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 ~~following:~~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:

~~(i)~~	~~the “Company,” “Ideanomics,”, “IDEX”, “we,” “us,” and “our” are to Ideanomics, Inc. a Nevada corporation, and its consolidated subsidiaries and variable interest entities;~~
~~(ii)~~●	“~~CB Cayman”~~DBOT” refers to ~~our wholly-owned subsidiary China Broadband, Ltd., a Cayman Islands company;~~the Delaware Board of Trade Holdings, Inc which is holding company for the Company’s FINRA Registered Broker Dealer. The Company owns 99% of the share capital Delaware Board of Trade Holdings, Inc.;

~~(iii)~~

●

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

~~(iv)~~

●

“~~GTD”~~EV” refers to ~~our minority shareholder, GT Dollar Pte. Ltd., a Singapore based information technology solution company;~~electric vehicles, particularly battery operated electric vehicles;

~~(v)~~

●

“~~GTB”~~FINRA” refers to ~~cryptocurrency received from GTD for digital asset management service and disposal of certain assets;~~the Financial Industry Regulatory Authority;

~~(vi)~~	●	“~~Hua Cheng”~~HK SAR” refers to ~~Hua Cheng Hu Dong (Beijing) Film and Television Communication Co., Ltd., a PRC company 39% owned by Sinotop Beijing and 20% owner~~the Hong Kong Special Administrative Region of ~~Zhong Hai Media;~~
~~(vii)~~	~~“PRC” and “China” refer to~~the People’s Republic of China;

~~(viii)~~

●

“Intelligenta” refers to the BDCG joint venture which was rebranded as Intelligenta. As part of the rebranding, Intelligenta’s strategy will now include AI solutions to enhance corporation services, index services and products, and capital market services and products;

●

“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 all of the Company’s electric vehicles investments;

●

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

~~(ix)~~

●

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

~~(x)~~

●

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

~~(xi)~~	~~“Sinotop Beijing” or “Sinotop” refers to Beijing Sino Top Scope Technology Co., Ltd, a PRC company controlled by YOD Hong Kong through contractual arrangements;~~
~~(xii)~~●	“SSF” refers to Tianjin Sevenstarflix Network Technology Limited, a PRC company controlled by YOD Hong Kong through contractual arrangements;

~~(xiii)~~

●

“Sinotop Beijing” refers to Beijing Sino Top Scope Technology Co., Ltd., a PRC company controlled by YOD Hong Kong through contractual arrangements;

●

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

●

“U.S. Tax Reform” refers to the Tax Cuts and Jobs Act, enacted by the United States ~~dollars;~~of America on December 22, 2017;

~~(xiv)~~

●

“VIEs” refers to our ~~current~~ variable interest entities Sinotop Beijing, and ~~Tianjin Sevenstarflix Network Technology Limited;~~SSF;

~~(xv)~~

●

“~~Wecast Services”~~VOD” refers to ~~our wholly-owned subsidiary Wecast Services Group Limited (formerly known as Sun Video Group Hong Kong Limited,~~video on demand, which includes near video on demand (“NVOD”) ~~a Hong Kong company;~~, subscription video on demand (“SVOD”), and transactional video on demand (“TVOD”);

~~(xvi)~~

●

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

~~(xvii)~~

●

“Wide Angle” refers to Wide Angle Group Limited, a Hong Kong company that is 55% owned by the Company;

~~(xviii)~~

●

“~~Zhong Hai Media”~~YOD Hong Kong” refers to ~~Zhong Hai Shi Xun Media~~YOU On Demand (Asia) Limited, formerly Sinotop Group Limited, a Hong Kong company, which is wholly- owned by CB Cayman;

●

“YOD WFOE” refers to YOU On Demand (Beijing) Technology Co., Ltd., a PRC company ~~80% owned~~and a “wholly foreign-owned enterprise,” which is wholly-owned by ~~Sinotop Beijing until June 30, 2017;~~YOD Hong Kong; and

~~(xix)~~

●

“SSSIG” refers to Sun Seven Stars Investment Group Limited, a British Virgin Islands corporation, an affiliate of Dr. Wu.

2●

SEDA refers to the Standby Equity Distribution Agreement between the Company and YA II PN Ltd

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

IDEANOMICS, INC.

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	~~Page~~
	Page
Unaudited Condensed Consolidated Balance Sheets	4 5
Unaudited Condensed Consolidated Statements of Operations	5 6
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	6 7
Unaudited Condensed Consolidated Statements of Equity	7 8
Unaudited Condensed Consolidated Statements of Cash Flows	9 10
Notes to Unaudited Condensed Consolidated Financial Statements	10 11

Table of Contents

IDEANOMICS, INC.

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

September 30, 2019 December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents $ 1,686,596 $ 3,106,244
Accounts receivable, net 2,941,245 19,370,665
Licensed content, current - 16,958,149
Prepayments 1,013,384 2,042,041
Other current assets 2,371,913 3,594,942
Total current assets
8,013,138
45,072,041
Property and equipment, net 14,504,993 15,029,427
Intangible assets, net 81,960,331 3,036,352
Goodwill 10,028,073 704,884
Long-term investments 42,159,313 26,408,609
Operating lease right of use assets 6,845,031 -
Other non-current assets 1,252,797 3,983,799
Total assets $
164,763,676
$ 94,235,112

LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK AND EQUITY
Current liabilities: (including amounts of the consolidated VIEs without recourse to Ideanomics, Inc. See Note 4)
Accounts payable $ 1,543,291 $ 19,265,094
Deferred revenue 458,894 405,929
Amount due to related parties 2,565,812 800,822
Other current liabilities 9,141,870 5,321,697
Current portion of operating lease liabilities 912,271 -
Convertible promissory note due to related parties 1,288,032 4,140,055
Total current liabilities 15,910,170 29,933,597
Deferred tax liabilities - 513,935
Asset retirement obligations 6,392,500 8,000,000
Convertible promissory note due to related parties – long term
3,000,000
-
Convertible note - long term 12,627,531 11,313,770
Promissory note - long term 3,000,000 -
Operating lease liability-long term 6,329,533 -
Total liabilities 47,259,734 49,761,302
Commitments and contingencies (Note 18)
Convertible redeemable preferred stock:
Series A - 7,000,000 shares issued and outstanding, liquidation and deemed liquidation preference of $3,500,000 as of September 30, 2019 and December 31, 2018 1,261,995 1,261,995
Equity:
Common stock - $0.001 par value; 1,500,000,000 shares authorized, 132,696,071 shares and 102,766,006 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively 132,696 102,765
Additional paid-in capital 255,737,318 195,779,576
Accumulated deficit
(138,468,441
) (149,975,302 )
Accumulated other comprehensive loss (1,557,346 ) (1,664,598 )
Total IDEX shareholder’s equity
115,844,227
44,242,441
Non-controlling interest
397,720
(1,030,626 )
Total equity
116,241,947
43,211,815
Total liabilities, convertible redeemable preferred stock and equity $
164,763,676
$ 94,235,112


	June 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	36,384	$	2,633
Accounts receivable, net (due from related parties were $1,127 and $2,284 as of June 30, 2020 and December 31, 2019, respectively)		1,242		2,405
Prepayments		1,389		572
Amount due from related parties		1,328		1,256
Notes receivable		1,931		—
Other current assets		263		587
Total current assets		42,537		7,453
Property and equipment, net		177		378
Fintech Village		12,562		12,561
Intangible assets, net		51,479		52,771
Goodwill		10,460		23,344
Long-term investments		22,644		22,621
Operating lease right of use assets		7,579		6,934
Other non-current assets		552		883
Total assets	$	147,990	$	126,945

LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK, REDEMABLE NON-CONTROLLING INTEREST AND EQUITY
Current liabilities
Accounts payable	$	2,313	$	3,380
Deferred revenue		593		477
Accrued salaries		910		923
Amount due to related parties		596		3,962
Other current liabilities		6,045		6,466
Current portion of operating lease liabilities		1,618		1,113
Current acquisition earn-out liability		6,474		12,421
Promissory note-short term		3,704		3,000
Convertible promissory note due to third-parties		7,066		1,753
Convertible promissory note due to related parties		—		3,260
Total current liabilities		29,319		36,755
Asset retirement obligations		4,653		5,094
Convertible promissory note due to third-parties-long term		—		5,089
Convertible promissory note due to related parties–long term		—		1,551
Operating lease liability-long term		11,717		6,222
Non-current acquisition earn-out liability		10,428		12,235
Total liabilities		56,117		66,946
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 June 30, 2020 and December 31, 2019		1,262		1,262
Redeemable non-controlling interest		7,260		—
Equity:
Common stock - $0.001 par value; 1,500,000,000 shares authorized, 237,008,159 shares and 149,692,953 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		237		150
Additional paid-in capital		357,720		282,554
Accumulated deficit		(287,407)		(248,481)
Accumulated other comprehensive loss		(508)		(664)
Total IDEX shareholder’s equity		70,042		33,559
Non-controlling interest		13,309		25,178
Total equity		83,351		58,737
Total liabilities, convertible redeemable preferred stock, redeemable non-controlling interest and equity	$	147,990	$	126,945

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

Table of Contents

IDEANOMICS, INC.

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

Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2019 2018 2019 2018
Revenue from third parties $ 249,512 $ 43,707,937 $ 949,384 $ 362,628,296
Revenue from related party
2,854,178
- 43,554,178 -
Total revenue 3,103,690 43,707,937 44,503,562 362,628,296
Cost of revenue from third parties 243,360 42,844,876 750,290 115,729,433
Cost of revenue from related parties - - 466,894 244,110,132
Gross profit 2,860,330 863,061 43,286,378 2,788,731

Operating expenses:
Selling, general and administrative expense 7,769,503 4,333,259 18,442,280 16,861,425
Research and development expense - 667,416 - 1,393,025
Professional fees 1,388,842 1,927,431 3,918,461 3,280,729
Impairment of property and equipment
2,298,887
-
2,298,887
-
Depreciation and amortization 806,481 291,512 1,420,480 314,737
Total operating expense 12,263,713 7,219,618 26,080,108 21,849,916

Income (loss) from operations (9,403,383 ) (6,356,557 ) 17,206,270 (19,061,185 )

Interest and other income (expense)
Interest expense, net (639,395 ) (145,610 ) (1,955,476 ) (201,782 )
Equity in loss of equity method investees (40,369 ) (13,882 ) (606,390 ) (44,316 )
Gain on disposal of subsidiaries 1,057,363 - 1,057,363 -
Loss on remeasurement of DBOT investment (3,178,702 ) - (3,178,702 ) -
Other (99,997 ) (925,771 ) (155,946 ) (558,271 )
Income (loss) before income taxes and non-controlling interest (12,304,483 ) (7,441,820 ) 12,367,119 (19,865,554 )

Income tax benefit - - 513,935 -

Net income (loss) (12,304,483 ) (7,441,820 ) 12,881,054 (19,865,554 )

Net (income) loss attributable to non-controlling interest (1,407,384 ) 254,973 (1,374,193 ) 637,314

Net income (loss) attributable to IDEX common shareholders $ (13,711,867 ) $ (7,186,847 ) $ 11,506,861 $ (19,228,240 )

Earnings (loss) per share
Basic $ (0.11 ) $ (0.10 ) $ 0.10 $ (0.27 )
Diluted $ (0.11 ) $ (0.10 ) $ 0.10 $ (0.27 )

Weighted average shares outstanding:
Basic 127,609,748 74,063,495 113,964,933 71,574,303
Diluted 127,609,748 74,063,495 118,319,893 71,574,303

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

~~IDEANOMICS, INC.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)~~


	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Revenue from third-parties	$	4,685	$	354	$	5,063	$	700
Revenue from related parties		7		14,100		7		40,700
Total revenue		4,692		14,454		5,070		41,400
Cost of revenue from third-parties		4,435		250		4,769		507
Cost of revenue from related parties		2		466		2		467
Gross profit		255		13,738		299		40,426

Operating expenses:
Selling, general and administrative expenses		6,725		6,485		12,552		10,672
Professional fees		2,372		1,169		4,128		2,530
Impairment loss		6,200		—		7,088		—
Acquisition earn-out/true-up expense, net		746		—		1,279		—
Depreciation and amortization		481		370		957		614
Total operating expenses		16,524		8,024		26,004		13,816

Income (loss) from operations		(16,269)		5,714		(25,705)		26,610

Interest and other income (expense):
Interest expense, net		(8,890)		(581)		(12,047)		(1,316)
Equity in loss of equity method investees		(12)		(286)		(15)		(566)
Conversion expense		(2,266)		—		(2,266)		—
Other income (expense)		1,015		2		989		(56)
Income (loss) before income taxes and non-controlling interest		(26,422)		4,849		(39,044)		24,672

Income tax benefit		—		428		—		514

Net income (loss)		(26,422)		5,277		(39,044)		25,186

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

Net loss attributable to common stockholders		(26,606)		5,277		(39,228)		25,186

Net loss attributable to non-controlling interest		28		15		300		33

Net income (loss) attributable to IDEX common shareholders	$	(26,578)	$	5,292	$	(38,928)	$	25,219

Earnings (loss) per share
Basic	$	(0.15)	$	0.05	$	(0.23)	$	0.24
Diluted		(0.15)		0.05		(0.23)		0.22

Weighted average shares outstanding:
Basic		180,034,278		108,694,719		168,946,960		107,029,448
Diluted		180,034,278		112,461,401		168,946,960		117,605,184

Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2019 2018 2019 2018
Net income (loss) $ (12,304,483 ) $ (7,441,820 ) $ 12,881,054 $ (19,865,554 )

Other comprehensive income (loss), net of nil tax
Foreign currency translation adjustments 23,502 708,140 102,481 565,315
Comprehensive income (loss) (12,280,981 ) (6,733,680 ) 12,983,535 (19,300,239 )

Comprehensive loss attributable to non-controlling interest (1,470,410 ) 243,078 (1,419,916 ) 614,298
Comprehensive income (loss) attributable to IDEX common shareholders $ (13,751,391 ) $ (6,490,602 ) $ 11,563,619 $ (18,685,941 )

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

Table of Contents

IDEANOMICS, INC.

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~EQUITY~~COMPREHENSIVE INCOME (LOSS) (Unaudited) (USD in thousands)

Nine Months Ended September 30, 2018
Common
Stock Par
Value Additional
Paid-in
Capital Accumulated
Deficit Accumulated
Other
Comprehensive
Income (Loss)
Ideanomics
Shareholders'
equity
Non-
controlling
Interest Total
Equity
Balance, January 1, 2018 68,509,090 $ 68,509 $ 158,449,544 $ (126,693,022 ) $ (782,074 ) $ 31,042,957 $ (1,289,367 ) $ 29,753,590
Share-based compensation - - 121,190 - - 121,190 - 121,190
Common stock issuance for RSU vested 13,464 13 (13 ) - - - - -
Common stock issuance for option exercised 42,501 43 2,589 - - 2,632 - 2,632
Common stock issued for warrant exercised 300,000 300 524,700 - - 525,000 - 525,000
Net loss - - - (3,721,369 ) - (3,721,369 ) (91,444 ) (3,812,813 )
Foreign currency translation adjustments, net of nil tax - - - - (32,481 ) (32,481 ) (9,148 ) (41,629 )
Balance, March 31, 2018 (restated) 68,865,055 $ 68,865 $ 159,098,010 $ (130,414,391 ) $ (814,555 ) $ 27,937,929 $ (1,389,959 ) $ 26,547,970
Share-based compensation - - 3,239,727 - - 3,239,727 - 3,239,727
Investment from GTD and SSS - - 5,900,000 - - 5,900,000 - 5,900,000
Common stock issuance for RSU vested 1,227,244 1,227 (1,227 ) - - - - -
Common stock issuance for acquisition of BDCG 3,000,000 3,000 7,797,000 - - 7,800,000 - 7,800,000
Net loss - - - (8,320,024 ) - (8,320,024 ) (290,897 ) (8,610,921 )
Foreign currency translation adjustments, net of nil tax - - - - (121,465 ) (121,465 ) 20,269 (101,196 )
Balance, June 30, 2018 73,092,299 $ 73,092 $ 176,033,510 $ (138,734,415 ) $ (936,020 ) $ 36,436,167 $ (1,660,587 ) $ 34,775,580
Share-based compensation - - 11,530 - - 11,530 - 11,530
Investment from GTD and SSS - - 5,288,502 - - 5,288,502 - 5,288,502
Common stock issued for warrant exercised 343,714 344 601,156 - - 601,500 - 601,500
Common stock issuance for option exercised 40,295 40 (40 ) - - - -
Common stock issuance for Star Thrive Group Limited 3,770,493 3,770 6,869,138 - - 6,872,908 - 6,872,908
Conversion feature of convertible note - - 1,384,614 - - 1,384,614 - 1,384,614
Acquisition of Grapevine - - - - - 1,154,419 1,154,419
Net loss - - - (7,186,847 ) - (7,186,847 ) (254,973 ) (7,441,820 )
Foreign currency translation adjustments, net of nil tax - - - - 696,245 696,245 11,895 708,140
Balance, September 30, 2018 77,246,801 77,246 190,188,410 (145,921,262 ) (239,775 ) 44,104,619 (749,246 ) 43,355,373


	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Net income (loss)	$	(26,422)	$	5,277	$	(39,044)	$	25,186
Other comprehensive income (loss), net of NaN tax
Foreign currency translation adjustments		276		(68)		283		79
Comprehensive income (loss)		(26,146)		5,209		(38,761)		25,265
Deemed dividend related to warrant repricing		(184)		—		(184)		—
Comprehensive loss attributable to non-controlling interest		76		7		(173)		50
Comprehensive income (loss) attributable to IDEX common shareholders	$	(26,254)	$	5,216	$	(39,118)	$	25,315

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

Table of Contents

IDEANOMICS, INC.

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

Nine Months Ended September 30, 2019

Common
Stock

Par
Value

Additional
Paid-in
Capital

Retained
Earnings/
Accumulated (Deficit)

Accumulated
Other
Comprehensive
Income (Loss)

Ideanomics
Shareholders'
equity

Non-
controlling
Interest
Total Equity
Balance, January 1, 2019 102,766,006 $ 102,765 $ 195,779,576 $ (149,975,302 ) $ (1,664,598 ) $ 44,242,441 $ (1,030,626 ) $ 43,211,815
Share-based compensation - - 224,484 - - 224,484 - 224,484
Common stock issuance for restricted shares 129,840 130 (130 ) - - - - -
Common Stock issuance for acquisition-SolidOpinion (Note 5(a)) 4,500,000 4,500 7,150,500 - - 7,155,000 - 7,155,000
Common stock issuance for convertible debt (Note 12(b)) 1,166,113 1,166 2,048,834 - - 2,050,000 - 2,050,000
Net income (loss) - - - 19,926,515 - 19,926,515 (17,761 ) 19,908,754
Foreign currency translation adjustments, net of nil tax - - - - 172,133 172,133 (25,295 ) 146,838
Balance, March 31, 2019 108,561,959 $ 108,561 $ 205,203,264 $ (130,048,787 ) $ (1,492,465 ) $ 73,770,573 $ (1,073,682 ) $ 72,696,891
Share-based compensation - - 3,702,636 - - 3,702,636 - 3,702,636
Common stock issuance for asset acquisition-Fintalk (Note 5(b)) 2,860,963 2,861 5,347,139 - - 5,350,000 - 5,350,000
Common stock issuance for acquisition of non-controlling interest Grapevine (Note 5(c)) 590,671 591 491,027 - - 491,618 (491,618 ) -
Investment from SSSIG¹ 575,431 576 (576 ) - - - - -
Net income (loss) - - - 5,292,213 - 5,292,213 (15,430 ) 5,276,783
Foreign currency translation adjustments, net of nil tax - - - - (75,851 ) (75,851 ) 7,992 (67,859 )
Balance, June 30, 2019 112,589,024 $ 112,589 $ 214,743,490 $ (124,756,574 ) $ (1,568,316 ) $ 88,531,189 $ (1,572,738 ) $ 86,958,451
Share-based compensation - - 2,547,107 - - 2,547,107 - 2,547,107
Common stock issuance for acquisition of BlackHorse Ventures² 815,217 815 1,499,475 - - 1,500,290 - 1,500,290
Common stock issuance for acquisition of Glory Connection (Note 5(e)) 12,190,000 12,190 24,367,810 - - 24,380,000 - 24,380,000
Common stock issuance for acquisition of DBOT (Note 5(f)) 5,851,830 5,852 9,708,186 - - 9,714,038 104,648 9,818,686
Common stock issuance for releasing Grapevine as collateral 250,000 250 372,250 - - 372,500 - 372,500
Common stock issuance for Convertible note (Note 12(c)) 1,000,000 1,000 2,499,000 - - 2,500,000 - 2,500,000
Deconsolidation of Amer (Note 5(h)) - - - - - 445,894 445,894
Net income (loss) - - - (13,711,867 ) - (13,711,867 ) 1,407,384 (12,304,483 )
Foreign curency translation adjustments, net of nil tax - - - - 10,970 10,970 12,532 23,502
Balance, September 30, 2019 132,696,071 132,696 255,737,318 (138,468,441 ) (1,557,346 ) 115,844,227 397,720 116,241,947


	Six Months Ended June 30, 2019
						Retained		Accumulated
				Additional		Earnings/		Other		Ideanomics		Non-
	Common	Par		Paid-in		Accumulated		Comprehensive		Shareholders’		controlling
	Stock	Value		Capital		(Deficit)		Loss		equity		Interest		Total Equity
Balance, January 1, 2019	102,766,006	$	103	$	195,780	$	(149,975)	$	(1,665)	$	44,243	$	(1,031)	$	43,212
Share-based compensation	—		—		224		—		—		224		—		224
Common stock issuance for restricted shares	129,840		—		—		—		—		—		—		—
Common stock issuance for assets (SolidOpinion, Inc)	4,500,000		5		7,150		—		—		7,155		—		7,155
Common stock issuance for convertible debt	1,166,113		1		2,049		—		—		2,050		—		2,050
Net income (loss)	—		—		—		19,927		—		19,927		(18)		19,909
Foreign currency translation adjustments, net of nil tax	—		—		—		—		172		172		(25)		147
Balance, March 31, 2019	108,561,959		109		205,203		(130,048)		(1,493)		73,771		(1,074)		72,697
Share-based compensation	—		—		3,703		—		—		3,703		—		3,703
Common stock issuance for assets (Fintalk)	2,860,963		3		5,347		—		—		5,350		—		5,350
Common stock issuance for acquisition of non-controlling interest Grapevine	590,671		1		491		—		—		492		(492)		—
Investment from SSSIG	575,431		—		—		—		—		—		—		—
Net income (loss)	—		—		—		5,292		—		5,292		(15)		5,277
Foreign currency translation adjustments, net of nil tax	—		—		—		—		(76)		(76)		8		(68)
Balance, June 30, 2019	112,589,024	$	113	$	214,744	$	(124,756)	$	(1,569)	$	88,532	$	(1,573)	$	86,959

~~Notes:~~

¹In 2018, the Company entered into a subscription agreement and amended agreements with SSSIG to purchase $1.1 million of Common Stock at the then market price. The Company has received $1.1 million in total in 2018 and issued 575,431 shares of common stock in June 2019.

²On July 16, 2019, the Company entered into a share subscription agreement to subscribe 1,186 Pre-A preferred shares of BlackHorse Ventures, a Cayman Islands company, for a consideration of $1,500,290 paid in the form of common shares of the Company. The subscription shares represent 10% of the share capital of BlackHorse Ventures on a fully diluted basis.

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

Table of Contents


	Six Months Ended June 30, 2020
						Retained		Accumulated
				Additional		Earnings/		Other		Ideanomics		Non-
	Common	Par		Paid-in		Accumulated		Comprehensive		Shareholders’		controlling
	Stock	Value		Capital		(Deficit)		Loss		equity		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 interest (ID Venturas)	29,766		—		21		—		—		21		—		21
Common stock issuance for acquisition (DBOT)	10,883,668		11		6,737		—		—		6,748		—		6,748
Common stock issued for warrant exercised (YA II)	1,000,000		1		999		—		—		1,000		—		1,000
Common stock issuance for convertible note (YA II)	1,424,658		1		592		—		—		593		—		593
Tree Technologies measurement period adjustment	—		—		—		—		—		—		(11,454)		(11,454)
Non-controlling shareholder contribution (DBOT)	—		—		—		—		—		—		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 (DBOT)	459,180		—		293		—		—		293		—		293
Common stock issuance for convertible note conversion (Mr. McMahon)	5,084,746		5		2,995		—		—		3,000		—		3,000
Common stock issuance for convertible note conversion (SSSIG)	2,656,361		3		1,565		—		—		1,568		—		1,568
Common stock issuance for debt (SSSIG)	2,577,876		3		1,515		—		—		1,518		—		1,518
Common stock issuance for debt	2,000,000		2		795		—		—		797		—		797
Common stock issuance for option exercised	23,223		—		—		—		—		—		—		—
Common stock issuance for professional fee	515,942		1		308		—		—		309		—		309
Common stock issuance for RSU vested	270,634		—		—		—		—		—		—		—
Convertible notes conversion price reset (Mr. McMahon and SSSIG)	—		—		2,265		—		—		2,265		—		2,265
Common stock issuance for warrants exercised (YA II)	1,666,667		2		2,498		—		—		2,500		—		2,500
Common stock issuance for convertible notes conversion (YA II)	9,739,021		10		5,073		—		—		5,083		—		5,083
Common stock issuance for convertible notes conversion (ID Venturas)	8,751,506		9		4,608		—		—		4,617		—		4,617
Common stock issuance for financing (SEDA)	34,473,719		34		32,466		—		—		32,500		—		32,500
Convertible notes conversion price reset (YA II)	—		—		2,661		—		—		2,661		—		2,661
Convertible notes conversion price reset (ID Venturas)	—		—		817		—		—		817		—		817
Common stock issuance for warrants exercised (ID Venturas)	5,329,239		5		3,122		—		—		3,127		—		3,127
Tree Technologies MPA 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

* Excludes accretion of dividend for redeemable non-controlling interest

~~IDEANOMICS, INC.~~** Excludes deemed dividend related to warrant repricing

~~CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)~~

Nine Months Ended
September 30,2019 September 30, 2018

Cash flows from operating activities:
Net income (loss) $ 12,881,054 $ (19,865,554 )
Adjustments to reconcile net income (loss) to net cash used in operating activities
Share-based compensation expense 6,474,227 3,372,447
Depreciation and amortization 1,420,480 314,737
Non-cash interest expense 2,265,921 -
Equity in losses of equity method investees 606,390 44,316
Digital currency received as payment for services (40,700,000 ) -
Gain on disposal of subsidiaries (1,057,363 ) -
Impairment of property and equipment
2,298,887

Loss on remeasurement of DBOT investment 3,178,702 -
Change in operating assets and liabilities, net of effects of businesses acquired:
Accounts receivable (2,814,198 ) (78,572,438 )
Prepaid expenses and other assets 2,446,822 (3,332,696 )
Accounts payable 1,024,370 6,560,434
Deferred revenue 149,723 366,474
Amount due to related parties (104,323 ) 71,939,834
Accrued expenses, salary and other current liabilities 3,217,279 1,530,544
Net cash used in operating activities (8,712,029 ) (17,641,902 )

Cash flows from investing activities:
Acquisition of property and equipment (1,809,092 ) (167,891 )
Proceeds from disposal of subsidiaries 694,282 -
Acquisition of subsidiaries, net of cash acquired 246,929 (2,840,219 )
Payments for long term investments (870,000 ) (2,035,190 )
Net cash used in investing activities (1,737,881 ) (5,043,300 )

Cash flows from financing activities:
Proceeds from issuance of convertible note 4,802,300 12,000,000
Proceeds from issuance of shares and warrant 2,500,000 19,186,771
Borrowings from related parties 1,764,992 -
Net cash provided by financing activities 9,067,292 31,186,771
Effect of exchange rate changes on cash (37,030 ) (48,638 )
Net (decrease)/increase in cash and restricted cash (1,419,648 ) 8,452,931

Cash and cash equivalents at the beginning of the period 3,106,244 7,577,317

Cash and cash equivalents at the end of the period $ 1,686,596 $ 16,030,248

Supplemental disclosure of cash flow information:
Disposal of assets in exchange of GTB $ 20,218,920 $ -
Service Revenue received in GTB $ 40,700,000 $ -
Issuance of shares for acquisition of intangible assets $ 10,005,000 $ -

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

Table of Contents

IDEANOMICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD in thousands)

Six Months Ended


June 30, 2020

June 30, 2019
Cash flows from operating activities:


Net income (loss)

$
(39,044)

$
25,186
Adjustments to reconcile net loss to net cash used in operating activities

Share-based compensation expense

5,596

3,927
Depreciation and amortization

957

614
Non-cash interest expense

12,058

1,324
Equity in losses of equity method investees

15

566
Digital tokens received as payment for services

—

(40,700)
Conversion expense

2,266

—
Impairment loss

868

—
Impairment of operating lease assets

6,220

—
Settlement of ROU operating lease liabilities

(802)

—
Acquisition earn-out expense

1,279

—
Change in assets and liabilities:

Accounts receivable

1,162

(27)
Prepaid expenses and other assets

825

1,188
Accounts payable

(1,067)

(46)
Deferred revenue

117

88
Amount due to related parties

1,079

83
Accrued expenses, salary and other current liabilities

(1,919)

1,909
Net cash used in operating activities

(10,390)

(5,888)

Cash flows from investing activities:

Acquisition of property and equipment

(41)

(1,379)
Notes receivable

(1,838)

Payments for long-term investments

—

(870)
Net cash used in investing activities

(1,879)

(2,249)

Cash flows from financing activities

Proceeds from issuance of convertible notes

2,000

2,302
Proceeds from exercise of warrants and issuance of common stocks

39,128

2,500
Proceeds from noncontrolling interest shareholder

7,148

—
Borrowings from Small Business Association Paycheck Protection Program

460

—
Proceeds from/(Repayment of) amounts due to related parties

(2,999)

1,285
Net cash provided by financing activities

45,737

6,087
Effect of exchange rate changes on cash

283

4
Net increase (decrease) in cash and cash equivalents

33,751

(2,046)

Cash and cash equivalents at the beginning of the period

2,633

3,106

Cash and cash equivalents at the end of the period

$
36,384

$
1,060

Supplemental disclosure of cash flow information:




Cash paid for income tax

$
—

$
—
Cash paid for interest

$
311

$
—

Issuance of shares for acquisition of DBOT

$
7,042

$
—
Issuance of shares for convertible notes conversion

$
20,069

$
—
Tree Technologies measurement period adjustment on goodwill, non-controlling interest and intangible assets

$
12,848

$
—
Disposal of assets in exchange of GTB tokens

$
—

$
20,219
Service revenue received in GTB tokens

$
—

$
40,700
Advances from customer received in GTB tokens

$
—

$
10,005

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

Table of Contents

IDEANOMICS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Note 1.~~

~~Nature of Operations and Summary of Significant Accounting Policies~~

Note 1. Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Ideanomics, Inc. (“Ideanomics” or the “Company”) (Nasdaq: IDEX) is a Nevada corporation that primarily operates in Asia and the United States through its subsidiaries and ~~Asia.~~ variable interest entities ("VIEs"). Unless the context otherwise requires, the use of the terms "we," "us," "our," and the "Company" in these notes to condensed consolidated financial statements refers to Ideanomics, Inc., its consolidated subsidiaries and VIEs.

The Company's chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Therefore, the Company ~~is comprised of~~operates in one segment with two business units, the Mobile Energy Group ("MEG"), and Ideanomics Capital. As the chief executive officer previously reviewed two operating segments ~~(i) our Legacy YOD business with primary operations in~~separately for this purpose, the ~~PRC which~~Company has ~~been winding down operations over the last 12 months~~changed its presentation accordingly, from two reportable segments to one reportable segment.

The segment reporting changes were retrospectively applied to all periods presented.

MEG’s mission is to use electronic vehicles (“EVs”) and ~~(ii) our Mobile Energy Group (MEG) (formally known as our Wecast Service) business, which is transitioning~~EV battery sales and financing to ~~focus on the~~attract commercial fleet ~~market~~operators that will generate large scale demand for ~~electric vehicles in addition to the Company’s existing fintech advisory business. Our~~energy, energy storage systems, and energy management contracts. MEG ~~business~~ operates as an end-to-end solutions provider for the procurement, financing, charging and energy management needs ~~for~~of fleet operators of commercial ~~Electronic Vehicles (EV). MEG operates through a series~~EVs.

Ideanomics Capital is involved with areas of ~~joint ventures~~capital markets such as financial products advisory and creation, with ~~the leading companies in the commercial EV space, principally in China, and earns fees for every transaction completed based~~specific focus on the ~~spread for group buying~~application of ~~vehicles~~blockchain and fees derived from the arrangement of financing and energy management such as commercial purchasing of pre-paid electricity credits. MEG focuses on commercial EV rather than passenger EV, as commercial EV is on an accelerated adoption path when compared to consumer EV adoption – which is expected to take between ten to fifteen years. We focus on four distinct commercial vehicles types with supporting income streams: 1) Closed-area heavy commercial,artificial intelligence in areas such as Mining, Airports, and Sea Ports; 2) Last-mile delivery light commercial; 3) Buses and Coaches; 4) Taxis. The purchase and financing of vehicles provides for one-time fees and the charging and energy management provides for recurring revenue streams. In July 2019 the company invested in Glory Connection Snd. Bhd, (Glory) a vehicle manufacturer based in Malaysia. Glory holds the only license granted so far for the manufacture of electric vehicles in Malaysia and is in the process of setting up its manufacturing and assembly capabilities.

We continue to develop our FinTech services which principally consist of our ownership of the Delaware Board of Trade (DBOT) ATS, Intelligenta for marketing AI solutions to the Financial Services industry and FinTech Village, a 58 acre development site in West Hartford, Connecticut.

Fintech.

The ~~fintech~~Company also seeks to identify industries and business ~~intends~~processes where blockchain and artificial intelligence (“AI”) technologies can be profitably deployed to ~~offer customized services based on best-in-class blockchain, AI~~disrupt established industries and other technologies to mature and emerging businesses across various industries. To do so, we are building a financial technology ecosystem through license agreements, joint ventures and strategic investments, which we refer to as our “Fintech Ecosystem”.business processes.

Basis of Presentation

In this Form 10-Q, unless the context otherwise requires, the use of the terms "we," "us", "our" and the “Company” refers to Ideanomics, Inc, its consolidated subsidiaries and variable interest entities (“VIEs”).

