IDEANOMICS, INC. [IDEX] Filings

10-Q 1 idex-20210930.htm 10-Q idex-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-35561

IDEANOMICS, INC.

(Exact name of registrant as specified in its charter)


Nevada						20-1778374
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1441 Broadway, Suite 5116

New York, NY 10018

(Address of principal executive offices)

212-206-1216

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol(s)

Name of each exchange on which registered:

Common stock, $0.001 par value per share

IDEX

Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “larger accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 497,680,745 shares as of November 18, 2021.

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QUARTERLY REPORT ON FORM 10-Q

OF IDEANOMICS, INC.

FOR THE PERIOD ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS



PART I	-FINANCIAL INFORMATION

Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
Item 3	Quantitative and Qualitative Disclosures About Market Risk	67
Item 4.	Controls and Procedures	68

PART II	-OTHER INFORMATION

Item 1.	Legal Proceedings	70
Item 1A.	Risk Factors	70
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
Item 3.	Defaults Upon Senior Securities	75
Item 4.	Mine Safety Disclosures	75
Item 5.	Other Information	75
Item 6.	Exhibits	76
Signatures		77

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Use of Terms

Except as otherwise indicated by the context, references in this report to “we,” “us,” “our,” “our Company,” “the Company,” “IDEX,” or “Ideanomics,” are to the business of Ideanomics, Inc. (formerly known as “Seven Star Cloud Group, Inc.,” “SSC” and “Wecast Network, Inc.,”) a Nevada corporation, and its consolidated subsidiaries and variable interest entities.

In addition, unless the context otherwise requires and for the purposes of this report only:

•“DBOT” refers to the Delaware Board of Trade Holdings, Inc. which is holding company for the Company’s FINRA Registered Broker Dealer. The Company owns 98% of the share capital Delaware Board of Trade Holdings, Inc. On September 20, 2021 the name was changed to Justly Holdings Inc.;

•“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

•“EV” refers to electric vehicles, particularly battery operated electric vehicles;

•“FINRA” refers to the Financial Industry Regulatory Authority;

•“Legacy YOD” business refers to the premium content and integrated value-added service solutions for the delivery of VOD (defined below) and paid video programing to digital cable providers, Internet Protocol Television (“IPTV”) providers, Over-the-Top (“OTT”) streaming providers, mobile manufacturers and operators, as well as direct customers;

•“MEG” refers to Mobile Energy Global, the subsidiary that holds the Company’s EV businesses in the PRC;

•“PRC,” “China,” and “Chinese,” refer to the People’s Republic of China;

•“Renminbi” and “RMB” refer to the legal currency of the PRC;

•“SEC” refers to the United States Securities and Exchange Commission;

•“Securities Act” refers to the Securities Act of 1933, as amended;

•"Solectrac" refers to Solectrac, Inc., which was acquired on June 11, 2021;

•“SSSIG” refers to Sun Seven Stars Investment Group Limited, a British Virgin Islands corporation, an affiliate of Bruno Wu (“Dr. Wu,”) the former Chairman of the Company;

•“Timios” refers to Timios Holdings Corp. and its affiliates which was acquired on January 8, 2021;

•“U.S. dollars,” “dollars,” “USD,” “US$,” and “$” refer to the legal currency of the United States;

•"US Hybrid" refers to US Hybrid Corporation, which was acquired on June 20, 2021;

•“VOD” refers to video on demand, which includes near video on demand (“NVOD,”) subscription video on demand (“SVOD,”) and transactional video on demand (“TVOD;”) and

•“Wecast SH” refers to Shanghai Wecast Supply Chain Management Limited, a PRC company that is 51% owned by the Company;

•“WAVE” refers to Wireless Advanced Vehicle Electrification, Inc. which was acquired on January 15, 2021.

