This report should be read completely and with the understanding that actual future results may be materially different from what we expect. The forward looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Except as otherwise indicated by the context, references in this Annual Report to the words "we," "our," "us," the "Company," "IINX," or “Ionix” refers to
Ionix Technology, Inc
. All references to “USD” or United States Dollars refer to the legal currency of the United States of America.
Corporate Background
Ionix Technology, Inc. (the “Company”), formerly known as Cambridge Projects Inc., is a Nevada corporation that was formed on March 11, 2011, and
maintains its principal executive office at 3773 Howard Hughes Pkwy, Suite 500S, Las Vegas, Nevada, 89169. The Company was originally formed to pursue a business combination through the acquisition of, or merger with, an operating business. The Company filed a registration statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on August 23, 2011, and focused its efforts to identify a possible business combination.
On November 20, 2015, the Company’s former majority shareholder and chief executive offer, Locksley Samuels (“Seller”), completed a private common stock purchase agreement (the “SPA”) to sell his entire 21,600,000 shares of the Company’s common stock to Shining Glory Investments Limited (“Purchaser”). In connection with the SPA, the Board appointed Ms. Doris Zhou as the Company’s Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and director on November 20, 2015, and Seller concurrently resigned from all positions with the Company. As a result of the SPA, a change in control occurred as (i) Purchaser acquired approximately 65.45% of the Company’s common stock, and (ii) the Company’s sole officer and director after the SPA is Ms. Zhou.
On November 30, 2015, the Company’s board of directors (the “Board”) and the majority of its shareholders approved that (i) the Company change its name from “Cambridge Projects Inc.” to “Ionix Technology, Inc.”, (ii) the Company voluntarily changed its ticker symbol in connection with the name change, and (iii) the Company execute a 3:1 forward stock split, which will increase the Company’s issued and outstanding shares of common stock from 33,001,000 to 99,003,000 (the “Corporate Actions). The Company filed an application with the Financial Industry Regulatory Authority (“FINRA”) to effectuate the Corporate Actions and filed a Form 8-K on December 10, 2015, in regards to the Corporate Actions. On February 3, 2016, FINRA approved the Corporate Actions, which took effect on the market on February 4, 2016. As a result, (i) the Company’s name is now “Ionix Technology, Inc.”, (ii) its new trading symbol is “IINX”, (iii) the 3:1 forward stock split is effective, payable upon surrender, and (iv) the Company’s new CUSIP number is 46222Q107.
On February 17, 2016, the Board ratified, approved, and authorized the Company’s acquisition of a wholly-owned subsidiary, Well Best International Investment Limited, a limited liability company formed under the laws of Hong Kong Special Administrative Region (“Well Best”) on September 14, 2015. Well Best was acquired by Qingchun Yang, its current director, on November 10, 2015. One hundred percent interest in Well Best was transferred to Ionix Technology on February 15, 2016. Well Best’s purpose is to (i) act as an investment holding company and hold the assets of Taizhou Ionix Technology Company Limited (as explained below), and (ii) pursue new business ventures conducted in the Asia Pacific region excluding China.
Well Best has had no activities since inception.
On February 17, 2016, the Board ratified, approved, and authorized the Company, as the sole member of Well Best, on the formation of Taizhou Ionix Technology Company Limited (“Taizhou Ionix”), a company formed under the laws of China on December 17, 2015, and a wholly-owned subsidiary of Well Best. Taizhou Ionix conducted no business between its date of incorporation and date approved by the Board. As a result, Taizhou Ionix is an indirect wholly-owned subsidiary of the Company. Taizhou Ionix was formed to (i) develop, design, and manufacture lithium-ion batteries for electric vehicles, and (ii) act as an investment holding company that may acquire other businesses located in China.
