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 financial statements. The financial statements and notes are representations of the Company’s management, who is responsible for integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures made are adequate to make the information presented not misleading.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position as of June 30, 2026, the results of operations for the three and six months ended June 30, 2026 and 2025, and cash flows for the six months ended June 30, 2026 and 2025. Interim results are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2026 or any future interim period.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Basis of Consolidation

The consolidated financial statements include the accounts of I-On Digital Corp. and its wholly owned subsidiary Orebits Corp, (collectively, the Company). All significant intercompany transactions and balances have been eliminated in consolidation. Subsidiaries are entities over which the Company has control, typically through a majority voting interest. The Company consolidates entities in which it holds a controlling financial interest, as defined by Accounting Standards Codification (ASC) 810, Consolidation.

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern.

For the six months ended June 30, 2026, the Company reported net income of $3,584,107, primarily attributable to the gain recognized on the exchange of intangible assets and the gain on settlement of debt. These gains are non-recurring in nature and do not represent the results of the Company’s core operating activities. The Company continued to incur operating losses from its principal business activities and used approximately $0.8 million of cash in operating activities during the six months ended June 30, 2026.

As of June 30, 2026, the Company had a working capital deficiency of approximately $4.59 million, continued to rely on related-party financing and third-party borrowings to fund operations, and had an accumulated deficit of approximately $4.71 million. These conditions continue to raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.

Management continues to focus on expanding commercialization of its digital asset platform, developing additional revenue-generating opportunities, and obtaining additional financing through private placements and strategic financing arrangements. The Company also expects continued financial support from certain related parties as needed. However, there can be no assurance that additional financing or related-party support will be available on acceptable terms, or at all.

Accordingly, the accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Use of Estimates in the Preparation of Financial Statements

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. As a result, actual results could materially differ from these estimates.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 for contracts with customers. The core principle of ASC 606 is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled. The Company applies the following five-step model: (i) identification of the contract with a customer; (ii) identification of performance obligations; (iii) determination of the transaction price; (iv) allocation of the transaction price to performance obligations; and (v) recognition of revenue when or as performance obligations are satisfied.

The Company’s revenue during the six months ended June 30, 2026 consisted of fees earned under its Master Treasury Lease and Custody Agreement (“MTLCA”) with GGBR Inc. (“GGBR”). Under the MTLCA arrangement, the Company, performing in its role as the Lessor under the MTLCA, enables GGBR’s minting, issuance, and management of gold-backed digital tokens (“Goldfish Tokens”) by providing its ION.au Gold-backed Digital Assets (“ION.au”) as collateral to back the Goldfish Tokens. Under the MTLCA the Company’s single performance obligation is to provide vault access to the ION.au, however, the Company earns royalties on GGBR’s sales of Goldfish Tokens, therefore revenue is recognized when Goldfish Tokens are sold by GGBR, at the point when the Company is entitled to receive consideration.

Consideration received in advance of Goldfish Token sales is recorded as a contract liability and recognized as revenue when the Company is entitled to receive consideration. During the three months ended June 30, 2026, the Company did not recognize any revenue under the Master Treasury Lease and Custody Agreement (“MTLCA”). For the six months ended June 30, 2026, the Company recognized $27,000 of revenue under the MTLCA. As of June 30, 2026 and December 31, 2025, the Company had no accounts receivable related to the MTLCA and recorded deferred revenue of $0 and $460, respectively.

Digital Asset Yield Income

The Company recognizes income earned from contractual participation in digital asset treasury and decentralized finance (“DeFi”) yield-generating arrangements as other income, as such income is not derived from contracts with customers and is therefore outside the scope of ASC Topic 606, Revenue from Contracts with Customers. Yield income is recognized when earned based on the Company’s contractual rights under the applicable agreements. Amounts earned but not yet received are recorded as other receivables.

Cash and Cash Equivalents

The Company considers all money market funds and highly liquid investments with original maturities of three months or less to be cash equivalents. As of June 30, 2026 and December 31, 2025, the Company had no cash equivalents.

Intangible Assets

Intangible assets represent non-physical assets that lack physical substance but have economic value. The Company’s intangible assets primarily consist of internally developed software, technology platforms, and digital assets, including gold-backed digital assets and related digital tokens. Intangible assets are recorded at cost, fair value, or historical cost, as appropriate. Fair value is used when assets are acquired from parties not under common control, while historical cost is used for assets acquired from entities under common control. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives.

