Forward Looking Statements



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

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

Our unaudited interim consolidated financial statements for the nine months
ended September 30, 2022 and 2021 and as of September 30, 2022 and December 31,
2021 are expressed in US dollars and are prepared in accordance with generally
accepted accounting principles in the United States of America. They reflect all
adjustments (all of which are normal and recurring in nature) that, in the
opinion of management, are necessary for fair presentation of our interim
financial information. The results of operations for the interim periods
presented are not necessarily indicative of the results to be expected for any
subsequent quarter. Our unaudited consolidated financial statements and notes
included therein have been prepared on a basis consistent with and should be
read in conjunction with our audited financial statements and notes for the year
ended December 31, 2021, as filed in our annual report on Form 10-K.

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

Business Overview

Organization and Corporate History

I-ON Digital Corp. (formerly known as I-ON Communications Corp.) was
incorporated under the laws of the State of Delaware on June 18, 2013 as ALPINE
3 Inc. Alpine 3 Inc. was set up to serve as a vehicle to effect an asset
acquisition, merger, exchange of capital stock or other business combination
with a domestic or foreign business. ALPINE 3 did not undertake any effort to
cause a market to develop in its securities, either debt or equity, before it
successfully concluded a business combination. On April 4, 2014, The Michael J.
Rapport Trust (the "Trust") purchased 10,000,000 shares of common stock which
was all of the outstanding shares of Alpine 3, Inc., and subsequently changed
the name to Evans Brewing Company Inc. ("EBC") on May 29, 2014. On October 9,
2014 the Trust agreed to the cancellation of 9,600,000 of the shares of common
stock that it had acquired and retained 400,000 shares of common stock.

On October 15, 2014, Bayhawk and EBC entered into an Asset Purchase and Share
Exchange Agreement (the "Agreement"), subject to receiving approval of the
independent Bayhawk shareholders who voted on the transaction. On September 17,
2015, the independent Bayhawk shareholders approved the agreement and Bayhawk
sold to EBC and EBC purchased from Bayhawk assets of Bayhawk, including but not
limited to the assets relating to the Bayhawk Ales label and the Evans Brands
(collectively, the "Transferred Assets"). Bayhawk retained ownership of 100% of
the stock in Evans Brewing Co. (CA) ("Evans Brewing California") which has the
brewers license at City Brewery in Lacrosse, WI. Based on the affirmative vote
by the independent Bayhawk shareholders to approve the Asset Purchase
transaction, EBC proceeded with the share exchange and tender offer to the
Bayhawk shareholders, pursuant to which EBC offered to exchange shares of EBC
common stock for shares of Bayhawk common stock, on a one-for-one basis (the
"Exchange Offer"). At the close of the share exchange on December 2, 2015,
4,033,863 Bayhawk shares were accepted and exchanged for 4,033,863 shares of EBC
common stock.

                                                                              21

--------------------------------------------------------------------------------

Table of Contents



On January 25, 2018, Evans Brewing Company, Inc. consummated an Agreement of
Merger and Plan of Reorganization (the "Merger Agreement"), with I-ON
Communications Co., Ltd., a company organized under the laws of the Republic of
Korea (South Korea) ("I-ON") and I-ON Acquisition Corp., a wholly-owned
subsidiary of the Company ("Acquisition"). Pursuant to the terms of the Merger
Agreement, Acquisition merged with and into I-ON in a statutory reverse
triangular merger (the "Merger") with I-ON surviving as a wholly-owned
subsidiary of the Registrant.  As consideration for the Merger, the Registrant
agreed to issue the shareholders of I-ON (the "I-ON Holders") an aggregate of
26,000,000 shares of our Common Stock, in accordance with their pro rata
ownership of I-ON capital stock.  Following the Merger, the Registrant adopted
the business plan of I-ON in information technology consultancy and software
development.  On December 14, 2017, in connection with the Merger, the Company's
Board of Directors approved an amendment to its Certificate of Incorporation
(the "Amendment") to change its name to I-ON Communications Corp.