On April 24, 2018, the Company completed the acquisition of a 100% equity ownership in Shanghai Guang Ming Investment Management (“Guang Ming”), a PRC limited liability company. One of the two selling shareholders is a related party, an affiliate of Bruno Wu (“Dr. Wu”). Guang Ming holds a special fund management license. The acquisition will help the Company develop a fund management platform. Under Accounting Standard Codification (“ASC”) 805-50-05-5 and ASC 805-50-30-5, the transaction was accounted for as a reorganization of entities under common control, in a manner similar to a pooling of interest, using historical costs. As a result of the reorganization, the net assets of Guang Ming were transferred to the Company, and the accompanying consolidated financial statements as of and for the three and nine months ended September 30, 2018 have been prepared as if the current corporate structure had been in place at the beginning of the periods presented in which the common control existed.

In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances are eliminated onin consolidation. However, the results of operations included in such financial statements may not necessary be indicative of annual results.

~~We use~~The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the ~~Company's~~Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed with the Securities and Exchange Commission (“SEC”) on ~~April 1,~~ March 16, 2020 (“2019 ~~(“2018 Annual Report”~~Form 10-K.”).

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Table of Contents

On an ongoing basis, ~~we evaluate our~~management evaluates the Company's estimates, including those related to the bad debt allowance, variable ~~considerations,~~consideration, fair values of financial instruments, intangible assets (including digital currencies) and goodwill, useful lives of intangible assets and property and equipment, asset retirement obligations, income taxes, and contingent liabilities, among others. ~~We base our~~The Company bases its estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Significant Accounting Policies

For a detailed discussion about Ideanomics’ significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in Ideanomics’ consolidated financial statements included in the Company’s 2019 Form 10-K. During the six months ended June 30, 2020, there were no significant changes made to Ideanomics’ significant accounting policies.

Liquidity Improvements

~~Fair Value Measurements~~

~~Accounting standards require~~In the ~~categorization~~six months ended June 30, 2020, the Company improved its liquidity position by raising a total of ~~financial assets~~$48.2 million: $39.1 million through the issuance of common stock and ~~liabilities, based on~~exercise of warrants, $7.1 million from noncontrolling interest shareholders, and $2.0 million through the ~~inputs to the valuation technique, into a three-level fair value hierarchy. The various levels~~issuance of ~~the fair value hierarchy are described as follows:~~

~~Level 1 - Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that we have the ability to access.~~

Level 2 - Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

Level 3 - Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

~~The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.~~

senior secured convertible notes. The Company ~~reviews~~converted senior secured convertible notes of $9.4 million plus accrued interest of $0.3 million to common stock. Additionally, the ~~valuation techniques used~~Company converted $4.6 million of convertible notes payable and accrued interest to ~~determine if~~related parties and an additional $1.5 million due to related parties to common stock. As a result of these actions, the ~~fair value measurements are still appropriate on an annual basis~~Company reduced its the principal amount of its indebtedness by $13.9 million, and ~~evaluate and adjust the unobservable inputs used in the fair value measurements based on current market conditions and third party information.~~

~~Our financial assets and liabilities that are measured at fair value on a recurring basis include~~as of June 30, 2020, had cash and cash equivalents ~~accounts receivable, accounts payable, accrued expenses, other current liabilities~~of $36.4 million, $32.0 million of which is held in U. S. financial institutions.

Based upon its business projections and ~~convertible notes.~~its cash and cash equivalents balance as of June 30, 2020, the Company believes it has the ability to continue as a going concern.

Effects of COVID-19

Novel Coronavirus 2019 (“COVID-19”) is an infectious disease cause by severe acute respiratory syndrome coronavirus. The ~~fair values~~disease was first identified in December 2019 in Wuhan, the capital of ~~these assets approximate carrying values because~~China’s Hubei province, and has since spread globally, resulting in the ongoing COVID-19 pandemic. As of July 30, 2020, over 17.1 million cases had been reported across the globe, resulting in 0.7 million deaths.

The spread of COVID-19 has caused significant disruption to society as a whole, including the workplace. The resulting impact to the global supply chain has disrupted most aspects of national and international commerce, with government-mandated social distancing measures imposing stay-at-home and work-from-home orders in almost every country. The effects of social distancing has shut down significant parts of the ~~short-term nature~~local, regional, national, and international economies with the exception of ~~these instruments. If these instruments were measured at fair value in~~government designated essential services.

The Company assesses the ~~financial statements, they would be classified as Level 1 in the fair value hierarchy.~~

~~Our financial assets that are measured at fair value on a nonrecurring basis include~~recoverability of goodwill and other intangible assets, asset retirement obligations, and adjustment in carrying value of equity securities for which the measurement alternative of cost less impairment plus or minus observable price changes is used. There were no material impairments and no material adjustments to equity securities using the measurement alternative for the three and nine months ended September 30, 2019 and 2018.

~~Digital Currency~~

~~Digital currency consists of GTDollar Coins (“GTB”), Bitcoin and Ethereum.~~

GTB is received in connection with the services agreement and assets purchase agreement with GT Dollar Pte. Ltd. (“GTD”), our minority shareholder at the time of the transaction (Note 3 and 14 (b)). As of September 30, 2019, GTD has disposed of its investment in the Company and is no longer a minority shareholder.

GTB is a type of digital asset that is not a fiat currency and is not backed by hard assets or other financial instruments, and does not represent an investment in GTD or a right to access GTD’s platform. As a result, the value of GTB is determined by the value that various market participants place on GTB through their transactions. GTB holders make or lose money from buying and selling GTB. To date, the Asia EDX exchange has not permitted holders of GTB, Bitcoin or Ethereum to exchange digital currencies held in accounts at the exchange for fiat. The company is unable to predict when our cryptocurrency holdings will be convertible into fiat and consequently does not consider them to be part of the company’s liquid resources.

During the nine months ended September 30, 2019, the Company gradually converted 1,038,778 GTB to 2,763 Bitcoins and 21,312 Ethereum. As of September 30, 2019, the Company holds 7,294,555 GTB, 2,763 Bitcoins and 21,312 Ethereum. These Bitcoins and Etheruem represent GTB denominated in Bitcoin & Etheruem and do not represent a direct holding of Bitcoin and Etheruem.

Given that there is limited precedent regarding the classification and measurement of cryptocurrencies and other digital currencies under current GAAP, the Company has determined to account for these currencies as indefinite-lived intangible assets in ~~accordance with ASC 350, Intangibles-Goodwill and Other until further guidance is issued by~~ the ~~FASB.~~

~~Indefinite-lived intangible assets are recorded at cost and are not subject to amortization, but shall be tested for impairment annually and~~fourth quarter of each year, or more frequently if ~~events or changes in~~ circumstances indicate that it is more likely than not that the asset is impaired. If, at the time of an impairment test, the carrying amount of an intangible asset exceeds its fair value, an impairment loss in an amount equal to the excess is recognized. The fair value of GTB currency was a Level 2 measurement (see Note 3) based upon the consideration agreed by GTD and the Company with a discount considering volatility, risk and limitations at contract inception.

~~Assets and Liabilities Held for Sale~~

The Company classifies assets and liabilities (disposal group) to be sold as held for sale in the period in which all of the following criteria are met: management, having the authority to approve the action, commits to a plan to sell the disposal groups; the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal group; an active program to locate a buyer and other actions required to complete the plan to sell the disposal group have been initiated; the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify as a completed sale within one year, except if events or circumstances beyond the Company’s control extend the period of time required to sell the disposal group beyond one year; the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

The Company initially measures a disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Gains are not recognized on the sale of a disposal group until the date of sale.warrant. The Company assesses the ~~fair value~~recoverability of other long-lived assets as circumstances warrant, and in the six months ended June 30, 2020 did not consider any long-lived assets to be impaired other than certain right of use and fixed assets. Many of the Company’s operations are in the development or early stage, have not had significant revenues to date, and the Company does not anticipate significant adverse effects on its operations revenue as compared to its business plan in the near- or mid-term.

Resulting Delay in Documentation

In the three months ended March 31, 2020, the Company commenced the process of formulating and implementing a ~~disposal group, less any costs~~share-based compensation plan whereby key employees and certain consultants of its MEG business unit and wholly-owned subsidiary would benefit.

Table of Contents

As one component of this process, the Company had initially transferred 10,000 common shares of MEG, representing 20.0% of the overall outstanding common shares, to ~~sell, each reporting period it remains classified~~Merry Heart Technology Limited ("MHTL"),who was intended to act as ~~held~~a trustee over these shares, for ~~sale~~a nominal amount. It was the Company’s intent that this arrangement would be structured in a manner similar to other trusts used to effect share-based compensation plans, and ~~reports any subsequent losses~~would qualify as ~~an adjustment~~a VIE and consequently be consolidated.

However, the disruption caused by the COVID-19 virus, particularly in China, where many of the Company’s personnel and business advisors are located, initially delayed the Company’s efforts to implement this share-based compensation plan.

The Company has determined not to proceed with the MEG share-based compensation plan described above, and the parties have declared the transfer of the MEG shares, which was not believed to be substantive, to be null and void and they have reverted to the ~~carrying value~~Company. The Company is currently reviewing various scenarios with respect to a share-based compensation plan for the benefit of ~~the disposal group.~~MEG employees and certain consultants.

No share-based awards had been granted to employees or consultants pursuant to this arrangement as originally contemplated.

~~Reclassifications of a General Nature~~

Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income. Note 2 provides information about our adoption of new accounting standards for leases.

~~Note 2.~~

Note 2. New Accounting Pronouncements

Accounting Pronouncements

~~Recently Adopted Accounting Pronouncements~~

We adopted Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as of January 1, 2019, using a modified retrospective transition method and as a result, the consolidated balance sheet prior to January 1, 2019 was not restated, continues to be reported under ASC Topic 840, Leases, or ASC 840. For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease.

The lease liability is based on the present value of the remaining minimum lease payments, determined under ASC 840, discounted using our incremental borrowing rate at the effective date of January 1, 2019, using the original lease term as the tenor. As permitted under the transition guidance, we elected several practical expedients that permit us to not reassess (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. The application of the practical expedients did not have a significant impact on the measurement of the operating lease liability. Adoption of the new standard resulted in the recording of operating right of use assets and the related lease liabilities of approximately $3.6 million and $3.7 million, respectively, as of January 1, 2019. The difference between the additional lease assets and lease liabilities was immaterial. The standard did not materially impact our consolidated operating results and had no impact on cash flows. Please see Note 10.

In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which largely aligns the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees. The ASU also clarifies that any share-based payment issued to a customer should be evaluated under ASC 606,~~Revenue from Contracts with Customers~~. The ASU requires a modified retrospective transition approach. We adopted ASU 2018-07 as of January 1, 2019 and there is no impact to our consolidated financial statement because we did not have such payments in 2019.

In July 2017, the FASB issued ASU No. 2017-11, (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. The new standard applies to issuers of financial instruments with down-round features. A down-round provision is a term in an equity-linked financial instrument (i.e. a freestanding warrant contract or an equity conversion feature embedded within a host debt or equity contract) that triggers a downward adjustment to the instrument’s strike price (or conversion price) if equity shares are issued at a lower price (or equity-linked financial instruments are issued at a lower strike price) than the instrument’s then-current strike price. The purpose of the feature is typically to protect the instrument’s counterparty from future issuances of equity shares at a more favorable price. The ASU amends (1) the classification of such instruments as liabilities or equity by revising the certain guidance relative to evaluating if they must be accounted for as derivative instruments and (2) the guidance on recognition and measurement of freestanding equity-classified instruments. For the Company, this ASU was effective January 1, 2019. Please see Note 12.

~~Standards Issued and~~ Not Yet Adopted

In June 2016, the ~~FASB issued~~Financial Accounting Standards ~~Update~~Board (“FASB”) issued ASU No. 2016-13 ~~(ASU 2016-13) "Financial Instruments-Credit Losses (Topic 326)~~(“ASU 2016-13”) "Financial Instruments - Credit Losses” (“ASC 326”): Measurement of Credit Losses on Financial ~~Instruments"~~Instruments" which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. WeIn November 2019, the FASB issued ASU 2019-10 “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)” (“ASC 2019-10”), which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for public entities which meet the definition of a smaller reporting company. The Company will adopt ASU 2016-13 effective January 1, ~~2020. We are~~2023. Management is currently evaluating the effect of the adoption of ASU 2016-13 on ~~our~~the consolidated financial statements. The effect will largely depend on the composition and credit quality of ~~our~~the investment portfolio and the economic conditions at the time of adoption.

~~Note~~ 3.

~~Revenue~~

In December 2019, the FASB issued ASU No. 2019-12 (“ASU 2019-12”) “Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes.” ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions currently provided for in ASC 740, “Income Taxes” (“ASC 740”), and by amending certain other requirements of ASC 740. The changes resulting from ASU 2019-12 will be made on a retrospective or modified retrospective basis, depending on the specific exception or amendment. For public business entities, the amendments in ASU 2019-12 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company ~~recognizes revenue when its customer obtains control~~will adopt ASU 2019-12 effective January 1, 2021. Management is currently evaluating the effect of ~~promised goods or services~~the adoption of ASU 2019-12 on the consolidated financial statements.

Table of Contents

In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an ~~amount~~Entity’s Own Equity.” ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that ~~reflects~~continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the ~~consideration~~host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. For public business entities, the amendments in ASU 2020-06 are effective for public entities which meet the definition of a smaller reporting company are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023. The Company ~~expects to receive in exchange for those goods or services.~~

~~All~~will adopt ASU 2020-06 effective January 1, 2024. Management is currently evaluating the effect of the ~~Company’s revenue~~adoption of ASU 2020-06 on the consolidated financial statements. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption.

Note 3. Notes Receivable

(a)Zhu Note Receivable

In May 2020, a subsidiary of the Company, Qingdao Chenyang Ainengju New Energy Sales and Service Company Limited ("Energy Sales") provided a note receivable to Mr. Jianya Zhu ("Mr. Zhu") in the amount of 10.0 million RMB ($1.4 million). Mr. Zhu, through his wholly-owned entity Prime Capital Enterprise Pte. Ltd., provided collateral in the form of its 50.0% ownership of Seven Stars Founder Space Industrial Pte. Ltd ("Founder Space.") Founder Space is ~~derived~~also 50.0% owned by a related party, Seven Stars Innovative Industries Group Limited, an affiliate of Dr. Bruno Wu (“Dr. Wu”), the Chairman of the Company. Mr. Zhu agreed to repay 10.5 million RMB ($1.5 million) one month from ~~Mobile~~the disbursement date. Energy ~~Group (formerly Wecast Services)~~Sales has not received the 10.5 million RMB from Mr. Zhu and continues to hold the shares of Founder Space as collateral.

(b)Fuzhou Note Receivable

In May 2020, Energy Sales provided a note receivable to Fuzhou Zhengtong Hongxin Investment Management Company Limited ("Zhengtong") in the amount of 3.0 million RMB ($0.4 million). The note receivable is not collateralized. Zhengtong agreed to repay 3.3 million RMB ($0.5 million) within three months of the disbursement date.

Table of Contents

Note 4. Revenue

The following table ~~presents our~~summarizes the Company's revenues disaggregated by revenue source, geography (based on ~~our~~the Company's business locations), and timing of revenue ~~recognition.~~recognition (in thousands):

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018

									Three Months Ended				Six Months Ended
									June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019

Geographic Markets
Singapore	$	-	$	-	$	-	$	260,034,401
Malaysia									$	5	$	—	$	9	$	—
USA		249,512		200,660		41,649,384		200,660		105		14,454		429		41,400
Hong Kong/PRC		2,854,178		43,507,277		2,854,178		102,393,235
China										4,582		—		4,632		—
Total	$	3,103,690	$	43,707,937	$	44,503,562	$	362,628,296	$	4,692	$	14,454	$	5,070	$	41,400
Services Lines
Mobile Energy Group (formerly Wecast Services)
Crude oil	$	-	$	-	$	-	$	260,034,401
Consumer electronics		-		43,432,556		-		102,081,176
Product or Service
Digital asset management services		-		-		40,700,000		-	$	—	$	14,100	$	—	$	40,700
Electric Vehicles (“EV”)		2,854,178		-		2,854,178		-
Digital advertising services and other		249,512		275,381		949,384		512,719		105		354		428		700
Electric vehicles*										695		—		750		—
Combustion engine vehicles*										3,892		—		3,892		—
Total	$	3,103,690	$	43,707,937	$	44,503,562	$	362,628,296	$	4,692	$	14,454	$	5,070	$	41,400


Timing of Revenue Recognition
Products and services transferred at a point in time	$	3,103,690	$	43,707,937	$	3,803,562	$	362,628,296
Products transferred at a point in time									$	4,692	$	354	$	5,070	$	700
Services provided over time		-		-		40,700,000		-		—		14,100		—		40,700
Total	$	3,103,690	$	43,707,937	$	44,503,562	$	362,628,296	$	4,692	$	14,454	$	5,070	$	41,400

~~Mobile Energy Group revenue (formerly Wecast Services)~~

Mobile Energy Group is engaged in the sourcing, procurement, financing and management of commercial fleets of electronic vehicles. Historically, the Mobile Energy Group were mainly engaged in the logistics management, including sales of crude oil, consumer electronics, and digital consulting services such as assets management and marketing services. As of September 30, 2019, we no longer have control over Amer, the subsidiary that engaged in consumer electronics business, as disclosed in Note 5(h).

~~Logistics management revenue:~~

Revenue from the sales of crude oil and consumer electronics is recognized when the customer obtains control of the Company’s crude oil and consumer electronics, which occurs at a point in time, usually upon shipment or upon acceptance.* The ~~contracts are generally short-term contracts where the time between order confirmation and satisfaction of all performance obligations is less than one year.~~

~~The most significant judgment is determining whether we are the principal or agent for the sales of crude oil and consumer electronics. We report~~ revenues ~~from these transactions on a gross basis where we are the principal considering the following principal versus agent indicators:~~

*~~(a)~~*	We are primarily responsible for fulfilling the promise to provide the goods to the customer. The Company enters into contracts with customers with specific quality requirements and the suppliers separately. The Company is obliged to provide the goods if the supplier fails to transfer the goods to the customer and responsible for the acceptability of the goods.

*~~(b)~~*	The Company has certain inventory risk. Although the Company has the title to the goods only momentarily before passing title on to the customer, the Company is responsible to arrange and issue bill of lading to the customer so that the customer can have the right to obtain the required oil product. In addition, the customer can seek remedies and submit the claim against the Company regarding the quality or quantity of the products delivered.

*~~(c)~~*	The Company has discretion in establishing prices. Upon delivery of the crude oil and consumer electronics to the customer, the terms of the contract between the Company and the supplier require the Company to pay the supplier the agreed-upon price. The Company and the customer negotiate the selling price, and the Company invoices the customer for the agreed-upon selling price. The Company’s profit is based on the difference between the sales price negotiated with the customer and the price charged by the supplier. The sales price for crude oil is based on the daily benchmark price of spot product plus any premium determined by the Company.

During the fourth quarter of 2018, we began experiencing market demand for non-logistics management revenue -generating opportunities and have begun focusing our efforts on these new market fintech services opportunities, while phasing out of the oil trading and electronics trading businesses.

~~Digital asset management service with GTD:~~

On March 14, 2019, the Company entered into a service agreement with GTD, one of our minority shareholders, to provide digital asset management services including consulting, advisory and management services which will be delivered in two phases. There are two performance obligations: (1) the development of a master plan for GTD’s assets for 7,083,333 GTB agreed by both parties; and (2) exclusive marketing and business development management services for a fee as percentage (0.25%) of the total market value of GTB ; based on a 10-day average of the 10 business days leading up to the end of a respective calendar month, and paid on the first day of each new calendar month. No marketing and business development management services were delivered by the Company during the current quarter and, furthermore, the company does not anticipate providing these services in the fourth quarter.

The Company recognizes revenue for the master plan development services over the contract period based on the progress of the services provided towards completed satisfaction. Based on ASC 606-10-32, at contract inception, the Company considered the following factors to estimate the value of GTB (noncash consideration): a) it only trades in one exchange, which operations have been less than one year; b) its historical volatility is high; c) the Company’s intention to hold the majority of GTB, as part of our digital asset management services; and d) associated risks discussed in Note 19 (f). Therefore, the value of 7,083,333 GTB using Level 2 measurement was approximately $40.7 million with a 76% discount to the fixed contract price agreed upon by both parties when signing the contract. We considered similar assets exchanges in Singapore and considered the volatility of the quoted prices and determined a discount of 76%. The estimated value of GTB is calculated using the Black-Scholes valuation model using the following assumptions: expected terms 3.0 years; volatility 155%; dividend yield: zero and risk free interest rate 2.25%.

The Company considers the payments for marketing and business development management services as performance based consideration, in accordance with ASC 606 on constraining estimates of variable consideration, including the following factors:

•	~~The susceptibility of the consideration amount to factors outside the Company’s influence.~~
•	~~The uncertainty associated with the consideration amount is not expected to be resolved for a long period of time.~~
•	~~The Company’s experience with similar types of contracts.~~
•	~~Whether the Company expects to offer price concessions or change the payment terms.~~
•	~~The range of possible consideration amounts.~~

As of September 30, 2019, all performance obligations associated with the development of the master plan for GTD’s assets have been satisfied. Accordingly, the Company recognized revenue of $0 and $40.7 million, for the three ~~months~~ and ~~nine~~the six months ended ~~September~~June 30, ~~2019, respectively. No marketing~~2020 were recorded on either a Principal or Agency basis, depending on the terms of the underlying transaction, including the ability to control the product and ~~business development management services~~the level of inventory risk taken. The combustion engine vehicles for the three and the six months ended June 30, 2020 were ~~delivered by~~recorded on a Principal basis because the Company ~~during the current quarter and, furthermore, the company does not anticipate providing these services~~has inventory risk in the ~~fourth quarter.~~transaction.

~~Taxis Commission Revenue:~~

During Q2 2019, the Company signed an agreement with iUnicorn (also known as Shenma Zhuanche) to form a strategic joint venture (“JV”) that will focus on green finance and integrated marketing services for new energy taxi vehicles as part of Ideanomics’ Mobile Energy Group (“MEG”). The Company agreed to contribute advisory and sales resources which include arranging ABS-based auto financing with its bank partners, and will have 50.01% ownership interest in the JV and will have control of the board. iUnicorn, which will own 49.99% of the JV, agreed to contribute its vehicles sales orders in Sichuan province. The JV will generate revenues from commissions on vehicle sales order and ABS fees related to the financing, which will vary accordingly to manufacturer and vehicle model.

During Q3 2019, the JV took over an order of 4,172 EV taxis from a third-party and helped facilitate the completion of the order in Q3 2019. As part of the transaction, Qianxi agreed to pay a commission of $2.9 million to the JV for facilitating the completion of this order. There is no other remaining performance obligation relating to this commission. In addition, the commission revenue is considered revenue from related party as the minority shareholder of the JV is an affiliate of our customer, Qianxi.

~~Legacy YOD revenue~~

Since 2017, we have run our legacy YOD segment with limited resources. No revenue was recognized for the nine months ended September 30, 2019 and 2018. As of September 30, 2019, we have ceased operations in the YOD segment.

~~Arrangements with multiple performance obligations~~

Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the observable prices charged to customers or adjusted market assessment or using expected cost plus margin when one is available. Adjusted market assessment price is determined based on overall pricing objectives taking into consideration market conditions and entity specific factors.

~~Variable consideration~~

Certain customers may receive discounts, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. Our revenue reserves, consisting of various discounts and allowances, which are components of variable consideration as discussed above, are considered an area of significant judgment. Additionally, our digital asset management service revenue, as discussed above, is calculated as a percentage (0.25%) of the total market value of GTB. For these areas of significant judgment, actual amounts may ultimately differ from our estimates and are adjusted in the period in which they become known.

~~Deferred revenues~~

~~We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable.~~

Our payment terms vary by the type and location of our customer and the products or services offered. For certain products or services and customer types, we require payment before the products or services are delivered to the customer.

~~Practical expedients and exemptions~~

~~We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.~~

~~Note 4.~~

~~VIE Structure and Arrangements~~

Note 5. VIE Structure and Arrangements

~~We consolidate~~Prior to December 31, 2019, the Company consolidated certain VIEs located in the People’s Republic of China (“PRC”) in which ~~we hold a~~it held variable ~~interest~~interests and ~~are~~was the primary beneficiary through contractual agreements. ~~We are~~The Company was the primary beneficiary because ~~we have~~it had the power to direct activities that most significantly ~~affect~~affected their economic performance and ~~have~~had the obligation to absorb or right to receive the majority of their losses or benefits. The results of operations ~~and financial position~~ of these VIEs are included in ~~our~~the consolidated financial ~~statements.~~

~~For these consolidated VIEs, their assets are not available to us and their creditors do not have recourse to us. As of September 30, 2019 and~~statements for the year ended December 31, 2018, assets (mainly long-term investments) that can only be used to settle obligations of these VIEs were approximately $0.2 million and $3.5 million, respectively, and the Company is the major creditor for the VIEs.

~~In order to operate our Legacy YOD business~~2019. A shareholder in PRC and to comply with PRC laws and regulations that prohibit or restrict foreign ownership of companies that provides value-added telecommunication services, the Company entered into a series of contractual agreements with two VIEs: Beijing Sinotop Scope Technology Co., Ltd (“Sinotop Beijing”) and Tianjin Sevenstarflix Network Technology Limited (“SSF”). These contractual agreements will expire in March 2030 and April 2036, respectively and may not be terminated by the VIEs, except with the consent of the Company , or , in event of a material breach of the agreement by the Company. Currently, the Company is still evaluating the overall operating strategy for YOD legacy business and does not have plan to provide any funding to these two VIEs. Please refer to Note 19(a) for associated regulatory risks.

~~Based on the contracts we entered with VIEs’ shareholders, we consider that there is no asset~~one of the VIEs ~~that can be used only to settle obligation~~is the spouse of Dr. Wu.

The contractual agreements, which collectively granted the Company ~~except~~the power to direct the VIEs activities that most significantly affected their economic performance, as well to cause the Company to have the obligation to absorb or right to receive the majority of their losses or benefits, were terminated by all parties on December 31, 2019. As a result, the Company deconsolidated the VIEs as of December 31, 2019.

Refer to Note 10 for ~~the registered capital~~information on an additional VIE.

Table of ~~VIEs amounting to RMB 38.2 million (approximately $5.7 million).~~Contents

Note 6. Acquisitions and Divestitures

2020 Acquisitions and Divestitures

The Company has not acquired any companies nor disposed of any subsidiaries in the six months ended June 30, 2020.

The Company may divest certain businesses from time to time based upon review of the Company's portfolio considering, among other items, factors relative to the extent of strategic and technological alignment and optimization of capital deployment, in addition to considering if selling the businesses results in the greatest value creation for the Company and for shareholders.

2019 Acquisitions

~~Note 5.~~

~~Acquisitions and Divestitures~~(a)

Acquisition of Tree Technologies Sdn. Bhd. ("Tree Technologies")

~~Acquisitions~~

~~(a) Assets Acquisition of SolidOpinion, Inc (“SolidOpinion”)~~

On ~~February 19,~~December 26, 2019, the Company completed the acquisition of certain assets from SolidOpinion in exchange for 4,500,000 shares of the Company’s common stock. The assets include cash ($2.5 million) and intellectual property (“IP”) which is complementary to the IP of Grapevine. The parties agreed that 450,000 of such shares of common stock (“Escrow Shares”) will be held in escrow until February 19, 2020 in connection with SolidOpinion’s indemnity obligations pursuant to the agreement. SolidOpinion have the rights to vote and receive the dividends paid with respect to the Escrow Shares.

~~(b)~~~~Assets Acquisition of Fintalk Assets (“Fintalk”)~~

~~In September 2018, the Company entered into an agreement to purchase Fintalk Assets from Sun Seven Star International Limited,~~ a ~~Hong Kong company and an affiliate of Dr. Wu. FinTalk Assets include the rights, titles and~~51.0% interest in Tree Technologies, a ~~secure mobile financial information, social, and messaging platform that has been designed for streamlining financial-based communication for professional and retail users.~~Malaysian company engaged in the EV market. The ~~purchase~~acquisition price ~~for Fintalk Assets~~ was ~~$7.0 million payable with $1.0~~comprised of (1) $0.9 million in cash, ~~and~~(2) 9.5 million shares of ~~the Company’s~~Ideanomics common stock, ~~with~~and (3) earnout payments (the "Earnout") of up to $32.0 million over three years, to be paid in cash or Ideanomics common shares at the election of the Company. The Earnout was initially based upon revenue targets over three 12 month periods beginning in the three months ended December 31, 2019; due to financing delays and resulting production delays, these three 12 month periods will commence on July 1, 2020. In the three months ended June 30, 2020, the Company recorded a remeasurement gain of $0.3 million in "Acquisition earn-out expense, net" in the condensed consolidated statements of operations. As of June 30, 2020, the recorded balance of this liability was $15.1 million.

The fair ~~market~~ value of ~~$6.0 million.~~the Ideanomics stock was based upon the closing price of $0.82 on December 26, 2019, and the fair value of the Earnout was estimated to be $15.5 million, and revised to $15.3 million upon finalization of the purchase, and was recorded as a liability on the date of acquisition. The Company ~~paid $1.0~~estimated the fair value of the Earnout using a scenario-based method which incorporates various estimates, including projected gross revenue for the periods, probability estimates, discount rates and other factors. This fair value measurement is based on significant Level 3 inputs. The resulting probability-weighted cash flows were discounted using the Company's estimated weighted average cost of capital of 15.0%.

Tree Technologies holds the land use rights for 250 acres of vacant land zoned for industrial development in the Begeng Industrial Area adjacent to Kuantan Port. Kuantan is the capital city of the state of Pahang on the east coast of Peninsular Malaysia. The Company intends to develop this land and lease it to Tree Manufacturing for the manufacture of EVs. Tree Technologies holds an exclusive right to market and distribute the EVs manufactured by Tree Manufacturing. The goodwill arising from the acquisition consists largely of the synergies expected from the fulfillment of these contracts. None of the goodwill recognized is expected to be deductible for tax purposes.

The following table summarizes the acquisition-date fair value of assets acquired and liabilities assumed, as well as the fair value of the non-controlling interest in Tree Technologies recognized. The Company has completed the fair value analysis of the assets acquired, liabilities assumed, the noncontrolling interest, and the Earnout, and therefore the adjustments are incorporated in the table below (in thousands).


Land use rights	$	27,140
Accounts payable		(743)
Noncontrolling interest		(15,452)
Goodwill		468
Marketing and distribution agreement		12,590
	$	24,003

The completion of the fair value analysis resulted in measurement period adjustments of $12.8 million, primarily to the amount initially assigned to the noncontrolling interest, and reduced the amount of goodwill recorded.

Table of Contents

The accounts payable above of $0.7 million primarily represents the transfer tax payable for the land use rights for the 250 acres of vacant land; Company will pay the transfer tax in ~~October 2018 and recorded in prepaid expense~~the third quarter of 2020.

Tree Technologies had not commenced operations as of ~~December 31, 2018 because~~ the ~~transaction~~acquisition date, therefore pro forma results as if the acquisition had ~~not closed.~~

~~In June 2019, the Company entered into an amendment to the agreement which amended the purchase price for Fintalk Assets to $6.35 million payable with $1.0 million in cash and shares~~occurred as of ~~the Company’s common stock with a fair market value of $5.35 million. The Company issued 2,860,963 shares ($1.87 per share) in June~~January 1, 2019, and ~~completed the transaction. In addition, upon completion of transaction the $1.0 million cash paid in 2018 was reclassified from prepaid expense to intangible assets.~~related information, are not presented.

(b)

Acquisition of Grapevine Logic, Inc. ("Grapevine”)

~~(c)~~~~Acquisition of Grapevine Logic, Inc. (“Grapevine”)~~

InOn September 4, 2018, the Company completed the acquisition of ~~a 65.65%~~65.7% share of Grapevine for $2.4 million in cash. Fomalhaut Limited (“Fomalhaut”), a British Virgin Islands company and an affiliate of Dr. Wu, ~~the Chairman of the Company, is~~was the non-controlling equity holder of ~~34.35%~~34.4% in Grapevine (the “Fomalhaut Interest”). Fomalhaut entered into an option agreement, effective as of August 31, 2018 (the “Option Agreement”), with the Company pursuant to which the Company provided Fomalhaut with the option to sell the Fomalhaut Interest to the ~~Company (the “Option”).~~Company. The aggregate ~~exercise~~sale price for the ~~Option is~~Fomalhaut Interest was the fair market value of the Fomalhaut Interest as of the close of business on the date preceding the date upon which the ~~Option~~right to sell the Fomalhaut Interest to the Company is exercised ~~and~~by Fomalhaut. If the option is exercised, the sale price for the Fomalhaut Interest is payable in a combination of 1/3 in cash and 2/3 in the Company’s shares of common stock at the then market value on the exercise date. ~~The Option Agreement will expire on August 31, 2021.~~

In May 2019, the Company entered into two amendments to the Option ~~Agreement,~~Agreement. The aggregate exercise price for the Option iswas amended to the greater ~~of (i)~~of: (1) fair market value of the Fomalhaut Interest in Grapevine as of the close of business on the date preceding the date upon which the option is exercised; and ~~(ii)~~(2) $1.84 per share of the Company’s common stock. It was also agreed that the full amount of the exercise price shall be paid in the form of common stock of the Company.

In June 2019, the Company issued ~~590,671~~0.6 million shares in exchange for a ~~34.35%~~34.3% ownership in Grapevine as a result of the exercise of the ~~Option, at~~Option. At the completion of this transaction the Company owned ~~100%~~100.0% of Grapevine. At the ~~completion~~ date of the transaction, the carrying amount of the non-controlling interest in Grapevine was ~~approximately~~ $0.5 million. The difference between the value of the consideration exchanged of ~~approximately~~ $1.1 million and the carrying amount of the non-controlling interest in Grapevine is recorded as a debit to ~~Additional Paid in Capital~~additional paid-in capital based on ASC ~~810-10-45-23.~~810, Consolidation (“ASC 810.”)

