,692,933 |
Deferred tax assets | 232,766 | 65,947 |
Prepaid expenses and other current assets | 1,055,553 | 856,959 |
Total current assets | 8,056,241 | 7,790,797 |
Non-current assets: | ||
Investments | 105,437 | 102,756 |
Property and equipment, net | 203,754 | 163,995 |
Intangible assets, net | 192,868 | 136,432 |
Deposits | 354,300 | 358,028 |
Derivate asset | 105,594 | 109,343 |
Deferred tax assets | 774,307 | 1,211,621 |
Total non-current assets | 1,736,260 | 2,082,175 |
Total Assets | 9,792,501 | 9,872,972 |
Current liabilities: | ||
Accounts payable | 48,802 | 375,318 |
Accrued expenses and other | 1,705,485 | 790,676 |
Value added tax payable | 107,717 | 108,534 |
Income tax payable | 8,179 | 20,353 |
Short-term loan | 475,039 | 626,062 |
Current portion of long term debt | 194,300 | 89,509 |
Total current liabilities | 2,539,522 | 2,010,452 |
Convertible debt, net of debt discount of $0 and $175,000, respectively | 0 | 25,000 |
Long term debt, net of current portion | 194,300 | 402,397 |
Total liabilities | 2,733,822 | 2,437,849 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Common stock, $0.0001 par value; authorized 100,000,000 shares; 35,030,339 and 35,030,339 shares issued and outstanding at December 31, 2019 and 2018, respectively | 3,603 | 3,603 |
Treasury stock | (709,478) | (709,478) |
Additional paid-in-capital | 3,646,740 | 3,582,987 |
Accumulated other comprehensive loss | (259,960) | (52,193) |
Accumulated retained earnings | 3,897,337 | 4,609,785 |
Total company stockholders' equity | 6,578,242 | 7,434,704 |
Preferred stock (I-ON Korea) - $.4380 par value; authorized 2,000,000 shares; 157,142 and 0 shares issued and outstanding at December 31, 2019 and 2018, respectively | 475,036 | 0 |
Non-controlling interests | 5,401 | 419 |
Total stockholders' equity | 7,058,679 | 7,435,123 |
Total Liabilities and Stockholders' Equity | $ 9,792,501 | $ 9,872,972 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Accounts receivables, allowance for doubtful accounts | $ 674,129 | $ 725,389 |
Liabilities and Stockholders' Equity | ||
Convertible debt, discount | $ 0 | $ 175,000 |
Stockholders' Equity | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 35,030,339 | 35,030,339 |
Common stock, shares outstanding (in shares) | 35,030,339 | 35,030,339 |
Preferred stock, par value (in dollars per share) | $ 0.4380 | $ 0.4380 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, issued (in shares) | 157,142 | 0 |
Preferred stock, outstanding (in shares) | 157,142 | 0 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated Statements of Income and Comprehensive Income [Abstract] | ||
Net sales | $ 7,954,015 | $ 7,091,647 |
Cost of goods sold | 5,519,931 | 5,259,399 |
Gross profit | 2,434,084 | 1,832,248 |
Operating expenses: | ||
Research and development | 838,237 | 329,366 |
General and administrative | 1,871,818 | 1,934,899 |
Total operating expense | 2,710,055 | 2,264,265 |
Income (loss) from operations | (275,971) | (432,017) |
Other income (expense): | ||
Interest income | 52,104 | 49,990 |
Loss on extinguishment of convertible debt | (216,208) | 0 |
Foreign currency transaction gain (loss) | 14,966 | 10,503 |
Government subsidized income | 6,391 | 33,256 |
Miscellaneous income (expense), net | 35,308 | 53,457 |
Interest expense | (48,041) | (22,763) |
Total other income (expense), net | (155,480) | 124,443 |
Income (loss) before provision for income taxes, loss on equity investments in affiliates, and non-controlling interest | (431,451) | (307,574) |
Provision for (benefit from) income tax | 276,015 | (423,093) |
Net income before income or loss on equity investments in affiliates and non-controlling interest | (707,466) | 115,519 |
Loss on equity investments in affiliates | 0 | (33,515) |
Net income before non-controlling interest | (707,466) | 82,004 |
Non-controlling interest income | 4,982 | 167 |
Net income | (712,448) | 81,837 |
Comprehensive income statement: | ||
Net income (loss) | (712,448) | 81,837 |
Foreign currency translation | (207,767) | (326,661) |
Total Comprehensive income (loss) | $ (920,215) | $ (244,824) |
Earnings per share - Basic and diluted | ||
Net income (loss) before non-controlling interest (in dollars per share) | $ (0.02) | $ 0 |
Non-controlling interest (in dollars per share) | 0 | 0 |
Earnings per share to stockholders (in dollars per share) | $ (0.02) | $ 0 |
Weighted average number of common shares outstanding: | ||
Basic and diluted (in shares) | 35,030,339 | 35,030,339 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total Company Stockholders' Equity [Member] | Non-Controlling Interest [Member] | Preferred Stock [Member] | Total |
Balance at Dec. 31, 2017 | $ 2,600 | $ 3,212,037 | $ 4,527,781 | $ 0 | $ 274,468 | $ 8,016,886 | $ 252 | $ 0 | $ 8,017,138 |
Balance (in shares) at Dec. 31, 2017 | 26,000,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock | $ 903 | 0 | 0 | 0 | 0 | 903 | 0 | 0 | 903 |
Issuance of common stock (in shares) | 9,030,339 | ||||||||
Recognition of beneficial conversion feature in connection with convertible debt | $ 0 | 85,212 | 0 | 0 | 0 | 85,212 | 0 | 0 | 85,212 |
Recognition of common stock warrant issued in connection with convertible debt | 0 | 89,788 | 0 | 0 | 0 | 89,788 | 0 | 0 | 89,788 |
Issuance of common stock in connection with equity purchase agreement | $ 100 | 109,243 | 109,343 | 0 | 0 | 109,343 | |||
Issuance of common stock in connection with equity purchase agreement (in shares) | 0 | ||||||||
Foreign currency translation | $ 0 | 0 | 0 | 0 | (326,661) | (326,661) | 0 | 0 | (326,661) |
Repurchase of treasury stock | 0 | 0 | 0 | (709,478) | 0 | (709,478) | 0 | 0 | (709,478) |
Stock compensation expense | 0 | 86,707 | 0 | 0 | 0 | 86,707 | 0 | 0 | 86,707 |
Net income (loss) | 0 | 0 | 82,004 | 0 | 0 | 82,004 | 167 | 0 | 82,171 |
Balance at Dec. 31, 2018 | $ 3,603 | 3,582,987 | 4,609,785 | (709,478) | (52,193) | 7,434,704 | 419 | 0 | 7,435,123 |
Balance (in shares) at Dec. 31, 2018 | 35,030,339 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock in connection with equity purchase agreement | $ 0 | ||||||||
Issuance of common stock in connection with equity purchase agreement (in shares) | 100,000 | ||||||||
Foreign currency translation | $ 0 | 0 | 0 | 0 | (207,767) | (207,767) | 0 | 0 | $ (207,767) |
Stock compensation expense | 0 | 63,753 | 0 | 0 | 0 | 63,753 | 0 | 0 | 63,753 |
Issuance of preferred stock of subsidiary (I-ON Korea) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 475,036 | 475,036 |
Net income (loss) | 0 | 0 | (712,448) | 0 | 0 | (712,448) | 4,982 | 0 | (707,466) |
Balance at Dec. 31, 2019 | $ 3,603 | $ 3,646,740 | $ 3,897,337 | $ (709,478) | $ (259,960) | $ 6,578,242 | $ 5,401 | $ 475,036 | $ 7,058,679 |
Balance (in shares) at Dec. 31, 2019 | 35,030,339 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ (712,448) | $ 81,837 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Non-controlling interest | 10,360 | 167 |
Loss on equity investments in affiliates | 0 | 33,515 |
Depreciation and amortization | 240,053 | 76,818 |
Stock option expense | 63,753 | 86,707 |
Foreign exchange gain (loss) | 978 | 1,490 |
Amortization of debt discount | 11,111 | 25,000 |
Loss on extinguishment of convertible debt | 216,208 | 0 |
Interest expense - OID on convertible debt | (55,000) | 0 |
Changes in operating assets and liabilities: | ||
Account receivable, net | (205,056) | 1,144,298 |
Prepaid expenses and other current assets | (226,447) | (347,528) |
Deposit | (8,491) | 17,977 |
Deferred taxes | 225,161 | (441,081) |
Account payable | (352,800) | (96,846) |
Accrued expenses and other | 935,576 | (362,099) |
Value added tax payable | 2,885 | (69,058) |
Income tax payable | (11,399) | 20,683 |
Net cash provided by operating activities | 134,444 | 171,880 |
Cash flows from investing activities | ||
Purchases of short-term investments | (9,972) | (2,480,233) |
Proceeds from sales of short-term investments | 0 | 2,475,688 |
Purchases of property and equipment | (196,729) | (155,312) |
Purchases of patent | (83,852) | (86,480) |
Payments received from short-term loan receivable | 29,123 | 0 |
Borrowings (loans provided) under short-term loans | (200,701) | 83,657 |
Net cash provided by (used in) investing activities | (462,131) | (162,680) |
Cash flows from financing activities: | ||
Payments on short-term loan payable | (600,523) | 0 |
Borrowings on short-term loan payable | 471,840 | 636,190 |
Borrowings (principal payments) on loans payable | (85,858) | 227,211 |
Proceeds from (principal payments) on convertible debt, net of debt discount | (200,000) | 175,000 |
Purchase of treasury stock | 0 | (709,478) |
Proceeds from issuance of preferred shares | 471,837 | 0 |
Net Cash provided by (used in) financing activities | 57,296 | 328,923 |
Effect of foreign currency translation on cash and cash equivalents | (159,366) | (165,063) |
Net decrease in cash and cash equivalents including restricted cash | (429,757) | 173,060 |
Cash and cash equivalents including restricted cash, beginning of year | 3,408,541 | 3,235,481 |
Cash and cash equivalents including restricted cash, end of year | 2,978,784 | 3,408,541 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 6,750 | 22,763 |
Taxes paid | 6,757 | 17,988 |
Supplemental disclosure of noncash financing activities: | ||
Issuance of 100,000 shares of common stock pursuant to issuance of equity purchase agreement | $ 0 | $ 109,343 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) | 12 Months Ended |
Dec. 31, 2019shares | |
Supplemental disclosure of noncash financing activities: | |
Issuance of preferred stock (in shares) | 157,142 |
Issuance of common stock in connection with equity purchase agreement (in shares) | 100,000 |
Organization and Operations
Organization and Operations | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Operations [Abstract] | |
Organization and Operations | Note 1. Organization and Operations I-ON Digital Corp. (“the Company”) was incorporated on July 5, 1999, and is engaged in developing and supplying computerized system. The corporate headquarter is located at 15 Teheran-ro 10-gil Gangnam-gu Seoul, South Korea. The Company provides enterprise content management services to customers primarily in Korea, Japan and Indonesia, by developing industry-leading products such as ICS (web content management system), iDrive (e-document management system), LAMS (load aggregator’s management system), e.Form (mobile contract system), IDAS (digital asset management system) and ICE (content delivery system). I-ON, Ltd is the Japanese subsidiary of the Company incorporated in 2002. The Company has 99.5% ownership of I-ON, Ltd. PT ION-soft is the Indonesian affiliate of the Company incorporated in October 2011 (20% of ownership). The Company has changed the ownership of PT I-ON-soft into 0.9%, due to the capital increase of the major shareholder on August 1, 2019. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies The summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s Principles of Consolidation and Presentation The consolidated financial statements include the accounts of I-ON Digital Corp. and its 99.5% owned subsidiary, I-ON, Ltd. All intercompany accounts, transactions, and profits have been eliminated upon consolidation. The accompanying consolidated financial statements and the notes hereto are reported in US Dollars. The consolidated financial statements were prepared and presented in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. Non-controlling interests represent the portion of earnings that is not within the parent Company’s control. These amounts are required to be reported as equity instead of as a liability on the consolidated balance sheet. ASC requires net income or loss from non-controlling interests to be shown separately on the consolidated statements of operations. The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. These consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The unaudited information contained herein has been prepared on the same basis as the Company’s audited consolidated financial statements, and, in the opinion of the Company’s management, includes all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2020 or any future period. The Company is also required to consolidate any variable interest entities (VIEs), of which it is the primary beneficiary, as defined. Based on the Company’s analysis pursuant to ASC 810-10-25, Consolidations, the Company does not have any VIEs that need to be consolidated at this time. When the Company does not have a controlling interest in an entity, but exerts a significant influence over the entity, the Company would apply the equity method of accounting. Foreign Currency Transaction and Translation The Company’s principal country of operations is Korea. The financial position and results of operations of the Company are determined using the local currency, Korean Won (“KRW”), as the functional currency. ● 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 profit or loss. December 31, December 31, Average Year Ended December 31, Currency 2019 2018 2019 2018 Japanese Yen to Korean Won JPY10.63 JPY 10.13 JPY10.69 JPY9.96 Korean Won to US Dollar ($) KRW1,157.80 KRW 1,118.30 KRW1,165.65 KRW 1,100.30 Source (Seoul Money Brokerage Services) ● 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. Translation adjustments net of tax were a net loss of $207,767 and net loss of $326,661 for the years ended December 31, 2019 and 2018, respectively. Segment Reporting FASB ASC 280, Segment Reporting The Company generates revenues from two geographic areas, consisting of Korea and Japan. The following enterprise-wide disclosure is prepared on a basis consistent with the preparation of the consolidated financial statements: December 31, 2019 2018 Korea: Current assets $ 7,821,531 $ 7,550,184 Non-current assets 1,735,978 2,081,897 Current liabilities 2,437,550 1,802,402 Non-current liabilities 194,300 427,397 Net Sales 7,141,655 6,805,968 Japan: Current assets $ 234,710 $ 240,613 Non-current assets 282 278 Current liabilities 101,972 280,050 Non-current liabilities - - Net Sales 812,360 285,679 Revenue Recognition Revenues are recognized when control of the promised services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company’s revenue consists of services provided and commissions. These revenue sources are as follows: ● 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. Investments The Company classifies its investment securities as available-for-sale securities in accordance with FASB ASC 320, Investments The Company’s investment securities include privately-held companies where quoted market prices are not available and the cost method, combined with other intrinsic information, is used to assess the fair value of the investment. If the carrying value is below the fair value of an investment at the end of any period, the investment is considered for impairment. Investments are considered impaired when a decline in fair value is judged to be other-than-temporary. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded, and a new cost basis in the investment is established. Cash and Cash Equivalents The Company considers all money market funds and highly liquid financial instruments with original maturities of three months or less to be cash equivalents. Restricted Cash Restricted cash represents cash deposits which is restricted by the financial institutions for the loans the financial institutions having with the Company’s chief executive officer. The loans with the financial institutions are amounted to approximately $1,502,000 and $1,556,000 at December 31, 2019 and 2018, respectively, and expires on various days during 2019 and 2020, unless extended. The loans, bearing various interest rates, are guaranteed by the Company and the restricted cash deposits of the Company are provided to the financial institutions as collateral. The Company’s chief executive officer pays interest from the loans without any default at December 31, 2019 and 2018. The amount of restricted cash as of December 31, 2019 and 2018 was $1,641,043 and $1,699,331, respectively. This arrangement could be considered as a violation of Section 402 of the Sarbanes-Oxley Act of 2002 amended the Securities Exchange Act of 1934 to prohibit U.S. and foreign companies with securities traded in the United States from making, or arranging for third parties to make, nearly any type of personal loan to their directors and executive officers. Violations of the Sarbanes-Oxley loan prohibition are subject to the civil and criminal penalties applicable to violations of the Exchange Act. Short-Term Financial Instruments Short-term financial instruments represent interest-bearing certificates of deposits with original maturities between three months to year. Accounts Receivable Accounts receivables are recorded at the invoiced amount and do not bear interest. Amounts collected on accounts receivables are included in net cash provided by operating activities in the consolidated cash flow statements. The allowance for doubtful accounts reflects management’s best estimate of probable losses inherent in the trade accounts receivable. Management primarily determines the allowance based on the aging of accounts receivable balances, historical write-off experience, customer concentrations, customer credit worthiness and current industry and economic trends. The Company’s provision for uncollectible receivables are included in selling, marketing, general and administrative expense in the consolidated statements of operation and comprehensive loss. At December 31, 2019 and 2018, allowance for doubtful accounts was approximately $674,000 and $725,000, respectively. The Company does not have any off-balance sheet exposure related to its customers. Property and Equipment Property and equipment are recorded at cost. Depreciation of property and equipment is computed using the declining balance method, based on the estimated useful lives as follows: Facility equipment 4 years Automobile 4 years Office equipment 4 years Repairs and maintenance are expensed as incurred. Expenditures that increase the value or productive capacity of assets are capitalized. When property and equipment are retired, sold, or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts, and any gain or loss is included in operations. The Company is working on a government research project and many other technical innovation projects. The Company receives government grants that it uses to offset the amount of assets acquired or expenses incurred. Research and Development Research and development costs are expensed as incurred. Research and development costs include travel, payroll, and other general expenses specific to research and development activities. Research and development cost for the years ended December 31, 2019 and 2018 were approximately $838 , and $329,000, respectively. Intangible Assets When the Company acquires an intangible asset, it is recorded at acquisition cost (the purchase price of the intangible asset and the costs directly related to the preparation of the asset for its intended purpose). The cost of an intangible asset acquired in a business combination is measured at the fair value of the acquisition date according to the accounting standards for business combinations. Other intangible assets with a finite life are amortized using the straight-line method over their estimated useful lives. The estimated useful lives of the respective asset categories are as follows: Development costs 3 years Intangible asset excluding development costs 10 years Other Intangible assets 3 to 5 years Severance and Retirement Benefits In accordance with the Korean Labor Standard Law, employees and directors with at least one year of service are entitled to receive a lump-sum payment upon termination of their employment, based on their length of service and rate of pay at the time of termination. Accrued severance benefits represent an amount which would be payable assuming all eligible employees and directors were to terminate their employment as of the balance sheet date. The annual severance benefits expense charged to operations is calculated based upon the net change in the accrued severance benefits payable at the balance sheet date based on the guidance of FASB ASC 960, Accounting – Defined Benefit Pension Plans The Company’s retirement pension plan is a defined contribution plan, and the Company pays the defined contribution regardless of the results of the operation of the plan. The Company recognizes the contributions to be paid in the current accounting period as retirement benefits expense. The amounts recognized as costs related to defined contribution plans were $ and $421,647 for the years ended December 31, 2019 and 2018, respectively. Compensated Absences Employees of the Company are entitled to be compensated for absences depending on job classification, length of service, and other factors. At December 31, 2019 and 2018, the amounts were deemed to be immaterial. Impairment analysis for long-lived assets and intangible assets The Company’s long-lived assets and other assets (consisting of property and equipment and purchased intangible assets) are reviewed for impairment in accordance with the guidance of the FASB ASC 360, Property, Plant, and Equipment Earnings Per Share FASB ASC Topic 260, Earnings Per Share Fair Value Measurements The Company follows FASB ASC Topic 820, Fair Value Measurements ASC 820 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by the Company for financial instruments measured at fair value on a recurring basis. The three levels of inputs are as follows: 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. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Our financial instruments include cash and cash equivalents, restricted cash, short-term financial instruments, short-term loans, accounts receivable, investments, accounts payables and debt. The carrying values of these financial instruments approximate their fair value due to their short maturities. The carrying amount of our debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us. The Company also has financial instruments classified within the fair value hierarchy, which consists of the following: ● 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 The derivatives are evaluated under the hierarchy of ASC 480-10, ASC Paragraph 815-25-1 and ASC Subparagraph 815-10-15-74 addressing embedded derivatives. The fair value of the Level 3 financial instruments was determined with the assistance of an independent third-party valuation specialist using an Option Pricing Model. The following table summarize the Company’s fair value measurements by level at December 31, 2019 for the assets measured at fair value on a recurring basis: December 31, 2019 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 The following table summarize the Company’s fair value measurements by level at December 31, 2018 for the assets measured at fair value on a recurring basis: December 31, 2018 Level 1 Level 2 Level 3 Available-for-sale securities $ - $ - $ 102,756 Common stock purchase warrant - 89,788 - Equity purchase put option - - 109,343 Fair value, at December 31, 2018 $ - $ 89,788 $ 212,099 Income Taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consisted of taxes currently due and deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement and income tax purposes. The Company follows FASB ASC 740, Income Taxes FASB ASC 740-10-25 provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize additional liabilities for uncertain tax positions pursuant to FASB ASC 740-10-25 for the year ended December 31, 2019 and 2018. Contingencies Accounting guidance requires that the Company record an estimated loss from a loss contingency when information available prior to issuance of the consolidated financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the consolidated financial statements and the amount of the loss can be reasonably estimated. Accounting for contingencies such as legal matters requires significant judgment. Many of these legal matters can take years to resolve. Generally, as the time period increases over which the uncertainties are resolved, the likelihood of changes to the estimate of the ultimate outcome increases. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are cash and trade receivable arising from its normal business activities. The Company deposits its cash in high credit quality institutions. The Company performs ongoing credit evaluations to its customers and establishes allowances when appropriate. Cash and cash equivalents are maintained at various financial institutions located in Korea. The Company has never experienced any losses related to these balances. A dvertising Costs associated with advertising and promotions are expensed as incurred. Advertising expense amounted to $44,698 Employee Stock Based Compensation The Company accounts for its share-based compensation plan in accordance with FASB ASC 718, Stock Compensation Stock-based compensation issued to employees and members of our board of directors is measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. The grant date fair value of a stock-based award is recognized as an expense over the requisite service period of the award on a straight-line basis. For purposes of determining the variables used in the calculation of stock-based compensation issued to employees, the Company performs an analysis of current market data and historical data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, we use these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of stock options granted any fluctuations in these calculations could have a material effect on the results presented in our consolidated statements of operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on our consolidated financial statements. Non-controlling Interests Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date. Government Grants Government grants are not recognized unless there is reasonable assurance that the Company will comply with the grants’ conditions and that the grants will be received. Government borrowings, which are lower than the market interest rate, are regarded as government grants. The grant is measured from the difference between the fair values of the government borrowings computed using the market interest rate and the acquisition cost of the grant. Government grants whose primary condition is that the Company purchase, construct or otherwise acquire long-term assets are deducted in calculating the carrying amount of the asset. The grant is recognized in profit or loss over the life of a depreciable asset as a reduced depreciation expense. Government grants which are intended to compensate the Company for expenses incurred are recognized as other income in profit or loss over the periods in which the Company recognizes the related costs as expenses. There were no amounts of government grants outstanding as of December 31, 2019 and 2018. Value Added Tax National Tax Service in Korea administered Value Added Tax under the Tax Reform Act of 1976 promulgated by the National Assembly. Value added tax is imposed on goods sold in or imported into Korea and on services provided within Korea. Value added tax in Korea is charged on an aggregated basis at a rate of 10% on the full price collected for the goods sold or for the taxable services provided. Value added tax paid were $ 374,799 and $466,338 for the years ended December 31, 2019 and 2018, respectively. Recent Accounting Pronouncement Pronouncements Not Yet Effective ● Fair Value Measurements In August 2018, the FASB amended “Fair Value Measurements” to modify the disclosure requirements related to fair value. The amendment removes requirements to disclose (1) the amount of and reasons for transfers between levels 1 and 2 of the fair value hierarchy, (2) our policy related to the timing of transfers between levels, and (3) the valuation processes used in level 3 measurements. It clarifies that, for investments measured at net asset value, disclosure of liquidation timing is only required if the investee has communicated the timing either to us or publicly. It also clarifies that the narrative disclosure of the effect of changes in level 3 inputs should be based on changes that could occur at the reporting date. The amendment adds a requirement to disclose the range and weighted average of significant unobservable inputs used in level 3 measurements. The guidance is effective for the Company with the Company’s quarterly filing for the period ended March 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption will not have an impact on the Company’s consolidated results of operations, consolidated financial position, and cash flows. ● Retirement Plans In August 2018, the FASB amended “Retirement Plans” to modify the disclosure requirements for defined benefit plans. For the Company, the amendment requires the disclosure of the weighted average interest crediting rate used for cash balance plans and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. It removes the requirement to disclose the approximate amount of future benefits covered by insurance contracts. The guidance is effective for the Company with the Company’s annual filing for the year ended December 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption will not have an impact on the Company’s consolidated results of operations, consolidated financial position, and cash flows. ● Intangibles – Goodwill and other – Internal-Use Software In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company’s accounting for the service element of a hosting arrangement that is a service contract is not affected by the proposed amendments and will continue to be expensed as incurred in accordance with existing guidance. This standard does not expand on existing disclosure requirements except to require a description of the nature of hosting arrangements that are service contracts. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued. Entities can choose to adopt the new guidance prospectively or retrospectively. The Company plans to adopt the updated disclosure requirements of ASU No. 2018-15 prospectively in the first quarter of fiscal 2020, coinciding with the standard’s effective date, and expects the impact from this standard to be immaterial. ● Goodwill In January 2017, the FASB amended “Goodwill” to simplify the subsequent measurement of goodwill. The amended guidance eliminates Step 2 from the goodwill impairment test. Instead, impairment is defined as the amount by which the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill of the reporting unit. The new guidance is effective for the Company on January 1, 2020 and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows. ● Financial Instruments In June 2016, the FASB amended “Financial Instruments” to provide financial statement users with more decision-useful information about the expected credit losses on debt instruments and other commitments to extend credit held by a reporting entity at each reporting date. During November 2018 and April 2019, the FASB made amendments to the new standard that clarified guidance on several matters, including accrued interest, recoveries, and various codification improvements. The new standard, as amended, replaces the incurred loss impairment methodology in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. The new guidance is effective for us on January 1, 2020, and in the first half of 2019, we established an implementation team and began analyzing the impact on our current policies and procedures to identify potential differences that would result from applying the requirements of the new standard. The implementation team reports findings and progress of the project to management on a frequent basis. Through this process, we have identified appropriate changes to our processes, systems, and controls to support recognition and disclosure under the new standard. The Company is still evaluating the impact of the new standard on the Company’s consolidated results of operations, consolidated financial position, and cash flows. Other recently issued accounting updates are not expected to have a material impact on the Company’s Interim Financial Statements. Recently Adopted Accounting Pronouncements ● Income Statement – Reporting Comprehensive Income In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) (ASU 2018-02), which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-02 will be effective for beginning after December 15, 2018 ● Improvements to Nonemployee Share-based Payment Accounting In June 2018, the FASB issued ASU No. 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 aligns the accounting for share-based payment awards to employees and non-employees. Under ASU 2018-07 the existing employee guidance will apply to nonemployee share-based transactions, except for specific guidance related to the attribution of compensation cost. ASU 2018-07 should be applied to all new awards granted after the date of adoption. ASU 2018-07 is effective for annual and interim periods beginning after December 15, 2018 ● Leases (ASU 2019-01) In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements, which removed the requirement for an entity to disclose in the interim periods after adoption, the effect of the change on income from continuing operations, net income, any other affected financial statement line item, and any affected per share amount. For lessors, the new leasing standard requires leases to be classified as a sales-type, direct financing or operating leases. These criteria focus on the transfer of control of the underlying lease asset. This standard and related update was effective for fiscal years beginning after December 15, 2018 ● Leases (ASU 2016-02) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC 840 “Leases.” These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15, 2018 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment [Abstract] | |
Property and Equipment | Note 3. Property and Equipment Property and equipment consist of the following: December 31, 2019 2018 Facilities $ 185,528 $ 192,115 Vehicles 39,989 41,409 Equipment 1,615,288 1,355,710 Government grants (213,526 ) (109,272 ) Total property and equipment 1,627,279 1,479,962 Less: accumulated depreciation (1,423,525 ) (1,315,967 ) Property and equipment, net $ 203,754 $ 163,995 Depreciation expense for December 31, 2019 and 2018 were $151,652 and $56,295, respectively. As noted in Note 2, the government grants received is against the values of assets acquired or the expenses incurred. |
Investment
Investment | 12 Months Ended |
Dec. 31, 2019 | |
Investment [Abstract] | |
Investment | Note 4. Investment The Company had the following investments. Investments Percentage of Ownership December 31, 2019 December 31, 2018 PT IONSOFT 0.90 % $ - $ 3,972 ACDE Consulting VN PTE LED 20.00 % $ 10,040 $ - 4Grit 2.50 % $ 43,189 $ 44,723 E-channel 0.07 % $ 40,849 $ 42,299 KSFC 0.00 % $ 11,359 $ 11,762 Total Investment Securities $ 105,437 $ 102,756 Equity Method The Company applies the equity method for investments in affiliate, which a privately-held company where quoted market prices are not available, in which it has the ability to exercise significant influence over operating and financial policies of the affiliate. Significant influence is generally defined as 20% to 50% ownership in the voting stock of an investee. The Company changed PT IONSOFT account classification from equity method to cost method since third quarter of 2019 since the share of PT IONSOFT has changed from 20% into 0.9% as of August 1, 2019. Available-for-sale securities The Company’s investments also include privately-held companies, where quoted market prices are not available, and the cost method, combined with other intrinsic information, is used to assess the fair value of the investment. The following table summarize the Company’s investment securities at December 31, 2019 and 2018: Investments Percentage of Ownership December 31, 2019 December 31, 2018 PT IONSOFT 0.90 % - 3,972 ACDE Consulting VN PTE LED 20.00 % 10,040 - 4Grit 2.50 % 43,189 44,723 E-channel 0.07 % 40,849 42,299 KSFC 0.00 % 11,359 11,762 Total Investment Securities 0.00 % $ 105,437 $ 102,756 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets [Abstract] | |
Intangible Assets | Note 5. Intangible Assets Intangible assets consist of the following: December 31, 2019 2018 Patents $ 251,798 $ 174,823 Other intangible assets 551,865 568,276 Government grants (8,729 ) (13,428 ) Total intangible assets 794,634 729,671 Less: Accumulated amortization $ (601,766 ) (593,239 ) Intangible assets, net $ 192,868 $ 136,432 Amortization expense for December 31, 2019 and 2018 were $24,134 Future amortization expense of the Company’s intangible assets at December 31, 2019 is expected to be as follows: Years ending December 31, 2020 $ 26,609 2021 24,324 2022 23,482 2023 22,224 2024 22,782 Thereafter 73,447 Total $ 192,868 As noted in Note 2, the government grants received is against the values of assets acquired or the expenses incurred. |
Long-term Debt
Long-term Debt | 12 Months Ended |
Dec. 31, 2019 | |
Long-term Debt [Abstract] | |
Long-term Debt | Note 6. Long-term Debt Total long-term debt consisted of the following: December 31, 2019 2018 A note payable to a financial institution bearing interest at 2.75% and 2.81% at December 31, 2019 and 2018, respectively, and guaranteed by the officer of the Company. The Company was required to make interest-only payments until December 2018, then monthly payments of both principal and interest starting from January 2019. $ 388,600 $ 491,906 Long-term debt 388,600 491,906 Less: current portion (194,300 ) (89,509 ) Long-term debt, net of current portion $ 194,300 $ 402,397 Future minimum payments on debt consists of the following: Years ending December 31, 2020 $ 194,300 2021 194,300 Total $ 388,600 The long-term debts contain certain covenants, and the Company was in compliance with the covenants. |
Line of Credit
Line of Credit | 12 Months Ended |
Dec. 31, 2019 | |
Line of Credit [Abstract] | |
Line of Credit | Note 7. Line of Credit The Company has lines of credit with financial institutions for total amount of approximately $3,400,000 that expires in various months in 2020, unless extended. There was no outstanding balance under the credit lines at December 31, 2018. The lines of credit, bearing various interest rates are guaranteed by the officer of the Company. The Company has an arrangement with its customers and a financial institution, in which the Company’s customers issue electronic invoices with the Company as the recipient. The Company can use these receivables as collaterals for loans up to approximately $5,100,000 |
Convertible Debt, Beneficial Co
Convertible Debt, Beneficial Conversion Feature, and Common Stock Warrant | 12 Months Ended |
Dec. 31, 2019 | |
Convertible Debt, Beneficial Conversion Feature, and Common Stock Warrant [Abstract] | |
Convertible Debt, Beneficial Conversion Feature, and Common Stock Warrant | Note 8. Convertible Debt, Beneficial Conversion Feature, and Common Stock Warrant The Company entered into a securities purchase agreement (the “SPA”) with Peak One Opportunity Fund, L.P. (“Peak One”) on August 13, 2018. The financing arrangement between the Company and Peak One stipulates that Peak One will invest up to $540,000 in the Company through three separate tranches. Each tranche will be funded in exchange for a convertible debt instrument issued at a 10% discount, with a face value of $200,000. On this same date, the first tranche closed and the Company issued a convertible debt instrument to Peak One for $200,000 at a 10% discount. The convertible debt issued has the following significant terms: ● Term: The principal amount is repayable on August 13, 2021 (“Maturity Date”). All unpaid principal due and payable on the Maturity Date shall be paid in the form of common stock of the Company. Any amount of principal or interest that is due under the convertible debt, which is not paid by the Maturity Date, will bear interest at the rate of 18% per annum until it is satisfied. ● Conversion Rights: The Holder has the right to convert the amount outstanding plus any accrued interest into common stock of the Company after 180 calendar days from the issuance date. ● Conversion Price: Conversion price is equal to the lesser of (i) $2.75 or (ii) 70% of the lowest traded price of the common stock of the Company for the 20 trading days immediately preceding the date of the date of conversion of the Debts. ● Redemption by Issuer: The Company has the option to redeem the convertible debt prior to the Maturity Date. The convertible debt called for redemption shall be redeemable by the Company, upon not more than 2 days written notice, for an amount (the “Redemption Price”) equal to: (i) if the date of redemption is 90 days or less from the issuance date, 110% of the sum of the principal amount so redeemed plus accrued interest, if any; (ii) if the date of redemption is greater than or equal to 91 days from the issuance date and less than or equal to 120 days from the issuance date, 120% of the sum of the amount so redeemed plus accrued interest, if any; (iii) if the date of redemption is greater than or equal to 121 days from the issuance date and less than or equal to 180 days from the issuance date, 130% of the sum of the amount so redeemed plus accrued interest, if any; and (iv) if either (1) the convertible debts are in default but the Holder consents to the redemption notwithstanding such default or (2) the date of redemption is greater than or equal to 181 days from the issuance date, 140% of the sum of the amount so redeemed plus accrued interest, if any. ● Ratchet Provision: If, at any time while any portion of the convertible debts remains outstanding, the Company effectuates a stock split or reverse stock split of its common stock or issues a dividend on its common stock consisting of shares of common stock or otherwise recapitalizes its common stock, the conversion price of the convertible debts shall be equitably adjusted to reflect such action. ● Default: In the event of default by the Company on these convertible debts, the Holder will have the option and discretion to accelerate the full indebtedness under the convertible debts, in an amount equal to 140% of the outstanding principal amount and accrued and unpaid interest. The embedded conversion feature was determined to be a derivative that does not require bifurcation pursuant to ASC 815, but was determined to be a beneficial conversion feature that requires recognition within equity on the commitment date. The beneficial conversion feature is recognized at its intrinsic value on the commitment date, limited to the proceeds allocated to the convertible debt. As such, the Company recorded $89,788 within additional paid-in-capital on the consolidated balance sheet for the beneficial conversion feature identified. The debt discount arising from recognition of the beneficial conversion feature will be amortized as interest expense over the term of the convertible debt. As of December 31, 2018, amortization expense of debt discount related to the beneficial conversion feature was not significant. In connection with the convertible debt issuance, the Company also issued a detachable common stock warrant on August 13, 2018 that allows Peak One to purchase up to 50,000 shares of common stock at an exercise price of $2.75 per share, subject to adjustments as stated in the warrant agreement. The common stock warrant expires 5 years from the issuance date. The common stock warrant was determined to meet equity classification pursuant to ASC 480 and ASC 815. As such, the fair value of the common stock warrant is recorded as additional paid-in-capital on the consolidated balance sheet, which was determined to be $89,788, net of issuance costs allocated to the warrant, on the issuance date. The debt discount arising from recognition of the common stock warrant will be amortized as interest expense over the term of the convertible debt. As of December 31, 2019, amortization expense of debt discount related to the common stock warrant was not significant. The Company has the following convertible debt instruments outstanding: December 31, 2019 2018 A $200,000 convertible note, issued at 10% discount, five year term, no monthly interest due, maturing August 13, 2021 $ - $ 200,000 Long-term convertible debt - 200,000 Less: debt discount - (175,000 ) Long-term convertible debt, net of debt discount $ - $ 25,000 On February 19, 2019, the Company redeemed all the outstanding convertible debt at a 30% premium for a total redemption price of $255,000. The redemption was accounted for as an extinguishment of debt. Accordingly, the beneficial conversion feature recognized in conjunction with the convertible debt was de-recognized. The Company recorded approximately $216,208 of loss on extinguishment of convertible debt, which reported in the consolidated statement of income during 3 months period ending March 31, 2019. Interest expense related to the convertible debt for the years ended December 31, 2019 and 2018 amounted to approximately $ 8, and $23,000 respectively. |