22

--------------------------------------------------------------------------------

Table of Contents



At the effective time of the Merger, our board of directors and officers were
reconstituted by the appointment of Jae Cheol James Oh as Chairman, Chief
Executive Officer, and Chief Financial Officer, Hong Rae Kim as Executive
Director and Jae Ho Cho as Director.  Michael Rapport resigned as President,
Chief Executive Officer, and Chairman in connection with the Transaction and
Evan Rapport resigned as Vice President and Director, Kenneth Wiedrich resigned
as Chief Financial Officer and Director and Kyle Leingang resigned as Secretary.
Roy Robertson, Mark Lamb, Joe Ryan, and Kevin Hammons resigned as members of the
Board of Directors and their respective committees.

On March 21, 2019, the Company's Board of Directors approved an amendment to the
Company's Certificate of Incorporation to change the name of the Company to I-ON
Digital Corp.

I-ON Digital

Following the Merger, as described more fully herein, the Company adopted the
business plan of I-ON. I-ON was founded by Jae Cheol James Oh, who currently
serves as CEO. The Company's roots are in IT consultancy and software
development. I-ON services South Korea's enterprise content management system's
(CMS) market and specializes in advancing market-leading internet software
applications to capitalize on rapidly growing market sectors.

After being awarded its first of numerous international patents in 2003, I-ON
has since evolved into an industry-leading and recognized software developer and
provider of on-premise and cloud-based enterprise-class unstructured data
management, digital experience and digital marketing software and solutions.
I-ON's portfolio of software and solutions serves the digital marketing and
technology needs of organizations, enabling clients to create, measure, and
optimizes digital experiences for their audiences across marketing channels and
devices.  We believe these solutions help clients reduce the cost of content
management and delivery, while increasing the return on their investments in
digital communication and marketing spend.  As of its founding, the Company has
serviced and continues to service over 1,000 blue-chip and middle-market clients
across virtually all verticals in both private and public sectors.  The Company
has meaningfully expanded its reach over the past decade and now currently
markets, licenses and sells its products and services directly to clients in
South Korea and Japan, as well as in Singapore, Malaysia, Indonesia, Thailand,
Vietnam, and the U.S. through value-added resellers and partnerships.

I-ON currently holds 6 international and over 20 domestic patents for both
products and methodologies built into the 10 product offerings the Company
currently has at market.  These encompass enterprise CMS, digital experience and
service delivery software, digital marketing, smart mobility and analytics
tools, and, more recently, energy management solutions as well as sports
software and IT convergence services.  Beginning in the fourth quarter of 2018,
the Company started endorsing its 7th generation cloud based Digital Experience
(DXP) platform as a service offering known as ICE, which encompasses a more
feature-rich front and back end CMS.  The Company has designed and developed
industry-leading technologies that are compliant with global standards including
GS (Good Software) and NET (New Excellent Technology).  I-ON also holds numerous
domestic and global industry awards, earning high rankings and recognition from
the likes of Gartner (Magic Quadrant 2014) and Red Herring (2014 Asia Top 100
Winner), among many others.

In addition to South Korea, Japan has particularly helped fuel I-ON's growth
over the past 10 years owing to the success of an exclusive licensing deal with
Ashisuto, a large Japan-based technology services firm that employs
approximately 800 technical, engineering and marketing staff across 9 office
locations.  Ashisuto, which has provided technology services to Japan's
enterprises and government entities since 1973, currently white labels and sells
I-ON's core CMS offering ICS6 to over 600 clients as NOREN 6.

As a result of global enterprise digital marketing trends and I-ON's nearly 20
-year track record in South Korea, Japan and now, Southeast Asia, the Company's
objective is to continue to gain market share in these markets. I-ON will
continue to closely engage and consult with existing and prospective clients as
their subject matter expert and digital strategist of choice across multiple
touchpoints in the digital marketing and technology ecosystem, helping Chief
Marketing Officers (CMO) and Chief Information Officers (CIO) drive critical
change and growth for their organizations.

I-ON has invested and continues to spend substantial revenue on research and
development.  The Company has over 86 employees as of September 30, 2022,
approximately 90% of whom are considered full-time.  Research and development
typically comprise of approximately 80 junior, mid to senior level engineers and
developers, most of whom are based at the Company' headquarters located at 15
Teheran-ro 10-gil, Gangnam-gu, Seoul, South Korea, 06234.