The estimated useful lives of the respective asset categories are as follows:

 Schedule of Estimated Useful Lives of Asset Categories

The Company follows the guidance in ASC 350-30. Costs incurred to renew, maintain, or extend the useful life of recognized intangible assets are generally expensed as incurred unless they meet the capitalization criteria under U.S. GAAP.

Digital assets, including gold-backed digital assets and other blockchain-based digital tokens held by the Company, are accounted for as indefinite-lived intangible assets under ASC 350. Accordingly, these assets are not amortized but are evaluated for impairment at least annually, or more frequently whenever events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

When digital assets are exchanged for other digital assets or other consideration, the Company derecognizes the carrying amount of the assets surrendered and recognizes the assets received at the appropriate measurement basis in accordance with applicable U.S. GAAP. Any resulting gain or loss is recognized in the condensed consolidated statements of operations in the period the transaction occurs.

Impairment losses recognized on indefinite-lived intangible assets are not subsequently reversed if the fair value of the assets later increases.

Impairment Analysis for Long-lived Assets and Intangible Assets

The Company evaluates its long-lived assets, including finite-lived intangible assets, for impairment in accordance with ASC 360, Property, Plant, and Equipment, whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability is assessed by comparing the carrying amount of the asset or asset group to the estimated undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying amount is determined not to be recoverable, an impairment loss is recognized for the amount by which the carrying amount exceeds its fair value. Fair value is determined using appropriate valuation techniques, including discounted cash flow analyses, market-based approaches, quoted market prices, and independent third-party appraisals, as applicable.

The Company’s indefinite-lived intangible assets, including digital assets, are accounted for in accordance with ASC 350, Intangibles—Goodwill and Other. These assets are not amortized but are evaluated for impairment annually, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Management considers both qualitative and quantitative factors when evaluating impairment, including market conditions, observable market prices, technological developments, regulatory changes, and other relevant events.

If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, the Company recognizes an impairment loss equal to the excess carrying amount. Once recognized, impairment losses are not subsequently reversed if the fair value of the asset increases.

Management’s impairment analyses require the use of significant estimates and assumptions, including projected future cash flows, estimated useful lives, market conditions, and valuation inputs. Actual results may differ from these estimates and could materially affect the Company’s financial position and results of operations.

Earnings Per Share

The Company accounts for earnings per share (“EPS”) in accordance with FASB ASC Topic 260, Earnings Per Share. Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the applicable reporting period.

Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Potentially dilutive securities are included in the computation of diluted earnings per share using the if-converted method or the treasury stock method, as applicable, when their effect is dilutive. For certain convertible instruments with variable conversion features, the Company applies the applicable guidance under ASC 260 in determining the number of incremental shares to include in diluted earnings per share.

For periods in which the Company reports a net loss, all potentially dilutive securities are excluded from the computation of diluted loss per share because their effect would be anti-dilutive.

Potential common shares outstanding consisted of the following:

 Schedule of Anti-dilutive of Common Stock Equivalents

For the three months ended June 30, 2026, the Company reported a net loss; therefore, all potentially dilutive securities were excluded from the computation of diluted loss per share because their inclusion would have been anti-dilutive.

For the six months ended June 30, 2026, the Company reported net income. Accordingly, diluted earnings per share includes the effect of dilutive potential common shares as required under ASC 260.

The following table sets forth the computation of diluted weighted-average common shares for the six months ended June 30, 2026:

 Schedule of Diluted Weighted Average Common Shares

Fair Value Measurements

The Company accounts for fair value measurements in accordance with FASB ASC Topic 820, Fair Value Measurement. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820 establishes a fair value hierarchy that prioritizes the inputs used in measuring fair value. Observable inputs are based on market data obtained from independent sources, while unobservable inputs reflect management’s assumptions about the assumptions market participants would use in pricing an asset or liability.

The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are as follows:

A financial instrument’s categorization within the fair value hierarchy is based on the lowest level input that is significant to the fair value measurement.