~~(d)~~~~Termination of agreements with Tree Motion Sdn. Bhd. (“Tree Motion”)~~

Effective July 18, 2019, Ideanomics, Inc. (the “Company”) terminated its Acquisition Agreement with Tree Motion Sdn. Bhd., a Malaysian company (“Tree Motion”), pursuant to which the Company was to acquire 51% of Tree Motion in exchange for 25,500,000 shares of the Company’s common stock at $2.00 per share. Further, the Company terminated its Acquisition Agreement to acquire 11.22% of Tree Motion’s parent company, Tree Manufacturing Sdn. Bhd. (the “Parent Company”) for 12,190,000 shares of the Company’s common stock; provided, however, that the Company has acquired 250 acres in ~~Malaysia-China Kuantan Industrial Park (MCKIP),~~ ~~the 1st Malaysia National Industrial Park joint developed by both Malaysia and China for $620,000.~~

(c)

Acquisition of Delaware Board of Trade Holdings, Inc. (“DBOT”)

~~(e)~~~~Acquisition of Glory Connection Sdn. Bhd (“Glory”)~~

On July 18, 2019, Ideanomics, Inc. (the “Company”) entered into an Acquisition Agreement (“Glory Agreement”) to purchase a 34% interest in Glory Connection Sdn. Bhd. a Malaysian Company, from its shareholder Beijing Financial Holding Limited, a Hong Kong registered company, for the consideration of 12,190,000 restricted common shares of Ideanomics (IDEX), representing $24.4 million at $2.00 per share. As part of this transaction, the Company was also granted an option to purchase a 40% interest in Bigfair Holdings Limited (“Bigfair”) from its shareholder Beijing Financial Holding Limited for an exercise price of $13.2 million in the form of common shares of Ideanomics. Bigfair currently holds a 51% ownership stake in Glory. The option is exercisable from July 18, 2020 to July 19, 2021. If the option was exercised, the Company would have 20.4% indirect ownership in Glory in addition to the 34% direct ownership it already has. As of September 30, 2019, the Company does not have control of Glory and has accounted for Glory as an equity method investment.

The Company has performed a valuation analysis and allocated $23,000,000 and $1,380,000 of the consideration transferred to the equity method investment and the call option, respectively. The call option is accounted for as an equity security without readily determinable fair value. Pro forma results of operations for Glory have not been presented because they are not material to the consolidated results of operations. Glory is currently in the process of ramping up its operations.

~~The following table summarizes the income statement information of Glory as of September 30, 2019:~~

Three Months Ended
September 30, 2019

Nine Months Ended
September 30, 2019

Revenue $ 2,041 $ 3,936
Gross Profit 1,379 769
Net loss from operations 173,465 354,502
Net loss 171,719 352,606
Net loss attributable to Glory $ 95,477 $ 195,121

~~(f) Acquisition of Delaware Board of Trade Holdings, Inc. (“DBOT”)~~

In April 2019, the Company entered into a securities purchase agreement to acquire ~~6,918,547~~6.9 million shares in DBOT in exchange for ~~4,427,870~~4.4 million shares of the Company’s common stock at $2.11 per share. In July 2019, the Company entered into another securities purchase agreement to acquire an additional ~~2,224,937~~2.2 million shares in DBOT in exchange for ~~1,423,960~~1.4 million shares of the Company’s common stock at $2.11 per share. The two transactions, which increased the Company’s ownership in DBOT to ~~99.04%~~99.0%, were completed in July 2019. The securities purchase agreements required the Company to issue additional shares of the Company’s common stock (“True-Up Common Stock”) in the event the stock price of the common stock ~~fall~~falls below $2.11 at the close of trading on the date immediately preceding the lock-up date, which is 9 months from the closing date. The Company accounted for the additional True-Up Common Stock consideration as a liability in accordance with ASC ~~480. We~~480, Distinguishing Liabilities from Equity. The Company recorded this liability at fair value of ~~$2,217,034~~$2.2 million on the date of acquisition. As of ~~September 30,~~December 31, 2019, wethe Company remeasured this liability to ~~$2,327,919~~$7.3 million and the remeasurement loss of ~~$(110,885)~~$5.1 million was recorded in “Acquisition earn-out expense, net” in the ~~other income/(expense)~~consolidated statements of operations. In the three and six months ended June 30, 2020, the Company recorded remeasurement losses of $1.0 million and $1.5 million, respectively, in “Acquisition earn-out expense, net” in the condensed consolidated statements of operations, and partially satisfied the liability with the issuance of 11.4 million shares of common stock. As of June 30, 2020, the recorded balance of this liability was $1.8 million. The contractual period which required periodic remeasurement has expired, and therefore the Company will not remeasure this liability in the future.

Table of Contents

Immediately prior to the consummation of the ~~income statement.~~

transaction, the Company’s investment in DBOT consisted of 37.0% of the common shares outstanding, which had a fair value of $3.1 million, and the Company recorded a loss of $3.2 million to record the investment in DBOT to its fair value. This loss was recorded in “Loss on remeasurement of DBOT investment” in the condensed consolidated statements of operations in the three and nine months ended September 30, 2019. The fair value of the investment in DBOT immediately prior to the consummation of the transaction was determined in conjunction with the overall fair value determination of the DBOT assets acquired and liabilities assumed.

DBOT operates ~~three~~3 companies: ~~(i)~~(1) DBOT ATS LLC, an SEC recognized Alternative Trading ~~System; (ii)~~System (“ATS”); (2) DBOT Issuer Services LLC, focused on setting and maintaining issuer standards, as well as the provision of issuer services to DBOT designated issuers; and ~~(iii)~~(3) DBOT Technology Services LLC, focused on the provision of market data and marketplace connectivity.

The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and DBOT, as the Company executes its business plan of selling digital tokens and digital assets and other commodities on an approved ATS.

The consolidated statements of operation for the ~~three months~~year ended ~~September 30,~~December 31, 2019 include the results of ~~DBOT. Supplemental~~DBOT from July 2019 to December 31, 2019. For the time period from July 2019 through December 31, 2019, DBOT contributed $15,838 and $1.9 million to the Company’s revenue and net loss, respectively.

The following table summarizes supplemental information on an unaudited pro forma basis, as if the acquisition had been consummated as of January 1, ~~2018 is as follows:~~2019 (in thousands):

	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2019		Nine Months Ended September 30, 2018

									Three Months Ended		Six Months Ended
									June 30, 2019		June 30, 2019
Revenue	$	43,798,865		$	44,612,471	$	363,004,917		$	14,486	$	41,509
Net Income (loss) attributable to IDEX common shareholders	$	(7,818,047	)	$	10,582,474	$	(21,387,162	)
Net income attributable to IDEX common shareholders										4,829		24,309

The unaudited pro forma results of operations do not purport to represent what the Company’s results of operations would actually have been had the acquisition occurred on January 1, ~~2018.~~2019. Actual future results may vary considerably based on a variety of factors beyond the Company’s control.

~~For all intangible assets acquired, continuing membership agreements have useful life of 20 years and the customer list has useful life of 3 years.~~

The following table summarizes the acquisition-date fair value of assets acquired and liabilities assumed, as well as the fair value of the non-controlling interest in DBOT ~~recognized:~~recognized (in thousands):


Cash	$	246,929		$	247
Other financial assets		1,686,464			1,686
Financial liabilities		(4,411,140	)		(4,411)
Noncontrolling interest		(104,649	)		(105)
Goodwill		9,323,189			9,324
Intangible asset – continuing membership agreement		8,255,440			8,255
Intangible asset – customer list		58,830			59
	$	15,055,063
				$	15,055

~~Divestitures~~

The ~~Company may divest certain businesses from time to time based upon review~~excess of the ~~Company’s portfolio considering, among other items, factors relative~~consideration over the fair value of the net assets acquired has been recorded as goodwill, of which none is expected to be deductible for tax purposes. For all intangible assets acquired, continuing membership agreements have useful life of 20 years and the ~~extent~~customer list has useful life of ~~strategic and technological alignment and optimization~~3 years.

Table of ~~capital deployment, in addition to considering if selling the businesses results in the greatest value creation for the Company and for shareholders.~~Contents

~~(g)~~~~Red Rock Global Capital LTD (“Red Rock”)~~2019 Divestitures

(d)
Red Rock Global Capital LTD (“Red Rock”)

In May 2019, the Company determined to sell the Red Rock business and entered into an agreement with Redrock Capital Group Limited, an affiliate of Dr. Wu, to sell its entire interest in Red Rock for a consideration of ~~$700,000.~~$0.7 million. The Company decided to sell Red Rock primarily because it has incurred operating losses and its business is no longer needed based on ~~our strategic~~the Company’s business plan. The transaction was completed in July 2019 and the ~~company~~Company recorded a disposal gain of ~~$552,215.~~$0.6 million recorded in “Loss on disposal of subsidiaries, net” in the condensed consolidated statements of operations in the three and nine months ended September 30, 2019.

(e)

Amer Global Technology Limited (“Amer”)

~~(h) Amer Global Technology Limited (“Amer”)~~

On June 30, 2019, the Company entered into an agreement with BCC Technology Company Limited (“BCC”) and Tekang Holdings Technology Co., Ltd (“Tekang ”) pursuant to which Tekang will inject certain assets in the robotics and electronic internet industry and ~~IOT~~Internet of Things business consisting of manufacturing data, supply chain management &and financing, and lease financing of industrial robotics into Amer in exchange for ~~71.81%~~71.8% of ownership interest in Amer. The parties subsequently entered into several amendments ~~including~~including: (1) changing the name of Amer to Logistorm Technology Limited, (2) issuing 39,500 new shares in Amer or ~~71.81%~~71.8% ownership interest to BCC instead of Tekang, (3) issuing 5,500 new shares in Amer or ~~10%~~10.0% ownership interest to ~~Merry Heart Technology Limited (“MHT”)~~MHTL, and (4) the Company is responsible for ~~20%~~20.0% of any potential tax obligation associated with Amer, if Amer fails to be publicly listed in 36 months from the closing date of this transaction. The Company concluded that it’s not probable that this contingent liability would be incurred. As a result of this transaction, the Company’s ownership interest in Amer was diluted from ~~55%~~55.0% to ~~10%~~10.0%. The transaction was completed on August 31, ~~2019~~.

2019.

The Company recognized a disposal gain of ~~$505,148~~$0.5 million as a result of the deconsolidating ~~Amer. $95,104~~Amer, and such gain was recorded in “Loss on disposal of subsidiaries, net” in the condensed consolidated statements of operations in the three and nine months ended September 30, 2019. $0.1 million of the gain is attributable to the ~~10%~~10.0% ownership interest retained in Amer. In addition, on the date Amer was deconsolidated, the Company recorded a bad debt expense of ~~$622,286~~$0.6 million relating to a receivable due from Amer to a subsidiary of the ~~Company.~~

~~The following table summarizes~~Company, which was recorded in “Selling, general and administrative expense” in the ~~Consolidated Statement~~condensed consolidated statements of ~~Operations for~~operations in the three ~~months~~ and nine months ended September 30, ~~2018, on an unaudited pro forma basis, as if the dilution of the Company’s interest in Amer had been consummated as of January 1, 2018:~~

Three Months Ended
September 30, 2018

Nine Months Ended
September 30, 2018

Revenue $ 275,380 $ 260,547,120
Net loss from operations (6,305,340 ) (18,548,258 )
Net loss (7,390,597 ) (19,351,526 )
Net loss attributable to IDEX common shareholders $ (7,158,674 ) $ (18,945,524 )

2019.

Pro forma results of operations for the ~~period~~three and six months ended ~~September~~June 30, 2019 have not been presented because they are not material to the consolidated results of operations. Amer ~~has~~had no revenue and minimal operating ~~expense~~expenses in the year ended December 31, 2019.

~~Note 6.~~

~~Accounts Receivable~~

Note 7. Accounts ~~receivable is mainly from our Mobile Energy Group (formerly Wecast Services) business and consisted of the following:~~

September 30, December 31,
2019 2018
Accounts receivable, gross $
2,941,348
$ 19,370,665
Less: allowance for doubtful accounts (103 ) -
Accounts receivable, net $
2,941,245
$ 19,370,665

Receivable

The following table ~~outlines~~summarizes the ~~aging of~~Company’s accounts receivable (in thousands):


	June 30,		December 31,
	2020		2019
Accounts receivable, gross	$	1,242	$	2,405
Less: allowance for doubtful accounts		—		—
Accounts receivable, net	$	1,242	$	2,405

There were 0 changes in the allowance for doubtful accounts ~~receivable:~~

September 30,
2019

December 31,
2018

Within 90 days $
2,941,245
$ 1,219,526
91-180 days - 633
181-365 days - 12,385,193
More than 1 year - 5,765,313
Total $
2,941,245
$ 19,370,665

for the three and six months ended June 30, 2020 and 2019.

The ~~decrease in~~ balance ~~is mainly due to~~includes the ~~deconsolidation~~taxi commission revenue receivables of ~~Amer~~$1.1 million and $2.3 million from the related party Guizhou Qianxi Green Environmentally Friendly Taxi Service Co, as of ~~September~~June 30, 2020 and December 31, 2019, ~~as disclosed in Note 5(h). Our payment term is usually within 180 days upon the receipts~~respectively.

Table of ~~the goods. The Company has reviewed the outstanding balance by customers and concluded that the outstanding balances are collectible.~~Contents

~~Note 7.~~

Note 8. Property and Equipment, net

The following ~~is a breakdown of~~table summarizes the Company’s property and ~~equipment:~~equipment (in thousands):

	September 30,			December 31,
	2019			2018
Furnitures and office equipment		602,548			357,064

							June 30,		December 31,
							2020		2019
Furniture and office equipment							$	300	$	441
Vehicle		60,951			63,135			120		62
Leasehold improvements		239,781			200,435			173		243
Total property and equipment		903,280			620,634			593		746
Less: accumulated depreciation		(482,548	)		(186,514	)		(416)		(368)

Property and equipment, net								177		378
Fintech Village
Land		3,042,777			3,042,777			3,043		3,043
Building¹		308,779			2,607,666
Assets Retirement Obligations - Environmental Remediation		8,000,000			8,000,000
Building								309		309
Assets retirement obligations – environmental remediation								6,496		6,496
Capitalized direct development cost		2,732,705			944,864			2,714		2,713
Construction in progress (Fintech Village)		14,084,261			14,595,307			12,562		12,561

Property and Equipment, net	$	14,504,993		$	15,029,427		$	12,739	$	12,939

~~Note~~

¹ ~~The $2.3 million decrease from the prior year represents the impairment charge recorded in connection with four of the five existing buildings on Fintech Village which are expected to be demolished.~~

The Company recorded depreciation expense of $34,256 and $20,520, which is included in its operating expense, ~~of $65,862 and $14,820~~ for the three months ended ~~September~~June 30, 2020 and 2019, respectively, and ~~2018~~$65,792 and ~~$102,991 and $32,941~~$37,129 for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

In the three months ended June 30, 2020 the Company ceased to use the premises for its New York City headquarters at 55 Broadway, and vacated the premises. As a result, the Company recorded an impairment loss of $0.2 million related to leasehold improvements and other fixed assets at that location.

Global Headquarters for Technology and Innovation in Connecticut (“Fintech Village”)

The Company recorded ~~$8.0 million of Asset Retirement Obligations which are related to our legal contractual~~asset retirement obligations for environmental remediation matters in connection with the acquisition of Fintech Village. The following table summarizes the activity in the asset retirement obligation for the six months ended June 30, 2020 (in thousands):


	January 1,	Liabilities		Remediation		Accretion				June 30,
	2020	Incurred		Performed		Expense		Revisions		2020
Asset retirement obligation	$5,094	$	—	$	(441)	$	—	$	—	$	4,653

The Company capitalized direct costs incurred on Fintech Village and the capitalized cost is recorded as part of Construction in progress. Capitalized ~~direct development~~ costs ~~mainly represent the architectural~~were $2.7 million and $2.7 million as of June 30, 2020 and December 31, 2019, respectively, and are primarily related to legal and architect costs.

The Company has identified Fintech Village as a non-core asset and is evaluating its strategies for divesting of this asset.

Table of Contents

Note 9. Goodwill and Intangible Assets

~~Note~~8.

~~Goodwill and Intangible Assets~~

Goodwill

~~Changes~~The following table summarizes changes in the ~~carrying value of goodwill consist of following:~~

Nine months ended
September 30, 2019
Year Ended
December 31, 2018

At the beginning of the year 704,884 -
Goodwill Acquired¹ 9,323,189 704,884
At the end of the period 10,028,073 704,884

~~Note~~

¹ ~~The change in~~ carrying amount of goodwill ~~in the current year was the result of the acquisition of DBOT as disclosed in Note 5(f).~~(in thousands):


Balance as of January 1, 2019	$	705
Acquisitions		22,639
Balance as of December 31, 2019		23,344
Measurement period adjustments*		(12,848)
Effect of change in foreign currency exchange rates		(36)
Balance as of June 30, 2020	$	10,460

~~Intangible Assets~~

~~Information regarding amortizing and indefinite lived intangible assets consisted of the following:~~

September 30, 2019 December 31, 2018
Weighted
Average
Remaining Gross
Carry Accumulated Accumulated
Impairment Net Gross
Carry Accumulated Accumulated
Impairment Net
Useful Life Amount Amortization Loss Balance Amount Amortization Loss Balance
Amortizing Intangible Assets
Animation Copyright (Note 14 (b)) - $ - $ - $ - $ - $ 301,495 $ (64,606 ) $ - $ 236,889
Software and licenses - 97,308 (97,308 ) - - 97,308 (93,251 ) - 4,057
SolidOpinion IP (Note 5 (a)) 4.4 4,655,000 (543,084 ) - 4,111,916 - - - -
Fintalk intangible assets (Note 5 (b)) 4.8 6,350,000 (317,500 ) - 6,032,500 - - - -
Influencer network 8.9 1,980,000 (214,500 ) - 1,765,500 1,980,000 (66,000 ) - 1,914,000
Customer contract¹ 2.0 558,830 (185,458 ) - 373,372 500,000 (55,556 ) - 444,444
Continuing Membership Agreement¹ 19.8 8,255,440 (103,193 ) - 8,152,247 - - - -
Trade name 13.9 110,000 (7,944 ) - 102,056 110,000 (2,444 ) - 107,556
Technology platform 5.9 290,000 (44,881 ) - 245,119 290,000 (13,808 ) - 276,192
Total amortizing intangible assets $ 22,296,578 $ (1,513,868 ) $ - $ 20,782,710 $ 3,278,803 $ (295,665 ) $ - $ 2,983,138
Indefinite lived intangible assets
Website name 159,504 - (134,290 ) 25,214 159,504 - (134,290 ) 25,214
Patent 28,000 - - 28,000 28,000 - - 28,000
GTB (Note 14 (b)) 61,124,407 - - 61,124,407 - - - -
Total intangible assets $ 83,608,489 $ (1,513,868 ) $ (134,290 ) $ 81,960,331 $ 3,466,307 $ (295,665 ) $ (134,290 ) $ 3,036,352

~~Note~~

¹*During the ~~third~~fourth quarter of 2019, the Company completed the acquisition of a 51.0% interest in Tree Technologies, a Malaysian company engaged in the EV market. The Company adjusted goodwill balance in connection with the completion of acquisition accounting. Refer to Note 6(a) for additional ~~shares in DBOT which increased its ownership in DBOT to 99.04%. $8,314,270 of~~information.

Intangible Assets

The following table summarizes information regarding amortizing and indefinite lived intangible assets ~~were recognized on the date~~(in thousands):


	June 30, 2020										December 31, 2019
	Weighted		Gross								Gross
	Average Remaining		Carrying		Accumulated		Impairment		Net		Carrying		Accumulated		Impairment		Net
	Useful Life		Amount		Amortization		Loss		Balance		Amount		Amortization		Loss		Balance
Amortizing Intangible Assets
Software and licenses			$	97	$	(97)	$	—	$	—	$	97	$	(97)	$	—	$	—
Solid Opinion IP (a)		3.7		4,655		(1,241)		—		3,414		4,655		(776)		—		3,879
Fintalk intangible assets (b)		—		635		(635)		—		—		635		(635)		—		—
Influencer network (c)		8.2		1,980		(363)		—		1,617		1,980		(264)		—		1,716
Customer contract (c)		1.2		500		(306)		—		194		500		(222)		—		278
Continuing membership agreement (d)		19.0		8,255		(413)		—		7,842		8,255		(206)		—		8,049
Customer list		2.0		59		(20)		—		39		59		(10)		—		49
Trade name (c)		13.2		110		(13)		—		97		110		(10)		—		100
Technology platform (c)		5.2		290		(76)		—		214		290		(55)		—		235
Land use rights (e)		99.0		25,979		—		—		25,979		27,079		—		—		27,079
Marketing and distribution agreement (e)		20.0		12,030		—		—		12,030		11,333		—		—		11,333
Total				54,590		(3,164)		—		51,426		54,993		(2,275)		—		52,718
Indefinite lived intangible assets
Website name				25		—		—		25		25		—		—		25
Patent				28		—		—		28		28		—		—		28
Total			$	54,643	$	(3,164)	$	—	$	51,479	$	55,046	$	(2,275)	$	—	$	52,771

(a)

During the first quarter of 2019, the Company completed the acquisition of certain assets from SolidOpinion in exchange for 4.5 million shares of the Company’s common stock with a fair value of $7.2 million. The assets acquired included cash of $2.5 million and intellectual property (“IP”) which is complementary to the IP of Grapevine. The parties agreed that 0.5 million of such shares of common stock (“Escrow Shares”) will be held in escrow until February 19, 2020 in connection with SolidOpinion’s indemnity obligations pursuant to the agreement. SolidOpinion has the rights to vote and receive the dividends paid with respect to the Escrow Shares. The Escrow Shares were scheduled to be released on February 19, 2020, and were released in April 2020.

(b)

In September 2018, the Company entered into an agreement to purchase Fintalk Assets from Sun Seven Star International Limited, a Hong Kong company and an affiliate of Dr. Wu. FinTalk Assets include the rights, titles, and interest in a secure mobile financial information, social, and messaging platform that has been designed for streamlining financial-based communication for professional and retail users. The initial purchase price for the Fintalk Assets was $7.0 million payable with $1.0 million in cash and shares of the Company’s common stock with a fair market value of $6.0 million. The Company paid $1.0 million in October 2018 and recorded this amount in prepaid expenses as of December 31, 2018 because the transaction had not closed. The purchase price was later amended to $6.4 million, payable with $1.0 million in cash and shares of the Company’s common stock with a value of $5.4 million. The Company issued 2.9 million common shares in June 2019 and completed the transaction. In the fourth quarter of 2019, management determined these assets had no future use and recorded an impairment loss of $5.7 million.

Table of ~~acquisition as disclosed in Note 5(f).~~Contents

(c)	During the third quarter of 2018, the Company completed the acquisition of 65.7% share of Grapevine. Refer to Note 6(b).

(d)	During the third quarter of 2019, the Company completed the acquisition of additional shares in DBOT, which increased its ownership to 90.0 %. Intangible assets of $8.3 million were recognized on the date of acquisition. Refer to Note 6(c).

(e)

During the fourth quarter of 2019, the Company completed the acquisition of a 51.0% interest in Tree Technologies, a Malaysian company engaged in the EV market. In connection with the completion of acquisition accounting, the Company revised the estimated useful life of the marketing and distribution agreement from 5 to 20 years. As amortization of this agreement has not commenced, the revision of the estimated useful life had no effect on the condensed consolidated financial statements. Refer to Note 6(a) for additional information.

Amortization expense relating to intangible assets was ~~$764,010~~$0.5 million and ~~$276,692~~$0.3 million for the three months ended ~~September~~June 30, 2020 and 2019, respectively, and ~~2018~~$0.9 million and ~~$1,317,419 and $281,796~~$0.6 million for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, ~~and 2018,~~ respectively.

The following table ~~outlines~~summarizes the expected amortization expense for the following ~~years:~~years (in thousands):

	Amortization to be

			Amortization
			to be
Years ending December 31,	recognized		recognized
2019 (excluding the nine months ended September 30, 2019)	$	761,702
2020		3,046,811

2020 (excluding the six months ended June 30, 2020)			$	1,320
2021		2,991,255		2,585
2022		2,870,339		2,464
2023		2,860,534		2,454
2024 and thereafter		8,252,069
Total amortization to be recognized	$	20,782,710
2024				1,678
2025 and thereafter				40,925
Total			$	51,426

~~Note~~9.

~~Long-term Investments~~

The above table assumes that the amortization commences on the Land use rights and Marketing and distribution agreement on July 1, 2020; however, actual amortization may commence at a later date as EV production commences.

Note 10. Long-term Investments

The following table summarizes the Company's long-term investments ~~consisted of Non-marketable Equity Investment and Equity Method Investment as below:~~(in thousands):

September 30, December 31,
2019 2018
Non-marketable Equity Investment $ 9,147,170 $ 9,452,103
Equity Method Investment 33,012,143 16,956,506
Total $ 42,159,313 $ 26,408,609


	June 30,		December 31,
	2020		2019
Non-marketable equity investments	$	6,005	$	5,967
Equity method investments		16,639		16,654
Total	$	22,644	$	22,621

Non-marketable equity ~~investment~~ investments

~~Our non-marketable~~Non-marketable equity investments are investments in privately held companies without readily determinable fair ~~values. These investments~~values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Table of Contents

The Company reviews its equity securities without readily determinable fair values on a regular basis to determine if the investment is impaired. For purposes of this assessment, the Company considers the investee’s cash position, earnings and revenue outlook, liquidity and management ownership, among other factors, in its review. If management’s assessment indicates that an impairment exists, the Company estimates the fair value of the equity investment and recognizes in current earnings an impairment loss that is equal to the difference between the fair value of the equity investment and its carrying amount. ~~There is no~~Based on management's analysis of certain investment's performance, 0 impairment ~~for~~losses were recorded in the ~~nine~~three and six months ended ~~September~~June 30, 2020 and 2019.

In the six months ended June 30, 2019, the Company sold one non-marketable equity investment with a carrying amount of $3.2 million for GTB and recognized no gain or loss on the sale. Refer to Note 14(b) for additional information.

Equity method investments

The following table summarizes the Company’s investment in companies accounted for using the equity method of accounting ~~consist of the following:~~(in thousands):

September 30, 2019
Foreign
currency
December 31, Loss on Reclassification translation September 30,
2018 Addition investment to subsidiaries adjustments 2019
Wecast Internet (i) $ 4,114 $ - $ (5 ) $ - $ 1,930 $ 6,039
Hua Cheng (ii) 308,666 - (32,890 ) - (37,210 ) 238,566
Shandong Media (iii) - - - - - -
BDCG (iv) 9,800,000 - - - - 9,800,000
DBOT (v) 6,843,726 - (3,719,735 ) (3,123,991 ) - -
Glory (vi)
-
23,000,000 (32,462 )
-

-
22,967,538

Total $ 16,956,506 $ 23,000,000 $ (3,785,092 ) $ (3,123,991 ) $ (35,280 ) $ 33,012,143


		June 30, 2020
						Income (loss)						Foreign currency
		January 1,				on		Impairment				translation		June 30,
		2020		Addition		investment		losses		Disposal		adjustments		2020
BDCG	(a)	$	9,800	$	—	$	—	$	—	$	—	$	—	$	9,800
Glory	(b)		6,854		—		(15)		—		—		—		6,839
Total		$	16,654	$	—	$	(15)	$	—	$	—	$	—	$	16,639

All the investments above are privately held companies; therefore, quoted market prices are not available. ~~We have not received any dividends since initial investments.~~

~~(i)~~ ~~Wecast Internet~~

Starting from October 2016, we have 50% interest in Wecast Internet Limited (“Wecast Internet”) and initial investment was invested RMB 1,000,000 (approximately $149,750). Wecast Internet is in the process of liquidation and the remaining carrying value is immaterial.

~~(ii)~~ ~~Hua Cheng Hu Dong (Beijing) Film and Television Communication Co., Ltd.(“Hua Cheng”)~~

~~The Company held 39% equity ownership in Hua Cheng, a company established to provide integrated value-added service solutions for the delivery of VOD and enhanced content for cable providers.~~

~~(iii)~~ ~~Shandong Lushi Media Co., Ltd (“Shandong Media”)~~

The Company held 30% equity ownership in Shandong Media, a print based media business, for Legacy YOD business. The accumulated operating loss of Shandong Media reduced the Company’s investment in Shandong Media to zero. The Company has received no ~~obligation to fund future operating losses.~~dividends from equity method investees in the three and six months ended June 30, 2020 and 2019.

~~(iv)~~ ~~BBD Digital Capital Group Ltd. (“BDCG”)~~

(a)
BBD Digital Capital Group Ltd. (“BDCG”)

In 2018, wethe Company signed a joint venture agreement, with ~~two~~2 unrelated parties, to establish BDCG, subsequently renamed Intelligenta, located in the United States for providing block chain services for financial or energy industries by utilizing AIartificial intelligence and big data technology in the United States. ~~The Company received 40% equity ownership in BDCG from the initial joint venture agreement.~~ On April 24, 2018, the Company acquired ~~20%~~20.0% equity ownership in BDCG from one noncontrolling party for a total consideration of $9.8 million which ~~consists~~consisted of $2$2.0 million in cash and $7.8 million paid in the form of the Company’s ~~common~~capital stock (valued at $2.60 per share and equal to 33.0 million shares of the Company’s common stock), increasing the Company’s ownership to ~~60% in BDCG.~~60.0%. The remaining ~~40%~~40.0% of BDCG are held by Seasail ~~ventures limited~~Ventures Limited (“~~Seasail”~~Seasail.”). The accounting treatment of the joint venture is based on the equity method due to variable substantive participating rights (in accordance with ASC ~~810-10-25-11)~~810) granted to Seasail. The new entity is currently in the process of ramping up its operations. ~~In April~~Intelligenta has yet to record revenue or earnings or losses, and therefore its statement of operations and balance sheet data are not material.

As of June 30, 2020, the excess of the Company's investment over its proportionate share of Intelligenta's net assets was $9.8 million. The difference represents goodwill and is not being amortized.

(b)

Glory Connection Sdn. Bhd (“Glory”)

On July 18, 2019, the Company entered into an acquisition agreement to purchase a 34.0% interest in Glory, a Malaysian company, ~~rebranded~~from its shareholder Beijing Financial Holding Limited, a Hong Kong registered company, for the ~~name~~consideration of 12.2 million restricted common shares of the ~~BDCG joint venture~~Company, initially representing $24.4 million at $2.00 per share, the contract price, and subsequently revised to ~~Intelligenta.~~$20.0 million at $1.64 per share, the closing price on the date of acquisition. As part of this transaction, the ~~rebranding, Intelligenta’s strategy will now include credit services, corporation services, index services and products, and capital market services and products.~~

~~(v)~~ ~~Delaware Board~~Company was also granted an option to purchase a 40.0% interest in Bigfair Holdings Limited (“Bigfair”) from its shareholder Beijing Financial Holding Limited for an exercise price of ~~Trade Holdings, Inc. (“DBOT”)~~

~~Refer~~$13.2 million in the form of common shares of the Company. Bigfair currently holds a 51.0% ownership stake in Glory. The option is exercisable from July 18, 2020 to ~~Note 5(f).~~

~~(vi)~~July 19, 2021. If the option is exercised, the Company would have 20.4% indirect ownership in Glory ~~Connection Sdn. Bhd (“Glory”)~~

~~Refer~~in addition to ~~Note 5(e).~~the 34.0% direct ownership it already has.

Table of Contents

Upon the initial investment, the Company performed a valuation analysis and allocated $23.0 million and $1.4 million of the consideration transferred to the equity method investment and the call option, respectively, which was subsequently revised to $20.0 million and $0, respectively. Glory is currently in the process of ramping up its operations.

~~Note 10.~~

~~Leases~~

~~We lease certain office space~~As initially contemplated, Glory, through its subsidiary Tree Manufacturing, would hold a domestic EV manufacturing license in Malaysia, a marketing and ~~equipment from third parties. Leases with an initial term~~distribution agreement for EVs in the ASEAN region, as well as the land use rights for 250 acres of ~~12 months or less are not recorded~~vacant land zoned for industrial development in the Begeng Industrial Area adjacent to Kuantan Port. Kuantan is the capital city of the state of Pahang on the ~~balance sheet~~east coast of Peninsular Malaysia, which was to be the site of the manufacturing operations.

In December 2019, the Company acquired a 51.0% ownership interest in Tree Technologies. Tree Technologies had previously been granted the land use rights to the 250 acres of vacant land mentioned above, which was previously anticipated would be owned by Glory. As Glory would no longer receive the land use rights to the 250 acres of vacant land, the Company evaluated its investment in Glory for impairment, and ~~we recognize lease expense~~recorded an impairment loss of $13.1 million in “Impairment of and equity in loss of equity method investees” in the consolidated statements of operations in the year ended December 31, 2019.

Tree Technologies has also entered into a product supply arrangement and a product distribution arrangement with a subsidiary of Glory. The Company performed an assessment of these arrangements, and determined that Glory is a VIE, but that the Company is not the prime beneficiary. As of June 30, 2020, the Company accounts for ~~these leases on a straight-line basis~~Glory as an equity method investment.

The Company has advanced $0.4 million to Glory in order to fund its operations, although it had no obligation to do so. The Company’s maximum exposure to Glory is $7.3 million, the sum of its investment and advances.

As of June 30, 2020, the excess of the Company’s investment over its proportionate share of Glory’s net assets was $7.1 million. The difference primarily represents an amortizing intangible asset.

The following table summarizes the ~~lease term. For leases beginning~~income statement information of Glory for the three and six months ended June 30, 2020 (in thousands):


	Three Months Ended		Six Months Ended
	June 30, 2020		June 30, 2020
Revenue	$	3	$	5
Gross profit		(3)		(6)
Net loss from operations		(37)		(48)
Net loss		(34)		(44)
Net loss attributable to Glory		(19)		(25)

Note 11. Leases

On May 1, 2020, the Company took possession of premises in ~~2019 and later, at the inception~~Qingdao, China in furtherance of a ~~contract we assess whether~~larger public/private initiative to promote EV business in the ~~contract is, or contains, a lease. Our assessment is based on: (1) whether~~region and reduce the ~~contract involves~~reliance on traditional combustion engines. The premises are indirectly and partially owned by local governmental entities, and were provided to the ~~use of a distinct identified asset, (2) whether we obtain~~Company at no charge. The Company, pursuant to the ~~right to substantially all the economic benefit from the~~underlying lease, has use of the ~~asset throughout~~premises until November 30, 2034.

The Company has determined the ~~period, and (3) whether we have the right to direct the use~~fair value of the ~~asset. At inception of a~~ lease ~~we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine~~and recorded the lease ~~payments. Leases entered into prior to January 1, 2019, are accounted for under~~in accordance with ASC ~~840~~842, Leases(“ASC 842,”) ASC 845 Nonmonetary Transactions(“ASC 845,”) and ~~were not reassessed. We account for~~ASC 958, Not-for-Profit Entities (“ASC 958.”) In connection with this lease ~~components (e.g., fixed payments including rent, real estate taxes~~agreement, the Company recorded operating right of use assets of $7.2 million, and ~~insurance costs) separately from the nonlease components (e.g.,common-area maintenance costs).~~

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one year or more. The exercise of lease renewal options is at our sole discretion. Our leases do not include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Certain of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. All our leases arean operating lease. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The effect of short-term leases and initial direct costs on our right-of-use asset and lease liability ~~was not material.~~

of $7.2 million. The fair value of the annual lease payments is $0.7 million.