23

--------------------------------------------------------------------------------

Table of Contents



On September 29, 2022, the Company effectuated an Equity Transfer Agreement (the
"Sell-Off Agreement") among the Company, Communications and JFJ Digital Corp., a
Delaware corporation ("JFJ"), whereby all of the outstanding equity of
Communications was transferred to JFJ in exchange for the return of 15,306,119
shares of the Company's Common Stock held by Jae Cheol Oh and Hong Rae Kim, the
Company's principal executive officer and members of the Board of Directors (the
"Sell-Off") .  Pursuant to the Sell-Off Agreement, in addition to acquiring all
of the outstanding capital stock of Communications, JFJ will assume all
responsibilities for any debts, obligations and liabilities of Communications
and acquire all rights to any assets of Communications, including, but not
limited to, the Subscription Amount.

As a result of the Sell-Off, Communications ceased being a subsidiary of the
Company. Accordingly, the operating results of Communications are reported in
net loss from discontinued operations, net of income taxes in the Condensed
Consolidated Statements of Operations for all periods presented. In addition,
the related assets and liabilities held prior to the Sell-Off are reported as
Assets and Liabilities of Discontinued Operations on the Condensed Consolidated
Balance Sheets. All amounts and disclosures included in the Notes to Condensed
Consolidated Financial Statements reflect only the Company's continuing
operations unless otherwise noted.

Results of Discontinued Operations

Comparison of results of discontinued operations for the three months ended September 30, 2022 as Compared to the three months ended September 30, 2021

The following table sets forth selected items from our interim unaudited condensed consolidated statements of operations by dollar and as a percentage of our net sales for the periods indicated:



                                        Three months ended September 30,
                                      2022                            2021                           Change
                                   (RESTATED)                      (RESTATED)
                                              % of                            % of
                             Amount         Revenue          Amount         Revenue           Amount            %

Net sales                  $ 2,258,387          100.0 %    $ 3,616,267          100.0 %    $ (1,357,880 )        -37.5 %
Cost of goods sold           2,162,075           95.7 %      2,494,644           69.0 %        (332,569 )        -13.3 %
Gross profit                    96,312            4.3 %      1,121,623

31.0 % (1,025,311 ) -91.4 %



Operating expense              941,882           41.7 %        730,846           20.2 %         211,036           28.9 %

Other income (expense)         801,613           35.5 %         12,210

0.3 % 789,403 6465.0 %



Income (loss) before
provision for income
taxes, loss on equity
investment, and
non-controlling interest       (43,957 )         (1.9 )%       402,987           11.1 %        (446,944 )       -110.9 %
Provision for (benefit
from) income tax                  (878 )         (0.0 )%      (579,022 )        (16.0 )%        578,144          -99.8 %
Income (loss) before
loss on equity
investment and
non-controlling
interest                       (43,079 )         (1.9 )%       982,009           27.2 %      (1,025,088 )       -104.4 %
Loss on equity
investment                     (18,725 )         (0.8 )%             -           0.00 %         (18,725 )          N/A
Income (loss) before
non-controlling interest       (61,804 )         (2.7 )%       982,009           27.2 %      (1,043,813 )       -106.3
Non-controlling interest
income (loss)                  (36,941 )         (1.6 )%            89           0.00 %         (37,030 )     -41606.7 %
Net income (loss)
attributable to Parent
Company from
discontinued operations        (24,863 )         (1.1 )%       981,920

27.2 % (1,006,783 ) -102.5 %



Comprehensive income
statement:
Net income (loss)               38,968            1.7 %        982,009           27.2 %        (942,952 )        -96.0 %
Foreign currency
translation loss              (977,851 )        (43.3 )%      (468,727 )        (13.0 )%       (509,124 )        108.6 %
Total comprehensive
income (loss)              $  (938,883 )        (41.6 )%   $   513,282           14.2 %      (1,452,076 )        282.9 %



                                                                              24

--------------------------------------------------------------------------------

Table of Contents

Net Sales



Net sales decreased by $1.36 million or 37.5% from $3.62 million for the three
months ended September 30, 2021 to $2.26 million for the comparable period in
2022. The Company has experienced a decreased number of new contracts throughout
its customization and solution installation service operations.