Explanatory Note

On November 16, 2021, Ideanomics, Inc. (the “Company”, “we”, “our” or “us”) filed a Current Report on Form 8-K disclosing that the Company determined that our previously issued financial statements contained in our Quarterly Report on Form 10-Q for the period ended March 31, 2021 and Quarterly Report on Form 10-Q for the period ending June 30, 2021 should no longer be relied upon due to errors in such condensed consolidated financial statements related to revenue reported by our affiliate Timios Holding Corp. (“Timios”), that provides title and agency services.

The errors were uncovered as part of the preparation of the Company’s condensed consolidated financial statements as of and for the period ended September 30, 2021. The preparation of the Company’s condensed consolidated financial statements as of and for the period ended September 30, 2021 also identified additional transactions and accounting practices not in accordance with U.S. generally accepted accounting principles (“US GAAP”).

The amendments to our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30, 2021 reflect the correction of the following errors identified subsequent to the filing of our Quarterly Report on Form 10-Q for the period ended

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March 31, 2021 and June 30, 2021, which were initially filed with the Securities and Exchange Commission (the “SEC”) on May 17, 2021 and August 16, 2021, respectively:

A.The Company determined that it did not present Timios title and agency services revenue and the related cost of revenue in accordance with US GAAP on the condensed consolidated statement of operations, as premiums from title insurance policies written by independent agencies were presented on a gross basis and did not properly present revenue and cost of revenue net of commission costs.

B.The Company discovered that it did not properly account for its investment in Technology Metals Market Limited (“TM2”) in accordance with the equity method of accounting. In addition, the Company determined that it incorrectly presented equity income (loss) on its equity method investments as a component of interest and other income (expense) on the condensed consolidated statements of operations rather than as a separate financial statement caption below income taxes.

C.The Company discovered certain errors in determining the estimated fair value of acquired intangible assets in its purchase price allocation for its acquisitions.

D.The Company determined that the errors in determining the estimated fair value of net assets acquired in its acquisitions resulted in an additional reduction to the Company’s deferred tax liabilities.

E.The Company determined that it did not properly recognize income tax expense (benefit) for certain acquired entities subsequent to their respective acquisitions during the periods ended March 31, 2021 and six months ended June 30, 2021.

See “Item 4 — Controls and Procedures” that discloses a material weakness in the Company’s internal controls associated with the restatements, as well as management’s restated conclusion that the Company’s internal controls over financial reporting were not effective as of March 31, 2021 and June 30, 2021.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

IDEANOMICS, INC.

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


			Page
Unaudited Condensed Consolidated Balance Sheets			6
Unaudited Condensed Consolidated Statements of Operations			7
Unaudited Condensed Consolidated Statements of Comprehensive Loss			8
Unaudited Condensed Consolidated Statements of Equity			9
Unaudited Condensed Consolidated Statements of Cash Flows			11
Notes to Unaudited Condensed Consolidated Financial Statements			13

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IDEANOMICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD in thousands)


	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	256,930	$	165,764
Accounts receivable, net	4,494		7,400
Available-for-sale securities	58,441		—
Inventory	3,819		—
Prepaid expenses	23,384		2,629
Amount due from related parties	554		240
Other current assets	1,617		3,726
Held for sale assets (Fintech Village)	7,068		—
Total current assets	356,307		179,759
Property and equipment, net	1,627		330
Fintech Village	—		7,250
Intangible assets, net	74,246		29,705
Goodwill	111,458		1,165
Long-term investments	35,549		8,570
Operating lease right of use assets	8,759		155
Other non-current assets	7,933		7,478
Total assets	$	595,879	$	234,412

LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK, REDEEMABLE NON-CONTROLLING INTEREST AND EQUITY
Current liabilities
Accounts payable	$	6,943	$	5,057
Deferred revenue (including customer deposits of $3,527 and $31 as of September 30, 2021 and December 31, 2020, respectively)	4,464		1,129
Accrued salaries	5,487		1,750
Amount due to related parties	1,112		882
Other current liabilities	8,670		2,235
Current portion of operating lease liabilities	2,308		115
Current contingent consideration	2,775		1,325
Promissory note-short term	417		568