As of ~~September~~June 30, ~~2019, our~~2020, the Company's operating lease right of use assets and operating lease ~~liability~~liabilities are ~~approximately $6.8~~$7.6 million and ~~$7.2~~$13.3 million, respectively. The weighted-average remaining lease term is ~~6.6~~10.1 years and the weighted-average discount rate is 5.7%.

Table of Contents

As of December 31, 2019, the Company's operating right of use assets and operating lease liabilities were $6.9 million and $7.3 million, respectively. As of June 30, 2019, the weighted-average remaining lease term was 6.2 years and the weighted-average discount rate was 7.5%.

~~For the three and nine months ended September 30, 2019,~~The following table summarizes the components of lease expense ~~were as follows:~~(in thousands):

Three Months Ended
September 30, 2019

Nine Months Ended
September 30, 2019

Operating Lease Cost $ 390,577 $ 1,264,049
Short-Term Lease Cost 78,076 250,924
Sublease Income (10,605 ) (10,605 )
Total Lease Cost $ 458,048 $ 1,504,368


	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Operating lease cost	$	511	$	504	$	968	$	1,092
Short-term lease cost		107		26		197		54
Sublease income		(32)		—		(64)		—
Total	$	586	$	530	$	1,101	$	1,146

~~Supplemental~~The following table summarizes supplemental information related to leases ~~was as follows:~~(in thousands):

	Nine Months Ended September 30, 2019

			Three Months Ended				Six Months Ended
			June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	967,565	$	293	$	250	$	846	$	520

Right-of-use assets obtained in exchange for new operating lease liabilities	$	935,242
Right of use assets obtained in exchange for new operating lease liabilities				7,206		—		7,528		—

~~Maturity~~The following table summarizes the maturity of operating lease liabilities (in thousands):


	Leased Property
Years ending December 31	Costs
2020	$	1,169
2021		1,923
2022		1,909
2023		1,976
2024		2,016
2025 and thereafter		8,224
Total lease payments		17,217
Less: Interest		(3,882)
Total	$	13,335

In the three months ended March 31, 2020 the Company ceased to use the premises underlying one lease and vacated the real estate. As a result, the Company recorded an impairment loss related to the right of use asset of $0.9 million. In the three months ended June 30, 2020, the Company completed negotiations with the landlord to settle the remaining operating lease liability of $0.9 million by issuing a promissory note for $0.1 million, bearing an annual interest rate of 4.0%, and which is ~~as follows:~~due and payable on December 31, 2021. The Company recorded a gain of $0.8 million for the settlement of the operating lease liability in the three months ending June 30, 2020.

Maturity of Lease Liability Operating Lease
2019 (excluding the nine months ended September 30, 2019) $ 332,549
2020 1,307,783
2021 1,328,160
2022 1,422,965
2023 1,474,391
2024 and thereafter 3,377,653
Total lease payments 9,243,501
Less: Interest (2,001,696 )
Total $ 7,241,805

~~Note 11.~~

~~Supplemental Financial Statement Information~~

~~Other Current Assets~~In the three months ended June 30, 2020 the Company ceased to use the premises for its New York City headquarters at 55 Broadway, which are subject to two leases, and vacated the real estate. As a result, the Company recorded an impairment loss related to the right of use asset of $5.3 million. The Company has an operating use liability of $5.8 million with respect to these leases. The Company continues to negotiate with the landlord concerning the termination of these leases.

Table of Contents

Note 12. Promissory Notes

~~“Other current assets” were approximately $2.4 million and $3.6 million~~The following table summarizes the outstanding promissory notes as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018, respectively. Components~~2019 (dollars in thousands):


		June 30,				December 31,
		2020				2019
		Principal		Carrying		Principal		Carrying
	Interest Rate	Amount		Amount*		Amount		Amount*
Convertible Note-Mr. McMahon (Note 14 (a))	4.0%	$	—	$	—	$	3,000	$	3,260
Convertible Note -SSSIG (Note 14 (a))	4.0%		—		—		1,252		1,301
Convertible Note-SSSIG (Note 14 (a))	4.0%		—		—		250		250
Convertible Note-Advantech (a)	8.0%		12,000		7,066		12,000		3,193
Senior Secured Convertible Note (b)	10.0%		—		—		850		348
Senior Secured Convertible Note (c)	10.0%		—		—		3,580		1,896
Senior Secured Convertible Note (d)	4.0%		—		—		3,000		1,405
Promissory Note (e)	6.0%		3,000		3,108		3,000		3,000
Vendor Notes Payable (f)	0.25%-4%		135		135		—		—
Small Business Association Paycheck Protection Program (g)	1%		460		461		—		—
Total		$	15,595		10,770	$	26,932		14,653
Less: Current portion					10,770				8,013
Long-term Note, less current portion				$	—			$	6,640

*Carrying amount includes the accrued interest.

The following table summarizes future maturities of ~~"Other current assets" that were more than 5 percent~~the debt and contractual obligations (excluding the debt from small business association paycheck protection program), as well as projected interest expense resulting from the amortization of ~~total current assets: (1) other receivable due from third parties in our subsidiaries located in PRC and Hong Kong in the amount~~debt discounts as of ~~$1.7 million and $3.3 million for the period ended September~~June 30, ~~2019~~2020 (in thousands):


	Principal		Interest
2020	$	3,030	$	558
2021		12,105		479
Total	$	15,135	$	1,037

As of June 30, 2020 and December 31, ~~2018~~2019, the Company was in compliance with all ratios and ~~(2) $0.6 million receivable due from ID Venturas 7 relating to the convertible debenture executed on September 27, 2019. As disclosed in Note 12(c), we have received the $0.6 million in October.~~

~~Other Current Liabilities~~

“Other current liabilities” were approximately $9.1 million and $5.3 million as of September 30, 2019 and December 31, 2018, respectively. Components of "Other current liabilities" that were more than 5 percent of total current liabilities: (1) $2.3 million liability relating to additional True-Up Common Stock consideration from the DBOT acquisition as disclosed in Note 5 (f) and (2) other payable due to third parties in the amount of $5.1 million and $4.6 million for the period ended September 30, 2019 and December 31, 2018, respectively.

covenants.

~~Note 12~~.

(a)

$12.0 Million Convertible Note – Advantech

~~The following is the summary of outstanding convertible notes as of September 30, 2019 and December 31, 2018:~~

September 30, December 31,
2019 2018
Convertible Note-Mr. McMahon(Note 14 (a)) $ 3,229,808 $ 3,140,055
Convertible Note-SSSIG (Note 14 (a)) 1,288,032 1,000,000
Convertible Note-Advantech 12,382,806 11,313,770
$2.05 million Senior Secured Convertible Note - ID Venturas 7 626,387 -
$2.5 million Senior Secured Convertible Note - ID Venturas 7 14,917 -
Total $ 17,541,950 $ 15,453,825
Short-term Note 1,914,419 4,140,055
Long-term Note 15,627,531 11,313,770

~~(a) $12 million Convertible Note - Advantech~~

On June 28, 2018, the Company entered into a convertible note purchase agreement with Advantech Capital Investment II Limited (“Advantech”) in the aggregate principal amount of ~~$12,000,000~~$12.0 million (the ~~Notes).~~“Advantech Note.”) The ~~Notes bear~~Advantech Note bears interest at a rate of ~~8%, mature~~8.0% and matures on June 28, 2021, and ~~are~~is convertible into ~~approximately 6,593,406~~the shares of the Company’s common stock at a stated conversion price, subject to adjustment if subsequent equity shares have a lower conversion price (“down round provision.”) The stated conversion price was initially $1.82 per share, which was subsequently reset to $1.00 in October 2019, $0.5869 on April 22, 2020, then further reduced to $0.36 on May 20, 2020 due to the down round provision.

The Company received aggregate gross proceeds of ~~$ 1.82 per share.~~ $12.0 million, net of $34,133 for the issuance expenses paid by Advantech.

The initial difference between the conversion price and the fair ~~market~~ value of the common stock on the commitment date ~~(transaction date)~~ resulted in a beneficial conversion feature (“BCF”) recorded of ~~approximately~~ $1.4 ~~million.~~ million and increased by $10.6 million due to the down round provision adjustment in October 2019.

NaN additional BCF is recognized because the discount assigned to the BCF is already equal to the proceeds allocated to the convertible instrument.

Table of Contents

For the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, total interest expense recognized ~~relating to~~was $1.9 million and $0.4 million, respectively, and was $3.9 million and $0.7 million for the ~~beneficial conversion feature was $117,000 and $112,000, respectively. For the nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018, total interest expense recognized relating to the beneficial conversion feature was $347,000 and $112,000,~~2019, respectively. The agreement also requires the Company to comply with certain covenants, including restrictions on the use of the proceeds and other conditions of the convertible note offering. ~~As of September 30, 2019, the Company was in compliance with all ratios and covenants.~~

~~(b) $2.05 million Senior Secured Convertible Debenture due in August 2020 - ID Ventura 7~~

(b)

$2.05 Million Senior Secured Convertible Debenture due in August 2020 - ID Venturas 7

On February 22, 2019, the Company executed a security purchase agreement with ID Venturas 7, LLC (“IDV”), whereby the Company issued ~~$2,050,000~~$2.1 million of senior secured convertible ~~note.~~note (“February IDV Note.”) The ~~note~~February IDV Note bears interest at a rate of ~~10%~~10.0% per year payable either in cash or in kind at the option of the Company on a quarterly basis and matures on August 22, 2020. In addition, IDV is entitled to the following: ~~(i)~~(1) the convertible note is senior secured; ~~(ii)~~(2) convertible at ~~$1.84~~an adjusted price per share of Company common stock at the option of IDV, ~~(approximately 1,114,130 shares),~~ subject to adjustments if subsequent equity shares have a lower conversion price ~~(ii) 1,166,113~~(original $1.84, $1.00 after October 30, 2019 and $0.5869 after April 22, 2020), (3) 1.2 million shares of common stock of the ~~Company~~Company; and ~~(iii)~~(4) a warrant exercisable for ~~150% of the number of~~1.6 million shares of common stock which the ~~note~~February IDV Note is convertible into ~~(approximately 1,671,196 shares)~~ at an adjusted exercise price of(original $1.84 , $1.00 after October 30, 2019 and $0.5869 after April 22, 2020) per share and will expire in 7 years, which was extended from 5 years after issuance. On October 29, 2019 the Company entered into a letter agreement (the “Agreement”) with ID Venturas pursuant to which the Company agreed to reduce the conversion price of the Debentures and the exercise price of the Warrants to $1.00,

on December 19, 2019.

The Company received aggregate gross proceeds of $2$2.0 million, net of $50,000 for the issuance expenses paid by IDV. Total funds received were allocated to ~~convertible note,~~the February IDV Note, common ~~stocks~~shares and warrants based on their relative fair values in accordance with ASC ~~470-20-30.~~470, Debt (“ASC 470.”) The fair value of the ~~convertible note~~February IDV Note and common ~~stocks~~shares was based on the closing price of the Company’s common stock on February 22, 2019. The fair value of the warrants was determined using the Black-Scholes option-pricing model, with the following assumptions: expected life of 5 years, expected dividend rate of 0%, volatility of 111.83% and an interest rate of 2.48%. The ~~relative~~ fair value of the warrants was recorded as additional paid-in capital and ~~reduced~~a corresponding discount on the carrying amount of the ~~convertible note.~~February IDV Note. The Company recognized a ~~beneficial conversion feature~~BCF of $0.6 million as an increase in additional paid-in capital and corresponding discount on ~~convertible note at its intrinsic value,~~the carrying amount of the February IDV Note, which was the fair value of the common ~~stock~~shares at the commitment date for ~~convertible note,~~the February IDV Note, less the effective conversion price. The Company recognized approximately $600,000 of beneficial conversion feature as an increase in additional paid in capital and reduced (discount on) the carrying amount of the convertible note in the accompanying consolidated balance sheet.

The discounts on the convertible note for the warrants and beneficial conversion feature are being amortized to interest expense, using the effective interest method over the term of the convertible note. As of September 30, 2019, the unamortized discount on the convertible note is approximately $1,424,000. Total interest expense recognized relating to the discount was approximately $175,000 and $626,000 for the three and nine months ended September 30, 2019, respectively.

Interest on the ~~convertible note~~February IDV Note is payable quarterly starting from April 1, 2019. The ~~convertible note~~February IDV Note is redeemable at the option of the Company in whole at an initial redemption price of the principal amount of the ~~convertible note~~February IDV Note plus additional warrants and accrued and unpaid interest to the date of redemption.

The security purchase agreement contains customary representations, warranties and covenants. The convertible note is collateralized by the Company’s equity interest in Grapevine, which had a carrying amount of $2.4 million as of September 30, 2019. The Company has the right to request for the removal of the guarantee and collateral by issuance of additional 250,000 shares of common stock. On September 27, 2019, the Company issued 250,000 shares of common stock to IDV in exchange for the release of Grapevine as collateral.

IDV has registration rights that require the Company to file and register the common stock issued or issuable upon conversion of the convertible note or the exercise of the warrants, within 180 days following the closing of the transaction.

The Company is also subject to penalty fee at 8%8.0% per annum for late payments of interests and compensation for the loss of IDV on failure to timely deliver conversion shares upon conversion.

The security purchase agreement contains customary representations, warranties, and covenants. The February IDV Note was collateralized by the Company’s equity interest in Grapevine and the Company had the right to request the removal of the guarantee and collateral by the issuance of additional 250,000 shares of common stock.

Modification/Extinguishment

On September 27, 2019, the Company issued 250,000 shares of common stock to IDV in exchange for the release of Grapevine as collateral. The issuance of the common shares in exchange for the removal of collateral was treated as a modification of the February IDV Note pursuant to the guidance of ASC 470. The Company concluded that the February IDV Note qualified for debt extinguishment as the 10.0% cash flow test was met. As a result, the carrying amount of $0.8 million of the February IDV Note was written off and the amended note was recorded at its fair value of $1.7 million. The Company recognized a non-cash loss on extinguishment of debt in the amount of $1.2 million and the intrinsic value of reacquisition of BCF is zero as of September 27, 2019.

Table of Contents

Down Round Price Adjustment on October 30, 2019

As a result of the additional financing on October 30, 2019, the Company entered into a letter agreement with IDV pursuant to which the Company agreed to reduce the conversion price of the February IDV Note and the exercise price of the warrants from $1.84 to $1.00. The Company recognized $1.4 million of remeasured BCF as an increase in additional paid- in capital and a corresponding discount on the carrying amount of the February IDV Note and $0.2 million of deemed dividend on warrant repricing for the difference between the fair value of the unadjusted warrants and adjusted warrants. The fair value of the adjusted warrants was determined using the Black-Scholes option-pricing model based on the following assumptions: expected life of 5 years, expected dividend rate of 0%, volatility of 112.0%, and an interest rate of 2.48%.

Down Round Price Adjustment on April 22, 2020

As a result of the additional financing on April 22, 2019, the conversion price of the February IDV Note and the exercise price of the warrants was reduced from $1.00 to $0.5869. The Company recognized $0.3 million of remeasured BCF as an increase in additional paid- in capital and a corresponding discount on the carrying amount of the February IDV Note and $59,372 of deemed dividend on warrant repricing for the difference between the fair value of the unadjusted warrants and adjusted warrants. The fair value of the adjusted warrants was determined using the Black-Scholes option-pricing model based on the following assumptions: expected life of 7 years, expected dividend rate of 0%, volatility of 122.4%, and an interest rate of 1.84%.

Conversion

As of December 31, 2019, $1.2 million of the February IDV Note, plus accrued and unpaid interest, were converted into 1.2 million shares of common stock of the Company.

During the three and six months ended June 30, 2020, the remaining $0.85 million of the February IDV note, plus accrued and unpaid interest, were converted into 1.4 million shares of common stock of the Company.

As a result of the conversions, the Company recognized associated unamortized discount at the date of conversion as interest expense. Total interest expense recognized was $0.7 million and $0.1 million for the three months ended June 30, 2020 and 2019, respectively, and was $0.9 million and $0.5 million for the six months ended June 30, 2020 and 2019, respectively.

21(c)

$3.58 Million Senior Secured Convertible Debenture due in March 2021 - ID Venturas 7

~~(c) $2.5 million Senior Secured Convertible Debenture due in March 2021 - ID Ventura 7~~

On September 27, 2019, the Company executed a security purchase agreement with ~~ID Venturas 7, LLC~~IDV (“~~IDV”~~IDV September Agreement”), whereby the Company issued ~~$2,500,000~~$2.5 million of senior secured convertible ~~note.~~note in September (“September IDV Note”) and issued an additional $1.1 million of secured convertible notes subsequently based on additional investment rights in the IDV September Agreement. The ~~note bears~~September IDV Notes bear interest at a rate of ~~10%~~10.0% per year payable either in cash or in kind at the option of the Company on a quarterly basis and ~~matures~~mature on March 27, 2021. In addition, IDV is entitled to the following: ~~(i)~~(1) the convertible note is senior secured; ~~(ii)~~(2) convertible at ~~$1.84~~an adjusted price per share of Company common stock at the option of IDV, ~~(approximately 1,358,696 shares),~~ subject to adjustments if subsequent equity shares have a lower conversion price ~~(ii) 1,000,000~~(original $1.84, $1.00 after October 30, 2019 and $0.5869 after April 22, 2020), (3) 1.5 million shares of common stock of the Company, and ~~(iii)~~(4) a warrant exercisable for ~~150% of the number of~~4.7 million shares of common stock ~~which the note is convertible into (approximately 2,038,043 shares)~~ at an adjusted exercise price of(original $1.84 , $1.00 after October 30, 2019 and $0.5869 after April 22, 2020) per share and will expire in 7 years, which was extended from 5 ~~years after issuance. On October 29, 2019 the Company entered into a letter agreement (the “Agreement”) with ID Venturas pursuant to which the Company agreed to reduce the conversion price~~years.

Table of ~~the Debentures and the exercise price of the Warrants to $1.00,~~Contents

The Company ~~will receive aggregate~~received net proceeds of $3.5 million (aggregate gross proceeds of ~~$2.5~~$3.6 million, net of ~~$66,195~~$65,000 for the issuance expenses paid ~~by IDV. The Company received $1.8 million proceed in September and the remaining $633,805 was received in October.~~to IDV). Total gross proceeds were allocated to ~~convertible note,~~the September IDV Note, common ~~stocks~~shares and warrants based on their relative fair values in accordance with ASC ~~470-20-30.~~470. The fair value of the ~~convertible note~~September IDV Note and common ~~stocks~~shares was based on the closing price of the common stock on September 27, 2019. The fair value of the warrants was determined using the Black-Scholes option-pricing model, with the following assumptions: expected life of 5 years, expected dividend rate of 0%, volatility of ~~110.36%~~122.44% and an average interest rate of ~~1.55%~~1.66%. The ~~relative~~ fair value of the warrants was recorded as additional paid-in capital and ~~reduced~~corresponding discount on the carrying amount of the ~~convertible note.~~September IDV Note. The Company recognized a ~~beneficial conversion feature~~BCF as a discount on ~~convertible note~~September IDV Note at its intrinsic value, which was the fair value of the common ~~stock~~shares at the commitment date, ~~for convertible note,~~ less the effective conversion price. The Company recognized ~~approximately $989,000~~$1.3 million of ~~beneficial conversion feature~~BCF in total as an increase in additional ~~paid in~~paid-in capital and ~~reduced (discount on)~~corresponding discount on the carrying amount of the ~~convertible note in the accompanying consolidated balance sheet.~~

September IDV Note.

The discounts on the convertible note for the warrants and beneficial conversion feature are being amortized to interest expense, using the effective interest method over the term of the convertible note. As of September 30, 2019, the unamortized discount on the convertible note is approximately $2,488,000. Total interest expense recognized relating to the discount was approximately $12,000 and $12,000 for the three and nine months ended September 30, 2019, respectively.

~~Interest on the convertible note is payable quarterly starting from October 1, 2019. The convertible note~~IDV Note is redeemable at the option of the Company in whole at an initial redemption price of the principal amount of the ~~convertible note~~September IDV Note plus additional warrants and accrued and unpaid interest to the date of redemption.

The security purchase agreement contains customary representations, warranties, and covenants. The ~~convertible note~~September IDV Note is collateralized by the Company’s equity interest in ~~DBOT, which had a carrying amount of $14.3 million as of September 30, 2019.~~

DBOT.

The Company is also subject to penalty fee at 8%8.0% per annum for late payments of interests and compensation for the loss of IDV on failure to timely deliver conversion shares upon conversion.

Down Round Price Adjustment on October 30, 2019

On October 29, 2019 the Company entered into a letter agreement with IDV pursuant to which the Company agreed to reduce the conversion price of the debentures and the exercise price of the warrants from $1.84 to $1.00 due to the lower conversion price and exercise price agreed in the additional issuance in October, 2019. The Company recognized $0.2 million of remeasured BCF as an increase in additional paid-in capital and corresponding discount on the carrying amount of the September IDV Note and $0.1 million of deemed dividend on warrant repricing for the difference between the fair value of the unadjusted warrants and adjusted warrants.

Additional Issuance for No Additional Consideration - Consent of IDV for Subsequent Financing with YA II PN

On December 19, 2019, the Company executed an additional issuance agreement with IDV, pursuant to which the Company obtained a consent from IDV for subsequent financing with YA II PN in exchange for: (1) 2.0 million shares of the Company’s common stock; (2) the warrant to purchase 1.0 million shares of the Company’s common stock at an exercise price of $1.00 with a 7 year term in the form of prior warrants issued to IDV; and (3) a 2 year extension of the exercise period for all outstanding warrants held by IDV.

The additional issuance above and the exercise period extension in exchange for the consent was treated as a modification of the September IDV Note pursuant to the guidance of ASC 470. The Company concluded that the September IDV Note qualified for debt extinguishment as the 10.0% cash flow test was met. As a result, the carrying amount of $0.4 million of the September IDV Note was written off and the amended note was recorded at its fair value of $2.2 million along with a BCF at intrinsic value of $0.5 million. The Company measured and recognized the intrinsic value of the BCF at its reacquisition price $0.5 million on December 19, 2019 and recognized a non-cash loss on extinguishment of debt in the amount of $2.7 million in accordance with ASC 470. In addition, the Company recognized a deemed dividend of $0.5 million for the extension of exercise period for all applicable warrants issued to IDV.

Table of Contents

Down Round Price Adjustment on April 22, 2020

As a result of the additional financing on April 22, 2019, the conversion price of the September IDV Note and the exercise price of the warrants was reduced from $1.00 to $0.5869. The Company recognized $0.3 million of remeasured BCF as an increase in additional paid- in capital and a corresponding discount on the carrying amount of the amended Note and $0.1 million of deemed dividend on warrant repricing for the difference between the fair value of the unadjusted warrants and adjusted warrants. The fair value of the adjusted warrants was determined using the Black-Scholes option-pricing model based on the following assumptions: expected life of 7 years, expected dividend rate of 0%, volatility of 122.4%, and an interest rate of 1.84%.

Down Round Price Adjustment on May 20, 2020

In order to facilitate the additional financing, the Company entered into an amendment and waiver agreement with IDV pursuant to which the Company agreed to reduce the conversion price of $1.0 million principal amount of debenture to the lowest price per share sold in the Financing but not less than $0.36. NaN additional BCF is recognized because the discount assigned to the BCF is already equal to the proceeds allocated to the convertible instrument.

Conversion

During the six months ended June 30, 2020, $3.58 million of the amended note, plus accrued and unpaid interest, were converted into 7.3 million shares of common stock of the Company.

As a result of the conversions, the Company recognized associated unamortized discount at the date of conversion as interest expense. Total interest expense recognized was $1.8 million and $2.1 million for the three and six months ended June 30, 2020,respectively.

~~Note~~~~13.~~

~~Stockholders’ Equity~~

(d)

$5.0 Million Senior Secured Convertible Debenture due in December 2020 - YA II PN

On December 19, 2019, the Company completed the initial closing with respect to a securities purchase agreement with YA II PN, Ltd, a company incorporated under the laws of the Cayman Islands (“YA II PN”), where YA II PN has agreed to purchase from the Company up to $5.0 million (with 4.0% discount) in units consisting of secured convertible debentures (the “YA II PN Note”), which shall be convertible into shares of the Company’s common stock at lower of: (1) $1.50 per share, or (2) 90.0% of the lowest 10 day volume weighted average price (“VWAP”) with a floor price at $1.00, subject to adjustments if subsequent equity shares have a lower conversion price, and shares of the Company’s common stock. The purchase and sale of the units shall take place in three closings:

First Closing: $2.0 million of YA II PN Note and 1.4 million shares of common stock closed on December 19, 2019;

Second Closing $1.0 million of YA II PN Note and 0.7 million shares of common stock closed on December 31, 2019 upon filing the registration statement; and

Third Closing: $2.0 million of YA II PN Note and 1.4 million shares of common stock closed on February 13, 2020 when such registration statement was declared effective by the SEC.

The Convertible Note matures in December 2020 and accrues interest at an 4.0% interest rate. YA II PN also received: (1) a warrant (the “Warrant I”) exercisable for 1.7 million shares of common stock at $1.50 with an expiration date 60 months from the date of the agreement, and (2) a warrant (the “Warrant II”) exercisable for 1.0 million shares of common stock at $1.00 with an expiration date of 12 months from the date of the agreement.

Table of Contents

The Company received aggregate gross proceeds of $2.9 million (net of $0.1 million discount) as of December 31, 2019 and received $2.0 million in February 2020. Total funds received were allocated to the Convertible Debentures, common shares and warrants based on their relative fair values in accordance with ASC 470. The fair value of the YA II PN Note and common shares was based on the closing price of the common stock on December 19, 2019. The fair value of the warrants was determined using the Black-Scholes option-pricing model, with the following assumptions: expected life of 5 years (1 year for Warrant II), expected dividend rate of 0%, volatility of 122.44% and an interest rate of 1.66% (1.54% for Warrant II). The fair value of the warrants was recorded as additional paid-in capital and a corresponding discount on the carrying amount of the Convertible Debentures. There was no BCF because its intrinsic value is zero since the stock price of the common shares at the commitment date for the YA II PN Note is greater than the effective conversion price.

The YA II PN Note are redeemable at the option of the Company in whole or in part at an initial redemption price of the principal amount of the YA II PN Note plus a redemption premium equal to 15.0% of the amount being redeemed and accrued and unpaid interest to the date of redemption. The security purchase agreement contains customary representations, warranties, and covenants.

Down Round Price Adjustment on April 22, 2020

As a result of the additional financing on April 22, 2019, the conversion price of the YA II PN Note was reduced from $1.00 to $0.5869. The Company recognized $2.7 million of remeasured BCF as an increase in additional paid- in capital and a corresponding discount on the carrying amount of the amended Note.

Down Round Price Adjustment on May 20, 2020

In order to facilitate the additional financing, the Company entered into an amendment and waiver agreement with YA II PN pursuant to which the Company agreed to reduce the conversion price of $1.0 million principal amount of debenture to the lowest price per share sold in the financing but not less than $0.36. NaN additional BCF is recognized because the discount assigned to the BCF is already equal to the proceeds allocated to the convertible instrument.

Conversion

During the six months ended June 30, 2020, $5.0 million of the YA II PN Note, plus accrued and unpaid interest, were converted into 9.7 million shares of common stock of the Company.

As a result of the conversions, the Company recognized associated unamortized discount at the date of conversion as interest expense. Total interest expense recognized was $4.5 million and $5.0 million for the three and six months ended June 30, 2020, respectively.

(e) $3.0 Million Promissory Note due in November 2020 – New Castle County

On November 25, 2015, DBOT, the subsidiary which the Company acquired in 2019, entered into a promissory note with New Castle County, a political subdivision of the State of Delaware in the aggregate principal amount of $3.0 million (the “New Castle County Notes”). The New Castle County Notes bear interest at a rate of 6.0%, and mature on November 25, 2020. Total interest expense recognized was $45,000 and $90,000 for the three and six months ended June 30, 2020. The agreement also requires the Company to comply with certain covenants, including restrictions on new indebtedness offering and liens.

(f)Vendor Notes Payable

On May 13, 2020, DBOT entered into a settlement agreement with a vendor whereby the existing agreement with the vendor was terminated, the vendor ceased to provide services, and all outstanding amounts were settled. In connection with this agreement, DBOT paid an initial $30,000 and executed an unsecured promissory note in the amount of $60,000, bearing interest at 0.25% per annum, and payable in two installments of $30,000. The first installment is due on December 31, 2020 and the remaining payment is due on August 31, 2021.

Table of Contents

In the three months ended March 31, 2020 the Company ceased to use the premises underlying one lease and vacated the real estate. In the three months ending June 30, 2020, the Company completed negotiations with the landlord to settle the remaining operating lease liability of $0.9 million by issuing a promissory note for $0.1 million, bearing an annual interest rate of 4.0%, and which is due and payable on December 31, 2021.

(g) Small Business Association Paycheck Protection Program

On April 10, 2020, the Company borrowed $0.3 million at an annual rate of 1.0% from a commercial bank through the Small Business Association Paycheck Protection Program. The loan is payable in 18 installments of $18,993 commencing on November 10, 2020, with a final payment due on April 10, 2022. The Company may apply for forgiveness of this loan in an amount equal to the sum of the following costs incurred in the eight weeks following the disbursement of the loan: (1) payroll costs, (2) interest on a covered mortgage obligation, (3) payment on a covered rent obligation, and (4) any covered utility payment.

On May 1, 2020 Grapevine borrowed $0.1 million at an annual rate of 1.0% from a commercial bank through the Small Business Association Paycheck Protection Program. The loan is payable in 18 installments of approximately $7,000 commencing on December 1, 2020, with a final payment due on May 1, 2022. The Company may apply for forgiveness of this loan in an amount equal to the sum of the following costs incurred in the eight weeks following the disbursement of the loan: (1) payroll costs, (2) interest on a covered mortgage obligation, (3) payment on a covered rent obligation, and (4) any covered utility payment.

Note 13. Stockholders’ Equity, Convertible Preferred Stock and Redeemable Non-controlling Interest

Convertible Preferred Stock

~~Our board~~The Board of ~~directors~~Directors has authorized 5050.0 million shares of convertible preferred stock, $0.001 par value, issuable in series.

As of September 30, 2019 and December 31, 2018, 7,000,000 shares of Series A preferred stock were issued and outstanding and is convertible, at any time at the option of the holder, into 933,333 shares of common stock (subject to customary adjustments). The Series A preferred stock shall be entitled to ~~ten~~one vote per common stock on an as-converted basis and is only entitled to receive dividends when and if declared by the ~~board. On liquidation, both series~~Board.

Redeemable Non-controlling Interest

The Company and Qingdao Chengyang Xinyang Investment Company Limited (“Qingdao”) formed an entity named Qingdao Chengyang Mobo New Energy Vehicle Sales Service Company Limited (“New Energy”). Qingdao entered into a capital subscription agreement for a total of ~~preferred~~RMB 200.0 million ($28.0 million), and made the first capital contribution of RMB 50.0 million in the three months ended March 31, 2020. The remaining RMB 150.0 million ($21.0 million) are payable in three installments of RMB 50.0 million ($7.0 million) upon New Energy attaining certain revenue or market value benchmarks.

The investment agreement stipulates that New Energy must pay Qingdao dividends at the rate of 6.0%. After one year, Qingdao may sell its investment to an institutional investor, and after three years may redeem its investment for the face amount plus 6.0% interest less dividends paid. The redemption feature is neither mandatory nor certain. Due to the redemption feature, the Company has classified the investment outside of permanent equity.

Table of Contents

The following table summarizes activity for the redeemable non-controlling interest for the six months ended June 30, 2020 (in thousands):


January 1, 2020	$	—
Initial investment		7,047
Accretion of dividend		213
Loss attributable to non-controlling interest		(80)
Adjustment to redemption value		80
June 30, 2020	$	7,260

Standby Equity Distribution Agreement (“SEDA”)

The Company entered into a SEDA with YA II PN on April 3, 2020 and amended the SEDA to reduce the aggregate amount of facility from $50.0 million to $45.0 million on June 9, 2020. The SEDA establishes what is sometimes termed an equity line of credit or an equity draw-down facility. The Company has the right to issue and sell to YA II PN up to $45.0 million of the Company’s common stock ~~are entitled~~over 36 months following the date of the agreement entered on April 3, 2020 in installments, the maximum amount of each of which is limited to $1.0 million. For each share of common stock purchased under the SEDA, YA II PN will pay 90% of the lowest VWAP of the Company’s shares during the five trading days following the Company’s advance notice to YA II PN. In general, the VWAP represents the sum of the value of all the sales of the Company’s common stock for a ~~liquidation preference~~given day (the total shares sold in each trade times the sales price per share of ~~$0.50 per share.~~ the common stock for that trade), divided by the total number of shares sold on that day.

YA II PN’s obligation under the SEDA is subject to certain conditions, including the Company maintaining the effectiveness of a registration statement for the securities sold under the SEDA. In addition, the Company may not request advances if the common shares to be issued would result in YA II PN owning more than 4.99% of the Company’s outstanding common stock, with any such request being automatically modified to reduce the advance amount.

The ~~shares are not redeemable except on liquidation or if there is a change in control~~SEDA contains customary representations, warranties and agreements of the Company ~~or a sale of all or substantially all~~and YA II PN, indemnification rights and other obligations of the ~~assets~~parties. YA II PN has covenanted not to cause or engage in any direct or indirect short selling or hedging of the ~~Company. The conversion price~~Company’s shares of common stock.

In connection with the SEDA, the Company issued 1.0 million shares of the ~~Series A may only be adjusted for standard anti-dilution, such~~Company’s common stock as ~~stock splits and similar events. The Series A preferred stocks are considered~~a commitment fee (the “Commitment Shares”) to ~~be equity instruments and therefore the embedded conversion options have not been separated. Because the preferred stocks have conditions for their redemption that may be outside the control~~a subsidiary of the YA II PN on April 3, 2020. The Company ~~they have been classified outside~~recognized such Commitment Shares as deferred offering costs and additional paid-in capital for a total of ~~Shareholders’ Equity,~~$0.9 million and fully charged against the gross proceeds received from SEDA in the ~~mezzanine section~~second quarter of ~~our balance sheet.~~2020 because SEDA was terminated.

