I-ON Digital Reports June Quarter Financial Results; Posts Record 40% Year Over Year Revenue Increase; Backlog Remains Healthy; Guidance Reaffirmed

SEOUL,South Korea,Aug. 14,2019 -- I-ON Digital Corp. ("I-ON" or the "Company"),www.i-on.net,a Seoul,South Korea based global enterprise software company focused on delivering leading unstructured data management solutions including digital experience platform (DXP),CMS,and digital marketing offerings,is pleased to announce financial results for the quarter ended June 30,2019 reflected in I-ON's current report on Form 10-Q filed with the SEC on August 13,2019.

Summary

During the period,revenue increased a record 40% year over year (14% sequentially) to $1.83 million,which was composed primarily of customized solutions and services associated with DXP implementation and migration projects,as well as greater royalty and subscription contribution out of Japan and South East Asia,respectively. The more favorable revenue mix was also characterized by higher margin contribution from the delivery of sports (TAMM and SDP) and energy solutions and SaaS (eForm),as well as the seasonal timing of revenue recognition on projects commenced during the first half of the year. This yielded a gross margin of 26%,reflecting a significant improvement over the year ago period and versus the recent March quarter. New and ongoing client engagements included HanaTour,Jeju Tourism and a major cosmetics company (DXP),the KLPGA,and Korea's 3x3 Basketball League (sports data management),as well as Japan-based TIS Intec Group and Malaysia-based Tenaga Nasional (energy management). Top ten customer concentration was also stable and consistent with previous periods at about 50%.

The double-digit top-line increase was also attributable to previously announced sales and marketing initiatives geared towards new platform and product launches commenced during the latter part of 2018 and the first half of this year. As a result,G&A and marketing spend for the June quarter grew 11.5% year over year to $0.52 million,while R&D declined 40% to $0.16 million as largely planned. Such efforts to accelerate revenue growth returned a negligible operating loss of roughly $0.18 million,a GAAP net loss of $0.22 million and loss per share of $0.01.

Chairman and CEO Mr. James Oh commented,"I-ON has remained resilient in the midst of lingering domestic macro-economic headwinds,registering back to back quarters of high double-digit revenue growth thanks to sales and marketing efforts designed to secure our market share lead domestically,while diversifying our revenue streams internationally,all while maintaining disciplined cost control measures,a healthy pipeline and balance sheet. As our results reflect,we remain focused on growing all facets of our business and will invest accordingly over the near and intermediate-term. Notably,the domestic adoption of our next generation digital experience platform (DXP) is exceeding expectations,and is proving to significantly advance our clients' cloud capabilities by enabling them to keep up with new features,services and devices for their marketing audiences,while pursuing digital transformation initiatives of their own in order to remain competitive within their respective industries. Our announcements over the past few months also reflect significant progress having been made on the energy and sport solutions front and we look forward to keeping the market and shareholders abreast of these exciting new opportunities,including on the M&A and financing fronts subject to the right market conditions.

Balance Sheet

I-ON's balance sheet remained healthy as of the end of June,reflecting sequential improvements across the board with total cash and equivalents of over $3.1 million,$4.8 million in working capital,total assets of $8.6 million,$0.4 million in long-term debt,and shareholders' equity of approximately $6.4 million. I-ON had available lines of credit with financial institutions for up to $3.6 million,of which there were no outstanding balances as of the close of the period. The Company also recently announced that it had secured an equity investment of approximately $500,000 from Seoul-based venture firm UTC Investment Co. The funding is coupled with qualified R&D grants from sovereign institutions and is primarily aimed towards accelerating I-ON's speed to market within the local sports ICT community including multiple amateur and professional sports leagues.

H9Pitch Acquisition

On June 28,2019,and on the heels of its engagement with California-based Pacific Pro Football League,I-ON announced that it had entered into a binding Letter of Intent to acquire all of the issued and outstanding shares of Seoul,South Korea-based H9Pitch (www.h9pitch.com),a fast growing traditional and multi-media design studio and agency catering to the domestic amateur and professional sports industry. The Company is near completion of its due diligence process and under the terms of the LOI,a definitive purchase agreement is expected to be executed during the current third quarter,upon which H9Pitch will become a wholly-owned subsidiary of the Company. The synergistic transaction will enable I-ON to secure additional infrastructure and talent,while broadening its sports solutions franchise to incorporate,for example,innovative and data driven wearable devices and technology into H9Pitch's next generation uniforms uniquely addressable to the domestic sports sector,in particular Korea's wide-reaching amateur and pro football clubs and leagues in which H9Pitch has established a strong foothold. H9Pitch will also play an instrumental role with respect to the recent launch of I-ON's sports data management platform offering,which will offer a unique blend of turn-key solutions geared for organizers,teams and audiences of live events.

Financial Guidance

I-ON's pipeline and backlog as of the beginning of August stood at approximately $8 million and $5 million,respectively,over a third of which remains tied to a diversified mix of longer-term sports and energy ICT contracts or letter of intents,with the remainder attributable to DXP migration projects domestically and out of Japan. With organic growth now being notched at a double-digit rate,I-ON continues to maintain its rolling twelve-month pro forma revenue guidance of $15 million,which assumes the consummation of the H9Pitch acquisition during the September quarter and only modest organic growth across the Company's core offerings. Existing DXP implementations are expected to be fully recognized over the back half of this year,which should yield an annualized and more normalized blended gross margin of closer to 40% and at least break-even in 2019. Management will also continue to pursue a multi-faceted strategy to attain a revenue run-rate goal of $25 million by 2020,which would likely reflect more international contribution and an improving revenue mix of PaaS and SaaS revenue,yielding higher y/y gross,and operating margins well above 45% and 15%,respectively.

About I-ON Digital Corp.

I-ON Digital Corp. (www.i-on.net) is a Seoul,South Korea-based software and solutions developer as well as provider founded in 1999. After being awarded its first of six key patents by 2003,I-ON has sold to over 1,600 clients across numerous verticals in both the private and public sectors,primarily throughout South Korea,Japan and Southeast Asia.The Company's core offerings include DXP (Digital Experience Platform) and revolve around unstructured data management,Sports data software and Energy ICT solutions.

Forward Looking Statements

Statements in this document contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,as amended. These statements are based on many assumptions and estimates and are not guarantees of future performance. These statements may involve known and unknown risks,uncertainties and other factors which may cause the actual results,performance or achievements of the Company to be materially different from future results,performance or achievements expressed or implied by such forward-looking statements. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason,or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements,even if new information becomes available in the future. Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors,including,without limitation those set forth as "Risk Factors" in our filings with the Securities and Exchange Commission ("SEC"). There may be other factors not mentioned above or included in the Company's SEC filings that may cause actual results to differ materially from those projected in any forward-looking statement. The Company assumes no obligation to update any forward-looking statements as a result of new information,future events or developments,except as required by securities laws.

Press/IR Contact

Bruce S. Lee

I-ON Digital Corp.

ir@i-on.net

View original content:/news-releases/i-on-digital-reports-june-quarter-financial-results-posts-record-40-year-over-year-revenue-increase-backlog-remains-healthy-guidance-reaffirmed-300901322.html