On August 19, 2016, Well Best, a wholly-owned subsidiary of the Company entered into a share transfer agreement (the “Share Transfer Agreement”) whereby Well Best sold 100% of its equity interest in Taizhou Ionix, to Mr. GuoEn Li, the sole director and officer of Taizhou for
approximately
30,000 Chinese Yuan
($5,000USD)
(the “Sale”). Well Best was the sole shareholder of Taizhou. The Board approved and authorized the Sale, and instructed Well Best to enter into and execute the Share Transfer Agreement due to the fact that the Company believed that Taizhou’s manufacturing contract with Taizhou Jiunuojie Electronic Technology Limited to produce lithium batteries was not beneficial to the Company. As a result of the Sale, (i) Taizhou is no longer an indirect, wholly-owned subsidiary of the Company, and (ii) Mr. Li is no longer affiliated with the Company. The Share Transfer Agreement was filed as exhibit 10.2 to the Company’s current report on Form 8-K filed with the Commission on August 24, 2016.
On August 19, 2016, the Board ratified, approved, and authorized the Company, as the sole member of Well Best, on the formation of Xinyu Ionix Technology Company Limited (“Xinyu Ionix”), a company formed under the laws of China on May 19, 2016. As a result Xinyu Ionix is a wholly-owned subsidiary of Well Best and an indirect wholly-owned subsidiary of the Company. Between May 19, 2016 and the date the Board ratified the incorporation, Xinyu Ionix conducted no business. Xinyu Ionix will focus on developing and designing lithium batteries as well as to act as an investment company that may acquire other businesses located in China.
On August 19, 2016, Xinyu Ionix, the Company’s indirect, wholly-owned subsidiary, entered into a manufacturing agreement with Jiangxi Huanming Technology Limited Company (“Jiangxi”) whereby Jiangxi would manufacture and produce lithium batteries for Xinyu on an as-needed basis, pursuant to Xinyu Ionix’s instructions and specifications, for 0.
9
Renminbi
(approximately $0.14 USD)
per unit (the “Jiangxi Agreement”). The Jiangxi Agreement was filed as exhibit 10.2 to the Company’s current report on Form 8-K filed with the Commission on August 24, 2016.
Prior Operations and Agreements (Quadra &Zhunger)
Quadra
On February 8, 2012, the Company entered into an exclusive licensing agreement with Quadra International Inc. (“Quadra”) to sub-license, market, establish joint ventures, operate a pyrolic waste disposal system (the “QI System”), and sell related by-products using the QI Systems in the states of Johore and Selangor, Malaysia for a period of twenty-five years in consideration for $40,000. The QI System processes organic waste into marketable by-products and is proprietary technology. The QI System is designed to handle commonly generated waste streams, whether liquid, solid, mixed or unmixed (including whole tires, all types of plastics, e-waste, shredder residues, sewage sludge, animal wastes, biomass, ligneous and infectious biohazard medical waste) and represents an environmentally friendly and commercially viable alternative to traditional methods of processing waste. The solutions are commercially viable ecological recycling models based on zero-waste philosophy. The Company planned to focus on using the application for processing waste tires for conversion to biochar and fuel oil.
Under the terms of the licensing agreement, the Company was committed to purchase and install the QI System at a cost of $400,000 by December 31, 2016, as amended under three subsequent addendum agreements, dated April 25, 2013, November 18, 2013, and April 7, 2014. Consideration for these extensions has been paid in full. The license agreement called for royalty fees of 5% of the fees received from sub licensors, and 3% of sales of by-products generated from use of the QI System. At the time, the Company was assured that an option would be available for the Company to obtain an exclusive license and rights in other states and federal territories in Malaysia that would have varying licensing fees within each state and territory.
On April 25, 2013, the Company signed an addendum to the February 8, 2012, licensing agreement with Quadra, whereby the Company was granted an extension to purchase the QI System by December 31, 2013, for an extension fee of $15,000 to be paid on or before Mary 15, 2013. This addendum also provided that the QI System would be installed at a later date even though the purchase deadline was December 31, 2013.
On November 18, 2013, the Company signed an addendum to the February 8, 2012, licensing agreement with Quadra, whereby the Company was granted another extension to purchase the QI System by September 30, 2015, for an extension fee of $20,000 to be paid on or before November 30, 2013.