Equity Purchase Agreement - Put
Equity Purchase Agreement - Put Option | 12 Months Ended |
Dec. 31, 2019 | |
Equity Purchase Agreement - Put Option [Abstract] | |
Equity Purchase Agreement - Put Option | Note 9. Equity Purchase Agreement – Put Option On August 13, 2018 (the “Closing Date”), the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) with the convertible debenture holder (the “Holder”), whereby, upon the terms and subject to the conditions thereof, the Holder is committed to purchase shares of the Company’s common stock, par value $0.0001 per share (the “Purchase Shares”), at an aggregate price of up to $10,000,000 (the “Total Commitment Amount”) over the course of a 24- month term. The significant terms of the Purchase Agreement are given below: ● 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. The actual amount of proceeds the Company receives pursuant to each Put Notice (each, the “Put Amount”) is to be determined by the lesser of (i) 88% of the lowest closing bid price of the Company’s Common Stock on the trading day immediately preceding the respective date of the Put Notice and (ii) 88% of the lowest closing bid price during the Valuation Period (the period of 7 trading days immediately following the clearing date associated with the applicable Put Notice). The Put Amount Requested pursuant to any single Put Notice must have an aggregate value of at least $20,000, and cannot exceed the lesser of (i) 250% of the average daily trading value of the common stock in the 10 trading days immediately preceding the Put Notice or (ii) such number of shares of common stock that has an aggregate value of $500,000. ● 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. Upon execution of the Purchase Agreement, the Company issued 100,000 shares of common stock with a par value of $0.0001 to the Holder. The Company adopted the provisions of FASB ASC Topic 480 and Topic 815, to determine the proper classification of the Purchase Agreement. The Company determined the put option meets the definition of a derivative under ASC 815 but is outside the scope of ASC 480. Under ASC 816-40, the Company determined the derivate does not meet equity classification and accordingly, is classified as an asset on the consolidated balance as a Level 3 financial instrument. The Company used an independent third-party valuation firm to determine the fair value of the derivative asset using an Option Pricing Model. Changes to fair value at the end of each reporting period is recorded as other income or expense in the consolidated statements of income. The following table summarizes the changes in the Level 3 financial instrument related to the derivate asset for the equity put option: 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 Fair value, at December 31, 2017 $ - Issuance of equity purchase put option 109,343 Change in fair value - Fair value, at December 31, 2018 $ 109,343 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies Royalty On February 15, 2006, the Company agreed to provide the rights to Ashisuto to sell the products in the Japanese market. Per the agreement, the contract period is automatically extended by 5 years up to 20 years. Total royalty amounts received for the three-months period were not significant. Total royalty amounts received for the years ended December 31, 2019 and 2018 were approximately $184,000 Operating Leases The Company leases its office under non-cancelable operating leases that expire on dates through December 2020. The lease is automatically extended upon agreement of both parties. Future minimum rental payments under the non-cancelable operating leases as of December 31, 2019 are as follows: December 31, Amount 2020 144,126 Total $ 144,126 Rent expense for all operating leases were $144,126 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 11. Related Party Transactions The Company receives loan guarantees from the chief executive officer with regards to its long-term borrowing, and the Company’s restricted cash provided as collateral to the Company’s chief executive officer’s loans. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 12. Earnings Per Share The Company calculates earnings per share in accordance with FASB ASC 260, Earnings Per Share The following table sets forth the computation of basic and diluted net income per common share: Years Ended December 31, 2019 2018 Net income before non-controlling interest $ (707,466 ) $ 82,004 Non-controlling interest 4,982 167 Net income (712,448 ) 81,837 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 $ (0.02 ) $ 0.00 Non-controlling interest $ 0.00 $ 0.00 Earnings per share to stockholders $ (0.02 ) $ 0.00 No non-vested share awards or non-vested share unit awards were antidilutive for the years ended December 31, 2019 and 2018. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes [Abstract] | |
Income Taxes | Note 13. Income Taxes Income taxes consist of the following: Total income tax (benefit) expense consists of the following: Current Deferred Total 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 Year ended December 31, 2018: Federal $ - $ - $ - State - - - Foreign 17,988 (441,081 ) (423,093 ) Total income tax provision (benefit) $ 17,988 $ (441,081 ) $ (423,093 ) Current income tax expense is based on taxable income for federal and state tax reporting purposes. Deferred income tax expense is provided for certain income and expenses which are recognized in different periods for tax and financial reporting purposes. Deferred income tax assets and liabilities are computed annually for differences between the consolidated financial statements and tax basis of assets and liabilities that will result in taxable or deductible amount in the future based on enacted tax laws and rates applicable to the period in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized. The significant components of deferred income tax assets and liabilities are as follows: As of December 31, 2019 2018 Deferred income tax assets: Allowance for bad debt $ 165,378 $ 122,715 Government grants 32,385 27,814 Available-for-sale securities 44,314 10,371 Research and development tax credit 1,232,877 1,015,919 Loss on equity investments - 35,778 Net operating income (loss) 90,550 - Retirement benefits 74,232 72,881 Total deferred income tax assets 1,639,736 1,285,478 Less - valuation allowance (625,819 ) - Deferred tax assets, net of valuation allowance 1,013,917 1,285,478 Deferred income tax liabilities: Other (6,844 ) (7,910 ) Total deferred income tax liabilities (6,844 ) (7,910 ) Net deferred tax assets $ 1,007,073 $ 1,277,568 Current deferred tax assets: $ 232,766 $ 65,947 Non-current deferred tax assets $ 774,307 $ 1,211,621 The difference between the change in net deferred tax assets and the deferred income tax expenses is mainly due to remeasurement of deferred tax assets and liabilities reflecting currency exchange rates at the balance sheet dates. The related tax impact was recorded through other comprehensive income. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. In assessing the realization of gross deferred income tax assets, management considers whether it is more likely than not that some portion or all its deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The effective tax rates for the reporting periods are as follows: The provision for income taxes differs from the amounts computed by applying the statutory tax rate of 22% to earnings before income taxes, as follows: Years Ended December 31, 2019 2018 Tax expense (benefit) at statutory rate - 22% foreign tax $ (94,919 ) $ (67,666 ) Allowance for bad debt (42,663 ) - Government grants (4,571 ) - Available-for-sale securities (33,943 ) - Research and development tax credit (216,958 ) (419,044 ) Loss on equity investments 35,778 - Net operating income (loss) (90,550 ) - Retirement benefits (1,351 ) Others 99,373 63,617 Valuation allowance 625,819 - Total income tax provision (benefit) $ 276,015 $ (423,093 ) Effective tax rate -63.37 % 137.56 % The Company adopted the guidance in ASC 740 for uncertain tax positions, which requires that realization of an uncertain income tax position must be more likely than not before it can be recognized in the financial statements. This guidance in ASC 740 further prescribes the benefits or liabilities to be recorded in the financial statements as the amounts are cumulatively more likely than not to be realized assuming a review by tax authorities having all relevant information and applying current conventions. The guidance also clarifies the financial statement classification of tax-related penalties and interest and sets forth new disclosure regarding unrecognized tax benefits or liabilities. Differences between the amounts recognized in the consolidated financial statements prior to the adoption of the guidance in ASC 740 for unrecognized tax benefits and the amounts reported after adoption would be accounted for as a cumulative-effect adjustment to the beginning balance of retained earnings. As of December 31, 2019 and 2018, the Company identified no material unrecognized tax benefits and does not expect material change within the next twelve-months. The Company’s policy is to recognize tax penalties and interest in tax expense, if any. The Company recorded tax deferred assets for its research & development tax credits in the amount of $1,232,877 and valuation allowances against this balance of $625,819 as of December 31, 2019 and $1,015,919 as of December 31, 2018. The tax credits are carried forward for five years. Tax years 2012 and forward are open to examination by the Korean National Tax Service (NTS). NTS conducted tax examination in 2012 and no penalties were charged to the Company. |
Stock Compensation
Stock Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Stock Compensation [Abstract] | |
Stock Compensation | Note 14. Stock Compensation The Company has a Stock Option Plan (“Plan”) that allows grants to officers and key employees shares of common stock. The options have vesting schedules of three years from the date of grant, and are exercisable within seven years from the end of the vesting period. Stock options granted and outstanding as of December 31, 2019 and 2018 may be exercised after one year from the date of the Company’s public listing. If the Company’s not publicly listed, these options will be cancelled. The Company recognized approximately $89,000 The fair value of each award to employees in 2019 is estimated on the date of grant using the Binomial option pricing model with the following weighted-average assumptions: expected life of approximately 6.25 years, risk-free interest rate of approximately 2.85%, expected volatility of 16.38% and no dividends during the expected life. Expected volatility is based on historical volatilities of public companies operating in the Company’s industry. The expected life of the options represents the period of time options are expected to be outstanding and is estimated considering vesting terms and employees’ historical exercise and post-vesting employment termination behavior. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company did not provide any n A summary of the status of the Company’s stock option plan is presented as follows: Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Live (In Years) Aggregate Intrinsic Value Outstanding, December 31, 2016 82,928 $ 1.49 4.22 Granted 150,000 1.88 Exercised - - Cancelled (72,812 ) 1.63 Outstanding, December 31, 2017 160,116 1.63 9.18 Granted - - Exercised - - Cancelled - - Outstanding, December 31, 2018 160,116 1.63 9.18 $ 64,046 Granted - - Exercised - - Cancelled - - Outstanding, December 31, 2019 160,116 1.63 9.18 $ 64,046 Options exercisable at December 31, 2019 91,044 $ - $ - $ - Vested and expected to vest at December 31, 2019 91,044 $ - $ - $ - As of December 31, 2019 and 2018, there were approximately $67,000 and $177,000, respectively, of total unrecognized compensation expense related to nonvested share option awards granted. That expense is expected to be recognized over a weighted-average period of 3 years. |
Non-Controlling Interest-Issued
Non-Controlling Interest-Issued of Preferred Stock by Subsidiary | 12 Months Ended |
Dec. 31, 2019 | |
Non-Controlling Interest-Issued of Preferred Stock by Subsidiary [Abstract] | |