During the second quarter of 2020 under the SEDA, the Company issued 30.1 million shares of common stock for a total of $30.5 million.

Common Stock

~~Our board~~The Board of ~~directors~~Directors has authorized 1,500 million shares of common stock, $0.001 par value.

2020 Equity Transactions

Refer to Note 12 for information related to issuance of common stock resulting from the conversion of convertible notes, Note 14 for information related to the issuance of common stock resulting from the conversion of convertible notes with related parties, Note 15 for information related to the issuance to common stock for warrant exercise, and Note 6(c) for the information related to the issuance of common stock for DBOT contingent consideration.

2019 Equity Transactions

Refer to Note 9 for information related to the issuance of common stock for assets and Note 12 for information related to the issuance of common stock in connection with convertible notes, and Note 6 for information related to the issuance of common stock for acquisitions.

Table of Contents

On March 5, 2019, the Company entered into an agreement to acquire a company based in Malaysia, and placed 25.5 million common shares into an escrow account. The agreement was terminated in July 2019 and the common shares removed from escrow.

Note 14. Related Party Transactions

~~Note~~ ~~14.~~

~~Related Party Transactions~~(a)

Convertible Notes

~~(a) Convertible Notes~~

$3.0 Million Convertible Note with Mr. Shane McMahon (“Mr. McMahon”)

On May 10, 2012, Mr. McMahon, ~~our~~the Company’s Vice Chairman, made a loan to the Company in the amount of ~~$3,000,000.~~$3.0 million. In consideration for the loan, the Company issued a convertible note to Mr. McMahon in the aggregate principal amount of ~~$3,000,000~~$3.0 million (the “Note”) at a 4%4.0% interest rate computed on the basis of a 365-day year. WeThe Company had previously entered several amendments with respect to the effective conversion price (changed from $1.75 to ~~$1.5)~~$1.50), convertible stocks (changed from of Series E Preferred Stock to Common Stock). The last amendment was made on May 9, 2020, and ~~extension of~~extended the maturity date to December 31, ~~2020.~~2022.

On June 5, 2020, the Audit Committee and the Board of Directors approved the reduction of conversion price to $0.59, contingent upon the immediate conversion of the Note. On June 5, 2020, the Note was converted into 5.1 million shares of common stock. The Company paid the accumulated interest $0.3 million in cash right before the conversion. For the three ~~and nine~~ months ended ~~September~~June 30, 2020 and 2019, the Company recorded interest expense of ~~approximately $30,000~~$21,041, and ~~$90,000, respectively,~~$29,918 related to the ~~Note. For~~Note, and $50,959 and $59,507 for the ~~three and nine~~six months ended ~~September~~June 30, ~~2018, the Company also recorded interest expense of approximately $30,000~~2020 and ~~$90,000, respectively, related to the Note. Interest payable was $229,808 and $140,055 as of September 30,~~ 2019, ~~and December 31, 2018,~~ respectively.

$2.5 Million Convertible Promissory Note with SSSIG

On February 8, 2019, the Company entered into a convertible promissory note agreement with SSSIG, an affiliate of Dr. Wu, in the aggregate principal amount of ~~$2,500,000.~~$2.5 million. The convertible promissory note bears interest at a rate of 4%4.0%, ~~matures~~was scheduled to mature on February 8, 2020, and is convertible into ~~the~~ shares of the Company’s common stock at a conversion price of $1.83 per share anytime at the option of SSSIG.

~~As of September 30, 2019, the~~ The Company received $1.3 million from SSSIG. ~~The Company has not received~~

On June 5, 2020, the ~~remaining $1.2 million as~~Audit Committee and the Board of Directors approved the reduction of conversion price to $0.59, contingent upon the immediate conversion of the ~~date~~convertible promissory note. On June 5, 2020, the convertible promissory note including accumulated interest was converted into 2.2 million shares of ~~this report.~~ common stock.

For the three ~~and nine~~ months ended ~~September~~June 30, 2020 and 2019, the Company recorded interest expense of ~~approximately $13,000~~$9,057 and ~~$36,000,~~$12,489 , respectively,related to the ~~Note.~~Note, and $21,546 and $23,000 for the six months ended June 30, 2020 and 2019, respectively.

$1.0 Million Convertible Promissory Note with SSSIG

On November 25, 2019, the Company entered into a convertible promissory note agreement with SSSIG, an affiliate of Dr. Wu, in the aggregate principal amount of $1.0 million. The convertible promissory note bears interest at a rate of 4.0%, matures on November 25, 2021, and is convertible into the shares of the Company's common stock at a conversion price of $1.25 per share anytime at the option of SSSIG. The Company received $0.25 million from SSSIG. On June 5, 2020, the Audit Committee and the Board of Directors approved the reduction of conversion price to $0.59, contingent upon the immediate conversion of the convertible promissory note. On June 5, 2020, the convertible promissory note, including accumulated interest, was converted into 0.4 million shares of common stock. For the three months and six months ended June 30, 2020, the Company recorded interest expense of $4,301 and $2,493, respectively.

Table of Contents

22(b)

Transactions with GTD

~~(b) Transactions with GTD~~

Disposal of Assets in exchange of ~~GTB~~

GTBDollar Coins (“GTB”)

In March 2019, the Company completed the sale of the following assets (with total carrying amount of ~~approximately~~ $20.4 million) to GTD, a minority shareholder based in Singapore, in exchange for ~~1,250,000~~1.3 million GTB. The Company considers the arrangement as a nonmonetary transaction and the fair values of GTB are not reasonably determinable due to the reasons described ~~in Note 3.~~below. Therefore, GTB received are recorded at the carrying amount of the assets exchanged and the Company did not recognize any gain or loss based on ASC ~~845-10-30.~~

845.

·●

License content (net carrying amount ~~approximately~~ $17.0 million)

·●

~~Approximately 13%~~13.0% ownership interest in Nanjing Shengyi Network Technology Co., Ltd (“Topsgame”) (carrying amount ~~approximately~~of $3.2 million which was included in long-term ~~investment-Non-marketable Equity Investment)~~investment as a non-marketable equity investment)

·●

Animation copy right (net carrying amount ~~approximately~~ $0.2 million which was included in intangible ~~asset.~~assets.)

Digital asset management services

~~Please refer~~The Company recognized revenue for the master plan development services over the contract period based on the progress of the services provided towards completed satisfaction. Based on ASC 606, Revenue from Contracts with Customers, at contract inception, the Company considered the following factors to ~~Note 3.~~

~~(c) Crude Oil Trading~~

~~For~~estimate the ~~nine months ended September 30, 2018, we purchased crude oil~~value of GTB (noncash consideration): 1) it only trades in one exchange, which operations have been less than one year; 2) its historical volatility is high; and 3) the Company's intention at the time to hold the majority of GTB, as part of its digital asset management services; and 4) associated risks related to holding GTB. Therefore, the value of 7.1 million GTB using Level 2 measurement was $40.7 million with a 76.0% discount to the fixed contract price agreed upon by both parties when signing the contract. The Company considered similar assets exchanges in Singapore and considered the volatility of the quoted prices and determined a discount of 76.0%. The estimated value of GTB was calculated using the Black-Scholes valuation model using the following assumptions: expected terms 3.0 years; volatility 155.0%; dividend yield: 0 and risk-free interest rate 2.25%. As of December 31, 2019, all performance obligations associated with the development of the master plan for GTD's assets had been satisfied. Accordingly, the Company recognized revenue of $40.7 million in the ~~amount~~year ended December 31, 2019.

Impairment loss

On October 29, 2019, GTB had an unexpected significant decline in quoted price, from $17.00 to $1.84. This decline continued through the fourth quarter of ~~approximately $244.1 million from three suppliers that~~2019, and on December 31, 2019 the quoted price was $0.23. As a ~~minority shareholder~~result of this decline in quoted price, and its inability to convert GTB into other digital currencies which were more liquid, or fiat currency, the Company ~~has significant influence upon because this minority shareholder has significant influence on both our Singapore joint venture~~performed an impairment analysis in the fourth quarter of 2019 and ~~these three suppliers. The Company has~~ recorded ~~the purchase on a separate line item referenced as “Cost~~an impairment loss of revenue from related parties” in its financial statements. There is no outstanding balance due (in Accounts Payable) as of September 30, 2019. No such related party transactions occurred for the same period in 2019.$61.1 million.

(c)

Severance payments

~~(d) Severance payments~~

On February 20, 2019, the Company accepted the resignation of former Chief Executive Officer, former Chief Investment Officer and former Chief Strategy Officer and agreed to pay ~~approximately $837,000~~$0.8 million in total for salary, severance and expenses. The Company paid ~~$637,000~~$0.6 million in the first quarter of ~~year~~ 2019 and recorded ~~$200,000~~$0.2 million in ~~other~~“Other current ~~liabilities~~liabilities” on ~~our~~its consolidated balance sheet as of ~~September 30,~~December 31, 2019. The ~~$837,000~~$0.8 million severance expenses were recorded in ~~the Selling,~~“Selling, general and administrative ~~expenses~~expenses" in the condensed consolidated statements of operations.

(d)

Borrowing from Dr. Wu. and his affiliates

In the ~~income statement.~~

~~(e) Borrowing from Dr. Wu. and his affiliates~~

~~During the third quarter of 2019,~~six months ended June 30, 2020, the Company’s net borrowings from Dr. Wu and his affiliates ~~increased~~decreased by ~~$1.0 million. We~~$3.5 million mainly due to repayments and conversion of certain amounts to common stock. The Company recorded these borrowings in “Amount due to related parties” in its condensed consolidated balance sheet as of June 30, 2020. These borrowings bear no interest.

Table of Contents

On June 5, 2020, the Audit Committee and the Board of Directors approved the conversion of some borrowings at a conversion price of $0.59 per common share, contingent upon the immediate conversion of these amounts. On June 5, 2020, the borrowings of $1.5 million, including the $0.4 millon transferred from Beijing Financial Holding Limited, were converted into 2.6 million shares of common stock.

(e)

Long-Term Investment to Qianxi

In November 2019, the Company entered into a share transfer agreement with Sichuan Shenma Zhixing Technology Co.(“Shenma”) to acquire its 1.72% ownership in Qianxi with the consideration of $4.9 million, which will be paid in six installments. Shenma needs to complete the share transfer registration prior to May 31, 2020, otherwise the Company can request Shenma to return the investment payment. The Company has recorded the first installment $0.5 million on the “Other Non-Current Assets” since the share transfer registration is not completed yet.

(f)

Borrowing from Beijing Financial Holdings Limited

The borrowings from Beijing Financial Holding Limited was zero in the condensed consolidated balance sheet as of June 30, 2020, and $0.7 million in “Other current liabilities” in the consolidated balance sheet as of December 31, 2019. Effective January 1, 2020, Beijing Financial Holding limited is considered a related party because MHTL was intended to act as a trustee over 10,000 common shares of MEG to effect a share-based compensation plan and has the same owner as Beijing Financial Holding Limited. The Company has determined not to proceed with the MEG share-based plan. Refer to Note 1 for additional information.

In the second quarter of 2020, the borrowing of $0.4 million from Beijing Financial Holding Limited was transferred to Dr. Wu, it was subsequently converted to shares at a conversion price of $0.59 per common share on June 5, 2020.

(g)

Zhu Note Receivable

Refer to Note 3 for this note collateralized by equity in a company partially-owned by a related party.

(h)

Borrowing from DBOT

During the second quarter of 2019, the Company obtained several borrowings, $550,000 in total, from DBOT, and recorded these borrowings in amount due to related parties on ~~our~~the condensed consolidated balance sheet as of ~~September~~June 30, 2019. These borrowings bear no0 interest. The Company has repaid $300,000 in July 2019.

(i)

Acquisition of Fintalk Assets

~~(f) Acquisition of Fintalk Assets~~

~~Please refer~~Refer to Note ~~5(b).~~

~~(g)~~ ~~Asset~~9 for ~~Sale-Red Rock Global Capital LTD (“Red Rock”)~~additional information regarding this 2019 asset acquisition.

(j)

Red Rock Global Capital LTD (“Red Rock”)

~~Please refer~~Refer to Note ~~5(g).~~6(d) for additional information regarding this 2019 divestiture.

(k)

Acquisition of Grapevine Logic. (“Grapevine”)

~~(h)~~ ~~Acquisition of Grapevine Logic. (“Grapevine”)~~

~~Please refer~~Refer to Note ~~5(c).~~6(b) for additional information regarding this 2019 acquisition.

(l)

Amer Global Technology Limited (“Amer”)

~~(i)~~ ~~Amer Global Technology Limited (“Amer”)~~

~~Please refer~~Refer to Note ~~5(h).~~6(e) for additional information regarding this 2019 divestiture.

~~(j)~~~~Taxis commission revenue from Guizhou Qianxi Green Environmentally Friendly Taxi Service Co. (“Qianxi”)~~

~~Please refer to~~ Note 3.

~~Note~~~~15.~~

~~Share-Based Payments~~

15. Share-Based Compensation

As of ~~September~~June 30, ~~2019,~~2020, the Company had ~~14,971,431~~26.3 million options, ~~55,586~~29,586 restricted shares and ~~3,709,240~~1.2 million warrants outstanding.

Table of Contents

The Company awards common stock and stock options to employees and directors as compensation for their services, and accounts for its stock option awards to employees and directors pursuant to the provisions of ASC 718,Stock Compensation. The fair value of each option award is estimated on the date of grant using the Black-Scholes Merton valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period.

Effective as of December 3, 2010 and amended on August 3, 2018, ~~our~~the Company’s Board of Directors approved the 2010 Stock Incentive Plan (“the 2010 Plan”) pursuant to which options or other similar securities may be granted. ~~As of September 30, 2019,~~ the maximum aggregate number of shares of ~~our~~ common stock that may be issued under the 2010 Plan ~~is 31,500,000~~increased from 4.0 million shares to 31.5 million shares. As of ~~September~~June 30, ~~2019,~~2020, options ~~and restricted shares~~ available for issuance are ~~14,160,326~~0.7 million shares.

~~The company recorded share-based payments expense of $2,547,107 and $11,530 for~~For the three months ended ~~September~~June 30, 2020 and 2019, total share-based compensation expense was $3.4 million and ~~2018~~$3.7 million, respectively, and ~~$6,474,227~~$5.6 million and ~~$3,372,447~~$3.9 million for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, ~~and 2018,~~ respectively.

(a)

Stock Options

~~(a)~~~~Stock Options~~

~~Stock~~The following table summarizes stock option activity for the ~~nine~~six months ended ~~September~~June 30, ~~2019 is summarized as follows:~~2020:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregated
	Options			Exercise		Contractual		Intrinsic
	Outstanding			Price		Life (Years)		Value
Outstanding at January 1, 2019		1,706,431		$	3.28		4.08	$	-

													Weighted
											Weighted		Average
											Average		Remaining	Aggregated
										Options	Exercise		Contractual	Intrinsic
										Outstanding	Price		Life (Years)	Value
Outstanding at January 1, 2020										14,936,726	$	2.13	8.48	$	—
Granted		14,325,000			1.98		8.75		-	13,750,000		0.53	9.36		20,350,000
Exercised		-			-		-		-	(60,000)		1.83	2.33		59,847
Expired		(83,333	)		1.98		-		-	(711,583)		1.95	0.41		41,682
Forfeited		(976,667	)		1.98		-		-	(1,657,917)		1.36	0.04		1,657,763
Outstanding at September 30, 2019		14,971,431		$	2.13		8.72	$	-
Vested and expected to be vested as of September 30, 2019		14,971,431		$	2.13		8.72	$	-
Options exercisable at September 30, 2019 (vested)		5,529,977		$	2.38		7.55	$	-
Outstanding at June 30, 2020										26,257,226		1.35	8.86		19,678,444
Vested and expected to be vested as of June 30, 2020										26,257,226		1.35	8.86		19,678,444
Options exercisable at June 30, 2020 (vested)										11,950,976		1.85	8.06		4,123,939

As of ~~September~~June 30, ~~2019, approximately $14,255,266~~2020, $10.1 million of total unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average period of ~~approximately 1.4~~1.32 years. The total fair value of shares vested ~~for~~in the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019 was $5.5 million and ~~2018~~$3.5 million, respectively. NaN cash was ~~$6,010,085 and $319,001, respectively. Cash~~ received from options ~~exercised during the nine months ended September 30, 2019 and 2018 was approximately $0 and $2,632, respectively.~~exercised.

~~(b)~~~~Warrants~~Table of Contents

(b)

Warrants

In connection with certain of the Company’s financings ~~the Warner Brother Agreement~~ and ~~the~~ service agreements, the Company issued warrants to service providers to purchase common stock of the Company. The warrants issued to Warner Brother ~~were~~ expired without exercise on January 31, 2019. The Company issued warrants to IDV and YA II PN, Ltd. in connection with senior secured convertible notes ~~(See Note 12)~~ and the weighted average exercise price was ~~$1.84~~$0.84 and the weighted average remaining life was ~~approximately 4.73~~5.7 years. Refer to Note 12 for additional information on promissory notes.

September 30, 2019 December 31, 2018
Number of Number of
Warrants Warrants
Outstanding and Outstanding and Exercise Expiration
Warrants Outstanding Exercisable Exercisable Price Date
2014 Broker Warrants (Series E Financing) - 60,000 $ 1.75 1/31/19
$2.05 million IDV Senior Secured Convertible Debenture 1,671,196 - $ 1.84 2/22/2024
$2.5 million IDV Senior Secured Convertible Debenture 2,038,044 - 1.84 9/27/2024
3,709,240 60,000


	June 30, 2020	December 31, 2019
	Number of	Number of
	Warrants	Warrants
	Outstanding and	Outstanding and	Exercise		Expiration
Warrants Outstanding	Exercisable	Exercisable	Price		Date
$2.05 million IDV**	—	1,671,196	$	1.00	2/22/2026
$3.58 million IDV**	1,000,000	4,658,043		0.5869	9/27/2026
$5.0 million YA II PN*	—	1,666,667		1.50	12/13/2024
$5.0 million YA II PN*	—	1,000,000		1.00
Contractors	150,000	—		2.50	2/28/2022 - 3/31/2022
Total	1,150,000	8,995,906

~~On September 24, 2018,~~* YA II PN exercised 1.0 million and 1.7 million warrants on March 31, 2020 and June 22, 2020 and the Company ~~entered into employment agreements with three executives. As part~~received $1.0 million and $2.5 million proceeds, respectively.

** ID Venturas exercised 5.3 million warrants in June 2020. The company received $3.1 million proceeds.

Table of ~~their employment agreements, they are entitled to warrants for an aggregate of 8,000,000 shares at an exercise price of $5.375~~Contents

Note 16. Earnings (Loss) Per Common Share

The following table summarizes the Company’s earnings (loss) per share ~~(the “Exercise Price”), which is a 25% premium to the $4.30~~(USD in thousands, except per share closing market price of the Company’s common stock on September 7, 2018, the date upon which the terms of the employment agreements were mutually agreed. In February 2019, the rights to receive warrants were terminated due to the resignation of three executives.amounts):


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
Net earnings (loss) attributable to common stockholders	$	(26,578)	$	5,292	$	(38,928)	$	25,219
Interest expense attributable to convertible promissory note		—		42		—		792
Net earnings (loss) assuming dilution	$	(26,578)	$	5,334	$	(38,928)	$	26,011
Basic weighted average common shares outstanding		180,034,278		108,694,719		168,946,960		107,029,448
Effect of dilutive securities
Convertible preferred shares- Series A		—		933,333		—		933,333
Conversion of restricted shares and employee stock options		—		30,135		—		12,631
Convertible promissory notes		—		2,803,214		—		9,629,772
Diluted potential common shares		180,034,278		112,461,401		168,946,960		117,605,184
Earnings (loss) per share:
Basic	$	(0.15)	$	0.05	$	(0.23)	$	0.24
Diluted	$	(0.15)	$	0.05	$	(0.23)	$	0.22

~~(c)~~~~Restricted Shares~~

In January 2019, the Company granted 129,840 restricted shares to the two independent directors under the “2010 Plan” which was approved as part of the 2018 independent board compensation plan by the Board of Directors. The restricted shares were all vested immediately since commencement date. The aggregated grant date fair value of all those restricted shares was $161,001.

~~A summary of the unvested restricted shares is as follows:~~

Weighted-average
Shares fair value
Non-vested restricted shares outstanding at January 1, 2019 87,586 $ 2.46
Granted 129,840 $ 1.24
Forfeited (3,000 ) $ 2.60
Vested (158,840 ) $ 1.49
Non-vested restricted shares outstanding at September 30, 2019 55,586 $ 2.37

As of September 30, 2019, there was $33,800 of unrecognized compensation cost related to unvested restricted shares. This amount is expected to be recognized over a weighted-average period of 0.51 years.

~~Note 16.~~

~~Earnings (Loss) Per Common Share~~

Basic earnings (loss) per common share attributable to ~~our~~the Company’s shareholders is calculated by dividing the net earnings (loss) attributable to ~~our~~the Company’s shareholders by the weighted average number of outstanding common shares during the period.

Diluted earnings (loss) per share is calculated by taking net earnings (loss), attributable to the Company’s shareholders, divided by the diluted weighted average common shares outstanding. ~~The calculations of basic and diluted earnings (loss) per share for the three months and nine months ended, 2019 and 2018 are as follows:~~

Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2019 2018 2019 2018
Net earnings (loss) attributable to common stockholders $
(13,711,867
) $ (7,186,847 ) $
11,506,861
$ (19,228,240 )
Interest expense attributable to convertible promissory note - - 125,485 -
Net earnings (loss) assuming dilution
(13,711,867
) (7,186,847 )
11,632,346
(19,228,240 )
Basic
Basic weighted average common shares outstanding 127,609,748 74,063,495 113,964,933 71,574,303
Effect of dilutive securities
-

-

-

-

Convertible preferred shares- Series A
-

-
933,333
-

Conversion of restricted shares and employee stock options
-

-
22,823
-

Convertible promissory notes
-

-
2,777,687
-

Contingently issuable shares
-

-

621,117

-

Diluted potential common shares 127,609,748 74,063,495 118,319,893 71,574,303

Net earnings (loss) per share:
Basic $ (0.11 ) $ (0.10 ) $ 0.10 $ (0.27 )
Diluted $ (0.11 ) $ (0.10 ) $ 0.10 $ (0.27 )

~~In 2018, diluted~~Diluted net loss per share equals basic net loss per share because the effect of securities convertible into common shares ~~was~~is anti-dilutive.

The following table includes the number of shares that may be dilutive potential common shares in the future. The holders of these shares do not have a contractual obligation to share in ~~our earnings (losses)~~the Company’s losses and thus these shares were not included in the computation of diluted ~~earnings (loss)~~loss per share because the effect was antidilutive. (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018

									June 30,	December 31,
									2020	2019
Warrants		3,709,240		60,000		3,709,240		60,000	1,150	8,996
Options		14,971,431		1,797,017		14,965,598		1,797,017	26,287	14,938
Series A Preferred Stock		933,333		933,333		-		933,333	933	933
DBOT True-up shares									2,810	8,501
Convertible promissory note and interest		12,417,909		10,227,507		9,324,911		10,227,507	37,315	21,678
Total		32,031,913		13,017,857		27,999,749		13,017,857	68,495	55,046

~~Note 17.~~

Note 17. Income Taxes

During the ~~nine~~three and six months ended ~~September~~June 30, 2020 income tax expense is NaN because of net operating loss and deferred tax assets related to the net operating loss carryovers utilized had been offset by a valuation allowance. The Company had established a 100% valuation allowance against its net deferred tax assets due to its history of pre-tax losses and the likelihood that the deferred tax assets will not be realized.

Table of Contents

During the six months ended June 30, 2019, the Company recorded an income tax benefit of ~~$513,935, $152,876~~$0.5 million, $0.2 million resulting from losses of Grapevine ~~Logic, Inc. offsetting~~which offsett deferred tax liabilities that were recognized on the its acquisition ~~of Grapevine Logic, Inc.~~ and a ~~$361,059~~$0.4 million reduction of the valuation allowance on ~~Ideanomics, Inc.~~Ideanomics’ deferred tax assets in excess of those reversed to offset ~~Ideanomics, Inc.’s~~Ideanomics’, income. The reduction in valuation allowance resulted from ~~Ideanomics, Inc.’s~~Ideanomics’ acquisition of additional ownership interests in Grapevine ~~Logic, Inc.~~ which caused Grapevine ~~Logic, Inc.~~ to be included in a consolidated tax return with Ideanomics ~~Inc.~~ beginning June 30, 2019. This meant that ~~$361,059~~$0.4 million of ~~Ideanomics, Inc.’s~~Ideanomics’ deferred tax assets could be utilized to offset ~~Grapevine Logic Inc.’s~~Grapevine’s remaining deferred tax ~~liabilities.~~liabilities.. This resulted in an effective tax rate of ~~(4.43%~~(2.1%). The effective tax rate for the ~~nine~~six months ended ~~September~~June 30, 2019 differs from the U.S. statutory tax rate primarily due to the effect of taxes on foreign earnings, non-deductible expenses and the reduction in the beginning of the year deferred tax valuation allowance.

As of September 30, 2019, the Company had approximately $9.9 million of the U.S domestic cumulative tax loss carryforwards and approximately $30.9 million of the foreign cumulative tax loss carryforwards which may be available to reduce future income tax liabilities in certain jurisdictions. The remaining 2018 U.S. tax loss is not subject to expiration under the new Tax Law. The foreign tax loss carryforwards will expire beginning year 2019 through 2023.

There was no0 identified unrecognized tax benefit as of ~~September~~June 30, 2020 and December 31, 2019. ~~We are not aware of any unrecorded tax liabilities which would impact our financial position or our results of operations.~~

Note 18. Commitments and Contingencies

~~Note 18.~~

~~Contingencies and Commitments~~

Lawsuits and Legal Proceedings

From time to time, wethe Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm ~~our~~the business.

Shareholder Class Action

On July 19, 2019, a purported class action, now captioned ~~Jose Pinto Claro Da Fonseca Miranda~~Rudani v. Ideanomics, et al. Inc., was filed in the United States District Court for the Southern District of New York against the Company and certain of its current and former officers and directors. The Amended Complaint alleges violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934. Among other things, the Amended Complaint alleges purported misstatements made by the Company in 2017 and 2018. The Company and the other defendants filed a motion to dismiss that is currently pending before the Court.

On June 28, 2020, a purported securities class action, captioned Lundy v. Ideanomics et al. Inc., was filed in the United State District Court for the Southern District of New York against the Company and certain current officers and directors of the Company. Additionally, on July 7, 2020, a purported securities class action captioned Kim v. Ideanomics, et al, was filed in the Southern District of New York against the Company and certain current officers and directors of the Company. Both cases allege violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 arising from certain purported misstatements by the Company beginning in March 2020 regarding its MEG division. Both complaints have yet to be served on the Company.

On July 10, 2020, the Company was named as a nominal defendant, and certain of its former officers and directors were named as defendants, in a shareholder derivative action filed in the United States District Court for the Southern District of New York, captioned Toorani v. Ideanomics, et al., 1:20-cv-05333. The Complaint alleges violations of Section 14(a) of the Securities Exchange Act of 1934, breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and corporate waste and seeks monetary damages and other relief on behalf of the Company.

On March 20, 2020, the Company received a formal demand letter to the Board of Directors ascertain allegations similar to those alleged in the Rudani Complaint and demanding that the Board pursue causes of action on behalf of the Company against certain of the Company’s former and current directors and officers. In response to this stockholder demand letter, the Board established a demand review committee to review the demand and make a recommendation to the Board of Directors regarding a response to the demand. The demand review committee has not yet completed its review.

While the Company believes that the Class Action is without merit and plans to vigorously defend itself against these claims, there can be no assurance that the Company will prevail in the lawsuits. The Company cannot currently estimate the possible loss or range of losses, if any, that it may experience in connection with these litigations.

Table of Contents

~~Note 19.~~

Note 19. Concentration, Credit and Other Risks

(a)	PRC Regulations

~~(a)~~The EV industry is relatively new in China, and the PRC ~~Regulations~~

~~The~~government has not adopted a clear regulatory framework to regulate the industry. Therefore, there is some degree of uncertainty regarding the regulatory requirements of the PRC ~~market~~government in ~~which~~the EV industry. If the PRC government enacts new laws and regulations, or adopt new interpretations or policies with respect to the current laws and regulations, that require licenses or permits for the operation of the Company’s existing or future businesses, the Company ~~operates poses certain macro-economic and regulatory risks and uncertainties. These uncertainties extend to~~cannot ensure that it has all the ~~ability of~~permits or licenses required for its EV business or that the Company to conduct wireless telecommunication services through contractual arrangements in the PRC since the industry remains highly regulated. The Company conducts legacy YOD business in China through a series of contractual arrangements (See Note 4). The Company believes that these contractual arrangements are in compliance with PRC law and are legally enforceable. If Sinotop Beijing, SSF or their respective legal shareholders fail to perform the obligations under the contractual arrangements or any dispute relating to these contracts remains unresolved, we can enforce its rights under the VIE contracts through PRC law and courts. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce these contractual arrangements. In particular, the interpretation and enforcement of these laws, rules and regulations involve uncertainties. If we had direct ownership of Sinotop Beijing and SSF, we wouldwill be able to ~~exercise our rights as a shareholder to effect changes~~obtain or maintain permits or licenses in the board of directors of Sinotop Beijing or SSF, which in turn could affect changes at the management level, subject to any applicable fiduciary obligations. However, under the current contractual arrangements, the Company relies on Sinotop Beijing, SSF and their respective legal shareholders to perform their contractual obligations to exercise effective control. The Company also gives no assurance that PRC government authorities will not take a view in the future that is contrary to the opinion of the Company. If the current ownership structure of the Company and its contractual arrangements with the VIEs and their equity holders were found to be in violation of any existing or future PRC laws or regulations, the Company's ability to conduct its business could be affected and the Company may be required to restructure its ownership structure and operations in the PRC to comply with the changes in the PRC laws which may result in deconsolidation of the VIEs.

From time to time the PRC government imposes regulations that limit the amount and timing of foreign payments from companies operating in the PRC. Our ability to repatriate cash held in the PRC, or obtain funding from sources in the PRC, may be restricted by such regulations.

In addition, the telecommunications, information and media industries remain highly regulated. Restrictions are currently in place and are unclear with respect to which segments of these industries foreign owned entities, like YOD WFOE, may operate. The PRC government may issue from time to time new laws or new interpretations on existing laws to regulate areas such as telecommunications, information and media, some of which are not published on a timely basis or may have retroactive effect. For example, there is substantial uncertainty regarding the Draft Foreign Investment Law, including, among others, what the actual content of the law will be as well as the adoption and effective date of the final form of the law. Administrative and court proceedings in China may also be protracted, resulting in substantial costs and diversion of resources and management attention. While such uncertainty exists, the Company cannot assure that the new laws, when it is adopted and becomes effective, and potential related administrative proceedings will not have a material and adverse effect on the Company's ability to control the affiliated entities through the contractual arrangements. Regulatory risk also encompasses the interpretation by the tax authorities of current tax laws, and the Company’s legal structure and scope of operations in the PRC, which could be subject to further restrictions resulting in limitations on the Company’s ability to conduct business in the PRC.manner.

~~(b)~~~~Major Customers~~

For the nine months ended September 30, 2018, one customer individually accounted for more than 10% of the Company’s revenue from third parties. One customer individually accounted for more than 10% of the Company’s net accounts receivables as of September 30, 2018, respectively.

For the nine months ended September 30, 2019, one customer individually accounted for more than 10% of the Company’s revenue. One customer individually accounted for more than 10% of the Company’s net accounts receivables as of September 30, 2019, respectively.

~~(c)~~~~Major Suppliers~~

For the nine months ended September 30, 2018, two suppliers individually accounted for more than 10% of the Company’s cost of revenues. Two suppliers individually accounted for more than 10% of the Company’s accounts payable and amount due to related parties as of September 30, 2018.

~~For the nine months ended September 30, 2019, one supplier individually accounted for more than 10% of the Company’s accounts payable as of September 30, 2019.~~

~~(d)~~~~Concentration of Credit Risks~~

(b)
Concentration of Credit Risks

Financial instruments that potentially subject the Company to significant concentration of credit risk primarily consist of cash and accounts receivable. As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company’s cash was held by financial institutions (located in the PRC, Hong Kong, the United States, Malaysia and Singapore) that management believes have acceptable credit. Accounts receivable are typically ~~unsecured and are mainly derived from revenues from Mobile Energy Group (formerly Wecast Services).~~unsecured. The risk with respect to accounts receivable is mitigated by regular credit evaluations that the Company performs on its distribution partners and its ongoing monitoring of outstanding balances.

(c)	Foreign Currency Risks

~~(e)~~~~Foreign Currency Risks~~

~~We have certain~~A majority of the Company's operating transactions ~~that~~ are denominated in RMB and a significant portion of the Company’s assets and liabilities ~~that~~ is denominated in RMB. RMB is not freely convertible into foreign currencies. The value of the RMB is subject to changes in the central government policies and to international economic and political developments. In the PRC, certain foreign exchange transactions are required by laws to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to complete the remittance.

Cash consist of cash on hand and demand deposits at banks, which are unrestricted as to withdrawal.

Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term of greater than three months when purchased. Time deposits which mature over one year as of the balance sheet date are included in non-current assets.

~~Cash and time deposits maintained at banks consist of the following:~~

September 30, December 31,
2019 2018
RMB denominated bank deposits with financial institutions in the PRC $ 110,005 $ 1,523,622
US dollar denominated bank deposits with financial institutions in the PRC $ 30,666 $ 133,053
HKD denominated bank deposits with financial institutions in Hong Kong Special Administrative Region (“HK SAR”) $ 17,985 $ 13,133
US dollar denominated bank deposits with financial institutions in Hong Kong Special Administrative Region (“HK SAR”) $ 13,708 $ 44,182
US dollar denominated bank deposits with financial institutions in Singapore (“Singapore”) $ 569,707 $ 697,099
SGD denominated bank deposits with financial institutions in Singapore $ 70,432 -
US dollar denominated bank deposits with financial institutions in The United States of America (“USA”) $ 874,093 $ 695,155
Total $ 1,686,596 $ 3,106,244

As of September 30, 2019 and December 31, 2018, deposits of $855,915 and $0 were insured. To limit exposure to credit risk relating to bank deposits, the Company primarily places bank deposits only with large financial institutions in the PRC, HK SAR, USA, Singapore and Cayman with acceptable credit rating.