On April 7, 2014, the Company entered into an addendum agreement with Quadra to amend certain terms of the licensing agreement dated February 8, 2012, and November 18, 2013. The terms amended included the granting of additional territories to all states in Malaysia, and a requirement to purchase the QI System on or before December 31, 2016, in consideration for $70,000, payable on or before April 30, 2014. On April 17, 2014, the Company obtained a shareholder loan in the amount of $70,000, and such funds were remitted to Quadra for full payment.
On November 19, 2015, the Company entered into a final addendum agreement with Quadra to terminate the license agreement dated February 8, 2012, effective immediately.
However, on November 23, 2015, the Company signed a first final addendum amendment agreement with Quadra to amend the final addendum agreement dated as of November 19, 2015. Per this first final addendum amendment, the license agreement dated February 8, 2012, with subsequent addendums thereto, is set to expire automatically on January 31, 2016, for no additional consideration, and no further action by either party is necessary to terminate the license agreement. The Company is also relieved from and is not required to purchase the QI System from Quadra as stated under the license agreement, with subsequent addendums thereto. For the sake of clarity, the Company shall not purchase the QI System from Quadra for $400,000, and no amount is owed by the Company to Quadra under the license agreement, with subsequent addendums thereto. Amounts already paid by the Company to Quadra have already been written off in the books of the Company, and Quadra will not be liable for any of such amounts.
Zhunger
The Company entered into a sub-license agreement on February 15, 2012, with Zhunger Capital Partners Inc. ("Zhunger”), a licensee domiciled in Taiwan to grant exclusive rights to sub-license, establish joint ventures, use and process organic waste, and sell related by-products using the QI System for a period of 25 years in the territory of Johore, Malaysia. The license rights were sold for $70,000, payable in $5,000 monthly installments commencing on March 1, 2012, and ending on April 1, 2013. As of September 30, 2013, the sub-license fee has been fully paid. As per our agreement with Quadra, 5% of any sub license fees received are payable to Quadra on a quarterly basis. As additional consideration under the agreement with Quadra or the agreement with Zhunger, gross sales on by-products generated from the QI System will be subject to a 3% royalty fee. Zhunger was required to purchase the QI System (one treatment application – used tires) for a fixed price of $400,000 by April 30, 2013.
On April 26, 2013, the Company entered into an addendum to the February 15, 2012, sub license agreement with Zhunger, whereby the Company granted Zhunger an extension to purchase the QI System by December 31, 2013, for an extension fee of $20,000 payable in lump sum on or before April 30, 2013, or payable in 5 monthly installments of $5,000 per month commencing from May 1 through September 1, totaling $25,000. Zhunger opted to pay the extension fee through installments. The addendum also provided that although the purchase deadline was extended to December 31, 2013, the installation of the QI System would be determined at a later date as approved by Quadra’s technical team. The sub license agreement was also amended to increase the royalty fee on gross sales of by-products generated from the QI System from 3% to 5%. In addition, the Company would have the sole option to participate in joint venture operations with Zhunger for a $ 150,000 investment for 50% equity of the joint venture. This option was to expire on December 31, 2013.
On November 19, 2013, the Company entered into an addendum to its February 15, 2012, sub license agreement with Zhunger, whereby the Company granted Zhunger an extension to purchase the QI System by September 30, 2015, for an extension fee of $30,000 payable in 6 monthly installments of $5,000 per month commencing from December 1, 2013, through May 1, 2014.
On April 10, 2014, the Company entered into an addendum agreement with Zhunger to amend certain terms of the original agreement dated February 15, 2012, and November 19, 2013. Terms amended include the requirement to purchase the QI System by December 31, 2015, for an extension fee of $30,000 payable in monthly installments of $5,000 per month, commencing August 1, 2014 to January 1, 2015 ( 6 payments in all). The Company also obtained the option of acquiring 50% of waste conversion operations derived from the QI System by investing $150,000. This option was to expire on September 30, 2015.
On November 19, 2015, the Company entered into a final addendum agreement with Zhunger to forgive the total debt owed by Zhunger to the Company, as well as to terminate the sub-license agreement dated February 15, 2012, effective immediately.