Non-Controlling Interest-Issued of Preferred Stock by Subsidiary | Note 15. Non-Controlling Interest-Issued of Preferred Stock by Subsidiary On April 9, 2019, The Company’s subsidiary, I-ON Co., Ltd. (Korea) issued redeemable convertible preferred stock with proceed of KRW549,997,000 and issued 157,142 shares of preferred stock or at price of KRW3,500 per share. The convertible preferred stock agreement contain provisions as follows: ● 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. The Company accounted the issuance of preferred stock under ASC 810-10-45-23, Consolidation, and was accounted for as equity transaction as the parent’s ownership interest retains control of a subsidiary. The preferred stock issuance by a subsidiary to noncontrolling interest holders should be reflected as a noncontrolling interest in the financial statements of the parent at the amount of the cash proceeds received. The convertible preferred shares meet definition of equity instrument and contain put option that is not outside the Company’s control and the conversion to common stock is at a fixed determinable share conversion price at KRW 3,500 per share. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16. Subsequent Events The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements are available to be issued. Any material events that occur between the balance sheet date and the date that the financial statements were available for issuance are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at the balance sheet date. Based upon this review, except as disclosed within the footnotes, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation | The consolidated financial statements include the accounts of I-ON Digital Corp. and its 99.5% owned subsidiary, I-ON, Ltd. All intercompany accounts, transactions, and profits have been eliminated upon consolidation. The accompanying consolidated financial statements and the notes hereto are reported in US Dollars. The consolidated financial statements were prepared and presented in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. Non-controlling interests represent the portion of earnings that is not within the parent Company’s control. These amounts are required to be reported as equity instead of as a liability on the consolidated balance sheet. ASC requires net income or loss from non-controlling interests to be shown separately on the consolidated statements of operations. |
Basis of Presentation | The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. These consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The unaudited information contained herein has been prepared on the same basis as the Company’s audited consolidated financial statements, and, in the opinion of the Company’s management, includes all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2020 or any future period. The Company is also required to consolidate any variable interest entities (VIEs), of which it is the primary beneficiary, as defined. Based on the Company’s analysis pursuant to ASC 810-10-25, Consolidations, the Company does not have any VIEs that need to be consolidated at this time. When the Company does not have a controlling interest in an entity, but exerts a significant influence over the entity, the Company would apply the equity method of accounting. |
Foreign Currency Transaction and Translation | Foreign Currency Transaction and Translation The Company’s principal country of operations is Korea. The financial position and results of operations of the Company are determined using the local currency, Korean Won (“KRW”), as the functional currency. ● 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 profit or loss. December 31, December 31, Average Year Ended December 31, Currency 2019 2018 2019 2018 Japanese Yen to Korean Won JPY10.63 JPY 10.13 JPY10.69 JPY9.96 Korean Won to US Dollar ($) KRW1,157.80 KRW 1,118.30 KRW1,165.65 KRW 1,100.30 Source (Seoul Money Brokerage Services) ● 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. Translation adjustments net of tax were a net loss of $207,767 and net loss of $326,661 for the years ended December 31, 2019 and 2018, respectively. |
Segment Reporting | Segment Reporting FASB ASC 280, Segment Reporting The Company generates revenues from two geographic areas, consisting of Korea and Japan. The following enterprise-wide disclosure is prepared on a basis consistent with the preparation of the consolidated financial statements: December 31, 2019 2018 Korea: Current assets $ 7,821,531 $ 7,550,184 Non-current assets 1,735,978 2,081,897 Current liabilities 2,437,550 1,802,402 Non-current liabilities 194,300 427,397 Net Sales 7,141,655 6,805,968 Japan: Current assets $ 234,710 $ 240,613 Non-current assets 282 278 Current liabilities 101,972 280,050 Non-current liabilities - - Net Sales 812,360 285,679 |
Revenue Recognition | Revenue Recognition Revenues are recognized when control of the promised services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company’s revenue consists of services provided and commissions. These revenue sources are as follows: ● 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. |
Investments | Investments The Company classifies its investment securities as available-for-sale securities in accordance with FASB ASC 320, Investments The Company’s investment securities include privately-held companies where quoted market prices are not available and the cost method, combined with other intrinsic information, is used to assess the fair value of the investment. If the carrying value is below the fair value of an investment at the end of any period, the investment is considered for impairment. Investments are considered impaired when a decline in fair value is judged to be other-than-temporary. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded, and a new cost basis in the investment is established. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all money market funds and highly liquid financial instruments with original maturities of three months or less to be cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash represents cash deposits which is restricted by the financial institutions for the loans the financial institutions having with the Company’s chief executive officer. The loans with the financial institutions are amounted to approximately $1,502,000 and $1,556,000 at December 31, 2019 and 2018, respectively, and expires on various days during 2019 and 2020, unless extended. The loans, bearing various interest rates, are guaranteed by the Company and the restricted cash deposits of the Company are provided to the financial institutions as collateral. The Company’s chief executive officer pays interest from the loans without any default at December 31, 2019 and 2018. The amount of restricted cash as of December 31, 2019 and 2018 was $1,641,043 and $1,699,331, respectively. This arrangement could be considered as a violation of Section 402 of the Sarbanes-Oxley Act of 2002 amended the Securities Exchange Act of 1934 to prohibit U.S. and foreign companies with securities traded in the United States from making, or arranging for third parties to make, nearly any type of personal loan to their directors and executive officers. Violations of the Sarbanes-Oxley loan prohibition are subject to the civil and criminal penalties applicable to violations of the Exchange Act. |
Short-Term Financial Instruments | Short-Term Financial Instruments Short-term financial instruments represent interest-bearing certificates of deposits with original maturities between three months to year. |
Accounts Receivable | Accounts Receivable Accounts receivables are recorded at the invoiced amount and do not bear interest. Amounts collected on accounts receivables are included in net cash provided by operating activities in the consolidated cash flow statements. The allowance for doubtful accounts reflects management’s best estimate of probable losses inherent in the trade accounts receivable. Management primarily determines the allowance based on the aging of accounts receivable balances, historical write-off experience, customer concentrations, customer credit worthiness and current industry and economic trends. The Company’s provision for uncollectible receivables are included in selling, marketing, general and administrative expense in the consolidated statements of operation and comprehensive loss. At December 31, 2019 and 2018, allowance for doubtful accounts was approximately $674,000 and $725,000, respectively. The Company does not have any off-balance sheet exposure related to its customers. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost. Depreciation of property and equipment is computed using the declining balance method, based on the estimated useful lives as follows: Facility equipment 4 years Automobile 4 years Office equipment 4 years Repairs and maintenance are expensed as incurred. Expenditures that increase the value or productive capacity of assets are capitalized. When property and equipment are retired, sold, or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts, and any gain or loss is included in operations. The Company is working on a government research project and many other technical innovation projects. The Company receives government grants that it uses to offset the amount of assets acquired or expenses incurred. |
Research and Development | Research and Development Research and development costs are expensed as incurred. Research and development costs include travel, payroll, and other general expenses specific to research and development activities. Research and development cost for the years ended December 31, 2019 and 2018 were approximately $838 , and $329,000, respectively. |
Intangible Assets | Intangible Assets When the Company acquires an intangible asset, it is recorded at acquisition cost (the purchase price of the intangible asset and the costs directly related to the preparation of the asset for its intended purpose). The cost of an intangible asset acquired in a business combination is measured at the fair value of the acquisition date according to the accounting standards for business combinations. Other intangible assets with a finite life are amortized using the straight-line method over their estimated useful lives. The estimated useful lives of the respective asset categories are as follows: Development costs 3 years Intangible asset excluding development costs 10 years Other Intangible assets 3 to 5 years |
Severance and Retirement Benefits | Severance and Retirement Benefits In accordance with the Korean Labor Standard Law, employees and directors with at least one year of service are entitled to receive a lump-sum payment upon termination of their employment, based on their length of service and rate of pay at the time of termination. Accrued severance benefits represent an amount which would be payable assuming all eligible employees and directors were to terminate their employment as of the balance sheet date. The annual severance benefits expense charged to operations is calculated based upon the net change in the accrued severance benefits payable at the balance sheet date based on the guidance of FASB ASC 960, Accounting – Defined Benefit Pension Plans The Company’s retirement pension plan is a defined contribution plan, and the Company pays the defined contribution regardless of the results of the operation of the plan. The Company recognizes the contributions to be paid in the current accounting period as retirement benefits expense. The amounts recognized as costs related to defined contribution plans were $ and $421,647 for the years ended December 31, 2019 and 2018, respectively. |
Compensated Absences | Compensated Absences Employees of the Company are entitled to be compensated for absences depending on job classification, length of service, and other factors. At December 31, 2019 and 2018, the amounts were deemed to be immaterial. |
Impairment Analysis for Long-lived Assets and Intangible Assets | Impairment analysis for long-lived assets and intangible assets The Company’s long-lived assets and other assets (consisting of property and equipment and purchased intangible assets) are reviewed for impairment in accordance with the guidance of the FASB ASC 360, Property, Plant, and Equipment |
Earnings Per Share | Earnings Per Share FASB ASC Topic 260, Earnings Per Share |
Fair Value Measurements | Fair Value Measurements The Company follows FASB ASC Topic 820, Fair Value Measurements ASC 820 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by the Company for financial instruments measured at fair value on a recurring basis. The three levels of inputs are as follows: 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. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Our financial instruments include cash and cash equivalents, restricted cash, short-term financial instruments, short-term loans, accounts receivable, investments, accounts payables and debt. The carrying values of these financial instruments approximate their fair value due to their short maturities. The carrying amount of our debt approximates fair value because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us. The Company also has financial instruments classified within the fair value hierarchy, which consists of the following: ● 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 The derivatives are evaluated under the hierarchy of ASC 480-10, ASC Paragraph 815-25-1 and ASC Subparagraph 815-10-15-74 addressing embedded derivatives. The fair value of the Level 3 financial instruments was determined with the assistance of an independent third-party valuation specialist using an Option Pricing Model. The following table summarize the Company’s fair value measurements by level at December 31, 2019 for the assets measured at fair value on a recurring basis: December 31, 2019 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 The following table summarize the Company’s fair value measurements by level at December 31, 2018 for the assets measured at fair value on a recurring basis: December 31, 2018 Level 1 Level 2 Level 3 Available-for-sale securities $ - $ - $ 102,756 Common stock purchase warrant - 89,788 - Equity purchase put option - - 109,343 Fair value, at December 31, 2018 $ - $ 89,788 $ 212,099 |
Income Taxes | Income Taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consisted of taxes currently due and deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement and income tax purposes. The Company follows FASB ASC 740, Income Taxes FASB ASC 740-10-25 provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize additional liabilities for uncertain tax positions pursuant to FASB ASC 740-10-25 for the year ended December 31, 2019 and 2018. |