Asset retirement obligations	4,653		—
Redeemable non-controlling interest	7,832		—
Total current liabilities	44,661		13,061
Asset retirement obligations	—		4,653
Deferred tax liabilities	826		—
Operating lease liability-long term	6,479		19
Non-current contingent consideration	2,337		7,635
Other long-term liabilities	7,710		7,275
Total liabilities	62,013		32,643
Commitments and contingencies (Note 18)
Convertible redeemable preferred stock and Redeemable non-controlling interest:
Series A - 7,000,000 shares issued and outstanding, liquidation and deemed liquidation preference of $3,500,000 as of September 30, 2021 and December 31, 2020	1,262		1,262
Redeemable non-controlling interest	—		7,485
Equity:
Common stock - $0.001 par value; 1,500,000,000 shares authorized, 481,901,523 shares and 344,861,295 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	483		345
Additional paid-in capital	938,006		531,866
Accumulated deficit	(411,409)		(346,883)
Accumulated other comprehensive income	546		1,256
Total Ideanomics, Inc. shareholders' equity	527,626		186,584
Non-controlling interest	4,978		6,438
Total equity	532,604		193,022
Total liabilities, convertible redeemable preferred stock, redeemable non-controlling interest and equity	$	595,879	$	234,412

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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IDEANOMICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD in thousands)


	Three Months Ended				Nine Months Ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Revenue from sales of products (including from a related party of $0, $2, $1 and $9 for the three and nine months ended September 30, 2021 and 2020, respectively)	$	9,977	$	10,140	$	21,934	$	14,728
Revenue from sales of services	17,070		480		65,898		962
Total revenue	27,047		10,620		87,832		15,690
Cost of revenue from sales of products (including from a related party of $9 ,$0, $20 and $2 for the three and nine months ended September 30, 2021 and 2020, respectively)	9,893		9,455		20,838		13,779
Cost of revenue from sales of services	12,626		451		42,323		897
Total cost of revenue	22,519		9,906		63,161		14,676
Gross profit	4,528		714		24,671		1,014

Operating expenses:
Selling, general and administrative expenses	28,876		7,636		53,650		20,188
Research and development expense	184		1,318		429		1,318
Professional fees	9,387		3,968		21,994		8,096
Impairment losses	21,033		3,275		21,033		10,363
Change in fair value of contingent consideration, net	(5,099)		(4,179)		(7,006)		(2,900)
Litigation settlement	—		—		5,000		—
Depreciation and amortization	1,682		695		4,445		1,651
Total operating expenses	56,063		12,713		99,545		38,716

Loss from operations	(51,535)		(11,999)		(74,874)		(37,702)

Interest and other income (expense):
Interest income (expense), net	109		(2,014)		(871)		(14,061)
Loss on disposal of subsidiaries, net	—		—		(1,446)		—
Conversion expense	—		—		—		(2,266)
Gain on remeasurement of investment	—		—		2,915		—
Gain on extinguishment of debt	300		—		300		—
Other income, net	8		5,283		689		6,272
Loss before income taxes and non-controlling interest	(51,118)		(8,730)		(73,287)		(47,757)

Income tax benefit	842		—		9,667		—

Equity in gain (loss) of equity method investees	(819)		7		(1,517)		(8)

Net loss	(51,095)		(8,723)		(65,137)		(47,765)

Deemed dividend related to warrant repricing	—		—		—		(184)

Net loss attributable to common shareholders	(51,095)		(8,723)		(65,137)		(47,949)

Net loss attributable to non-controlling interest	244		437		611		737

Net loss attributable to Ideanomics, Inc. common shareholders	$	(50,851)	$	(8,286)	$	(64,526)	$	(47,212)

Earnings (loss) per share
Basic	$	(0.11)	$	(0.03)	$	(0.15)	$	(0.25)
Diluted	$	(0.11)	$	(0.03)	$	(0.15)	$	(0.25)