However, on November 23, 2015, the Company signed a first final addendum amendment agreement with Zhunger to amend the final addendum agreement dated as of November 19, 2015. Per this first final addendum amendment, the sub-license agreement dated February 15, 2012, with subsequent addendums thereto, is set to expire automatically on January 31, 2016 (the “Termination Date”), for no additional consideration, and no further action by either party is necessary to terminate the sub-license agreement. Zhunger is relieved from and is not required to purchase the QI System from the Company as stated under the sub-license agreement, with subsequent addendums thereto. For the sake of clarity, Zhunger shall not purchase the QI System from the Company for $400,000, and no amount is owed by Zhunger to the Company under the sub-license agreement, with subsequent addendums thereto. The Company shall forgive the total debt owed by Zhunger to the Company to be effective as of the Termination Date.
Magnum
On November 19, 2015, we received a letter of debt forgiveness from Magnum Group International Inc. (“Magnum”) whereby an aggregate amount of $184,085 which was due to Magnum was forgiven. Magnum was a shareholder of the Company
.
Business Summary
Since January 2016, the Company has shifted its focus to becoming an aggregator of energy cooperatives to achieve optimum price and efficiency in creating and producing technology and products that emphasize long life, high output, high energy density, and high reliability. By and through its wholly owned subsidiary, Well Best and the indirect wholly owned subsidiaries,
Xinyu Ionix
and Taizhou Ionix, the Company has commenced its lithium batteries operation in China.
The Company believes that owning and operating its own manufacturing plant would be too costly. Also
by outsourcing manufacturing, the Company can devote its resources to research and development, design, and marketing of electronic control technologies, automotive battery technologies, and material and component technologies, including lithium-ion battery products for use in electric cars.
The Company, Well Best, and Xinyu Ionix are actively seeking additional new prospects for technology enhancements, design, manufacturing and production of the Company’s lithium-ion battery products and future product development.
Products
The Company’s current products include 18650-2000mAh lithium ion batteries for use in lithium cell electronic bicycles, balance cars, scooters, electric vehicles, special vehicles at low speed, energy storage, and other products. The 18650 -200mAh battery cell is a commodity format cell based on standardized specifications for product dimensions, however, the Company is able to and provides custom solutions based on the needs of customers regarding capacity and performance.
These specialized productions represented approximately 11% of the Company’s total revenue during the year ended June 30, 2016.
The product specifications for our 18650-2000mAH battery, pictured to the right, are set forth in the table below:
|
|
Items
|
Rated Performance
|
Remarks
|
Rated Capacity
|
2000mAh
|
1 C
5
Astandard charging
1 C
5
Astandard discharging
|
Minimum Capacity
|
2000mAh
|
Nominal Voltage
|
3.7V
|
working voltage
|
Discharge cut-off voltage
|
2.75V
|
|
Charge voltage
|
4.2V
|
|
AC Impedance
|
≤26mΩ
|
|
Standard Charging method
|
0.5 C
5
A CC(constant current) charge to 4.2V, then CV (constant voltage 4.2V) charge till charge current decline to 0.01 C
5
A
|
Charging time
:
Approximately 3.5h
|
Standard Discharge method
|
0.5
C
5
A.
electric constant exile to 2.25V
|
|
Fast charging
|
Continuous ChargeCurrent
:
1 C5A
Continuous Chargevoltage
:
4.2V
Decline Charge voltage
:
0.01 C
5
A
|
Charging time
:
Approximately 90min
|
Maximum Continuous DischargeCurrent
|
3C
5
A
|
|
Max. Discharge Current
|
5C
5
A
|
|
Operation Temperature Range
|
Charge
:
0
~45
℃
|
60±25%R.H
Single cell storage humidity range
|
Discharge: -20~55
℃
|
Storage T/H Range
|
Less than one year
:
-20~25
℃
|
60±25%R.H
Shipment status humidity range for
|
Less than 3 month
:
-20~35
℃
|
Weigh
|
Approximately
:
44g
|
|
Product Dimension
|
Height(Max)
:
65.5mm
|
Initial dimension
|
What is a Lithium-Ion Battery?