~~(f)~~~~Digital Currency Risks~~

As of September 30, 2019, the Company holds 7,294,555 GTB, 2,763 Bitcoins and 21,312 Ethereum. These Bitcoins and Etheruem represent GTB denominated in Bitcoin & Etheruem and not direct holdings of Bitcoin and Etheruem. The risks related to our holdings of GTB including:

·	~~Digital currency is highly volatile due to the limited trading history, and singular currency exchange platform;~~

·	Under the circumstances where governments prohibit or effectively prohibit the trading of digital currency, this will significantly impact the financial statements of the Company since the digital currency market is currently largely unregulated; and

To date the company has not been able to convert any of its crypto currency holdings to fiat. The Asia EDX exchange has indicated that it continues work towards providing exchangeability for coins held on the exchange into fiat. Management is unable to give any assurance as to when, if ever, the Asia EDX exchange will permit conversion of the company’s crypto currency holdings into fiat.

~~Note 20.~~

~~Defined Contribution Plan~~

For our U.S. employees, during 2019, the Company introduced a new 401(k) defined contribution plan which provides 100% employer matching up to 4% of each employee’s pay. Employee is eligible to participate after six months of employment. Company 401(k) matching contributions were approximately $8,700 and $487 for the three months ended September 30, 2019 and 2018 and $8,700 and $3,242 for the nine months ended September 30, 2019 and 2018, respectively.

Full time employees in the PRC participate in a government-mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. PRC labor regulations require the Company to make contributions based on certain percentages of the employees’ basic salaries. Other than such contributions, there is no further obligation under these plans. The total contribution for such PRC employee benefits was $113,654 and $235,811 for the three months ended September 30, 2019 and 2018 and $267,868 and $607,872 for the nine months ended September 30, 2019 and 2018, respectively.

~~Note 21.~~

~~Segments and Geographic Areas~~

We operate our business in two operating segments: Legacy YOD and Mobile Energy Group (formerly Wecast Services). Segment disclosures are on a performance basis consistent with internal management reporting. The Company does not allocate expenses below segment gross profit since these segments share the same executive team, office space, occupancy expenses, information technology infrastructures, human resources and finance department.

~~Information about segments during the periods presented were as follows:~~

Nine Months Ended
September 30,
2019 September 30,
2018
Revenue
-Legacy YOD $ - $ -
-Mobile Energy Group (formerly Wecast Services) 44,503,562 362,628,296
Total revenue 44,503,562 362,628,296
Cost of revenue
-Legacy YOD - -
-Mobile Energy Group (formerly Wecast Services) 1,217,184 359,839,565
Gross profit $ 43,286,378 $ 2,788,731

September 30,
2019
December 31,
2018

TOTAL ASSETS
-Legacy YOD $ 635,128 $ 26,442,810
-Mobile Energy Group (formerly Wecast Services) 164,128,548 51,592,929
-Unallocated assets - 16,199,373
Total $ 164,763,676 $ 94,235,112

~~Note 22.~~

~~Going Concern and Management’s Plans~~

As of September 30, 2019, the Company had cash and cash equivalents of approximately $1.7 million and the Company has incurred losses since its inception and must continue to rely on proceeds from debt and equity issuances to pay for ongoing operating expenses in order to execute its business plan.

Management has taken several actions below to ensure that the Company will continue as a going concern through November 30, 2020, including the cessation of YOD legacy segment related expenses and discretionary expenditures.

·	As discussed in Note 12, the Company executed a security purchase agreement with ID Venturas 7, LLC (“IDV”), whereby the Company issued $2,500,000 of senior secured convertible note during the third quarter.

·	~~As discussed in Note 5, the Company has received $0.7 million proceeds from the sale of Redrock.~~

The Company’s operating businesses are in the development and ramp up phase and are not yet cash generative as they generate minimal revenues and require investment to support their business plans. The Company intends to raise both debt and equity capital to cover its short and medium term capital needs.

Although the Company may attempt to raise funds by issuing debt or equity instruments, future financing may not be available to the Company on terms acceptable to the Company or at all or such resources may not be received in a timely manner. If the Company is unable to raise additional capital when required or on acceptable terms, the Company may be required to scale back or to discontinue certain operations, scale back or discontinue the development of new business lines, reduce headcount, sell assets, file for bankruptcy, reorganize, merge with another entity, or cease operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. If the Company is in fact unable to continue as a going concern, the shareholders may lose their entire investment in the Company.

~~Note 23.~~

~~Fair Value Measurements~~

Note 20. Fair Value Measurement

The following table ~~presents~~summarizes information about ~~our~~the Company’s financial instruments measured at fair value on a recurring basis, grouped into ~~level~~Level 1 to 3 based on the degree to which the input to fair value is ~~observable:~~observable (in thousands):

September 30, 2019
Level I Level II Level III Total
Contingent Consideration Liability¹ - - 2,327,919 2,327,919


	June 30, 2020
	Level I		Level II		Level III		Total
Acquisition true-up liability¹	$	—	$	—	$	1,798	$	1,798
Acquisition earn-out liability²		—		—		15,104		15,104

Note

¹ This represents the liability incurred in connection with the acquisition of DBOT shares during Q3the third quarter of 2019 and as subsequently remeasured as of April 17, 2020 as disclosed in Note ~~5(f)~~6(c). The contractual period which required periodic remeasurement has expired, and therefore the Company will not remeasure this liability in the future.

² This represents the liability incurred in connection with the acquisition of Tree Technology shares during the fourth quarter of 2019 and as subsequently remeasured as of June 30, 2020 as disclosed in Note 6(a).

The fair value of the ~~contingent consideration~~DBOT acquisition earn-out liability ~~at September 30,~~as of December 31, 2019 and March 31, 2020 was valued using the Black-Scholes Merton ~~method.~~ model.

Table of Contents

The following table ~~presents~~summarizes the significant inputs and assumptions used in the Black-Scholes Merton model:

	~~September~~ ~~30, 2019~~
~~Risk-free interest rate~~		~~1.8~~	%
~~Expected volatility~~		30	%
~~Expected term~~		~~0.5 year~~
~~Expected dividend yield~~		0	%


	March 31, 2020		December 31, 2019
Risk-free interest rate	0.1	%	1.6	%
Expected volatility	30	%	30	%
Expected term	0.08 years		0.25 years
Expected dividend yield	0	%	—	%

The significant unobservable inputs used in the fair value measurement of the Company’s contingent consideration liability includes the risk-free interest rate, expected volatility, expected term and expected dividend yield. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

~~Reconciliation of level 3~~The fair value ~~measurements:~~

Contingent
Consideration
Liability
January 1, 2019 $ -
Addition (2,217,034 )
Remeasurement (loss)/gain recognized in the income statement (110,885 )
September 30, 2019 $ (2,327,919 )

~~Note 24.~~

~~Subsequent Events~~

~~Senior Secured Convertible Debentures - ID Ventura 7~~

On October 29, 2019, the Company entered into an Additional Issuance Agreement (the “Purchase Agreement”), with ID Venturas 7, LLC. (“ID Venturas”) an exempted company incorporated and existing under the laws of the Delaware, pursuant to which ID Venturas invested $400,000 of the up to $2,500,000 of additional investment rights granted to ID Venturas in the September SPA (as defined below) and received (i) a promissory note (the “Convertible Note”) which is senior secured and convertible at $1.00 per share of Company common stock, subject to anti-dilution adjustments and (ii) a warrant (the “Warrant”) exercisable for 150% of the number of shares of common stock which the Note is convertible into. The Convertible Note is convertible into common stock, par value $0.001 per share (the “Common Stock”), at a conversion price of $1.00, subject to anti-dilution adjustments. The Convertible Note matures on March 27, 2021, and accrues at a 10% interest rate.

~~In connection with the above transaction, the Company also entered into a registration rights agreement with ID Venturas (the “~~~~Registration Rights Agreement~~~~”) which grants ID Venturas demand registration rights.~~

As disclosed in Note 12, the Company entered into Securities Purchase Agreements, dated February 22, 2019 (“The Purchase Agreement”) and dated September 27, 2019 (“Convertible Note Agreement”) with ID Venturas pursuant to which ID Venturas purchased 10% Senior Secured Convertible Debentures (the “Debentures”) and common stock purchase warrants (the “Warrants”) and were granted additional investments rights to purchase up to an additional $2,500,000 of Debentures and Warrants (“Additional Investment Rights”). On October 29, 2019 Ideanomics, Inc. (the “Company”) entered into a letter agreement (the “Agreement”) with ID Venturas pursuant to which the Company agreed to reduce the conversion price of the Debentures and the exercise price of the Warrants to $1.00, subject to adjustment thereunder. The Agreement also reduced the conversion price of Debentures and the exercise price of the Warrants issuable pursuant to the Additional Investment Rights.

~~GTB Impairment review~~

On October 29, 2019, our digital currency, GTB tokens (see Note 1), had a one-time unexpected significant decline in quoted price from $17 to $1.84. The Company’s management is currently evaluating the risks and potential impacts of this incident and plans to perform its annual impairment testTree Technology acquisition earn-out liability as of December 31, ~~2019.~~ 2019 and June 30, 2020 was valued using a scenario-based method which incorporates various estimates, including projected gross revenue for the periods, probability estimates, discount rates and other factors.

The ~~Company is not able to make a meaningful estimate of~~following table summarizes the ~~amount or range of potential impairment resulting from~~significant inputs and assumptions used in the ~~subsequent decline in quoted price.~~scenario-based method:

	30
		December 31, 2019
Weighted-average cost of capital		15.0	%

Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

The following table summarizes the reconciliation of Level 3 fair value measurements (in thousands):


	Acquisition
	Earn-out
	Liability
January 1, 2020	$	24,655
Measurement period adjustment		(1,990)
Settlement		(7,042)
Remeasurement (loss)/gain recognized in the income statement		1,279
June 30, 2020	$	16,902

Table of Contents

Cautionary Note Regarding Forward Looking Statements

This Form 10-Q contains “forward-looking” statements that involve risks and uncertainties. You can identify these statements by the use of forward-looking words such as "may", "will", "expect", "anticipate", "estimate", "believe", "continue", or other similar words. You should read statements that contain these words carefully because they discuss ~~our~~the Company’s future expectations, contain projections of ~~our~~the Company’s future results of operations or financial condition or state other "forward-looking" information. ~~We believe~~The Company believes that it is important to communicate ~~our~~its future expectations to ~~our~~its investors. However, these forward-looking statements are not guarantees of future performance and actual results may differ materially from the expectations that are expressed, implied or forecasted in any such forward-looking statements. There may be events in the future that we are unable to accurately predict or control, including weather conditions and other natural disasters which may affect demand for ~~our~~the Company’s products, and the product-development and marketing efforts of ~~our~~its competitors. Examples of these events are more fully described in the Company’s ~~2018 Annual Report~~2019 Form 10-K under Part I. Item 1A. Risk Factors.

Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However, readers should carefully review the reports and documents the Company files from time to time with the SEC, particularly its Quarterly Reports on Form 10-Q, Annual Report on Form 10-K, Current Reports on Form 8-K and all amendments to those reports.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management’s discussion and analysis ~~(“MD&A”)~~is presented in four sections as below and should be read in conjunction with ~~our~~the condensed consolidated financial statements and the notes thereto and the other financial information appearing elsewhere in this ~~report.~~report on Form 10-Q. In addition to historical information, the following discussion contains certain forward-looking information. See “Cautionary Note Regarding Forward Looking Statements” above for certain information concerning those forward-looking statements.

~~The MD&A is organized in the following sections:~~

●

Overview


·●	Results of Operations ~~- three months and nine months ended September 30, 2019~~


·●	Liquidity and Capital Resources

·	~~Outlook~~

·	~~Critical Accounting Policies and Estimates~~

●

Outlook

OVERVIEW

~~Overview~~

Ideanomics, Inc. (“Ideanomics” or the “Company”) (Nasdaq: IDEX) ~~is a Nevada corporation that primarily operates~~was incorporated in the ~~United States and Asia.~~ ~~The Company is comprised~~State of ~~two operating segments (i) our Legacy YOD~~Nevada on October 19, 2004. From 2010 through 2017, the Company’s primary business activities were providing premium content video on demand (“VOD”) services, with primary operations in the People’s Republic of China (“PRC, ~~which has been winding down~~”) through its subsidiaries and variable interest entities (“VIEs”) under the brand name You-on-Demand (“YOD”). The Company closed the YOD business during 2019.

Starting in early 2017, the Company transitioned its business model to become a next-generation financial technology (“fintech”) company. The Company built a network of businesses, operating principally in the trading of petroleum products and electronic components that the Company believed had significant potential to recognize benefits from blockchain and artificial intelligence (“AI”) technologies including, for example, enhancing operations, ~~over~~addressing cost inefficiencies, improving documentation and standardization, unlocking asset value and improving customer engagement. During 2018 the ~~last 12 months~~Company ceased operations in the petroleum products and ~~(ii) our~~electronic components trading businesses and disposed of the businesses during 2019. Fintech continues to be a priority for us as we look to invest in and develop businesses that can improve the financial services industry, particularly as it relates to deploying blockchain and AI technologies. As the Company looked to deploy fintech solutions in late 2018 and into 2019, management found a unique opportunity in the Chinese Electric Vehicle (“EV”) industry to facilitate large scale conversion of fleet vehicles from internal combustion engines to EV. This led the Company to establish its Mobile Energy ~~Group (MEG) (formally known as our Wecast Service)~~Global (“MEG”) business which is transitioning to focus on the commercial fleet market for electric vehicles in addition to the Company’s existing fintech advisory business. Our MEG business operates as an end-to-end solutions provider for the procurement, financing, charging and energy management needs for fleet operatorsunit.

Table of commercial Electric Vehicles (EV). MEG operates through a series of joint ventures with the leading companies in the commercial EV space, principally in China, and earns fees for every transaction completed based on the spread for group buying of vehicles and fees derived from the arrangement of financing and energy management such as commercial purchasing of pre-paid electricity credits. MEG focuses on commercial EV rather than passenger EV, as commercial EV is on an accelerated adoption path when compared to consumer EV adoption – which is expected to take between ten to fifteen years. We focus on four distinct commercial vehicles types with supporting income streams: 1) Closed-area heavy commercial, in areas such as Mining, Airports, and Sea Ports; 2) Last-mile delivery light commercial; 3) Buses and Coaches; 4) Taxis. The purchase and financing of vehicles provides for one-time fees and the charging and energy management provides for recurring revenue streams. In July 2019 the company invested in Glory Connection Snd. Bhd, (Glory) a vehicle manufacturer based in Malaysia. Glory holds the only license granted so far for the manufacture of electric vehicles in Malaysia and is in the process of setting up its manufacturing and assembly capabilities.Contents

Principal Factors Affecting ~~Our~~the Company’s Financial Performance

~~Our~~The business is expected to be impacted by both macroeconomic and Ideanomics-specific factors. The following factors have been part of the transformation of the Company which affected the results of ~~our~~its operations ~~for the three months~~in 2020 and ~~nine months ended September 30,~~ 2019:

·	*~~Our business strategy may affect the comparability of financial results~~*

Our business strategy and the primary goal for entering certain industries, such as logistics management for crude oil trading and electronics, was to learn about the needs of buyers and sellers in industries and to promote the use, development and advancement of blockchain and AI-based technologies.

In parallel, and for strategic reasons, after the fourth quarter of 2018, we also chose to focus our resources and efforts on other non-logistics management revenue generating opportunities that we identified in the market. These new market opportunities also involve the use of our technologies in our FinTech Ecosystem and their application across Industry Ventures. We intend to continue to capitalize on our efforts and learning from overall logistics management business, but it is not intended to be our core business. Therefore, for comparability purposes, the financial results may not be comparable as we phase out of the logistics management business going forward.

·●	*~~Our~~The Company’s ability to transform ~~our~~the business and to meet internal or external expectations of future performance*.

In connection with this transformation, ~~we are~~the Company is in the process of considerable changes, which include assembling a new management team in the United States and overseas, reconfiguring ~~our~~its business structure, ~~to reflect our focus on the commercial fleet market for electric vehicles and blockchain-based fintech strategy,~~ continuing to further enhance ~~our~~the controls, procedures, and oversight during this transformation, and expanding ~~our~~the Company’s mission and business lines for continued growth. It is uncertain whether these efforts will prove beneficial or whether wethe Company will be able to develop the necessary business models, infrastructure and systems to support ~~our~~the businesses. To succeed, among other things, wethe Company will need to have or hire the right talent to execute ~~our~~the business strategy. Market acceptance of new product and service offerings will be dependent in part on ~~our~~management’s ability to include functionality and usability that address customer requirements, and optimally price ~~our~~the products and services to meet customer demand and cover ~~our~~ costs.

~~Our~~●

The Company’s ability to remain competitive.

~~As we enter the commercial fleet market for electric vehicles and develop our AI- and blockchain-enabled capabilities, we~~ The Company will continue to face intense competition: these new technologies are constantly evolving, and ~~our~~the Company’s competitors may introduce new platforms and solutions that are ~~superior to ours.~~superior. In addition, ~~our~~the Company’s competitors may be able to adapt more quickly to new technologies or may be able to devote greater resources to the development, marketing and sale of their products than wethe Company can. The Company may never establish and maintain a competitive position in the hybrid financing and logistics management businesses.

●

The fluctuation in earnings from the ~~continuing development~~deployment of the Mobile Energy Group ~~(formerly Wecast Services) segment~~Services business unit through acquisitions, strategic equity investments, the formation of joint ventures, and in-licenses of technology.

~~Our~~The Company’s results of operations may fluctuate from period to period based on ~~our~~the entry into new transactions to expand ~~commercial fleet market for commercial vehicles and develop our Fintech Ecosystem and Industry Ventures.~~the business. In addition, while ~~we intend~~management intends to contribute cash and other assets to ~~our~~the Company’s joint ventures, ~~we do~~the Company does not intend for ~~our~~its holding company to conduct significant research and development activities. ~~We intend~~The Company intends research and development activities to be conducted by ~~our~~its technology partners and licensors. These fluctuations in growth or costs and in ~~our~~the joint ventures and partnerships may contribute to significant fluctuations in the results of ~~our~~the Company’s operations.

·	*~~Longer periods for development and implementation of our technology~~*.

The Company has moved into a fintech advisory services and Platform-as-a-Service model. Our technology in this area of our ecosystem is new and constantly evolving and thus it has taken longer than anticipated to implement these technologies. Innovation is an integral part of our ecosystem and, while we strive to be first to market, it is also important to be best in class.

Table of Contents

Business Update and Liquidity Improvements

~~Information about segments~~In the second quarter the Company recorded revenues of $4.7 million, of which $4.6 million were generated by the Company’s MEG business unit; this represents the largest revenues earned by MEG since the Company commenced business. Of this amount, $3.9 million was earned by the sale of vehicles with traditional combustion engines.

In the six months ended June 30, 2020, the Company improved its liquidity position by raising a total of $48.2 million: $39.1 million through the issuance of common stock and exercise of warrants, $7.1 million from noncontrolling interest shareholders, and $2.0 million through the issuance of senior secured convertible notes. The Company converted senior secured convertible notes of $9.4 million plus accrued interest of $0.3 million to common stock. Additionally, the Company converted $4.6 million of convertible notes payable and accrued interest to related parties and an additional $1.5 million due to related parties to common stock. As a result of these actions, the Company reduced its principal amount of its indebtedness by $13.9 million, and as of June 30, 2020, had cash and cash equivalents of $36.4 million, $32.0 million of which is held in U. S. financial institutions.

Based upon its business projections and its cash and cash equivalents balance as of June 30, 2020, the Company believes it has the ability to continue as a going concern.

~~Mobile Energy Group (formerly Wecast Services) Segment~~

~~Within~~On May 1, 2020, the ~~Mobile Energy Group (formerly Wecast Services) segment, we~~Company’s MEG business unit commenced operations in a 40,000 square meter facility in the city of Qingdao. The facilities are ~~engaged in providing an end-to-end solution~~provided free of charge to Ideanomics through November 30, 2034 by the government with the objective of establishing a regional hub for the ~~purchase, financing, charging and energy management~~sale EVs. An additional 60,000 square meters are available for fleets of commercial Electric Vehicles (EV). We operate through a series of joint ventures with the leading companies in the commercial EV space, principally in China, and earn a fee for every transaction completed using the marketplace.future expansion. MEG focuses on commercial EV rather than passenger EV, as commercial EV is on an accelerated adoption path when compared to consumer EV adoption – which is expected to take between ten to fifteen years. We focus on four distinct commercial vehicles types with supporting income streams: 1) Closed-area heavy commercial, in areas such as Mining, Airports, and Sea Ports; 2) Last-mile delivery light commercial; 3) Buses and Coaches; 4) Taxis. The purchase and financing of vehicles provide a one time fee and the charging and energy management provide recurring revenue streams. In July 2019 the company invested in Glory Connection Snd. Bhd, (Glory) a vehicle manufacturer based in Malaysia. Glory holds the only license granted so far for the manufacture of electric vehicles in Malaysia and the is in the process of ~~setting up~~building its ~~manufacturing capability.~~sales force to facilitate the sale of new and used EVs, both to fleets and individuals.

In April 2020 management re-evaluated the opportunities in the OTC equity market and determined that the DBOT business as structured was unlikely to achieve profitability in the short to medium term without significant additional investment. The OTC equities business was closed in April, however the firm remains a FINRA registered Broker Dealer and the Company continues to develop its plan to use DBOT for sale of digital securities and broking of commodity products subject to obtaining the required regulatory approvals.

WeThe Company continues to review its cost base and as part of this process has reevaluated its real estate needs. The Company has vacated the office space previously used by DBOT in Wilmington, Delaware, and recorded an impairment charge of $0.9 million in the three months ended March 31, 2020, and a gain on the settlement of the lease liability of $0.8 million in the three months ended June 30, 2020. In the three months ended June 30, 2020, the Company determined that, with its New York workforce under a stay-at-home and work-from-home mandate, that the square footage provided in the leases for its New York headquarters was excessive. The Company has vacated its New York office space, and recorded an impairment charge of $5.3 million, while it continues to negotiate with the landlord for the termination of the leases. The Company is currently in the process of determining its needs for future New York office space and what configuration that space may require.

Effects of COVID-19

Novel Coronavirus 2019 (“COVID-19”) is an infectious disease caused by severe acute respiratory syndrome coronavirus. The disease was first identified in December 2019 in Wuhan, the capital of China’s Hubei province, and has since spread globally, resulting in the ongoing COVID-19 pandemic. As of July 30, 2020, over 17.1 million cases had been reported across the globe, resulting in 0.7 million deaths.

The spread of COVID-19 has caused significant disruption to society as a whole, including the workplace. The resulting impact to the global supply chain has disrupted most aspects of national and international commerce, with government-mandated social distancing measures imposing stay-at-home and work-from-home orders in almost every country. The effects of social distancing have shut down significant parts of the local, regional, national, and international economies with the exception of government designated essential services.

Table of Contents

As the spread of COVID-19 slowed in various parts of the world, many countries relaxed their stay-at-home and work-from-home orders, which allowed for partial economic recoveries, though many non-essential businesses remain closed. Certain countries, upon reopening of their economies, have experienced a resurgence of COVID-19, and have had to reinstitute restrictive measures. Although the international economies have improved with respect to the first quarter, challenges remain in many parts of the world at the local, regional, and national level.

The Company’s operations, including certain key personnel and business advisors and partners, are largely based in China, a country which was subject to a wide-ranging government shutdown as a result of the spread of COVID-19 in January 2020. Consequently, the country was effectively shuttered in the first quarter of 2020, resulting in China introducing a series of significant economic stimulus packages upon the easing of shutdown measures. The economic stimulus is designed to rebuild China’s economic infrastructure, with the expectation that it will rebound significantly in the near- to medium term.

The Company had experienced delays in the preparation and execution of certain key documents due to stay-at-home and work-from home measures which limited the Company’s abilities in these areas. As disclosed in Note 1 to the Condensed Consolidated Financial Statements, the Company had commenced the process of formulating and implementing a share-based compensation plan whereby key employees and certain consultants of its MEG business unit and wholly-owned subsidiary would benefit, but travel and other limitations prevented the Company from executing the formation and operation of the stock-based compensation plan.

Subsequently, the Company has determined not to proceed with the MEG share-based compensation plan described above, and the parties have declared the transfer of the MEG shares, which was not believed to be substantive, to be null and void and the shares have reverted to the Company. The Company is currently reviewing various scenarios with respect to a share-based compensation plan for the benefit of MEG employees and certain consultants.

No share-based awards had been granted to employees or consultants pursuant to this arrangement as initially contemplated.

As a result of the overall economic condition in China in the first quarter of 2020, minimal sales of EV’s occurred during that time frame. During the second quarter, China relaxed its stay-at-home and work-at-home orders, and the Company was able to open its Qingdao Sales Center on May 1, 2020, which was subsequently rebranded the MEG center. Ideanomics’ recorded total sales in China of $4.6 million in the second quarter, with sales of $3.9 million from the sale of vehicles with traditional combustion engines. The Company’s expectation is that its sales would increase as China’s economy continues to improve, although the Company is a recent entrant in the EV market in China and can provide no assurances on future sales.

The Company expects to continue to ~~develop our FinTech services which principally consist~~raise both equity and debt finance to support the Company’s investment plans and operations, and has been active with investors and is in ongoing discussions with both active and potential investors through the first six months of ~~our ownership~~2020, and this activity continues. In the three months ended June 30, 2020, the Company raised $39.1 million through the issuance of common stock and exercise of warrants. The Company does not anticipate that the COVID-19 pandemic will adversely affect its ability to raise funds in the near-term, although no assurances can be provided on this matter.

The Company assesses the recoverability of goodwill and other indefinite-lived intangible assets in the fourth quarter of each year, or more frequently if circumstances warrant. The Company assesses the recoverability of other long-lived assets as circumstances warrant, and in the six months ended June 30, 2020 did not consider any long-lived assets to be impaired. Many of the ~~Delaware Board~~Company’s operations are in the development or early stage, have not had significant revenues to date, and the Company does not anticipate significant adverse effects on its operations revenue as compared to its business plan in the near- or mid-term.

Governmental and other organizations are currently forecasting a resurgence of ~~Trade (DBOT) ATS, Intelligenta for marketing AI solutions~~COVID-19 later in 2020 or in the winter of 2020/2021. The impact on the Company cannot be predicted at this time, although the impact would be more adverse if any resurgence of COVID-19 were to be concentrated in Asia as compared to other parts of the ~~Financial Services industry~~world.

Table of Contents

Information about segments

The Company’s chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and ~~FinTech Village, a 58 acre development site~~assessing performance of the Company. Therefore, the Company operates in ~~West Hartford, Connecticut.~~

~~Legacy YOD Segment~~

~~Since 2017, we run our legacy YOD~~one segment with ~~limited resources.~~two business units: MEG and Ideanomics Capital. As ~~of September 30, 2019, we have ceased our operation of YOD Segment.~~the chief executive officer previously reviewed two operating segments separately for this purpose, the Company has changed its presentation accordingly, from two reportable segments to one reportable segment.

The segment reporting changes were retrospectively applied to all periods presented.

~~Our~~The Company’s Unconsolidated Equity Investments

~~For the~~The investments where ~~we may exercise~~the Company exercises significant influence, but not control, ~~they~~ are classified as long-term equity investments and accounted for using the equity method. Under the equity method, the investment is initially recorded at cost and adjusted for ~~our~~its share of undistributed earnings or losses of the investee. Investment losses are recognized until the investment is written down to nil, provided that ~~we do~~the Company does not guarantee the investee’s obligations or ~~commit~~is committed to provide additional funding. ~~Please refer~~Refer to Note 910 of the notes to unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

Taxation

~~Taxation~~

United States

Ideanomics, Inc., M.Y. Products, LLC, Grapevine Logic, ~~Inc~~.Inc., ~~DBOT,~~Delaware Board of Trade Holdings, Inc., Fintech Village, LLC and Red Rock Global Capital Ltd. are United States companies subject to the provisions of the Internal Revenue Code. Taxes that otherwise would have been due on the income of Ideanomics, Inc. were completely offset by net operating loss carryovers from prior years. Deferred tax assets related to those net operating loss carryovers had previously been entirely offset by valuation allowances. In July 2019, the Company completed the disposal of its interest in Red Rock Global Capital Ltd. A $513,935 income tax benefit was recorded, $152,876 resulting from losses of Grapevine Logic, Inc. offsetting deferred tax liabilities that were recognized on the acquisition of Grapevine Logic, Inc. and a $361,059 reduction of the valuation allowance on Ideanomics, Inc. deferred tax assets in excess of those reversed to offset Ideanomics, Inc.’s income. The reduction in valuation allowance resulted from Ideanomics, Inc.’s acquisition of additional ownership interests in Grapevine Logic, Inc. which caused Grapevine Logic, Inc. to be included in a consolidated tax return with Ideanomics, Inc. beginning June 30, 2019. This meant that $361,059 of Ideanomics, Inc.’s deferred tax assets could be utilized to offset Grapevine Logic Inc.’s remaining deferred tax liabilities. No provision for income taxes has been provided ~~for M.Y. Products, LLC, DBOT or Red Rock Global Capital Ltd.~~ as ~~neither~~none of the companies had taxable profit since inception.

At the acquisition of Grapevine Logic, Inc. in 2018, deferred tax liabilities were recorded relating to intangible assets recorded for financial reporting purposes but not recognized for income tax purposes. The intangible assets consequently could not provide deductible amortization expense for income tax purposes. The deferred tax liabilities were recorded on the acquisition to the extent that they could not be offset by usable net operating loss carryforwards acquired in the acquisition. These deferred tax liabilities were reduced, providing an income tax benefit, to the extent that the intangible assets were reduced by amortization expense and additional net operating loss carry forwards were created to offset the liabilities. These benefits amounted to $0.1 million for the three months ended June 30, 2019. Ideanomics, Inc. increased its ownership in Grapevine Logic, Inc. such that beginning with the third quarter of 2019, the result of which was that Grapevine Logic, Inc. activities would be included in the consolidated tax return of Ideanomics, Inc. As a result, the valuation allowance provided against Ideanomics, Inc.’s deferred tax assets were reduced by $0.4 million, the amount of Grapevine Logic, Inc.’s remaining deferred tax liabilities as that portion of Ideanomics Inc.’s net operating loss carryovers could now be utilized to offset these liabilities. As a result, there was no income tax or benefit for Grapevine for the three months ended June 30, 2020 and consequently U.S. income tax expense or benefit for the Company as a whole.

The Tax Cut and Jobs Act ~~(TCJA)~~(“TCJA”) of ~~2018~~2017 includes provision for Global Intangible Low-Taxed Income ~~(GILTI)~~(“GILTI”) under which taxes on foreign income are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries. TCJA also enacted the Base Erosion and Anti-Abuse Tax ~~(BEAT)~~(“BEAT”) under which taxes are imposed on certain base eroding payments to related foreign companies, subject to certain requirements.

There are substantial uncertainties in the interpretation of BEAT and GILTI and while certain formal guidance has been issued by the U.S. tax authorities, there are still aspects of the TCJA that remain unclear and additional clarification is expected in 2019. Future guidance may result in changes to the interpretations and assumptions the company made and actions it may have to take, which may impact amounts recorded with respect to international provisions of the TCJA.

Based on ~~current year financial~~the results of operations for the ~~company~~six months ended June 30, 2020, the Company has determined that there is no GILTI nor BEAT tax liability.

In addition, the TCJA now entitles USU.S. companies that own ~~10%~~10.0% or more of a foreign corporation a ~~100%~~100.0% dividends-received deduction for the foreign-source portion of dividends paid by such foreign corporation. Also, net operating losses ~~(NOLs)~~(“NOLs”) arising after December 31, ~~2018~~2017 are deductible only to the extent of ~~80%~~80.0% of the taxpayer’s taxable income, and may be carried forward indefinitely but generally not allowed to be carried back.

Table of Contents

Cayman Islands and the British Virgin Islands

Under current laws of the Cayman Islands and the British Virgin Islands, the ~~company~~Company is not subject to tax on its income or capital gains. In addition, dividend payments are not subject to withholding tax in the Cayman Islands or British Virgin Islands.

Hong Kong

The ~~company’s~~Company’s subsidiaries incorporated in Hong Kong are subject to progressive Profits Tax ofrate up to 16.5%. ~~No provision for~~$0.1 million tax expense was recorded in 2019 relating to the income on one Hong Kong ~~Profits Tax has been made as NOL~~subsidiary relating to a gain recorded on the sale of VIE related assets. All other Hong Kong subsidiaries had losses for 2019 and the resulting deferred tax assets relating to the loss carryovers were fully offset ~~current taxable income.~~by a valuation allowance.

The People’s Republic of China

Under the PRC’s Enterprise Income Tax Law (“EIT”), the company’s Chinese subsidiaries and VIEs are subject to an EIT of 25.0%.

The ~~company’s~~Company’s future effective income tax rate depends on various factors, such as tax legislation, geographic composition of its pre-tax income and non-tax deductible expenses incurred. The ~~company’s~~Company’s management regularly monitors these legislative developments to determine if there are changes in the statutory income tax rate.

During the three months ended March 31, 2020, one of the Company’s PRC subsidiaries incurred a taxable income in the amount of $2.8 million by providing the service to another one of the Company’s PRC subsidiaries. The tax expense is nil because of net operating loss and deferred tax assets related to the net operating loss carryovers utilized had been offset by a valuations allowance in prior periods. The valuations allowance was reversed as a result of this subsidiary taxable income in the amount of $0.7 million creating a deferred tax benefit offsetting the income tax expense that would otherwise have been incurred. Other PRC entities had losses that created additional operating loss carryovers, where the related deferred tax assets were offset by a valuation allowance.