Cost of Goods Sold



Cost of goods sold decreased by $332,569 or 13.3% from $2.49 million for the
three months ended September 30, 2021 to $2.16 million for the comparable period
in 2022. The decrease was primarily due to a reduction of outsourced consulting
fees which decreased by $338,432 or 25.43% from $1.33 million for the three
months ended September 30, 2021 to $991,891 for the comparable period in 2022.

Gross Profit



Gross profit decreased by $1.03 million or 91.4% from $1.12 million or 31.0% of
net sales for the three months ended September 30, 2021 to $96,312 or 4.3% of
net sales for the comparable period in 2022. The decrease in gross profit for
the compared periods was primarily driven by decreased net sales.

Operating Expenses

Operating expenses consist of research and development expenses and general and administrative expenses.

Research and development expenses decreased by $142,376 or 59.5% from $239,108 for the three months ended September 30, 2021 to $96,732 for the comparable period in 2022. The decrease was mainly due to a decrease in head count in research and development department.



General and administrative expenses increased by $362,726 or 73.8% to $854,464
for the three months ended September 30, 2022 from $491,738 for the comparable
period in 2021. This increase in general and administrative expenses for the
three months ended September 30, 2022 compared to the comparable period in the
prior year was primarily due to the increased salaries and wages to employees

Other Income (Expense)

The increase in other income was primarily due to the $801,616 received from SK E&S for small businesses' research & development projects.

25

--------------------------------------------------------------------------------

Table of Contents

Comprehensive income - Foreign currency translation



Foreign currency translation loss was $977,851 for the three months ended
September 30, 2022 compared to loss of $468,727 for the three months ended
September 30, 2021.  The change was due to devaluation of Korean Won compared to
US dollar in three months ended September 30, 2022 compared to September 30,
2021.  The average exchange rate for the three months ended September 30, 2022
and 2021 was KRW 1,268.9 and KRW 1,131,01, respectively.

Comparison of results of discontinued operations for the nine months ended September 30, 2022 as Compared to the nine months ended September 30, 2021

The following table sets forth selected items from our interim unaudited condensed consolidated statements of operations by dollar and as a percentage of our net sales for the periods indicated:



                                        Nine months ended September 30,
                                     2022                             2021                            Change
                                  (RESTATED)                       (RESTATED)
                                              % of                             % of
                             Amount         Revenue           Amount         Revenue           Amount            %

Net sales                 $  7,578,685          100.0 %    $ 12,224,926          100.0 %    $ (4,646,241 )        -38.0 %
Cost of goods sold           6,923,957           91.4 %       8,626,293           70.6 %      (1,702,336 )        -19.7 %
Gross profit                   654,728            8.6 %       3,598,633

29.4 % (2,943,905 ) -81.8 %



Operating expense            2,649,706           35.0 %       2,404,575           19.7 %         245,131           10.2 %

Other income (expense)       1,807,581           23.9 %          15,439

0.1 % 1,792,142 11607.9 %



Income (loss) before
provision for income
taxes, loss on equity
investment, and
non-controlling
interest                      (187,397 )         (2.5 )%      1,209,497            9.9 %      (1,396,894 )       -115.5 %
Provision for (benefit
from) income tax                30,002            0.4 %        (506,439 )         (4.1 )%        536,441         -105.9 %
Income (loss) before
loss on equity
investment and
non-controlling
interest                      (217,399 )         (2.9 )%      1,715,936           14.0 %      (1,933,335 )       -112.7 %
Loss on equity
investment                     (18,725 )         (0.2 )%              -           0.00 %         (18,725 )          N/A
Income (loss) before
non-controlling
interest                      (236,124 )         (3.1 )%      1,715,936           14.0 %      (1,952,060 )       -113.8 %
Non-controlling
interest income (loss)        (273,108 )         (3.6 )%           (409 )         0.00 %        (272,699 )     -66674.6 %
Net income (loss)
attributable to Parent
Company from
discontinued operations         36,984            0.5 %       1,716,345