A lithium-ion battery (“LIB”) is a rechargeable electric device
within which lithium moves from a negative electrode to a positive electrode during the discharge and back charging. The four main materials typically used in LIB’s are cathode materials, anode materials, operators, and electrolytic solution. The performance and safety of an LIB depends heavily on the materials from which they are made as their operation is based on chemical reactions which can be directly affected by the materials used in production.
LIB’s are one of the most common types of rechargeable batteries as they are frequently used as the power supply for most consumer devices that people use every day such as mobile phones, digital cameras, and power tools. Additionally, LIB’s are also utilized in aerospace applications and automotive products such as electric and hybrid vehicles. The lithium-ion battery has become the more sought-after alternative to nickel-metal batteries for
electric vehicles
, partially due to its lighter weight and smaller size, and LIB’s have become a common replacement for the lead acid batteries used in golf carts and utility vehicles.
Industry Overview
The first lithium-ion battery was commercialized by Japan’s Sony in 1991. Since then, the LIB has become the most popular and advanced battery with its reach expanding more and more every day. Lithium-ion batteries are used in and influence nearly every aspect of our lives daily, both at home and at work, and innovation is sprinting forward at a rapid pace. The push for clean and renewable energy, from wind power to solar power, is a driving force in business today and a major reason why Lithium-batteries are and have been a major contender in storing renewable energy.
The global market for lithium-ion batteries has grown significantly and is expected to continue to grow as the need for high power and high capacity battery cells increase its penetration into broader forms of use. The power density, safety, recharge time, cost, and other aspects of its technology are expected to continue to improve with future developments in technology.
According to a report published by Allied Market Research titled, "Lithium-Ion Battery Market" the global lithium-ion battery market is expected to generate revenue of $46.21 billion by 2022, with a CAGR of 10.8% during the forecast period (2016-2022).
1
As reported by Allied, the market for these batteries is expected to experience significant growth because of their increasing application in the automotive sector. Other key factors that may affect the growth of this market are the growing demand for smartphones, tablets, and other electronic devices; stringent government regulations aimed at reducing the increasing pollution levels; and enhanced efficiency of lithium-ion batteries.
Currently, the electronics industry has the highest demand for lithium-ion batteries, however, the automotive sector is forecast to have the highest rising demand for LIB for use in electric and plug-in hybrid vehicles. The number of electric/hybrid vehicles is expected to increase at an exponential rate in the coming years, which would further increase the demand for lithium ion batteries. For instance, in 2014, Tesla announced its plans to manufacture around 500,000 electric cars every year by around 2018, which would require a huge supply of lithium ion batteries.
The Asia-Pacific geographical region is currently the largest in LIB use and production due to burgeoning demand in China, Japan and India. North America and Europe are the second and third leading regions respectively, for lithium-ion battery market.
2
Currently, the global market is highly concentrated as about 5 to 6 major players occupy around 50% market share in the overall lithium-ion battery market.
3
The following figure shows the market size of lithium based batteries for the 2008-2013 period and expected market size for 2014-2020 forecast.
Figure: Revenues of the Global Lithium-based Battery Market (in USD Billion), 2008-2020
4
Competition
Our competitors include large consumer electronic and manufacturing companies that offer products similar to ours such as Panasonic Sanyo, Samsung, Hitachi, Mitsubishi Chemical, and LG Chem Ltd., among others. Many of our competitors have substantially greater financial, technical, and human resources than we do, as well as greater experience in the discovery and development of products and the commercialization of those products. Our competitors’ products may be more effective, or more effectively marketed and sold, than any products we may commercialize and may render our products obsolete or non-competitive before we can recover the expenses of their development and commercialization. We anticipate that we will face intense and increasing competition as new products enter the market and advanced technologies become available. However, we believe that our products will offer key potential advantages over competitive products that could enable our products to capture meaningful market share from our competitors
.