Contingencies | Contingencies Accounting guidance requires that the Company record an estimated loss from a loss contingency when information available prior to issuance of the consolidated financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the consolidated financial statements and the amount of the loss can be reasonably estimated. Accounting for contingencies such as legal matters requires significant judgment. Many of these legal matters can take years to resolve. Generally, as the time period increases over which the uncertainties are resolved, the likelihood of changes to the estimate of the ultimate outcome increases. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are cash and trade receivable arising from its normal business activities. The Company deposits its cash in high credit quality institutions. The Company performs ongoing credit evaluations to its customers and establishes allowances when appropriate. Cash and cash equivalents are maintained at various financial institutions located in Korea. The Company has never experienced any losses related to these balances. |
Advertising | A dvertising Costs associated with advertising and promotions are expensed as incurred. Advertising expense amounted to $44,698 |
Employee Stock Based Compensation | Employee Stock Based Compensation The Company accounts for its share-based compensation plan in accordance with FASB ASC 718, Stock Compensation Stock-based compensation issued to employees and members of our board of directors is measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. The grant date fair value of a stock-based award is recognized as an expense over the requisite service period of the award on a straight-line basis. For purposes of determining the variables used in the calculation of stock-based compensation issued to employees, the Company performs an analysis of current market data and historical data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, we use these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of stock options granted any fluctuations in these calculations could have a material effect on the results presented in our consolidated statements of operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on our consolidated financial statements. |
Non-controlling Interests | Non-controlling Interests Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date. |
Government Grants | Government Grants Government grants are not recognized unless there is reasonable assurance that the Company will comply with the grants’ conditions and that the grants will be received. Government borrowings, which are lower than the market interest rate, are regarded as government grants. The grant is measured from the difference between the fair values of the government borrowings computed using the market interest rate and the acquisition cost of the grant. Government grants whose primary condition is that the Company purchase, construct or otherwise acquire long-term assets are deducted in calculating the carrying amount of the asset. The grant is recognized in profit or loss over the life of a depreciable asset as a reduced depreciation expense. Government grants which are intended to compensate the Company for expenses incurred are recognized as other income in profit or loss over the periods in which the Company recognizes the related costs as expenses. There were no amounts of government grants outstanding as of December 31, 2019 and 2018. |
Value Added Tax | Value Added Tax National Tax Service in Korea administered Value Added Tax under the Tax Reform Act of 1976 promulgated by the National Assembly. Value added tax is imposed on goods sold in or imported into Korea and on services provided within Korea. Value added tax in Korea is charged on an aggregated basis at a rate of 10% on the full price collected for the goods sold or for the taxable services provided. Value added tax paid were $ 374,799 and $466,338 for the years ended December 31, 2019 and 2018, respectively. |
Recent Accounting Pronouncement | Recent Accounting Pronouncement Pronouncements Not Yet Effective ● Fair Value Measurements In August 2018, the FASB amended “Fair Value Measurements” to modify the disclosure requirements related to fair value. The amendment removes requirements to disclose (1) the amount of and reasons for transfers between levels 1 and 2 of the fair value hierarchy, (2) our policy related to the timing of transfers between levels, and (3) the valuation processes used in level 3 measurements. It clarifies that, for investments measured at net asset value, disclosure of liquidation timing is only required if the investee has communicated the timing either to us or publicly. It also clarifies that the narrative disclosure of the effect of changes in level 3 inputs should be based on changes that could occur at the reporting date. The amendment adds a requirement to disclose the range and weighted average of significant unobservable inputs used in level 3 measurements. The guidance is effective for the Company with the Company’s quarterly filing for the period ended March 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption will not have an impact on the Company’s consolidated results of operations, consolidated financial position, and cash flows. ● Retirement Plans In August 2018, the FASB amended “Retirement Plans” to modify the disclosure requirements for defined benefit plans. For the Company, the amendment requires the disclosure of the weighted average interest crediting rate used for cash balance plans and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. It removes the requirement to disclose the approximate amount of future benefits covered by insurance contracts. The guidance is effective for the Company with the Company’s annual filing for the year ended December 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption will not have an impact on the Company’s consolidated results of operations, consolidated financial position, and cash flows. ● Intangibles – Goodwill and other – Internal-Use Software In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company’s accounting for the service element of a hosting arrangement that is a service contract is not affected by the proposed amendments and will continue to be expensed as incurred in accordance with existing guidance. This standard does not expand on existing disclosure requirements except to require a description of the nature of hosting arrangements that are service contracts. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued. Entities can choose to adopt the new guidance prospectively or retrospectively. The Company plans to adopt the updated disclosure requirements of ASU No. 2018-15 prospectively in the first quarter of fiscal 2020, coinciding with the standard’s effective date, and expects the impact from this standard to be immaterial. ● Goodwill In January 2017, the FASB amended “Goodwill” to simplify the subsequent measurement of goodwill. The amended guidance eliminates Step 2 from the goodwill impairment test. Instead, impairment is defined as the amount by which the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill of the reporting unit. The new guidance is effective for the Company on January 1, 2020 and is not expected to have an impact on our consolidated results of operations, consolidated financial position, and cash flows. ● Financial Instruments In June 2016, the FASB amended “Financial Instruments” to provide financial statement users with more decision-useful information about the expected credit losses on debt instruments and other commitments to extend credit held by a reporting entity at each reporting date. During November 2018 and April 2019, the FASB made amendments to the new standard that clarified guidance on several matters, including accrued interest, recoveries, and various codification improvements. The new standard, as amended, replaces the incurred loss impairment methodology in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. The new guidance is effective for us on January 1, 2020, and in the first half of 2019, we established an implementation team and began analyzing the impact on our current policies and procedures to identify potential differences that would result from applying the requirements of the new standard. The implementation team reports findings and progress of the project to management on a frequent basis. Through this process, we have identified appropriate changes to our processes, systems, and controls to support recognition and disclosure under the new standard. The Company is still evaluating the impact of the new standard on the Company’s consolidated results of operations, consolidated financial position, and cash flows. Other recently issued accounting updates are not expected to have a material impact on the Company’s Interim Financial Statements. Recently Adopted Accounting Pronouncements ● Income Statement – Reporting Comprehensive Income In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) (ASU 2018-02), which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-02 will be effective for beginning after December 15, 2018 ● Improvements to Nonemployee Share-based Payment Accounting In June 2018, the FASB issued ASU No. 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 aligns the accounting for share-based payment awards to employees and non-employees. Under ASU 2018-07 the existing employee guidance will apply to nonemployee share-based transactions, except for specific guidance related to the attribution of compensation cost. ASU 2018-07 should be applied to all new awards granted after the date of adoption. ASU 2018-07 is effective for annual and interim periods beginning after December 15, 2018 ● Leases (ASU 2019-01) In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements, which removed the requirement for an entity to disclose in the interim periods after adoption, the effect of the change on income from continuing operations, net income, any other affected financial statement line item, and any affected per share amount. For lessors, the new leasing standard requires leases to be classified as a sales-type, direct financing or operating leases. These criteria focus on the transfer of control of the underlying lease asset. This standard and related update was effective for fiscal years beginning after December 15, 2018 ● Leases (ASU 2016-02) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC 840 “Leases.” These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15, 2018 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Foreign Currency Exchange Rates | The Company’s principal country of operations is Korea. The financial position and results of operations of the Company are determined using the local currency, Korean Won (“KRW”), as the functional currency. ● 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 profit or loss. December 31, December 31, Average Year Ended December 31, Currency 2019 2018 2019 2018 Japanese Yen to Korean Won JPY10.63 JPY 10.13 JPY10.69 JPY9.96 Korean Won to US Dollar ($) KRW1,157.80 KRW 1,118.30 KRW1,165.65 KRW 1,100.30 Source (Seoul Money Brokerage Services) ● 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. |
Consolidated Financial Statements by Geographic Areas | The Company generates revenues from two geographic areas, consisting of Korea and Japan. The following enterprise-wide disclosure is prepared on a basis consistent with the preparation of the consolidated financial statements: December 31, 2019 2018 Korea: Current assets $ 7,821,531 $ 7,550,184 Non-current assets 1,735,978 2,081,897 Current liabilities 2,437,550 1,802,402 Non-current liabilities 194,300 427,397 Net Sales 7,141,655 6,805,968 Japan: Current assets $ 234,710 $ 240,613 Non-current assets 282 278 Current liabilities 101,972 280,050 Non-current liabilities - - Net Sales 812,360 285,679 |
Estimated Useful Lives of Property and Equipment | Property and equipment are recorded at cost. Depreciation of property and equipment is computed using the declining balance method, based on the estimated useful lives as follows: Facility equipment 4 years Automobile 4 years Office equipment 4 years |
Estimated Useful Lives of Respective Asset Categories | The estimated useful lives of the respective asset categories are as follows: Development costs 3 years Intangible asset excluding development costs 10 years Other Intangible assets 3 to 5 years |
Fair Value Measurements by Level for Assets Measured at Fair Value on Recurring Basis | The following table summarize the Company’s fair value measurements by level at December 31, 2019 for the assets measured at fair value on a recurring basis: December 31, 2019 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 The following table summarize the Company’s fair value measurements by level at December 31, 2018 for the assets measured at fair value on a recurring basis: December 31, 2018 Level 1 Level 2 Level 3 Available-for-sale securities $ - $ - $ 102,756 Common stock purchase warrant - 89,788 - Equity purchase put option - - 109,343 Fair value, at December 31, 2018 $ - $ 89,788 $ 212,099 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment [Abstract] | |
Property and Equipment | Property and equipment consist of the following: December 31, 2019 2018 Facilities $ 185,528 $ 192,115 Vehicles 39,989 41,409 Equipment 1,615,288 1,355,710 Government grants (213,526 ) (109,272 ) Total property and equipment 1,627,279 1,479,962 Less: accumulated depreciation (1,423,525 ) (1,315,967 ) Property and equipment, net $ 203,754 $ 163,995 |
Investment (Tables)
Investment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investment [Abstract] | |
Equity Method Investments | The Company had the following investments. Investments Percentage of Ownership December 31, 2019 December 31, 2018 PT IONSOFT 0.90 % $ - $ 3,972 ACDE Consulting VN PTE LED 20.00 % $ 10,040 $ - 4Grit 2.50 % $ 43,189 $ 44,723 E-channel 0.07 % $ 40,849 $ 42,299 KSFC 0.00 % $ 11,359 $ 11,762 Total Investment Securities $ 105,437 $ 102,756 |
Investment Securities | The following table summarize the Company’s investment securities at December 31, 2019 and 2018: Investments Percentage of Ownership December 31, 2019 December 31, 2018 PT IONSOFT 0.90 % - 3,972 ACDE Consulting VN PTE LED 20.00 % 10,040 - 4Grit 2.50 % 43,189 44,723 E-channel 0.07 % 40,849 42,299 KSFC 0.00 % 11,359 11,762 Total Investment Securities 0.00 % $ 105,437 $ 102,756 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets [Abstract] | |