Table of Contents

Consolidated Results of Operations

Comparison of Three and Six Months Ended ~~September~~June 30, 2020 and 2019 ~~and 2018~~

Three Months Ended
September 30, September 30, Amount
2019 2018 Change % Change
Revenue $ 3,103,690 $ 43,707,937 (40,604,247 ) (93 )
Cost of revenue 243,360 42,844,876 (42,601,516 ) (99 )
Gross profit 2,860,330 863,061 1,997,269 231

Operating expenses:
Selling, general and administrative expenses 7,769,503 4,333,259 3,436,244 79
Research and development expense - 667,416 (667,416 ) (100 )
Professional fees 1,388,842 1,927,431 (538,589 ) (28 )
Impairment of property and equipment 2,298,887 - 2,298,887 100
Depreciation and amortization 806,481 291,512 514,969 177
Total operating expenses 12,263,713 7,219,618 5,044,095 70

Loss from operations (9,403,383 ) (6,356,557 ) (3,046,826 ) 48

Interest and other income (expense):
Interest expense, net (639,395 ) (145,610 ) (493,785 ) 339
Equity in loss of equity method investees (40,369 ) (13,882 ) (26,487 ) 191
Gain on disposal of subsidiaries 1,057,363 - 1,057,363 100
Loss on remeasurement of DBOT investment (3,178,702 ) - (3,178,702 ) 100
Others (99,997 ) (925,771 ) 825,774 (89 )
Income (Loss) before income taxes and non-controlling interest (12,304,483 ) (7,441,820 ) (4,862,663 ) 65

Income tax benefit - -

Net income (loss) (12,304,483 ) (7,441,820 ) (4,862,663 ) 65

Net (income) loss attributable to non-controlling interest (1,407,384 ) 254,973 (1,662,357 ) (652 )

Net income (loss) attributable to IDEX common shareholders $ (13,711,867 ) $ (7,186,847 ) (6,525,020 ) 91

Earnings (loss) per share
Basic $ (0.11 ) $ (0.10 )
Diluted $ (0.11 ) $ (0.10 )
~~Revenues~~(USD in thousands)

Three Months Ended

Six Months Ended


June 30, 2020

June 30, 2019

Amount Change

% Change


June 30, 2020

June 30, 2019

Amount Change

% Change

Revenue

$
4,692

$
14,454

$
(9,762)

(68)
%

$
5,070

$
41,400

$
(36,330)

(88)
%
Cost of revenue

4,437

716

3,721

520
%

4,771

974

3,797

390
%
Gross profit

255

13,738

(13,483)

(98)
%

299

40,426

(40,127)

(99)
%

Operating expenses:

Selling, general and administrative expenses

6,725

6,485

240

4
%

12,552

10,672

1,880

18
%
Professional fees

2,372

1,169

1,203

103
%

4,128

2,530

1,598

63
%
Impairment loss

6,200

—

6,200

n/m

7,088

—

7,088

n/m

Acquisition earn-out expense

746

—

746

n/m

1,279

—

1,279

n/m

Depreciation and amortization

481

370

111

30
%

957

614

343

56
%
Total operating expenses

16,524

8,024

8,500

106
%

26,004

13,816

12,188

88
%

Income (Loss) from operations

(16,269)

5,714

(21,983)

(385)
%

(25,705)

26,610

(52,315)

(197)
%

Interest and other income (expense):

Interest expense, net

(8,890)

(581)

(8,309)

n/m

(12,047)

(1,316)

(10,731)

n/m

Equity in loss of equity method investees

(12)

(286)

274

(96)
%

(15)

(566)

551

(97)
%
Conversion expense

(2,266)

—

(2,266)

n/m

(2,266)

—

(2,266)

n/m

Other income (expense)

1,015

2

1,013

n/m

989

(56)

1,045

n/m

Earnings (Loss) before income taxes and non-controlling interest

(26,422)

4,849

(31,271)

n/m

(39,044)

24,672

(63,715)

n/m

Income tax benefit

—

428

(428)

(100)
%

—

514

(514)

(100)
%

Net income (loss)

(26,422)

5,277

(31,699)

(601)
%

(39,044)

25,186

(64,230)

(255)
%
Deemed dividend related to warrant repricing

(184)

—

(184)

n/m

(184)

—

(184)

n/m

Net loss attributable to non-controlling interest

28

15

13

87
%

300

33

267

n/m

Net earnings (loss) attributable to IDEX common shareholders

$
(26,578)

$
5,292

$
(31,870)

n/m

$
(38,928)

$
25,219

$
(64,147)

(254)
%

Revenues (USD in thousands)
Three Months Ended
September 30,
2019 September 30,
2018 Amount
Change % Change
- Mobile Energy Group (formerly Wecast Services)
Crude oil $ - $ - $ - -
Consumer electronics - 43,432,556 (43,432,556 ) (100 )
Digital asset management services - - - -
Electric Vehicles (“EV”) 2,854,178 - 2,854,178 100
Other 249,512 275,381 (25,869 ) (9 )
Total $ 3,103,690 $ 43,707,937 $ (40,604,247 ) (93 )

Three Months Ended

Six Months Ended


June 30, 2020

June 30, 2019

Amount Change

% Change

June 30, 2020

June 30, 2019

Amount Change

% Change

Electric vehicles

$
695

$
—

$
695

n/m

$
750

$
—

$
750

n/m

Combustion engine vehicles

3,892

—

3,892

n/m

3,892

—

3,892

n/m

Digital asset management services

—

14,100

(14,100)

n/m

—

40,700

(40,700)

n/m

Other

105

354

(249)

(70)
%

428

700

(272)

(39)
%
Total

$
4,692

$
14,454

$
(9,762)

(68)
%
$
5,070

$
41,400

$
(36,330)

(88)
%
n/m = Not Meaningful

Table of Contents

Three months ended June 30, 2020 as compared to the three months ended June 30, 2019

Revenue for the three months ended ~~September~~June 30, ~~2019~~2020 was ~~$3.1~~$4.7 million as compared to ~~$43.7~~$14.5 million for the same period in ~~2018,~~2019, a decrease of ~~approximately $40.6~~$9.8 million, or ~~93%~~68%. The decrease was ~~mainly~~almost entirely due to ~~a change to our business focus~~the lack of revenues from ~~logistics~~digital asset management toservices in the current period.

In March 2019, the Company entered into an agreement with GTD, one of the Company’s minority shareholders and strategic investors, whereby the Company provided digital ~~business consulting services and electric vehicle businesses. Our business strategy and the primary goal for entering the crude oil and electronic trading businesses~~asset management services. The revenue was ~~to learn about the needs of buyers and sellers in these industries that rely heavily~~recognized based on the ~~shipment~~progress of ~~goods. Our activities~~completion of services.

In the second quarter of 2020, the Company continued to develop its EV business and recognized $4.6 million revenue from the sales of vehicles, which included revenue of $3.9 million from the sale of traditional combustion vehicles. In the second quarter of 2020 the Company acted in both a Principal and Agent capacity in relation to vehicle sales. For those contracts in which it acted in a Principal capacity revenues were recorded on a Gross basis and for those contracts where it acted in an Agent capacity the revenues were recorded on a Net basis.

Six months ended June 30, 2020 as compared to the six months ended June 30, 2019

Revenue for the six months ended June 30, 2020 was $5.1 million as compared to $41.4 million for the same period in 2019, a decrease of $36.3 million, or 88%. The decrease was almost entirely due to the lack of revenues from digital asset management services in the ~~crude oil trading~~six months ended June 30, 2020.

In March 2019, the Company entered into an agreement with GTD, one of the Company’s minority shareholders and ~~electronic trading business have been successful~~strategic investors, whereby the Company provided digital asset management services. The revenue was recognized based on the progress of completion of services. The Company recognized revenue of $40.7 million in ~~various aspects~~the six months ended June 30, 2019. The Company recognized no revenue from the provision of digital asset management services in ~~2018,~~the six months ended June 30, 2020 and does not anticipate earning revenue from provision of digital asset management services in the foreseeable future.

In the six months ended June 30 2020, the Company continued to develop its EVs and recognized $4.6 million revenue from the sales of vehicles, which included revenue of $3.9 million from the sale of traditional combustion vehicles. In the six months ended June 30, 2020 the Company acted in both a Principal and Agent capacity in relation to vehicle sales. For those contracts in which it acted in a Principal capacity revenues were recorded on a Gross basis and for ~~strategic reasons we have now phased out~~those contracts where it acted in an Agent capacity the revenues were recorded on a Net basis.

Cost of ~~our crude oil trading business and electronics trading business so that we can work towards enabling the application~~revenues (USD in thousands)

Three Months Ended

Six Months Ended


June 30, 2020

June 30, 2019

Amount Change

% Change

June 30, 2020

June 30, 2019

Amount Change

% Change

Electric vehicles

$
452

$
—

$
452

n/m

$
454

$
—

$
454

n/m

Combustion engine vehicles

3,871

—

3,871

n/m

3,871

—

3,871

n/m

Digital asset management services

—

466

(466)

n/m

—

466

(466)

n/m

Other

114

250

(136)

(54)
%

446

508

(62)

(12)
%
Total

$
4,437

$
716

$
3,721

520
%
$
4,771

$
974

$
3,797

390
%

Table of ~~our Fintech Ecosystem for other useful cases that we have identified.~~Contents

~~We did not generate any revenue from YOD Legacy business in 2018 and for~~Three months ended June 30, 2020 as compared to the three months ended ~~September~~June 30, 2019 ~~since our new fintech services business strategy limits the support of the Legacy YOD business.~~

~~Cost of revenues~~

Three Months Ended
September 30,
2019 September 30,
2018 Amount
Change % Change
- Mobile Energy Group (formerly Wecast Services)
Crude oil $ - $ - $ - -
Consumer electronics - 42,658,775 (42,658,775 ) (100 )
Digital asset management services - - - -
Electric Vehicles (“EV”) - - - -
Other 243,360 186,101 57,259 31
Total $ 243,360 $ 42,844,876 $ (42,601,516 ) (99 )
Cost of revenues was ~~approximately $0.2~~$4.4 million for the three months ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~$42.8~~$0.7 million for the three months ended ~~September~~June 30, 2019 ~~a decrease~~an increase of ~~approximately $42.6~~$3.7 million or ~~99%~~520%. ~~From a comparability perspective,~~The increase in the ~~cost~~Cost of ~~revenue during 2018 is not necessarily indicative~~revenues was due to the change in the mix of ~~the digital business consulting services and electric vehicle businesses~~revenues. Revenues recognized in 2019. The cost of revenue during 2018 was primarily associated with the logistics management business (oil trading and electronics trading), which traditionally has a very high cost of revenue and low gross margin, while the cost of revenue during the third quarter of 2019 is primarily associated with subsidiaries including Grapevine and DBOT.
~~Gross profit~~
Three Months Ended
For the Period ended September 30,
2019 September 30,
2018 Amount
Change % Change
- Mobile Energy Group (formerly Wecast Services)
Crude oil $ - $ - $ - -
Consumer electronics - 773,781 (773,781 ) (100 )
Digital asset management services - - - -
Electric Vehicles (“EV”) 2,854,178 - 2,854,178 100
Other 6,152 89,280 (83,128 ) (93 )
Total $ 2,860,330 $ 863,061 $ 1,997,269 231
~~Gross profit ratio~~
Three Months Ended
September 30,
2019 September 30,
2018
- Mobile Energy Group (formerly Wecast Services)
Crude oil 0 % 0 %
Consumer electronics 0 % 2 %
Digital asset management services 0 % 0 %
Electric Vehicles (“EV”) 100 % 0 %
Other 2 % 32 %
Total 92 % 2 %
~~Our gross profit for~~ the three months ended ~~September~~June 30, ~~2019 was approximately $2.9 million, as compared to $0.9 million during~~2020 arose from the ~~same period in 2018, representing an increase~~sale of ~~231%. The gross profit ratio for~~vehicles which have a sigifcantly lower margin than the ~~three months ended September 30, 2019 was 92%, as compared to 2% during the same period in 2018.~~
36
~~Selling, general and administrative expenses~~
Selling, general and administrative expenses for the three months ended September 30, 2019 was $7.8 million as compared to $4.3 million for the same period in 2018, an increase of approximately $3.5 million or 79%. Majority of the increase was due to:
· ~~an increase of $2.6 million in share-based compensation expense primarily related to the stock options granted to employees and directors during Q1 2019;~~
· ~~an increase of $0.3 million in office related expenses; and~~
· ~~an increase of $0.3 million in insurance expenses~~
~~Research and development expense~~
Research and development expense decreased to zero for the three months ended September 30, 2019 from $0.7 million in the same period in 2018. Majority of the expense in 2018 was related to the early stage technology development.
~~Professional fees~~
Professional fees are generally related to public company reporting and governance expenses as well as legal fees related to business transition and expansion. Our professional fees for the three months ended September 30, 2019 was $1.4 million as compared to $1.9 million for the same period in 2018, a decrease of approximately $0.5 million. The decrease was related to a decrease in legal, valuation, audit and tax as well as fees associated with continuing to build out our technology ecosystem and establishing strategic partnerships and M&A activity as part of this technology ecosystem.
~~Impairment of property and equipment~~
Impairment of property and equipment increased $2.3 million for the three months ended September 30, 2019 as compared to the same period in 2018. The increase was due to the impairment charge recorded in connection with four of the five existing buildings on Fintech Village which are expected to be demolished.
~~Depreciation and amortization~~
Depreciation and amortization for the three months ended September 30, 2019 was $0.8 million as compared to $0.3 million for the same period in 2018, an increase of approximately $0.5 million. The increase was mainly due to the increase in amortization expense from intangible assets acquired during 2019.
~~Interest expense, net~~
Our interest expense increased $0.5 million to $0.6 million for the three months ended September 30, 2019, from $0.1 million during the same period of 2018. The increase in interest expense was primarily because of the accretion of interest expense and amortization of beneficiary conversion features associated with the convertible note issued in February 2019.
~~Equity in loss of equity method investees~~
Loss of equity method investees increased $0.03 million for the three months ended September 30, 2019 comparing to the same period in 2018 was primarily due to the net loss incurred in Glory (see Note 9 to the Consolidated Financial Statements).
~~Gain on disposal of subsidiaries~~
Gain on disposal of subsidiaries increased $1.1 million for the three months ended September 30, 2019 comparing to the same period in 2018 was due to the disposal of Redrock and the dilution of the Company’s equity interest in Amer from 55% to 10% (see Note 5 to the Consolidated Financial Statements).
~~Loss on remeasurement of DBOT investment~~
Loss on remeasurement of DBOT investment increased $3.2 million for the three months ended September 30, 2019 comparing to the same period in 2018 was due to the acquisition of controlling equity interest in DBOT which resulted in the remeasurement of the Company’s previously held equity interest in DBOT at the acquisition-date fair value.
~~Net (income) loss attributable to non-controlling interest~~
Net income attributable to non-controlling interests was approximately $1.4 million for the three months ended September 30, 2019, as compared to a net loss of $0.3 million during the same period in 2018. The change is primarily due to the $1.4 million net income attributable to the noncontrolling interest of the Mobile Energy Group (“MEG”) in relation to the taxis commission revenue recognized during the quarter.
37
~~Consolidated Results of Operations~~
~~Comparison of Nine Months Ended September 30, 2019 and 2018~~
Nine Months Ended
September 30,
2019 September 30,
2018 Amount
Change % Change
Revenue $ 44,503,562 $ 362,628,296 (318,124,734 ) (88 )
Cost of revenue 1,217,184 359,839,565 (358,622,381 ) (100 )
Gross profit 43,286,378 2,788,731 40,497,647 1,452

Operating expenses:
    Selling, general and administrative expenses 18,442,280 16,861,425 1,580,855 9
    Research and development expense - 1,393,025 (1,393,025 ) (100 )
    Professional fees 3,918,461 3,280,729 637,732 19
    Impairment of property and equipment 2,298,887 - 2,298,887 100
    Depreciation and amortization 1,420,480 314,737 1,105,743 351
Total operating expenses 26,080,108 21,849,916 4,230,192 19

Income (Loss) from operations 17,206,270 (19,061,185 ) 36,267,455 (190 )

Interest and other income (expense):
    Interest expense, net (1,955,476 ) (201,782 ) (1,753,694 ) 869
    Equity in loss of equity method investees (606,390 ) (44,316 ) (562,074 ) 1268
    Gain on disposal of subsidiaries 1,057,363 - 1,057,363 100
    Loss on remeasurement of DBOT investment (3,178,702 ) - (3,178,702 ) 100
    Others (155,946 ) (558,271 ) 402,325 (72 )
Income (Loss) before income taxes and non-controlling interest 12,367,119 (19,865,554 ) 32,232,673 (162 )

Income tax benefit 513,935 - 513,935 100

Net income (loss) 12,881,054 (19,865,554 ) 32,746,608 (165 )

Net (income) loss attributable to non-controlling interest (1,374,193 ) 637,314 (2,011,507 ) (316 )

Net income (loss) attributable to IDEX common shareholders $ 11,506,861 $ (19,228,240 ) 30,735,101 (160 )

Earnings (loss) per share
Basic $ 0.10 $ (0.27 )
Diluted $ 0.10 $ (0.27 )

~~Revenues~~
Nine Months Ended

September 30,
2019

September 30,
2018

Amount
Change
% Change
- Mobile Energy Group (formerly Wecast Services)
Crude oil $ - $ 260,034,401 $ (260,034,401 ) (100 )
Consumer electronics - 102,081,176 (102,081,176 ) (100 )
Digital asset management services 40,700,000 - 40,700,000 100
Electric Vehicles (“EV”) 2,854,178 - 2,854,178 100
Other 949,384 512,719 436,665 85
Total $ 44,503,562 $ 362,628,296 $ (318,124,734 ) (88 )
Revenue for the nine months ended September 30, 2019 was $44.5 million as compared to $362.6 million for the same period in 2018, a decrease of approximately $318.1 million, or 88%. The decrease was mainly due to a change to our business focus from logistics management to digital business consulting services and electric vehicle businesses. Our business strategy and the primary goal for entering the crude oil and electronic trading businesses was to learn about the needs of buyers and sellers in these industries that rely heavily on the shipment of goods. Our activities in the crude oil trading and electronic trading business have been successful in various aspects in 2018, and for strategic reasons we have now phased out of our crude oil trading business and electronics trading business so that we can work towards enabling the application of our Fintech Ecosystem for other useful cases that we have identified.
~~Please see Note 3 to the unaudited consolidated financial statements included in this report.~~
We did not generate any revenue from YOD Legacy business in 2018 and for the nine months ended September 30, 2019 since our new fintech services business strategy limits the support of the Legacy YOD business.
38
~~Cost of revenues~~
Nine Months Ended
September 30,
2019 September 30,
2018 Amount
Change % Change
- Mobile Energy Group (formerly Wecast Services)
Crude oil $ - $ 260,006,382 $ (260,006,382 ) (100 )
Consumer electronics - 99,568,729 (99,568,729 ) (100 )
Digital asset management services 466,894 - 466,894 100
Electric Vehicles (“EV”) - - - -
Other 750,290 264,454 485,836 184
Total $ 1,217,184 $ 359,839,565 $ (358,622,381 ) (100 )
Cost of revenues was approximately $1.2 million for the nine months ended September 30, 2019, as compared to $359.8 million for the same period in 2018, a decrease of approximately $358.6 million, or 100%. From a comparability perspective, the cost of revenue during 2018 is not necessarily indicative of the new FinTech business in 2019. The cost of revenue during 2018 was primarily associated with the logistics management business (oil trading and electronics trading), which traditionally has a very high cost of revenue and low gross margin, while the cost of revenue during the first 9 months of 2019 primarily include the personnel cost associated with our digital asset management services ~~and creator payments from~~revenues recognized in the ~~Grapevine business. Majority~~prior quarter.
The majority of the cost associated with ~~the development of the master plan~~digital asset management services ~~have~~had already been incurred in 2018. In 2018, due to the uncertainty associated with the future economic benefits when such costs were incurred, the Company expensed those costs during 2018.
Six months ended June 30, 2020 as compared to the six months ended June 30, 2019
Cost of revenues was $4.8 million for the six months ended June 30, 2020, as compared to $1.0 million for the six months ended June 30, 2019 an increase of $3.8 million or 390%. The increase in the Cost of revenues was due to the change in the mix of revenues. Revenues recognized in the six months ended June 30, 2020 arose from the sale of vehicles which have a significantly lower margin than the digital asset management services revenues recognized in the prior quarter.
The majority of the cost associated with digital asset management services had already been incurred in 2018. In 2018, due to the uncertainty associated with the future economic benefits when such costs were incurred, the Company expensed those costs during 2018.
Gross profit (USD in thousands)

Three Months Ended

Six Months Ended


June 30, 2020

June 30, 2019

Amount Change

% Change


June 30, 2020

June 30, 2019

Amount Change

% Change

Electric vehicles

$
243

$
—

$
243

n/m

$
296

$
—

$
296

n/m

Combustion engine vehicles

21

—

21

n/m

21

—

21

n/m

Digital asset management services

—

13,633

(13,633)

n/m

—

40,234

(40,234)

n/m

Other

(9)

105

(114)

(109)
%

(18)

192

(210)

(109)
%
Total

$
255

$
13,738

$
(13,483)

(98)
%

$
299

$
40,426

$
(40,127)

(99)
%

Nine Months Ended
For the Period ended September 30,
2019 September 30,
2018 Amount Change % Change
- Mobile Energy Group (formerly Wecast Services)
Crude oil $ - $ 28,019 $ (28,019 ) (100 )
Consumer electronics - 2,512,447 (2,512,447 ) (100 )
Digital asset management services 40,233,106 - 40,233,106 100
Electric Vehicles (“EV”) 2,854,178 - 2,854,178 100
Other 199,094 248,265 (49,171 ) (20 )
Total $ 43,286,378 $ 2,788,731 $ 40,497,647 1,452
Gross profit ratio

Three Months Ended

Six Months Ended


June 30, 2020

June 30, 2019


June 30, 2020

June 30, 2019

Electric vehicles

35
%
—

39
%
—

Combustion engine vehicles

0.6
%
—

0.6
%
—

Digital asset management services

—

97
%

—

99
%
Other

—

30
%

4
%
28
%
Total

5
%
95
%

6
%
98
%

Table of Contents

Three months ended June 30, 2020 as compared to the three months ended June 30, 2019

Nine Months Ended
September 30,
2019 September 30,
2018
- Mobile Energy Group (formerly Wecast Services)
Crude oil 0 % 0 %
Consumer electronics 0 % 2 %
Digital asset management services 99 % 0 %
Electric Vehicles ("EV") 100 % 0 %
Other 21 % 48 %
Total 97 % 1 %
~~Our gross~~Gross profit for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 was ~~approximately $43.3~~$0.3 million, as compared to ~~$2.8~~gross profit in the amount of $13.7 million during the same period in ~~2018.~~2019. The gross profit ratio for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 was ~~97%~~5%, while in 2019, it was 1%95%. The decrease was mainly due to: 1) digital asset management service revenue recognized in 2019 had higher gross margins than the gross margin in vehicles; and 2) the negative gross margin from the Delaware Board of Trade (“DBOT”) business for the three months ended March 31, 2020 due to the business being at the development stage.
Six months ended June 30, 2020 as compared to the six months ended June 30, 2019
Gross profit for the six months ended June 30, 2020 was $0.3 million, as compared to gross profit in the amount of $40.4 million during the same period in ~~2018.~~2019. The ~~increase~~gross profit ratio for the six months ended June 30, 2020 was 6%, while in 2019, it was 98%. The decrease was mainly due to: 1) ~~the Company recorded service revenue from~~ digital asset management ~~services~~service revenue recognized in 2019 had higher gross margin than the gross margin in vehicles; and 2) the ~~low cost of revenue with our digital asset management services, which resulted in higher~~negative gross ~~profit~~ margin ~~in 2019 compared~~from the DBOT business for the three months ended March 31, 2020 due to the ~~low gross profit margin of~~business still being in the ~~logistics management business in 2018.~~development stage.
39
Selling, general and administrative expenses
Three months ended June 30, 2020 as compared to the three months ended June 30, 2019
Selling, general and administrative expense for the three months ended June 30, 2020 was $6.7 million as compared to $6.5 million for the same period in 2019, an increase of $0.2 million or 4%. The slight increase was mainly due to increase in salary and employee benefits expenses resulting from the acquisition of DBOT and Tree Technology in late 2019.
Six months ended June 30, 2020 as compared to the six months ended June 30, 2019
Selling, general and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 was ~~$18.4~~$12.6 million as compared to ~~$16.9~~$10.7 million for the same period in ~~2018,~~2019, an increase of ~~approximately $1.6~~$1.9 million or 9%18%. ~~Majority~~The majority of the increase was due ~~to:~~
to
·● an increase of ~~$2.9~~$2.1 million in share-based compensation expense ~~primarily related~~due to the ~~stock options granted to employees~~new option grants.
● an increase of $0.5 million in salary and ~~directors during Q1 2019;~~employee benefits expenses resulting from the acquisition of DBOT and Tree Technology in late 2019, partially offset by
·● ~~an increase~~a decrease of $0.8 million in severance payments made in 2019 to the former Chief Executive Officer, former Chief Investment Officer and former Chief Strategy ~~Officer; partially offset by~~
· ~~a decrease of $2.3 million in salary and employee benefits expenses~~Officer
Professional fees
~~Research and development expense~~
~~Research and development expense decreased to zero for the nine~~Three months ended ~~September~~June 30, ~~2019 from $1.4 million in~~2020 as compared to the ~~same period in 2018. Majority of the expense in 2018 was~~three months ended June 30, 2019
Professional fees are generally related to ~~the early stage technology development.~~
~~Professional~~public company reporting and governance expenses as well as legal fees
related to business transition and expansion. Professional fees for the ~~nine~~three months ended ~~September~~June 30, ~~2019 was $3.9~~2020 were $2.4 million as compared to ~~$3.3~~$1.2 million for the same period in ~~2018,~~2019, an increase of ~~approximately $0.6~~$1.2 million. The increase was related to an increase in legal, ~~valuation, audit and tax~~investor relation, regulatory compliance as well as fees associated with establishing the MEG operation, continuing to build out our technology ecosystem and Ideanomics Capital, and also establishing strategic partnerships and ~~M&A~~merger and acquisition activity ~~as part~~for these business units.

Table of ~~this technology ecosystem.~~ Contents

~~Impairment of property and equipment~~

~~Impairment of property and equipment increased $2.3 million for the nine~~Six months ended ~~September~~June 30, ~~2019~~2020 as compared to the six months ended June 30, 2019

Professional fees for the six months ended June 30, 2020 were $4.1 million as compared to $2.5 million for the same period in ~~2018.~~2019, an increase of $1.6 million. The increase was ~~due~~related to an increase in legal, investor relation and regulatory compliance as well as fees associated with establishing the MEG operation, continuing to build out our technology ecosystem and Ideanomics Capital, and also establishing strategic partnerships and merger and acquisition activity for these business units.

Impairment loss

Three months ended June 30, 2020 as compared to the three months ended June 30, 2019

The Company recorded impairment ~~charge recorded in connection with four~~losses of $5.9 million as the Company decided to cease the use of the ~~five existing buildings on Fintech Village which are expected~~New York headquarters’ office space, and impaired the right of use assets, leasehold improvements and fixed assets. The Company also recorded an impairment loss of $0.3 million related to ~~be demolished.~~

an other current asset.

Six months ended June 30, 2020 as compared to the six months ended June 30, 2019

The Company recorded an impairment loss of $0.9 million related to the DBOT right of use assets and $5.9 million related to the New York headquarters’ right of use assets, leasehold improvement and fixed assets because the Company decided to cease use the office and vacated the space subsequently. The Company also recorded an impairment loss of $0.3 million related to another current asset.

Acquisition Earn-out/True-up expense

Three months ended June 30, 2020 as compared to the three months ended June 30, 2019

The acquisition earn-out/true-up expense of $ 0.7 million represents the remeasurement of the contingent consideration payable to the former DBOT and Tree Technology shareholders.

Six months ended June 30, 2020 as compared to the six months ended June 30, 2019

The acquisition earn-out/true-up expense of $ 1.3 million represents the remeasurement of the contingent consideration payable to the former DBOT and Tree Technology shareholders.

Depreciation and amortization

Three months ended June 30, 2020 as compared to the three months ended June 30, 2019

Depreciation and amortization for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 was ~~$1.4~~$0.5 million as compared to ~~$0.3~~$0.4 million for the same period in ~~2018,~~2019, an increase of ~~approximately $1.1~~$0.1 million. The increase was mainly due to the increase in amortization expense from intangible assets acquired ~~during~~in the third quarter of year 2019.

~~Interest expense, net~~Six months ended June 30, 2020 as compared to the six months ended June 30, 2019

~~Our interest expense increased $1.8~~Depreciation and amortization for the six months ended June 30, 2020 was $1.0 million as compared to ~~$2.0~~$0.6 million for the ~~nine~~same period in 2019, an increase of $0.3 million. The increase was mainly due to the increase in amortization expense from intangible assets acquired in the third quarter of year 2019.

Table of Contents

Interest expense, net

The following table summarizes the breakdown of the interest expense (in thousands):

Three Months Ended

Six Months Ended


June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
Interest, net

$
325

$
339

$
598

$
634
Amortization of beneficial conversion feature

8,565

242

11,449

682
Total

$
8,890

$
581

$
12,047

$
1,316

Three months ended ~~September~~June 30, 2020 as compared to the three months ended June 30, 2019
Interest expense increased $8.3 million to $8.9 million for the three months ended June 30, 2020, from ~~$0.2~~$0.6 million during the same period of ~~2018.~~2019. The ~~increase in~~ interest expense increase during 2020 was primarily ~~because of~~due to the ~~accretion of~~remaining unamortized beneficial conversion features recognized as interest expense ~~and amortization~~immediately upon conversion of ~~beneficiary~~convertible notes to common stock.
Six months ended June 30, 2020 as compared to the six months ended June 30, 2019
Interest expense increased $10.7 million to $12.0 million for the six months ended June 30, 2020, from $1.3 million during the same period of 2019. The interest expense increase during 2020 was primarily due to the remaining unamortized beneficial conversion features ~~associated with~~recognized as interest expense immediately upon conversion of convertible notes ~~issued in June 2018 and February 2019.~~to common stock.
Equity in loss of equity method investees
Three months ended June 30, 2020 as compared to the three months ended June 30, 2019
~~Loss~~Equity in loss of equity method investees ~~increased $0.6~~decreased $ 0.3 million for the ~~nine~~three months ended ~~September~~June 30, ~~2019 comparing~~2020 in comparison to the same period of ~~2018~~2019 as DBOT was ~~due~~an equity method investment until July 2019, at which date the Company increased its ownership to ~~net loss incurred in DBOT for the first half of the year (see Note 9~~99.0% and consolidated DBOT.
Six months ended June 30, 2020 as compared to the ~~Consolidated Financial Statements).~~
~~Gain on disposal of subsidiaries~~six months ended June 30, 2019
~~Gain on disposal~~Equity in loss of ~~subsidiaries increased $1.1~~equity method investees decreased $ 0.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019 comparing~~2020 in comparison to the same period ~~in 2018~~of 2019 as DBOT was ~~due~~an equity method investment until July 2019, at which date the Company increased its ownership to 99.0% and consolidated DBOT.
Conversion expense
Conversion expense for the three and six months ended June 30, 2020 represents the expense recognized as a result of the reduction of conversion price to induce the conversion of the convertible notes from the related parties.
Other income (expense)
Three months ended June 30, 2020 as compared to the ~~disposal of Redrock and the dilution of the Company’s equity interest in Amer from 55% to 10% (see Note 5 to the Consolidated Financial Statements).~~
~~Loss on remeasurement of DBOT investment~~three months ended June 30, 2019
~~Loss on remeasurement of DBOT investment~~Other income (expense) increased ~~$3.2~~$1.0 million for the ~~nine~~three months ended ~~September~~June 30, ~~2019 comparing~~2020 in comparison to the same period ~~in 2018 was due~~of 2019 mainly because DBOT has reached agreement with landlord to terminate the current lease, and recorded a gain of $0.8 million upon settlement.

Table of Contents

Six months ended June 30, 2020 as compared to the ~~acquisition~~six months ended June 30, 2019

Other income (expense) increased $1.0 million for the three months ended June 30, 2020 in comparison to the same period of ~~controlling equity interest in~~2019 mainly because DBOT ~~which resulted in~~has reached agreement with landlord to terminate the ~~remeasurement~~current lease, and recorded a gain of ~~the Company’s previously held equity interest in DBOT at the acquisition-date fair value.~~$0.8 million upon settlement.

Income tax ~~expenses~~expense

Three months ended June 30, 2020 as compared to the three months ended June 30, 2019

During the ~~nine~~three months ended ~~September~~June 30, 2020 income tax expense is nil because of net operating loss and deferred tax assets related to the net operating loss carryovers utilized had been offset by a valuation allowance. The Company had established a 100.0% valuation allowance against its net deferred tax assets due to its history of pre-tax losses and the likelihood that the deferred tax assets will not be realized.

During the three months ended June 30, 2019, the Company recorded an income tax benefit of ~~$513,935, $152,876~~$0.4 million, $0.1 million resulting from losses of Grapevine that offsett deferred tax liabilities that were recognized on its acquisition and a $0.4 million reduction of the valuation allowance on Ideanomics’ deferred tax assets in excess of those reversed to offset Ideanomics’ income. The reduction in valuation allowance resulted from Ideanomics’ acquisition of additional ownership interests in Grapevine which caused Grapevine to be included in a consolidated tax return with Ideanomics, beginning June 30, 2019. This meant that $0.4 million of Ideanomics’ deferred tax assets could be utilized to offset Grapevine’s remaining deferred tax liabilities.. This resulted in an effective tax rate of (2.1%). The effective tax rate for the six months ended June 30, 2019 differs from the U.S. statutory tax rate primarily due to the effect of taxes on foreign earnings, non-deductible expenses and the reduction in the beginning of the year deferred tax valuation allowance.

Six months ended June 30, 2020 as compared to the six months ended June 30, 2019

During the six months ended June 30, 2020 income tax expense is nil because of net operating loss and deferred tax assets related to the net operating loss carryovers utilized had been offset by a valuation allowance. The Company had established a 100.0% valuation allowance against its net deferred tax assets due to its history of pre-tax losses and the likelihood that the deferred tax assets will not be realized.

During the six months ended June 30, 2019, the Company recorded an income tax benefit of $0.5 million, $0.2 million resulting from losses of Grapevine Logic, Inc. offsetting deferred tax liabilities that were recognized on the acquisition of Grapevine ~~Logic, Inc.~~ and a ~~$361,059~~$0.4 million reduction of the valuation allowance on ~~Ideanomics, Inc.~~Ideanomics’ deferred tax assets in excess of those reversed to offset Ideanomics, Inc.’s income. The reduction in valuation allowance resulted from Ideanomics, Inc.’s acquisition of additional ownership interests in Grapevine Logic, Inc. which caused Grapevine Logic, Inc. to be included in a consolidated tax return with Ideanomics, Inc. beginning June 30, 2019. This meant that $361,059 of Ideanomics, Inc.’s deferred tax assets could be utilized to offset Grapevine Logic Inc.’s remaining deferred tax liabilities.Ideanomics’ income as discussed above.

Net ~~(income)~~ loss attributable to non-controlling interest

Three months ended June 30, 2020 as compared to the three months ended June 30, 2019

Net ~~income~~loss attributable to non-controlling interests was ~~approximately $1.4 million~~$28,199 for the ~~nine~~three months ended ~~September~~June 30, ~~2019, as~~2020 compared to a net loss of ~~$0.6 million during the same period~~$15,430 in ~~2018.~~2019. The ~~change~~loss is primarily due to (1) the $1.4 million net income attributable to the noncontrolling interest of the Mobile Energy Group (“MEG”) in relation to the taxis commission revenue recognized during the third quarter and (2) the decrease in net loss from ~~Grapevine~~our joint ventures.