We believe the principal methods of competition and primary competitive factors in our business include:
1
Lithium-Ion Battery Market
by Material Type.Allied Market Research, March 2016.
https://www.alliedmarketresearch.com/lithium-ion-battery-market
2
Id.
3
Id.
4
Global Market for Lithium-Ion batteries- Forecast, Trends, & Opportunies 2014-2020. Taiyou Research
|
·
|
product performance, reliability and safety.
|
Distribution Methods of Products
The Company’s products are currently directly shipped from the manufacturers to the distributors and retailers. Our Directors are currently responsible for the marketing of the Company’s products until marketing and sales departments can be established to cope with the growth of the Company. We explore potential customer bases using internal resources. Currently, we do not have any long term contracts with our customers and will manufacture according to the purchase orders received. In the future, we will continue to seek additional channels of distribution for our products to include wholesale stores and mass retailers. The Company plans to focus primarily on distributing its products regionally, starting in Greater China, and will then seek to expand its distribution channels across the U.S. and internationally.
Manufacturing
We plan to outsource the manufacturing and packaging of our products to a third party located in China on an order-by-order basis. The Company does not currently have any long-term contracts in place for manufacturing The Company and Xinyu Ionix are actively seeking new prospects for the manufacturing and production of the Company’s lithium-ion battery products. Further, when we do identify and engage a manufacturer we expect that that manufacturer would not work exclusively for the Company and may be limited in their ability to meet our production needs, however, we are considering this a top priority while trying to identify prospects.
Supplies of Materials
The elements necessary for our products are and will be sourced from several different suppliers located primarily in China on an order-by-order basis. These materials include lithium manganite (Li-Mn) and lithium nickel manganese cobalt (Li-NiCoMn). Some of the materials in our products are not readily available in large quantities or are available on a limited basis only. Further, the limited availability of some of these materials could cause significant fluctuations in their costs.
The Company, Taizhou Ionix, and Xinyu Ionix acquire materials from the following list of principal suppliers, dependent on availability and price points:
lithium manganate
(
Li-Mn)*
|
|
lithium nickel manganese cobalt
(
Li-NiCoMn
)
*
|
Anhui Aland New Energy Materials Co.,Ltd.
|
|
Xinxiang Zhongtian Luminous Materials Co.,Ltd.
|
Guangzhou Guanggang New Energy Technology Co.,Ltd.
|
|
Xinxiang Jinrun Science and Technology Co.,Ltd.
|
Zhejiang New Era Haichuang Lithium Battery Technology Co.,Ltd.
|
|
Jiaozuo Banlv Na-No Material Engineering Company Limited
|
Long Power Systems (Suzhou) Co.,Ltd.
|
|
|
*This list of suppliers is subject to change at any time.
Our management researches and develops our sources of materials used in the manufacturing of our products. The materials that we source are and will be sent to our manufacturer in China to create our products. The Company does not have any long-term contracts with our suppliers and we cannot be assured that they will be able to meet our demands.
Intellectual Property
As part of our business, we will seek to protect our intellectual property rights in various ways, including through trademarks, copyrights, trade secrets, including know-how, patents, patent applications, employee and third party nondisclosure agreements, intellectual property licenses and other contractual rights. We currently hold no intellectual property rights.
Government Regulations Affecting Our Business
At this stage in our business, we are unaware of any government regulations that are directly affecting our business, however, as we grow our business
activities may become subject to various governmental regulations in different countries in which we operates, including regulations relating to: various business/investment approvals; trade affairs, including customs, import and export control; competition and antitrust; anti-bribery; advertising and promotion; intellectual property; broadcasting, consumer and business taxation; foreign exchange controls; personal information protection; product safety; labor; human rights; conflict; occupational health and safety; environmental; and recycling requirements.
Employees of the Company
The Company has no significant employees other than our officers and directors. We intend to increase the size of our management team and hire additional employees in the future to manage the continued growth of our company and to increase our sales force and marketing efforts.
WHERE YOU CAN GET ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, DC 20549. You can obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC’s web site,
www.sec.gov
.