Intangible Assets | Intangible assets consist of the following: December 31, 2019 2018 Patents $ 251,798 $ 174,823 Other intangible assets 551,865 568,276 Government grants (8,729 ) (13,428 ) Total intangible assets 794,634 729,671 Less: Accumulated amortization $ (601,766 ) (593,239 ) Intangible assets, net $ 192,868 $ 136,432 |
Future Amortization Expense of Intangible Assets | Future amortization expense of the Company’s intangible assets at December 31, 2019 is expected to be as follows: Years ending December 31, 2020 $ 26,609 2021 24,324 2022 23,482 2023 22,224 2024 22,782 Thereafter 73,447 Total $ 192,868 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Long-term Debt [Abstract] | |
Long-term Debt | Total long-term debt consisted of the following: December 31, 2019 2018 A note payable to a financial institution bearing interest at 2.75% and 2.81% at December 31, 2019 and 2018, respectively, and guaranteed by the officer of the Company. The Company was required to make interest-only payments until December 2018, then monthly payments of both principal and interest starting from January 2019. $ 388,600 $ 491,906 Long-term debt 388,600 491,906 Less: current portion (194,300 ) (89,509 ) Long-term debt, net of current portion $ 194,300 $ 402,397 |
Future Minimum Payment on Debt | Future minimum payments on debt consists of the following: Years ending December 31, 2020 $ 194,300 2021 194,300 Total $ 388,600 |
Convertible Debt, Beneficial _2
Convertible Debt, Beneficial Conversion Feature, and Common Stock Warrant (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Convertible Debt, Beneficial Conversion Feature, and Common Stock Warrant [Abstract] | |
Convertible Debt Instruments | The Company has the following convertible debt instruments outstanding: December 31, 2019 2018 A $200,000 convertible note, issued at 10% discount, five year term, no monthly interest due, maturing August 13, 2021 $ - $ 200,000 Long-term convertible debt - 200,000 Less: debt discount - (175,000 ) Long-term convertible debt, net of debt discount $ - $ 25,000 |
Equity Purchase Agreement - P_2
Equity Purchase Agreement - Put Option (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity Purchase Agreement - Put Option [Abstract] | |
Changes in Level 3 Financial Instrument Related to Derivative Asset for Equity Put Option | The following table summarizes the changes in the Level 3 financial instrument related to the derivate asset for the equity put option: 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 Fair value, at December 31, 2017 $ - Issuance of equity purchase put option 109,343 Change in fair value - Fair value, at December 31, 2018 $ 109,343 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies [Abstract] | |
Future Minimum Rental Payments | Future minimum rental payments under the non-cancelable operating leases as of December 31, 2019 are as follows: December 31, Amount 2020 144,126 Total $ 144,126 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Income Per Common Share | The following table sets forth the computation of basic and diluted net income per common share: Years Ended December 31, 2019 2018 Net income before non-controlling interest $ (707,466 ) $ 82,004 Non-controlling interest 4,982 167 Net income (712,448 ) 81,837 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 $ (0.02 ) $ 0.00 Non-controlling interest $ 0.00 $ 0.00 Earnings per share to stockholders $ (0.02 ) $ 0.00 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes [Abstract] | |
Income Taxes | Total income tax (benefit) expense consists of the following: Current Deferred Total 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 Year ended December 31, 2018: Federal $ - $ - $ - State - - - Foreign 17,988 (441,081 ) (423,093 ) Total income tax provision (benefit) $ 17,988 $ (441,081 ) $ (423,093 ) |
Components of Deferred Income Tax Assets and Liabilities | The significant components of deferred income tax assets and liabilities are as follows: As of December 31, 2019 2018 Deferred income tax assets: Allowance for bad debt $ 165,378 $ 122,715 Government grants 32,385 27,814 Available-for-sale securities 44,314 10,371 Research and development tax credit 1,232,877 1,015,919 Loss on equity investments - 35,778 Net operating income (loss) 90,550 - Retirement benefits 74,232 72,881 Total deferred income tax assets 1,639,736 1,285,478 Less - valuation allowance (625,819 ) - Deferred tax assets, net of valuation allowance 1,013,917 1,285,478 Deferred income tax liabilities: Other (6,844 ) (7,910 ) Total deferred income tax liabilities (6,844 ) (7,910 ) Net deferred tax assets $ 1,007,073 $ 1,277,568 Current deferred tax assets: $ 232,766 $ 65,947 Non-current deferred tax assets $ 774,307 $ 1,211,621 |
Effective Tax Rate | The provision for income taxes differs from the amounts computed by applying the statutory tax rate of 22% to earnings before income taxes, as follows: Years Ended December 31, 2019 2018 Tax expense (benefit) at statutory rate - 22% foreign tax $ (94,919 ) $ (67,666 ) Allowance for bad debt (42,663 ) - Government grants (4,571 ) - Available-for-sale securities (33,943 ) - Research and development tax credit (216,958 ) (419,044 ) Loss on equity investments 35,778 - Net operating income (loss) (90,550 ) - Retirement benefits (1,351 ) Others 99,373 63,617 Valuation allowance 625,819 - Total income tax provision (benefit) $ 276,015 $ (423,093 ) Effective tax rate -63.37 % 137.56 % |
Stock Compensation (Tables)
Stock Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock Compensation [Abstract] | |
Summary of Stock Option Plan | A summary of the status of the Company’s stock option plan is presented as follows: Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Live (In Years) Aggregate Intrinsic Value Outstanding, December 31, 2016 82,928 $ 1.49 4.22 Granted 150,000 1.88 Exercised - - Cancelled (72,812 ) 1.63 Outstanding, December 31, 2017 160,116 1.63 9.18 Granted - - Exercised - - Cancelled - - Outstanding, December 31, 2018 160,116 1.63 9.18 $ 64,046 Granted - - Exercised - - Cancelled - - Outstanding, December 31, 2019 160,116 1.63 9.18 $ 64,046 Options exercisable at December 31, 2019 91,044 $ - $ - $ - Vested and expected to vest at December 31, 2019 91,044 $ - $ - $ - |
Organization and Operations (De
Organization and Operations (Details) | Dec. 31, 2019 | Aug. 01, 2019 | Jul. 31, 2019 |
PT I-ON-soft [Member] | |||
Organization and Operations [Abstract] | |||
Ownership percentage | 20.00% | ||
Ownership percentage | 0.90% | ||
Subsidiaries [Member] | I-ON, Ltd [Member] | |||
Organization and Operations [Abstract] | |||
Ownership percentage | 99.50% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended | ||||||||||||
Dec. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2019USD ($)₩ / ¥ | Dec. 31, 2019USD ($)₩ / $ | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($)₩ / ¥ | Dec. 31, 2018USD ($)₩ / $ | Dec. 31, 2019 | Dec. 31, 2019₩ / ¥ | Dec. 31, 2019₩ / $ | Dec. 31, 2019Segment | Dec. 31, 2018₩ / ¥ | Dec. 31, 2018₩ / $ | |
Foreign Currency Transaction and Translation [Abstract] | |||||||||||||
Foreign currency exchange rate | 10.63 | 1,157.80 | 10.13 | 1,118.30 | |||||||||
Average exchange rate for the period | 10.69 | 1,165.65 | 9.96 | 1,100.30 | |||||||||
Net loss on translation adjustments | $ (207,767) | $ (326,661) | |||||||||||
Segment Reporting [Abstract] | |||||||||||||
Number of geographic areas | Segment | 2 | ||||||||||||
Consolidated Financial Statements by Geographic Areas [Abstract] | |||||||||||||
Current assets | $ 8,056,241 | 8,056,241 | $ 8,056,241 | $ 8,056,241 | 7,790,797 | $ 7,790,797 | $ 7,790,797 | ||||||
Non-current assets | 1,736,260 | 1,736,260 | 1,736,260 | 1,736,260 | 2,082,175 | 2,082,175 | 2,082,175 | ||||||
Current liabilities | 2,539,522 | 2,539,522 | 2,539,522 | 2,539,522 | 2,010,452 | 2,010,452 | 2,010,452 | ||||||
Net Sales | 7,954,015 | 7,091,647 | |||||||||||
Investment [Abstract] | |||||||||||||
Unrealized gain or loss | 0 | 0 | |||||||||||
Restricted Cash [Abstract] | |||||||||||||
Restricted cash, restricted for loans with the financial institutions | 1,502,000 | 1,502,000 | 1,502,000 | 1,502,000 | 1,556,000 | 1,556,000 | 1,556,000 | ||||||
Restricted cash | 1,641,043 | 1,641,043 | 1,641,043 | 1,641,043 | 1,699,331 | 1,699,331 | 1,699,331 | ||||||
Accounts Receivable [Abstract] | |||||||||||||
Allowance for doubtful accounts | $ 674,000 | 674,000 | 674,000 | 674,000 | 725,000 | 725,000 | 725,000 | ||||||
Research and Development [Abstract] | |||||||||||||
Research and development cost | 838,237 | 329,366 | |||||||||||
Severance and Retirement Benefits [Abstract] | |||||||||||||
Minimum service to receive lump-sum payment | 1 year | ||||||||||||
Defined contribution plans cost | 353,892 | 421,647 | |||||||||||
Assets Measured at Fair Value on Recurring Basis [Abstract] | |||||||||||||
Available-for-sale securities | $ 105,437 | 105,437 | 105,437 | 105,437 | 102,756 | 102,756 | 102,756 | ||||||
Equity purchase put option | $ 105,594 | 105,594 | 105,594 | 105,594 | 109,343 | 109,343 | 109,343 | ||||||
Advertising [Abstract] | |||||||||||||
Advertising expense | 44,698 | 43,158 | |||||||||||
Employee Stock Based Compensation [Abstract] | |||||||||||||
Vesting period | 3 years | ||||||||||||
Government Grants [Abstract] | |||||||||||||
Government grants outstanding | $ 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
Value Added Tax [Abstract] | |||||||||||||
Value added tax rate | 10.00% | ||||||||||||
Value added tax paid | 374,799 | 466,338 | |||||||||||
Facility Equipment [Member] | |||||||||||||
Property and Equipment [Abstract] | |||||||||||||
Estimated useful lives | 4 years | ||||||||||||
Automobile [Member] | |||||||||||||
Property and Equipment [Abstract] | |||||||||||||
Estimated useful lives | 4 years | ||||||||||||
Office Equipment [Member] | |||||||||||||
Property and Equipment [Abstract] | |||||||||||||
Estimated useful lives | 4 years | ||||||||||||
Recurring [Member] | Level 1 [Member] | |||||||||||||
Assets Measured at Fair Value on Recurring Basis [Abstract] | |||||||||||||
Available-for-sale securities | $ 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
Common stock purchase warrant | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
Equity purchase put option | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
Fair value | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
Recurring [Member] | Level 2 [Member] | |||||||||||||
Assets Measured at Fair Value on Recurring Basis [Abstract] | |||||||||||||
Available-for-sale securities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
Common stock purchase warrant | 0 | 0 | 0 | 0 | 89,788 | 89,788 | 89,788 | ||||||
Equity purchase put option | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
Fair value | 0 | 0 | 0 | 0 | 89,788 | 89,788 | 89,788 | ||||||
Recurring [Member] | Level 3 [Member] | |||||||||||||
Assets Measured at Fair Value on Recurring Basis [Abstract] | |||||||||||||
Available-for-sale securities | 105,437 | 105,437 | 105,437 | 105,437 | 102,756 | 102,756 | 102,756 | ||||||
Common stock purchase warrant | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
Equity purchase put option | 105,594 | 105,594 | 105,594 | 105,594 | 109,343 | 109,343 | 109,343 | ||||||
Fair value | $ 211,031 | 211,031 | 211,031 | 211,031 | 212,099 | 212,099 | 212,099 | ||||||
Development Costs [Member] | |||||||||||||
Intangible Assets [Abstract] | |||||||||||||
Estimated useful lives of finite lived intangible assets | 3 years | ||||||||||||
Intangible Asset Excluding Development Costs [Member] | |||||||||||||
Intangible Assets [Abstract] | |||||||||||||
Estimated useful lives of finite lived intangible assets | 10 years | ||||||||||||
Other Intangible Assets [Member] | Minimum [Member] | |||||||||||||
Intangible Assets [Abstract] | |||||||||||||
Estimated useful lives of finite lived intangible assets | 3 years | ||||||||||||
Other Intangible Assets [Member] | Maximum [Member] | |||||||||||||
Intangible Assets [Abstract] | |||||||||||||
Estimated useful lives of finite lived intangible assets | 5 years | ||||||||||||
Reportable Geographical Areas [Member] | Korea [Member] | |||||||||||||
Consolidated Financial Statements by Geographic Areas [Abstract] | |||||||||||||
Current assets | $ 7,821,531 | 7,821,531 | 7,821,531 | 7,821,531 | 7,550,184 | 7,550,184 | 7,550,184 | ||||||
Non-current assets | 1,735,978 | 1,735,978 | 1,735,978 | 1,735,978 | 2,081,897 | 2,081,897 | 2,081,897 | ||||||
Current liabilities | 2,437,550 | 2,437,550 | 2,437,550 | 2,437,550 | 1,802,402 | 1,802,402 | 1,802,402 | ||||||
Non-current liabilities | 194,300 | 194,300 | 194,300 | 194,300 | 427,397 | 427,397 | 427,397 | ||||||
Net Sales | 7,141,655 | 6,805,968 | |||||||||||
Reportable Geographical Areas [Member] | Japan [Member] | |||||||||||||
Consolidated Financial Statements by Geographic Areas [Abstract] | |||||||||||||
Current assets | 234,710 | 234,710 | 234,710 | 234,710 | 240,613 | 240,613 | 240,613 | ||||||
Non-current assets | 282 | 282 | 282 | 282 | 278 | 278 | 278 | ||||||
Current liabilities | 101,972 | 101,972 | 101,972 | 101,972 | 280,050 | 280,050 | 280,050 | ||||||
Non-current liabilities | $ 0 | 0 | $ 0 | $ 0 | 0 | $ 0 | $ 0 | ||||||
Net Sales | $ 812,360 | $ 285,679 | |||||||||||
Subsidiaries [Member] | I-ON, Ltd [Member] | |||||||||||||
Principles of Consolidation and Presentation [Abstract] | |||||||||||||
Ownership percentage | 99.50% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Components of Property and Equipment [Abstract] | ||
Government grants | $ (213,526) | $ (109,272) |
Total property and equipment | 1,627,279 | 1,479,962 |
Less: accumulated depreciation | (1,423,525) | (1,315,967) |
Property and equipment, net | 203,754 | 163,995 |
Deprecation expense | 151,652 | 56,295 |
Facilities [Member] | ||
Components of Property and Equipment [Abstract] | ||
Property and equipment before government grants | 185,528 | 192,115 |
Vehicles [Member] | ||
Components of Property and Equipment [Abstract] | ||
Property and equipment before government grants | 39,989 | 41,409 |
Equipment [Member] | ||
Components of Property and Equipment [Abstract] | ||
Property and equipment before government grants | $ 1,615,288 | $ 1,355,710 |
Investment, Equity Method (Deta
Investment, Equity Method (Details) - USD ($) | Dec. 31, 2019 | Jul. 31, 2019 | Dec. 31, 2018 |
Investments [Abstract] | |||
Percentage of ownership | 0.00% | ||
Available for sale | $ 105,437 | $ 102,756 | |
Total investment securities | $ 105,437 | 102,756 | |
PT IONSOFT [Member] | |||
Investments [Abstract] | |||
Percentage of ownership | 0.90% | 20.00% | |
Available for sale | $ 0 | 3,972 | |
ACDE Consulting VN PTE LED [Member] | |||