14.0 % (1,679,361 ) -97.8 %



Comprehensive income
statement:
Net income (loss)             (236,124 )         (3.1 )%      1,715,936           14.0 %      (1,952,060 )       -113.8 %
Foreign currency
translation loss            (1,691,420 )        (22.3 )%     (1,015,434 )         (8.3 )%       (675,986 )         66.6 %
Total comprehensive
income (loss)             $ (1,927,544 )        (25.4 )%   $    700,502            5.7 %      (2,628,046 )       -375.2 %



Net Sale

Net sales decreased by $4,646,241 or 38.0%, to $7,578,685 for the nine months
ended September 30, 2022 from $12,224,926 for the nine months ended September
30, 2021. The change in net sales reflected the following:

- Customization revenue decreased by approximately $1,063,000 from approximately
$5,931,000 for the nine months ended September 30, 2021 to $4,868,000 for the
nine months ended September 30, 2022 due to decrease in new contracts.

26

--------------------------------------------------------------------------------

Table of Contents



- Installation revenue decreased by approximately $2,559,000 from approximately
$3,153,000 for the nine months ended September 30, 2021 to $594,000 for the nine
months ended September 30, 2022 due to decrease in new contracts.

Cost of Goods Sold



Cost of goods sold decreased by $1,702,336 or 19.7%, to $6,923,957 for the nine
months ended September 30, 2022 from $8,626,293 for the nine months ended
September 30, 2021.  The decrease was primarily due to outsourced consulting
fees.  The outsourced consulting fees decreased by $2,102,224 or 47.15%, to
$2,355,427 for the nine months ended September 30, 2022 from $4,457,652 for the
nine months ended September 30, 2021.

Gross Profit



Gross profit decreased by $2,943,905, to $654,728, or 81.8% of net sales, for
the nine months ended September 30, 2022, from $3,598,633 or 29.4% of net sales,
for the nine months ended September 30, 2021. The decrease in gross profit for
the compared periods was primarily driven by decreased net sales.

Operating Expenses

Operating expenses consist of research and development expenses and general and administrative expenses.



Research and development expenses decreased by $310,753 or 37.2%, to $524,611
for the nine months ended September 30, 2022 from $835,364 for the nine months
ended September 30, 2021.  The decrease was due to decrease in head count
computer programmers at the research and development department.

General and administrative expenses increased by $565,198 or 36.0%, to $2,134,409 for the nine months ended September 30, 2022 from $1,569,211 for the nine months ended September 30, 2021. The expenses have been continuously increased mainly due to an increase in salary.

Other Income (Expense)

The increase in other income was primarily due to the $1,736,227 received from SK E&S for small businesses' research & development projects.

Comprehensive income - Foreign currency translation



Foreign currency translation loss was $1,691,420 for the nine months ended
September 30, 2022 compared to loss of $1,015,434 for the nine months ended
September 30, 2021.  The change was due to devaluation of Korean Won compared to
US dollar in nine months ended September 30, 2022 compared to September 30,
2021.  The average exchange rate for the nine months ended September 30, 2022
and 2021 was KRW 1,268.9 and KRW 1,131.01, respectively.

27

--------------------------------------------------------------------------------

Table of Contents

Liquidity and Capital Resources



As of the Sell-Off date, which was September 29, 2022, the Company had
approximately $12.6 million of total assets and $3.6 million of total
liabilities on its consolidated balance sheet. Those assets and liabilities were
owned by Communications or Communications' subsidiaries, such as I-ON, Ltd
(Japanese subsidiary), eformworks Co., Ltd. (Korean subsidiary) and EIPGRID
(Korean subsidiary). As a result of the Sell-Off Agreement, all assets and
liabilities will be transferred to JFJ and the Company will remain as a shell
company with no operating assets or liabilities in its financial statements.

Critical Accounting Estimates



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

28

--------------------------------------------------------------------------------

Table of Contents

© Edgar Online, source Glimpses