Weighted average shares outstanding:
Basic	473,829,962		237,535,999		432,989,602		191,976,856
Diluted	473,829,962		237,535,999		432,989,602		191,976,856

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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IDEANOMICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (USD in thousands)


	Three Months Ended				Nine Months Ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Net loss	$	(51,095)	$	(8,723)	$	(65,137)	$	(47,765)
Other comprehensive income (loss), net of nil tax:
Changes in fair value of available-for-sale securities	4		—		(16)		—
Foreign currency translation adjustments	(295)		1,356		(1,196)		1,639
Comprehensive loss	(51,386)		(7,367)		(66,349)		(46,126)
Deemed dividend related to warrant repricing	—		—		—		(184)
Comprehensive loss (gain) attributable to non-controlling interest	350		122		1,113		(51)
Comprehensive loss attributable to Ideanomics, Inc. common shareholders	$	(51,036)	$	(7,245)	$	(65,236)	$	(46,361)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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IDEANOMICS, INC.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) (USD in thousands)


	Nine Months Ended September 30, 2020
	Common Stock	Par Value		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Ideanomics Shareholders’ equity		Non- controlling Interest*		Total Equity
Balance, January 1, 2020	149,692,953	$	150	$	282,554	$	(248,481)	$	(664)	$	33,559	$	25,178	$	58,737
Share-based compensation	—	—		2,202		—		—		2,202		—		2,202
Common stock issuance for professional fee	429,000	—		240		—		—		240		—		240
Common stock issuance for convertible note	1,454,424	1		613		—		—		614		—		614
Common stock issuance for acquisition	10,883,668	11		6,737		—		—		6,748		—		6,748
Common stock issuance for warrant exercise	1,000,000	1		999		—		—		1,000		—		1,000
Measurement period adjustment	—	—		—		—		—		—		(11,454)		(11,454)
Non-controlling shareholder contribution	—	—		—		—		—		—		100		100
Net income (loss)	—	—		—		(12,348)		—		(12,348)		(378)		(12,726)
Foreign currency translation adjustments, net of nil tax	—	—		—		—		(16)		(16)		23		7
Balance, March 31, 2020	163,460,045	163		293,345		(260,829)		(680)		31,999		13,469		45,468
Share-based compensation	—	—		3,394		—		—		3,394		—		3,394
Common stock issuance for acquisition	459,180	—		293		—		—		293		—		293
Common stock issuance for convertible note	26,231,634	26		19,983		—		—		20,009		—		20,009
Common stock issued to settle debt	4,577,876	5		2,309		—		—		2,314		—		2,314
Common stock issued under employee stock incentive plan	293,857	—		—		—		—		—		—		—
Common stock issuance for professional fee	515,942	1		308		—		—		309		—		309
Common stock issuance for warrant exercise	6,995,906	7		5,621		—		—		5,628		—		5,628
Common stock issuance	34,473,719	35		32,467		—		—		32,502		—		32,502
Measurement period adjustment	—	—		—		—		—		—		(131)		(131)
Net income (loss)**	—	—		—		(26,578)		—		(26,578)		(133)		(26,711)
Foreign currency translation adjustments, net of nil tax	—	—		—		—		172		172		104		276
Balance, June 30, 2020	237,008,159	237		357,720		(287,407)		(508)		70,042		13,309		83,351
Share-based compensation	—	—		3,252		—		—		3,252		—		3,252
Common stock issuance for acquisition	1,613,207	2		1,031		—		—		1,033		—		1,033
Common stock issuance for professional fee	250,000	—		343		—		—		343		—		343
Net income (loss)*	—	—		—		(8,286)		—		(8,286)		(547)		(8,833)
Foreign currency translation adjustments, net of nil tax	—	—		—		—		798		798		558		1,356
Balance, September 30, 2020	238,871,366	$	239	$	362,346	$	(295,693)	$	290	$	67,182	$	13,320	$	80,502

__________________________

* Excludes accretion of dividend for redeemable non-controlling interest.