The carrying amounts of cash, other receivables, due from related party, prepaid expenses, accrued expenses, due to related parties, and other current liabilities approximate fair value because of the short-term nature of these instruments. The carrying amounts of notes payable and convertible notes payable also approximate fair value due to their relatively short maturities or because the stated interest rates approximate current market rates for similar instruments.

The Company’s derivative liabilities associated with certain convertible notes are measured at fair value on a recurring basis and are classified as Level 3 within the fair value hierarchy because the valuation incorporates significant unobservable inputs, including assumptions regarding expected volatility, expected term, risk-free interest rates, conversion features, and other factors. The derivative liabilities are remeasured at fair value at each reporting date, with changes in fair value recognized in the accompanying condensed consolidated statements of operations. See Note 10 – Convertible Promissory Notes and Embedded Derivative Liabilities for additional information.

The following table provides a summary of the fair value of the Company’s derivative liabilities as of June 30, 2026 and December 31, 2025:

 Schedule of fair value of derivative liabilities

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC Topic 740, Income Taxes. Income taxes consist of current taxes payable and deferred taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes a valuation allowance when, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company recognizes the financial statement benefit of a tax position only when it is more likely than not that the position will be sustained upon examination by the applicable taxing authorities based on the technical merits of the position. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with the taxing authority. The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense.

For the three and six months ended June 30, 2026 and 2025, the Company did not recognize any liabilities for uncertain tax positions under ASC 740, nor did it recognize any interest or penalties related to uncertain tax positions.

Contingencies

Accounting guidance requires that the Company record an estimated loss from a loss contingency when information available prior to issuance of the condensed 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 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 consist primarily of cash and cash equivalents maintained at financial institutions. The Company places its cash deposits with high-credit-quality financial institutions that management believes are creditworthy.

Cash balances maintained at financial institutions may, at times, exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit of $250,000 per depositor, per insured bank. As of June 30, 2026, the Company maintained cash balances in excess of federally insured limits. Management believes that the credit risk associated with these deposits is minimal due to the financial strength of the institutions where the funds are held.

The Company generally does not extend significant credit to customers in the ordinary course of business. The Company monitors the creditworthiness of its counterparties and establishes allowances for expected credit losses when considered necessary based on historical experience, current economic conditions, and other relevant factors. As of June 30, 2026 and December 31, 2025, management believed that no allowance for credit losses was required.

Segment Reporting

The Company accounts for segment reporting in accordance with FASB ASC Topic 280, Segment Reporting. Operating segments are identified based on the manner in which the Company’s Chief Operating Decision Maker (“CODM”) evaluates financial information for purposes of allocating resources and assessing performance.

Advertising

Advertising and marketing costs are expensed as incurred and are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

The Company incurred $0 and $13,936 of advertising and marketing expense during the three months ended June 30, 2026 and 2025, respectively, and $0 and $50,836 during the six months ended June 30, 2026 and 2025, respectively.

Employee Stock Based Compensation

The Company accounts for share-based compensation in accordance with FASB ASC Topic 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and nonemployees based on the grant-date fair value of the awards.

Share-based compensation expense is recognized over the requisite service period of the award, generally on a straight-line basis for awards that vest based solely on service conditions. The Company accounts for forfeitures as they occur.

The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model, which requires management to make assumptions regarding the expected term of the award, expected stock price volatility, the risk-free interest rate, expected dividend yield, and other relevant factors. Because the Company has limited historical trading data, expected volatility is estimated using the historical volatility of comparable publicly traded companies when appropriate. The expected term of stock options is estimated based on the contractual term of the award and expected exercise behavior.

Changes in the assumptions used to estimate the grant-date fair value of share-based awards could have a material effect on the amount of stock-based compensation expense recognized in future periods.

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires public business entities to provide additional disclosures, in tabular form, about specified natural expense categories, including employee compensation, depreciation, amortization, and inventory or transaction-related costs, within relevant income statement captions.

The standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company has not elected early adoption and is currently evaluating the impact that the adoption of ASU 2024-03 will have on its consolidated financial statement disclosures. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position, results of operations, or cash flows, although it expects the standard will require expanded financial statement disclosures.

Management has reviewed other recently issued accounting pronouncements issued by the FASB through the date these condensed consolidated financial statements were available to be issued and determined that, other than the standard discussed above, there are no recently issued accounting pronouncements that are expected to have a material impact on the Company’s condensed consolidated financial statements.