Investments [Abstract] | |||
Percentage of ownership | 20.00% | ||
Available for sale | $ 10,040 | 0 | |
4Grit [Member] | |||
Investments [Abstract] | |||
Percentage of ownership | 2.50% | ||
Available for sale | $ 43,189 | 44,723 | |
E-channel [Member] | |||
Investments [Abstract] | |||
Percentage of ownership | 0.07% | ||
Available for sale | $ 40,849 | 42,299 | |
KSFC [Member] | |||
Investments [Abstract] | |||
Percentage of ownership | 0.00% | ||
Available for sale | $ 11,359 | $ 11,762 |
Investment, Available-for-sale
Investment, Available-for-sale securities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Investment Securities [Abstract] | ||
Percentage of ownership | 0.00% | |
Balance | $ 105,437 | $ 102,756 |
PT IONSOFT [Member] | ||
Investment Securities [Abstract] | ||
Percentage of ownership | 0.90% | |
Balance | $ 0 | 3,972 |
ACDE Consulting VN PTE LED [Member] | ||
Investment Securities [Abstract] | ||
Percentage of ownership | 20.00% | |
Balance | $ 10,040 | 0 |
4Grit [Member] | ||
Investment Securities [Abstract] | ||
Percentage of ownership | 2.50% | |
Balance | $ 43,189 | 44,723 |
E-channel [Member] | ||
Investment Securities [Abstract] | ||
Percentage of ownership | 0.07% | |
Balance | $ 40,849 | 42,299 |
KSFC [Member] | ||
Investment Securities [Abstract] | ||
Percentage of ownership | 0.00% | |
Balance | $ 11,359 | $ 11,762 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible Assets [Abstract] | ||
Government grants | $ (8,729) | $ (13,428) |
Total intangible assets | 794,634 | 729,671 |
Less: Accumulated amortization | (601,766) | (593,239) |
Intangible assets, net | 192,868 | 136,432 |
Amortization expense | 24,134 | 20,523 |
Patents [Member] | ||
Intangible Assets [Abstract] | ||
Intangible assets before government grants | 251,798 | 174,823 |
Other Intangible Assets [Member] | ||
Intangible Assets [Abstract] | ||
Intangible assets before government grants | $ 551,865 | $ 568,276 |
Intangible Assets, Future Amort
Intangible Assets, Future Amortization Expense of Intangible Assets (Details) | Dec. 31, 2019USD ($) |
Future Amortization Expense [Abstract] | |
2020 | $ 26,609 |
2021 | 24,324 |
2022 | 23,482 |
2023 | 22,224 |
2024 | 22,782 |
Thereafter | 73,447 |
Total | $ 192,868 |
Long-term Debt (Details)
Long-term Debt (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Long-term Debt [Abstract] | ||
Long-term debt | $ 388,600 | $ 491,906 |
Less: current portion | (194,300) | (89,509) |
Long-term debt, net of current portion | 194,300 | 402,397 |
Future Minimum Payments on Debt [Abstract] | ||
2020 | 194,300 | |
2021 | 194,300 | |
Long-term debt | 388,600 | 491,906 |
Notes Payable to Financial Institution [Member] | ||
Long-term Debt [Abstract] | ||
Long-term debt | $ 388,600 | $ 491,906 |
Stated interest rate | 2.75% | 2.81% |
Future Minimum Payments on Debt [Abstract] | ||
Long-term debt | $ 388,600 | $ 491,906 |
Line of Credit (Details)
Line of Credit (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Line of Credit [Member] | ||
Line of Credit [Abstract] | ||
Maximum borrowing capacity | $ 3,400,000 | |
Line of credit | $ 0 | |
Collateral Debt [Member] | ||
Line of Credit [Abstract] | ||
Maximum borrowing capacity | 5,100,000 | 5,400,000 |
Line of credit | $ 0 | $ 0 |
Convertible Debt, Beneficial _3
Convertible Debt, Beneficial Conversion Feature, and Common Stock Warrant (Details) | Feb. 19, 2019USD ($) | Aug. 13, 2018USD ($)Tranche$ / sharesshares | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)Days$ / shares | Dec. 31, 2018USD ($) |
Convertible Debt and Common Stock Warrant [Abstract] | |||||
Number of tranches | Tranche | 3 | ||||
Common stock warrant (in shares) | shares | 50,000 | ||||
Exercise price (in dollars per share) | $ / shares | $ 2.75 | ||||
Warrants expiration period | 5 years | ||||
Fair value of warrant | $ 89,788 | ||||
Debt Instruments [Abstract] | |||||
Less: debt discount | $ 0 | $ (175,000) | |||
Long-term debt | 388,600 | 491,906 | |||
Loss on extinguishment of convertible debt | (216,208) | 0 | |||
Maximum [Member] | |||||
Convertible Debt and Common Stock Warrant [Abstract] | |||||
Investment amount to be received | 540,000 | ||||
Convertible Debt [Member] | |||||
Convertible Debt and Common Stock Warrant [Abstract] | |||||
Beneficial conversion feature | $ 89,788 | ||||
Debt Instruments [Abstract] | |||||
Long term debt | 0 | 200,000 | |||
Less: debt discount | 0 | (175,000) | |||
Long-term debt | 0 | 25,000 | |||
Interest expense | $ 8,333 | 23,000 | |||
Convertible Debt [Member] | Convertible Note One [Member] | |||||
Convertible Debt and Common Stock Warrant [Abstract] | |||||
Interest rate | 10.00% | ||||
Face amount | $ 200,000 | ||||
Debt instrument, maturity date | Aug. 13, 2021 | ||||
Interest rate on unpaid principal or interest | 18.00% | ||||
Threshold conversion period | 180 days | ||||
Conversion price (in dollars per share) | $ / shares | $ 2.75 | ||||
Percentage of lowest traded price of common stock | 70.00% | ||||
Number of trading days | Days | 20 | ||||
Percentage of principal amount redemption in event of default | 140.00% | ||||
Debt Instruments [Abstract] | |||||
Long term debt | $ 0 | $ 200,000 | |||
Debt instrument term | 5 years | ||||
Monthly interest due | $ 0 | ||||
Debt premium | 30.00% | ||||
Convertible debenture redemption | $ 255,000 | ||||
Loss on extinguishment of convertible debt | $ (216,208) | ||||
Convertible Debt [Member] | Convertible Note One [Member] | Maximum [Member] | |||||
Convertible Debt and Common Stock Warrant [Abstract] | |||||
Notification period for redemption | 2 days | ||||
Convertible Debt [Member] | Convertible Note One [Member] | 90 Days or Less [Member] | |||||
Convertible Debt and Common Stock Warrant [Abstract] | |||||
Percentage of principal amount redemption | 110.00% | ||||
Convertible Debt [Member] | Convertible Note One [Member] | 91 Days to 120 Days [Member] | |||||
Convertible Debt and Common Stock Warrant [Abstract] | |||||
Percentage of principal amount redemption | 120.00% | ||||
Convertible Debt [Member] | Convertible Note One [Member] | 121 Days to 180 Days [Member] | |||||
Convertible Debt and Common Stock Warrant [Abstract] | |||||
Percentage of principal amount redemption | 130.00% | ||||
Convertible Debt [Member] | Convertible Note One [Member] | Greater Than or Equal to 181 Days [Member] | |||||
Convertible Debt and Common Stock Warrant [Abstract] | |||||
Percentage of principal amount redemption | 140.00% |
Equity Purchase Agreement - P_3
Equity Purchase Agreement - Put Option (Details) - USD ($) | Aug. 13, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Equity Purchase Agreement [Abstract] | |||
Par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Equity Purchase Agreement [Member] | |||
Equity Purchase Agreement [Abstract] | |||
Par value (in dollars per share) | $ 0.0001 | ||
Agreement value | $ 10,000,000 | ||
Agreement term | 24 months | ||
Minimum percentage of lowest closing bid price to determine put notice | 88.00% | ||
Number of trading days associated with the put notice | 7 days | ||
Minimum aggregate value of single put notice | $ 20,000 | ||
Minimum percentage of average daily trading value to determine put amount | 250.00% | ||
Number of trading days associated with the average daily trading value to determine put notice | 10 days | ||
Aggregate value of common stock under put notice | $ 500,000 | ||
Number of shares issued (in shares) | 100,000 | ||
Equity Purchase Agreement [Member] | Put Option [Member] | |||
Changes in Level 3 financial instrument related to derivative asset for equity put option [Roll Forward] | |||
Fair value, beginning of period | $ 109,343 | $ 0 | |
Issuance of equity purchase put option | 0 | 109,343 | |
Change in fair value | (3,749) | 0 | |
Fair value, end of period | $ 105,594 | $ 109,343 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Royalty [Abstract] | ||
Royalty agreement extension period | 5 years | |
Proceeds from royalties | $ 184,000 | $ 181,000 |
Minimum future lease payments [Abstract] | ||
2020 | 144,126 | |
Total | 144,126 | |
Rent expense | $ 144,126 | $ 152,686 |
Maximum [Member] | ||
Royalty [Abstract] | ||
Term of royalty agreement | 20 years |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Net income before non-controlling interest | $ (707,466) | $ 82,004 |
Non-controlling interest | 4,982 | 167 |
Net income | $ (712,448) | $ 81,837 |
Weighted-average shares of common stock outstanding [Abstract] | ||
Basic (in shares) | 35,030,339 | 35,030,339 |
Dilutive effect of common stock equivalents arising from share option, excluding antidilutive effect from loss (in shares) | 0 | 0 |
Dilutive shares (in shares) | 35,030,339 | 35,030,339 |
Earnings per share - Basic and diluted [Abstract] | ||
Net income before non-controlling interest (in dollars per share) | $ (0.02) | $ 0 |
Non-controlling interest (in dollars per share) | 0 | 0 |
Earnings per share to stockholders (in dollars per share) | $ (0.02) | $ 0 |
Non-vested antidilutive awards (in shares) | 0 | 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current [Abstract] | ||
Federal | $ 0 | $ 0 |
State | 0 | 0 |
Foreign | 16,786 | 17,988 |
Current income tax provision (benefit) | 16,786 | 17,988 |
Deferred [Abstract] | ||
Federal | 0 | 0 |
State | 0 | 0 |
Foreign | 259,229 | (441,081) |
Deferred income tax provision (benefit) | 259,229 | (441,081) |
Total [Abstract] | ||
Federal | 0 | 0 |
State | 0 | 0 |
Foreign | 276,015 | (423,093) |
Total income tax provision (benefit) | $ 276,015 | $ (423,093) |
Income Taxes, Components of Def
Income Taxes, Components of Deferred Income Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred income tax assets [Abstract] | ||
Allowance for bad debt | $ 165,378 | $ 122,715 |
Government grants | 32,385 | 27,814 |
Available-for-sale securities | 44,314 | 10,371 |
Research and development tax credit | 1,232,877 | 1,015,919 |
Loss on equity investments | 0 | 35,778 |
Net operating income (loss) | 90,550 | 0 |
Retirement benefits | 74,232 | 72,881 |
Total deferred income tax assets | 1,639,736 | 1,285,478 |
Less - valuation allowance | (625,819) | 0 |
Deferred tax assets, net of valuation allowance | 1,013,917 | 1,285,478 |
Deferred income tax liabilities [Abstract] | ||
Other | (6,844) | (7,910) |
Total deferred income tax liabilities | (6,844) | (7,910) |
Net deferred tax assets | 1,007,073 | 1,277,568 |
Current deferred tax assets | 232,766 | 65,947 |
Non-current deferred tax assets | $ 774,307 | $ 1,211,621 |
Income Taxes, Effective Tax Rat
Income Taxes, Effective Tax Rates (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Effective Tax Rates [Abstract] | ||
Tax expense (benefit) at statutory rate - 22% foreign tax | $ (94,919) | $ (67,666) |
Allowance for bad debt | (42,663) | 0 |
Government grants | (4,571) | 0 |
Available-for-sale securities | (33,943) | 0 |
Research and development tax credit | (216,958) | (419,044) |
Loss on equity investments | 35,778 | 0 |
Net operating income (loss) | (90,550) | 0 |
Retirement benefits | (1,351) | |
Others | 99,373 | 63,617 |
Valuation allowance | 625,819 | 0 |
Total income tax provision (benefit) | $ 276,015 | $ (423,093) |
Effective tax rate | (63.37%) | 137.56% |
Statutory tax rate | 22.00% | 22.00% |
Deferred tax assets recorded on research & development tax credits | $ 1,232,877 | $ 1,015,919 |
Tax credit carry forward period | 5 years |
Stock Compensation (Details)
Stock Compensation (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Option Plan [Abstract] | ||||
Vesting period | 3 years | |||
Stock Options [Member] | ||||
Stock Option Plan [Abstract] | ||||
Vesting period | 3 years | |||
Exercisable period from end of vesting period | 7 years | |||
Exercisable period from date of public listing | 1 year | |||
Stock-based compensation | $ 89,000 | $ 87,000 | ||
Weighted average assumptions used in valuing stock options [Abstract] | ||||
Expected life | 6 years 3 months | |||
Risk-free interest rate | 2.85% | |||
Expected volatility | 16.38% | |||
Dividends | 0.00% | |||
Number of Shares [Roll Forward] | ||||
Outstanding, beginning of period (in shares) | 160,116 | 160,116 | 82,928 | |
Granted (in shares) | 0 | 0 | 150,000 | |
Exercised (in shares) | 0 | 0 | 0 | |
Cancelled (in shares) | 0 | 0 | (72,812) | |
Outstanding, end of period (in shares) | 160,116 | 160,116 | 160,116 | 82,928 |
Options exercisable, at end of period (in shares) | 91,044 | |||
Vested and expected to vest, at end of period (in shares) | 91,044 | |||
Weighted-Average Exercise Price [Abstract] | ||||
Outstanding, beginning of period (in dollars per share) | $ 1.63 | $ 1.63 | $ 1.49 | |
Granted (in dollars per share) | 0 | 0 | 1.88 | |
Exercised (in dollars per share) | 0 | 0 | 0 | |
Cancelled (in dollars per share) | 0 | 0 | 1.63 | |
Outstanding, end of period (in dollars per share) | 1.63 | $ 1.63 | $ 1.63 | $ 1.49 |
Options exercisable, at end of period (in dollars per share) | 0 | |||
Vested and expected to vest, at end of period (in dollars per share) | $ 0 | |||
Weighted Average Remaining Contractual Live [Abstract] | ||||
Outstanding | 9 years 2 months 5 days | 9 years 2 months 5 days | 9 years 2 months 5 days | 4 years 2 months 19 days |
Options exercisable | 0 years | |||
Vested and expected to vest | 0 years | |||
Aggregate Intrinsic Value [Abstract] | ||||
Outstanding, end of period | $ 64,046 | $ 64,046 | ||
Options exercisable, at end of period | 0 | |||
Vested and expected to vest, at end of period | 0 | |||
Unrecognized compensation expense related to nonvested share [Abstract] | ||||
Unrecognized compensation expense related to nonvested share option awards | $ 67,000 | $ 177,000 | ||
Weighted-average period of nonvested share option awards | 3 years | 3 years |
Non-Controlling Interest-Issu_2
Non-Controlling Interest-Issued of Preferred Stock by Subsidiary (Details) | Apr. 09, 2019KRW (₩)₩ / sharesshares | Dec. 31, 2019shares |
Non-Controlling Interest-Issued of Preferred Stock by Subsidiary [Abstract] | ||
Shares issued (in shares) | shares | 157,142 | |
Redeemable Convertible Preferred Stock [Member] | ||
Non-Controlling Interest-Issued of Preferred Stock by Subsidiary [Abstract] | ||
Proceeds from issuance of redeemable convertible preferred stock | ₩ | ₩ 549,997,000 | |
Shares issued (in shares) | shares | 157,142 | |
Price per share (in dollars per share) | ₩ / shares | ₩ 3,500 | |
Ratio of voting rights of preferred stock to common stock | 1 | |
Annual dividend | 2.00% | |
Conversion price (in dollars per share) | ₩ / shares | ₩ 3,500 | |
Call option premium | 7.00% |