** Excludes deemed dividend related to warrant repricing

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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IDEANOMICS, INC.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) (USD in thousands) Continued


	Nine months ended September 30, 2021
	Common Stock	Par Value		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Ideanomics Shareholders’ equity		Non- controlling Interest*		Total Equity
Balance, January 1, 2021	344,861,295	$	345	$	531,866	$	(346,883)	$	1,256	$	186,584	$	6,438	$	193,022
Share-based compensation	—	—		2,040		—		—		2,040		—		2,040
Common stock issuance for acquisition	10,181,299	10		32,367		—		—		32,377		—		32,377
Common stock issuance for professional fee	440,909	—		1,162		—		—		1,162		—		1,162
Common stock issued under employee stock incentive plan	475,000	—		251		—		—		251		—		251
Common stock issuance for at the market offering	17,615,534	18		53,389		—		—		53,407		—		53,407
Common stock issuance for convertible note	45,895,763	46		140,080		—		—		140,126		—		140,126
Net income (loss)*	—	—		—		(6,412)		—		(6,412)		(280)		(6,692)
Foreign currency translation adjustments, net of nil tax	—	—		—		—		(472)		(472)		(388)		(860)
Balance, March 31, 2021	419,469,800	419		761,155		(353,295)		784		409,063		5,770		414,833
Share-based compensation	—	—		2,007		—		—		2,007		—		2,007
Common stock issuance for at the market offering	25,301,190	25		74,322		—		—		74,347		—		74,347
Common stock issued under employee stock incentive plan	4,590,000	5		7,735		—		—		7,740		—		7,740
Common stock issuance for acquisition	6,733,497	7		21,120		—		—		21,127		—		21,127
Common stock issued pursuant to SEDA	10,000,000	10		27,290		—		—		27,300		—		27,300
Common stock issuance for professional fee	260,000	—		656		—		—		656		—		656
Changes in available-for-sale securities fair value	—	—		—		—		(20)		(20)		—		(20)
Net income (loss)*	—	—		—		(7,263)		—		(7,263)		(319)		(7,582)
Foreign currency translation adjustments, net of nil tax	—	—		—		—		(34)		(34)		(7)		(41)
Balance, June 30, 2021	466,354,487	466		894,285		(360,558)		730		534,923		5,444		540,367
Share-based compensation	—

IDEANOMICS, INC. [IDEX] Filings
10-Q	[2021-11-23]
10-Q	[2021-08-16]
10-Q	[2021-05-17]
10-K	[2021-03-31]
10-Q	[2020-11-09]
10-Q	[2020-08-10]
10-Q	[2020-05-11]
10-K	[2020-03-16]
10-Q	[2019-11-14]
10-Q	[2019-08-14]
10-Q	[2019-05-02]
10-K	[2019-04-01]
10-Q	[2018-11-14]
10-Q	[2018-08-13]
10-Q	[2018-05-15]
S-1	[2018-04-20]
10-K	[2018-03-30]
10-Q	[2017-11-13]
10-Q	[2017-08-14]
10-Q	[2017-05-15]
10-K	[2017-03-31]
10-Q	[2016-11-14]
10-Q	[2016-08-15]
10-Q	[2016-05-16]
10-K	[2016-03-30]
10-Q	[2015-11-16]
10-Q	[2015-08-13]
10-Q	[2015-05-14]
10-K	[2015-03-30]
10-Q	[2014-11-13]
10-Q	[2014-08-14]
10-Q	[2014-05-15]
10-K	[2014-03-31]
10-Q	[2013-11-14]
10-Q	[2013-08-14]
10-Q	[2013-05-15]
10-K	[2013-04-08]
10-Q	[2012-11-14]
10-Q	[2012-08-14]
10-Q	[2012-05-15]
10-K	[2012-03-30]