Six months ended June 30, 2020 as compared to the six months ended June 30, 2019

Net loss attributable to non-controlling interests was $0.3 million for the six months ended June 30, 2020 compared to a net loss of $33,191 in 2019. The increase of loss is primarily due to net loss from our joint ventures formed and ~~Amer.~~acquired in late 2019.

Table of Contents

Liquidity and Capital Resources

As of ~~September~~June 30, ~~2019, we~~2020, the Company had cash of ~~approximately $1.7~~$36.4 million. ~~Approximately $1.6~~On that date, $34.0 million was held in ~~our~~the Company’s Hong Kong, USU.S. Malaysia, and Singapore entities and ~~$0.1~~$2.4 million was held in ~~our~~the Company’s PRC entities. The Company does not consider cash balances held in the PRC to be available for use outside of the PRC. The Company’s operations outside of the PRC will continue to be dependent upon access to debt and equity funding raised outside of the PRC. There is no guarantee that debt and equity funds will be available to the Company when they are required.

A majority of the Company’s operating transactions are denominated in RMB and a significant portion of the Company’s assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. The value of the RMB is subject to changes in the central government policies and to international economic and political developments. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC.”) Remittances in currencies other than RMB by the Company in China must be processed through PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to complete the remittance.

As a broker-dealer, DBOT has minimum capital requirements. DBOT had cash of $0.3 million as of June 30, 2020, which was necessary for DBOT to meet its minimum capital requirements. The Company consolidates a 51.0% joint venture which is based in Singapore. This joint venture had cash of $1.1 million as of June 30, 2020. The agreement of the Company’s joint venture partner is required prior to disbursement of this joint venture’s funds.

The following table provides a summary of ~~our~~ net cash flows from operating, investing, and financing activities ~~(unaudited).~~(in thousands):

	Nine Months Ended
	September 30, 2019			September 30, 2018

							Six Months Ended
							June 30, 2020		June 30, 2019
Net cash used in operating activities	$	(8,712,029	)	$	(17,641,902	)	$	(10,390)	$	(5,888)
Net cash used in investing activities		(1,737,881	)		(5,043,300	)		(1,879)		(2,249)
Net cash provided by financing activities		9,067,292			31,186,771			45,737		6,087
Effect of exchange rate changes on cash		(37,030	)		(48,638	)		283		4
Net decrease in cash		(1,419,648	)		8,452,931
Total cash at beginning of period		3,106,244			7,577,317
Cash at end of period	$	1,686,596		$	16,030,248
Net increase/(decrease) in cash and cash equivalents								33,751		(2,046)
Cash and cash equivalents at beginning of period								2,633		3,106
Cash and cash equivalents at end of period							$	36,384	$	1,060

Operating Activities

Cash used in operating activities ~~decreased~~increased by ~~$8.9~~$4.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the same period in ~~2018,~~2019, primarily due toto: (1) an ~~increase~~decrease in operating results from net ~~loss of $19.9 million for the nine months ended September 30, 2018 to net~~ income of ~~$12.9~~$25.2 million in the ~~same period in~~first quarter of 2019 to a net loss of $39.0 million, (2) total non-cash adjustments increase (decrease) to net income (loss) was ~~$(25.5)~~$28.5 million and ~~$3.8~~$(34.3) million for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, ~~and 2018, respectively,~~respectively; and (3) total changes in operating assets and liabilities resulted in an increase of ~~$3.9~~$0.2 million and of ~~$(1.5)~~$3.2 million in cash used in ~~operations~~operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Investing Activities

Cash used in investing activities decreased by ~~$3.3~~$0.4 million, primarily due to the ~~$2.8~~Company entered into two notes receivable of $1.8 million ~~cash consideration paid~~ for the ~~acquisition~~six months ended June 30, 2020 offset by decreased spending of ~~Grapevine~~$2.2 million on the fixed assets and long term investment compared to the six months ended June 30, 2019.

Table of Contents

Financing Activities

The Company received $39.1 million from the exercise of warrants and the issuance of common stock, $7.1 million from noncontrolling shareholders contribution, and $2.0 million from the issuance of convertible notes, and made repayment of $3.0 million to related parties for the six months ended June 30, 2020. While in ~~2018.~~

~~Financing Activities~~

Wethe same period in 2019, the Company received ~~$4.8~~$2.3 million from the issuance of convertible notes and $2.5 million in proceeds in a private placement from the issuance of restricted shares for the ~~nine~~six months ended ~~September~~June 30, 2019, to certain investors, including officers, directors and other affiliates. While in the same period in 2018, we received $31.2 million. In addition, the borrowings from related parties increased by $1.8 million for the nine month ended September 30, 2019 from the same period in 2018.

~~Currently, our primary source of liquidity is cash on hand and we have relied on debt and equity financings~~The Company expects to fund our operations to date. We believe that our cash balance and our expected cash flow, including additional debt & equity issuances will be sufficient to meet all of our financial obligations for the twelve months from the date of this report.

~~In the future, we will need additional capital to fund our operations and growth initiatives, which we expect~~continue to raise ~~through a combination of~~both equity ~~offerings,~~and debt ~~financings, related party or third-party funding.~~

~~The Company’s operating strategy is~~finance to enter into joint ventures (JVs) with partners who bring special capabilities in a particular market sector, Because we operate through joint ventures we may be restricted by the operating agreement governing a particular JV from accessing any cash balances in the JV for use in other Company activities outside of the JV.

We have historically incurred significant losses which could raise substantial doubt about our ability to continue as a going concern. The unaudited consolidated financial statements included in this report have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.

~~The Company’s independent registered public accounting firm’s report of the financial statements for year ended December 31, 2018, contained an explanatory paragraph regarding~~support the Company’s ~~ability to continue as a going concern.~~ investment plans and operations.

Effects of Inflation

Inflation and changing prices have had an effect on ~~our~~the business and ~~we expect~~management expects that inflation or changing prices could materially affect ~~our~~the business in the foreseeable future. ~~Our~~Company management will closely monitor the price ~~change~~changes and make efforts to maintain effective cost control in operations.

Off-Balance Sheet Arrangements

Off-balance sheet arrangements are obligations the Company has with nonconsolidated entities related to transactions, agreements, or other contractual arrangements.

The Company holds variable interests in joint ventures accounted for under the equity method of accounting. The Company is not the primary beneficiary of these joint ventures and therefore is not required to consolidate these entities (see Note 9 to the Consolidated Financial Statements).

~~We do~~does not have other ~~off balance~~off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on ~~our~~the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in ~~our~~its securities.

Contractual Obligations and Commitments

The tabular presentation of contractual obligations is not required for Smaller Reporting Companies.

AsSeasonality

The Company’s MEG division operates in the market for fleet sales of commercial EVs and the Company expects that orders and sales will be influenced by the amount and timing of budgeted expenditure by its customers, changes in government subsidy programs promoting the conversion to EV and government regulations relating to vehicle emission standards. Typically, the Company would expect to see higher sales at the start of the date of this report, other than changes related to adoption of the new lease accounting standard as described in Note 2 to the unaudited consolidated financial statements, there were no material changes to our contractual obligationsyear when companies start executing on their capital programs and ~~commitments outside the ordinary course of business since April 1, 2019 as reported in our 2018 Form 10-K.~~

~~OUTLOOK~~

The Company believes that the fleet market for commercial Electronic Vehicles (EV) provides a significant revenue and profit opportunity. It is our intention to develop this market initially in China and the ASEAN countries with potential in the future to expand into other regions.

The most immediate revenue opportunity is in the Taxi sector where the company has orders for 11,000 taxis of which we anticipate delivering 5,000 in the fourth quarter 2019 and the remaining 6,000 in the first quarter of 2020 with a potential for another 82,000 taxis to be delivered in 2020.

The Company is well advanced in its plans to develop finance and buy-back programs for the batteries used in closed-area heavy vehicles, last mile delivery light commercial vehicles and buses and coaches. We anticipate having these financing and buy-back programs in place byat the end of the ~~first quarter 2020~~year when companies are spending any surplus or uncommitted budget before the new budget cycle commences. The Company’s MEG business unit is building out its network and ~~anticipate~~has not generated sufficient orders to allow it to establish with any degree of certainty an expected pattern of seasonality.

OUTLOOK

The Company anticipates that its MEG business unit will be the ~~first~~largest contributor to revenues ~~from these activities~~in 2020. The rate at which the MEG business unit grows is highly correlated with the development of financing structures for fleet purchases of commercial EVs and the speed at which business in the ~~second quarter~~PRC and the rest of ~~2020.~~

Asia returns to pre COVID-19 levels.

The ~~company acquired~~Company will continue to seek ways to deploy its DBOT Alternative Trading System (“ATS”) as a ~~non-controlling interest in Glory Connection Sdn. Bhd. (Glory), a Malaysian entity, in July 2019. Glory holds the only license granted so far~~platform for the ~~manufacture~~issuance of ~~electric vehicles in Malaysia~~digital securities and ~~is in the process~~tokens, trading of ~~setting up its manufacturing~~commodities and ~~assembly capabilities.~~

~~We converted our DBOT business to a new trading infrastructure that went live in November. We have commenced a marketing program to grow revenues by increasing the number~~origination and distribution of ~~financial institutions trading on the DBOT platform.~~

~~Remediation work continues on the Company’s 58 acre campus located in West Hartford, Connecticut, this is the intended site of our FinTech Village. We~~private placements. The Company does not anticipate that DBOT will generate material amounts of revenue in 2020 due to the ~~remediation work will be completed in~~developmental stage the ~~second half of 2020.~~ business is in.

~~Grapevine our business focused on connecting nano-influencers with established brands~~The Company continues ~~to develop its platform. In November 2019 we launched Grapevine Village, an ecommerce platform driven by social media content. We continue~~ to look for ~~ways to grow our market share in~~acquisitions that will accelerate the ~~influencer~~growth of its MEG and ~~social media space.~~ Ideanomics Capital business units.

~~We have recorded no revenues from Digital Asset Management services in the current quarter and we do not anticipate recording any revenues in the fourth quarter~~Table of ~~2019.~~ Contents

Environmental Matters

~~We are~~The Company is subject to various federal, state, and local laws and regulations governing, among other things, hazardous materials, environmental contamination, and the protection of the environment. ~~We have~~The Company has made, and ~~expect~~expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. WeThe Company may also incur fines and penalties from time to time associated with noncompliance with such laws and regulations. ~~Starting from year~~In 2018, ~~we had $8~~the Company accrued $8.0 million ~~accrued~~ for ~~Asset Retirement Obligations~~asset retirement obligations, which isare related to ~~our~~the legal contractual obligation in connection with the acquisition of Fintech Village.

New Accounting Pronouncements

~~CRITICAL ACCOUNTING ESTIMATES~~

~~The discussion and analysis of our financial condition and results of operation are based upon our unaudited consolidated financial statements. The preparation of financial statements~~Information regarding new accounting pronouncements is included in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates, and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. Note 2 to the Condensed Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. Since December 31, 2018, besides new accounting policy adopted (see Note 2 to the Consolidated Financial Statements), there have been no material changes in the Company’s accounting policies that are impacted by judgments, assumptions and estimates. Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Periodically, we review our critical accounting estimates with the Audit Committee of our Board of Directors.Statements.

~~See the discussion in this section for information regarding the Company's accounting policy with respect to digital currency.~~

~~Digital Currency~~

Digital Currency consists of (1) GTB received in connection with the services agreement and assets purchase agreement with GTD and (2) GTB denominated in Bitcoin and Ethereum. The Bitcoin and Ethereum were obtained as part of the companies ongoing plan to convert its crypto currency holdings from GTB to Bitcoin & Ethereum in order to diversify our holdings of crypto currency. Given that there is limited precedent regarding the classification and measurement of cryptocurrencies and other digital currency under current GAAP, the Company has determined to account for these tokens as indefinite-lived intangible assets in accordance with ASC 350, Intangibles-Goodwill and Other until further guidance is issued by the FASB.

Indefinite-lived intangible assets are recorded at cost and are not subject to amortization, but shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If, at the time of an impairment test, the carrying amount of an intangible asset exceeds its fair value, an impairment loss in an amount equal to the excess is recognized. The fair value of our digital currency, such as GTB, Bitcoin and Ethereum, was a Level 2 measurement based upon the consideration agreed by GTD and the Company with a discount considering volatility, risk and limitations at contract inception.

~~New Accounting Pronouncements~~

Refer to Note 2 to the Consolidated Financial Statements for a description of accounting standards adopted related to leases. We do not expect any other recently issued accounting pronouncements will have a material effect on our financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk
~~We are~~The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and ~~are~~is not required to provide the information under this item.

Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September~~June 30, ~~2019.~~2020. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ~~not~~ effective as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, which have materially affected or would likely materially affect our internal control over financial reporting. The Company continues to invest resources in order to upgrade internal controls.

43
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
For a description of ~~our~~the Company’s legal proceedings, see Note 18, ~~Contingencies~~Commitments and ~~Commitments~~Contingencies, to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Table of Contents

Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in ~~our 2018 Annual Report~~the 2019 Form 10-K which could materially affect ~~our~~the Company’s business, financial condition, or future results. The risks described in ~~our Annual Report on~~the 2019 Form 10-K isare not the only risks facing ~~our~~the Company. Additional risks and uncertainties not currently known to usmanagement or that wemanagement currently ~~deem~~deems to be immaterial also may materially ~~and~~ adversely affect ~~our~~the Company’s business, financial condition, or future results.

~~We are subject to risks related to holding cryptocurrencies and accepting cryptocurrencies as a form of payment.~~
We have formed strategic partnerships with third parties and entered into service agreements that provided us with cryptocurrencies as compensation for our services. Cryptocurrencies are not considered legal tender or backed by any government and have experienced price volatility, technological glitches and various law enforcement and regulatory interventions. The use of cryptocurrency such as bitcoin has been prohibited or effectively prohibited in some countries. If we fail to comply with prohibitions applicable to us, we could face regulatory or other enforcement actions and potential fines and other consequences.
As part of our strategy of forming strategic alliances with other companies in the blockchain and FinTech services industry, we may receive cryptocurrency or tokens as compensation for services. For instance, as part of our digital asset management services agreement with GTD, our compensation was paid in GTB. The prices of cryptocurrency, such as GTB, Bitcoins and Ethereum, are typically highly volatile and subject to exchange rate risks, as well as the risk that regulatory or other developments may adversely affect their value. However, our cryptocurrency will be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. As a result, fluctuations in the market value of cryptocurrency could cause us to record an impairment charge on the value of our cryptocurrency, which would directly impact our balance sheet and statements of operations.
In particular, our GTB may experience periods of extreme volatility due to (i) GTB having a very limited trading history, (ii) a lack of adoption of GTB by cryptocurrency holders, including a lack of adoption of cryptocurrencies generally due to the expense of mining cryptocurrencies in the current cryptocurrency price environment and (iii) GTB trading on one cryptocurrency exchange which has limited operating histories. Speculators and investors who seek to profit from trading and holding GTB currently account for a significant portion of GTB demand. Such speculation regarding the potential future appreciation in the value of GTB may artificially inflate their price. Fluctuations in the value of our GTB or any other cryptocurrencies that we hold may also lead to fluctuations in the value of our common stock. In addition, because of converting our holdings to fiat currency would likely take an extended period of time. If the exchange where GTB trades was to cease operations or no longer quote GTB, there would be no trading platform for GTB and it would likely be impossible to convert GTB into fiat currency.
In addition, there is substantial uncertainty regarding the future legal and regulatory requirements relating to cryptocurrency or transactions utilizing cryptocurrency. For instance, governments may in the near future curtail or outlaw the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. These uncertainties, as well as future accounting and tax developments, or other requirements relating to cryptocurrency, could have a material adverse effect on our business.
~~We may not be able to convert our holdings of cryptocurrencies into fiat~~
To date the Asia EDX exchange has not permitted us to convert any part of our holdings of GTB, Bitcoin & Ethereum to fiat. We are in regular contact with the exchange regarding the ability to convert some or all of our holdings to fiat, we have been informed that the exchange plans to introduce a capability to allow convertibility into fiat. It is possible that the Asia EDX Exchange may never allow GTB, Bitcoin & Ethereum held at the exchange to be converted into fiat.
The cryptocurrency exchange on which our GTB trade has limited operating histories and, in most cases, is largely unregulated and, therefore, may be more exposed to fraud and failure than established, regulated exchanges for traditional securities and other products. To the extent that such exchange involved in fraud or experience security failures or other operational issues, it may result in negative impact to our financial results, or the loss or destruction of, our GTB.
The cryptocurrency exchange on which the GTB trade has limited operating histories and, in most cases, are largely unregulated. Furthermore, the cryptocurrency exchange does not provide the public with significant information regarding their ownership structure, management team, corporate practices or regulatory compliance. As a result, the marketplace may lose confidence in or may experience problems relating to such exchange. Cryptocurrency exchanges may impose daily, weekly, monthly or customer-specific transaction or distribution limits, or they may suspend withdrawals entirely, rendering the exchange of GTB for other digital assets or for fiat currency difficult or impossible.
Over the past few years, a number of cryptocurrency exchanges have been closed due to fraud, failure or security breaches. In many of these instances, the customers of such exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. The AsiaEDX, which is the principal exchange for the GTB, launched in 2018 and is less likely to have the infrastructure and capitalization that make larger cryptocurrency exchanges more stable. As a result, the AsiaEDX may be at risk for cybersecurity attacks or may suffer from a greater exposure to technical failure.
44
A lack of stability in the AsiaEDX or the other exchanges upon which GTB trade and their closure or temporary shutdown due to fraud, business failure, hackers or malware, or government-mandated regulation could result in us losing all or a portion of our GTB or may reduce confidence in the GTB and result in greater volatility in their pricing. If the GTB are delisted from the AsiaEDX or any other cryptocurrency exchange, or if any of the cryptocurrency exchanges that list GTB shut down or cease to continue operations, there may cease to be a liquid market for GTB. These potential consequences could also have a material adverse impact on our financial results. Moreover, the exchanges that list GTB operate outside of the United States. Accordingly, in the event of fraud, we may have difficulty successfully pursuing claims against these exchanges in the courts of the countries in which they are organized.
~~Currently, there are no regulated trading markets for our GTB or the other digital currencies that we hold, and therefore our ability to sell such tokens may be limited.~~
As of the date of this report, the online trading platforms on which the tokens we hold trade, including, with respect to our GTB, the AsiaEDX, currently does not qualify as registered exchanges within the meaning of federal securities laws or regulated alternative trading systems. To the extent the tokens trading on these platforms meet the definition of a security under federal securities laws, the platform is generally required to register with the SEC as a national securities exchange or be exempt from such registration requirements. The failure of these platforms to register as national securities exchanges or properly comply with registration exemptions could result in the SEC bringing an enforcement action seeking to prohibit, suspend or limit their operations. In such event, the tokens we hold may be tradable on a very limited range of venues, or not at all, and there may be periods where trading activity in tokens that we hold is minimal or non-existent. These potential consequences could have a material adverse impact on the trading price of the tokens that we hold and could render the exchange of our tokens for other digital assets or fiat currency difficult or impossible.
~~GTB and other cryptocurrencies that we hold may be subject to loss, theft or restriction on access.~~
There is a risk that some or all of our cryptocurrencies could be lost or stolen. Access to our coins could also be restricted by cybercrime. We currently hold all of our GTB in cold storage. Cold storage refers to any cryptocurrency wallet that is not connected to the internet. Cold storage is generally more secure but is not ideal for quick or regular transactions. We expect to continue to hold the majority of our cryptocurrencies in cold storage to reduce the risk of malfeasance, but this risk cannot be eliminated.
Hackers or malicious actors may launch attacks to steal, compromise or secure cryptocurrencies, such as by attacking the cryptocurrency network source code, exchange servers, third party platforms, cold and hot storage locations or software, or by other means. We are in control and possession of one of the more substantial holdings of GTB, and we may in the future hold substantial positions in other cryptocurrencies. As we increase in size, we may become a more appealing target of hackers, malware, cyber-attacks or other security threats. Any of these events may adversely affect our operations and, consequently, our investments and profitability. The loss or destruction of a private key required to access our digital wallets may be irreversible and we may be denied access for all time to our cryptocurrency holdings or the holdings of others. Our loss of access to our private keys or our experience of a data loss relating to our digital wallets could adversely affect our investments and assets.
Cryptocurrencies are controllable only by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held, which wallet’s public key or address is reflected in the network’s public blockchain. We will publish the public key relating to digital wallets in use when we verify the receipt of transfers and disseminate such information into the network, but we will need to safeguard the private keys relating to such digital wallets. To the extent such private keys are lost, destroyed or otherwise compromised, we will be unable to access our cryptocurrency coins and such private keys may not be capable of being restored by any network. Any loss of private keys relating to digital wallets used to store our cryptocurrencies could have a material adverse effect on our business, prospects or operations and the value of any GTB or other cryptocurrencies we hold for our own account.
Because there has been limited precedent set for financial accounting of cryptocurrencies and other digital assets, the determination that we have made for how to account for our GTB and any other digital assets we may acquire may be subject to change.
Because there has been limited precedent set for the accounting classification and measurement of cryptocurrency and other digital tokens and related revenue recognition, it is unclear how companies may in the future be required to account for digital asset transactions and assets and related revenue recognition. We are currently accounting for our GTB as indefinite-lived intangible assets in accordance with Accounting Standard Codification No. 350: Intangibles-Goodwill and Other. Indefinite-lived intangible assets are recorded at cost and are not subject to amortization, but shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. However, a change in regulatory or financial accounting standards could result in the necessity to change our accounting methods and restate our financial statements. Such a restatement could adversely affect the accounting for our GTB or other cryptocurrencies that we may acquire and may more generally negatively impact our business, prospects, financial condition and results of operation.
45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no unregistered sales of equity securities during the fiscal quarter ended ~~September~~June 30, ~~2019, other than those that were previously reported in our Current Reports on Form 8-K.~~2020.

Item 3. Defaults Upon Senior Securities
There were no defaults upon senior securities during the fiscal quarter ended ~~September~~June 30, ~~2019.~~2020.

Item 4. Mine Safety Disclosures
Not applicable.

Item 5. Other Information
Effective August 10, 2020, the board of directors accepted the resignation of Mr. Steven Fadem from the board of directors. The Company and Mr. Fadem have entered into a consulting agreement, effective August 10, 2020. The consulting agreement is for a term of 12 months and Mr. Fadem will be paid $4,000 per month.
~~Not applicable.~~ Effective August 5, 2020, the Company and Mr. Alfred Poor amended his employment agreement which provides for (i) a term of 2 years; (ii) a base salary of $500,000; (iii) a 2020 cash bonus of $300,000 in recognition of Mr. Poor’s performance during the first 6 months of 2020; (iv) an option grant of 2,000,000 shares in 2021 which shall vest monthly over 2 years; (v) future cash bonuses based on performance objectives to be mutually agreed by the board of directors or an appropriate committee; (vi) in the event Mr. Poor is terminated without cause or for “good reason” as defined in the employment agreement, severance payments equal to the base salary through the remainder of the term of the employment agreement plus the prior year’s performance bonuses divided by 12 and multiplied by the months remaining in the term and the estimated cost of health insurance pursuant to COBRA for 12 months following termination and (vii) eligibility for employee benefits provided to the Company’s senior executives.
Effective August 5, 2020, the Company and Mr. Conor McCarthy amended his employment agreement which provides for (i) a term of 2 years; (ii) a base salary of $350,000; (iii) an option grant of 750,000 shares in 2021 which shall vest monthly over 2 years; (iv) future cash bonuses based on performance objectives to be mutually agreed by the board of directors or an appropriate committee; (v) in the event Mr. McCarthy is terminated without cause or for “good reason” as defined in the employment agreement, severance payments equal to the base salary through the remainder of the term of the employment agreement plus the prior year’s performance bonuses divided by 12 and multiplied by the months remaining in the term and the estimated cost of health insurance pursuant to COBRA for 12 months following termination and (vi) eligibility for employee benefits provided to the Company’s senior executives.
Effective August 4, 2020, the Company agreed to terminate the Financial Advisory Agreement, dated August 19, 2018 (the “Agreement”), between the Company and National Transport Capacity Co., Ltd., a company established in the People’s Republic of China (“NTC”) pursuant to the entry into a new Supplement to the Cooperation Agreement (the “Cooperation Agreement” by and among the Company, Shenzhen National Transportation Service Co., Ltd. (“SNTS”), Mobile Energy Global Limited and Qingdao Enengju New Energy Sales Service Co., Ltd. The Cooperation Agreement provides for a 1 year term and SNTS has agreed to cooperate in conducting its new energy vehicle projects in cooperation with the Company, including but not limited to supply chain finance, funds, financial leasing and ABS. SNTS also agreed to begin negotiating the hand over of the exclusive operation of its own projects and the ABS business in cooperation with "Pang Da Automobile Trade Group Co., Ltd." to the Company. Following the negotiation of the matters set forth in the Agreement, the parties will work toward the execution of a separate written agreement. The Cooperation Agreement is governed by Chinese law.

Table of Contents

Item 6. Exhibits
Exhibit

~~Exhibit~~
No.
Description
10.1

~~Convertible Note Purchase~~Letter Agreement, dated ~~September 27, 2019,~~June 9, 2020, by and between YA II and the Company and ID Venturas 7, LLC*Ideanomics, Inc.*
10.2

~~Convertible Note,~~Debenture Amendment Agreement, dated ~~September 27, 2019,~~June 9, 2020, by and between ~~the Company~~YA II and ID Venturas 7, LLC*Indeanomics, Inc.*
10.3

~~Warrant,~~Subscription Agreement, dated ~~September 27, 2019,~~June 9, 2020, by and between ~~the Company~~D-Beta One EQ, Ltd. and ID Venturas 7, LLC*Ideanomics, Inc.*
10.4

Registration Rights Agreement, dated September 27, 2019, by and between the Company and ID Venturas, LLC*Amendment No. 9 to Convertible Promissory Note in $3,000,000 principal amount issued to Shane McMahon*
10.5

Amendment to Terms of Convertible Promissory Note & Advance Payments*
10.6

Employment Agreement, dated ~~September~~August 5, ~~2019,~~2020, by and between the Company and Mr. Conor J. McCarthy*
~~10.6~~
10.7

~~Share transfer agreement,~~Employment Agreement, dated July ~~18, 2019,~~31, 2020, by and between ~~Ideanomics Inc.~~the Company and Beijing Financial Holdings Limited*Mr. Alfred P. Poor *
~~31.1~~
10.8

Consulting Agreement, dated August 10, 2020, by and between the Company and Mr. Steven Fadem*
10.9

Supplement to the Cooperation Agreement, dated August 4, 2020, by and among Ideanomics, Inc., Mobile Energy Global Limited, Shenzhen National Transportation Service Co., Ltd. and Qingdao Enengju New Energy Sales Service Co., Ltd.
31.1
Certifications of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2
Certifications of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2
Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS
XBRL Instance Document
101.SCH
Taxonomy Extension Schema Document
101.CAL
Taxonomy Extension Calculation Linkbase Document
101.DEF
Taxonomy Extension Definition Linkbase Document
101.LAB
Taxonomy Extension Label Linkbase Document
101.PRE
Taxonomy Extension Presentation Linkbase Document
*Filed herewith
**Furnished herewith

46
60
Table of Contents
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on ~~November 14, 2019.~~August 10, 2020.
IDEANOMICS, INC.

~~By:~~
~~/s/Conor McCarthy~~
By:
/s/ Conor McCarthy
Conor McCarthy
Chief Financial Officer
(Principal Financial and Accounting Officer)

47
61

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


Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common stock, $0.001 par value per share	IDEX	The Nasdaq Stock Market



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


PART I	~~FINANCIAL~~-FINANCIAL INFORMATION

Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31 43
Item 3	Quantitative and Qualitative Disclosures About Market Risk	43 58
Item 4.	Controls and Procedures	43 58

PART II	~~OTHER~~-OTHER INFORMATION

Item 1.	Legal Proceedings	44 58
Item 1A.	Risk Factors	44 59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46 59
Item 3.	Defaults Upon Senior Securities	46 59
Item 4.	Mine Safety Disclosures	46 59
Item 5.	Other Information	46 59
Item 6.	Exhibits	46 60
Signatures		47 61

	September 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	1,686,596		$	3,106,244
Accounts receivable, net		2,941,245			19,370,665
Licensed content, current		-			16,958,149
Prepayments		1,013,384			2,042,041
Other current assets		2,371,913			3,594,942
Total current assets		8,013,138			45,072,041
Property and equipment, net		14,504,993			15,029,427
Intangible assets, net		81,960,331			3,036,352
Goodwill		10,028,073			704,884
Long-term investments		42,159,313			26,408,609
Operating lease right of use assets		6,845,031			-
Other non-current assets		1,252,797			3,983,799
Total assets	$	164,763,676		$	94,235,112

LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK AND EQUITY
Current liabilities: (including amounts of the consolidated VIEs without recourse to Ideanomics, Inc. See Note 4)
Accounts payable	$	1,543,291		$	19,265,094
Deferred revenue		458,894			405,929
Amount due to related parties		2,565,812			800,822
Other current liabilities		9,141,870			5,321,697
Current portion of operating lease liabilities		912,271			-
Convertible promissory note due to related parties		1,288,032			4,140,055
Total current liabilities		15,910,170			29,933,597
Deferred tax liabilities		-			513,935
Asset retirement obligations		6,392,500			8,000,000
Convertible promissory note due to related parties – long term		3,000,000			-
Convertible note - long term		12,627,531			11,313,770
Promissory note - long term		3,000,000			-
Operating lease liability-long term		6,329,533			-
Total liabilities		47,259,734			49,761,302
Commitments and contingencies (Note 18)
Convertible redeemable preferred stock:
Series A - 7,000,000 shares issued and outstanding, liquidation and deemed liquidation preference of $3,500,000 as of September 30, 2019 and December 31, 2018		1,261,995			1,261,995
Equity:
Common stock - $0.001 par value; 1,500,000,000 shares authorized, 132,696,071 shares and 102,766,006 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		132,696			102,765
Additional paid-in capital		255,737,318			195,779,576
Accumulated deficit		(138,468,441	)		(149,975,302	)
Accumulated other comprehensive loss		(1,557,346	)		(1,664,598	)
Total IDEX shareholder’s equity		115,844,227			44,242,441
Non-controlling interest		397,720			(1,030,626	)
Total equity		116,241,947			43,211,815
Total liabilities, convertible redeemable preferred stock and equity	$	164,763,676		$	94,235,112

	Nine Months Ended September 30, 2018
	Common Stock		Par Value		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Ideanomics Shareholders' equity			Non- controlling Interest			Total Equity
Balance, January 1, 2018		68,509,090	$	68,509	$	158,449,544		$	(126,693,022	)	$	(782,074	)	$	31,042,957		$	(1,289,367	)	$	29,753,590
Share-based compensation		-		-		121,190			-			-			121,190			-			121,190
Common stock issuance for RSU vested		13,464		13		(13	)		-			-			-			-			-
Common stock issuance for option exercised		42,501		43		2,589			-			-			2,632			-			2,632
Common stock issued for warrant exercised		300,000		300		524,700			-			-			525,000			-			525,000
Net loss		-		-		-			(3,721,369	)		-			(3,721,369	)		(91,444	)		(3,812,813	)
Foreign currency translation adjustments, net of nil tax		-		-		-			-			(32,481	)		(32,481	)		(9,148	)		(41,629	)
Balance, March 31, 2018 (restated)		68,865,055	$	68,865	$	159,098,010		$	(130,414,391	)	$	(814,555	)	$	27,937,929		$	(1,389,959	)	$	26,547,970
Share-based compensation		-		-		3,239,727			-			-			3,239,727			-			3,239,727
Investment from GTD and SSS		-		-		5,900,000			-			-			5,900,000			-			5,900,000
Common stock issuance for RSU vested		1,227,244		1,227		(1,227	)		-			-			-			-			-
Common stock issuance for acquisition of BDCG		3,000,000		3,000		7,797,000			-			-			7,800,000			-			7,800,000
Net loss		-		-		-			(8,320,024	)		-			(8,320,024	)		(290,897	)		(8,610,921	)
Foreign currency translation adjustments, net of nil tax		-		-		-			-			(121,465	)		(121,465	)		20,269			(101,196	)
Balance, June 30, 2018		73,092,299	$	73,092	$	176,033,510		$	(138,734,415	)	$	(936,020	)	$	36,436,167		$	(1,660,587	)	$	34,775,580
Share-based compensation		-		-		11,530			-			-			11,530			-			11,530
Investment from GTD and SSS		-		-		5,288,502			-			-			5,288,502			-			5,288,502
Common stock issued for warrant exercised		343,714		344		601,156			-			-			601,500			-			601,500
Common stock issuance for option exercised		40,295		40		(40	)		-			-			-			-
Common stock issuance for Star Thrive Group Limited		3,770,493		3,770		6,869,138			-			-			6,872,908			-			6,872,908
Conversion feature of convertible note		-		-		1,384,614			-			-			1,384,614			-			1,384,614
Acquisition of Grapevine		-		-		-			-			-						1,154,419			1,154,419
Net loss		-		-		-			(7,186,847	)		-			(7,186,847	)		(254,973	)		(7,441,820	)
Foreign currency translation adjustments, net of nil tax		-		-		-			-			696,245			696,245			11,895			708,140
Balance, September 30, 2018		77,246,801		77,246		190,188,410			(145,921,262	)		(239,775	)		44,104,619			(749,246	)		43,355,373

	Nine Months Ended September 30, 2019
	Common Stock		Par Value		Additional Paid-in Capital			Retained Earnings/ Accumulated (Deficit)			Accumulated Other Comprehensive Income (Loss)			Ideanomics Shareholders' equity			Non- controlling Interest			Total Equity
Balance, January 1, 2019		102,766,006	$	102,765	$	195,779,576		$	(149,975,302	)	$	(1,664,598	)	$	44,242,441		$	(1,030,626	)	$	43,211,815
Share-based compensation		-		-		224,484			-			-			224,484			-			224,484
Common stock issuance for restricted shares		129,840		130		(130	)		-			-			-			-			-
Common Stock issuance for acquisition-SolidOpinion (Note 5(a))		4,500,000		4,500		7,150,500			-			-			7,155,000			-			7,155,000
Common stock issuance for convertible debt (Note 12(b))		1,166,113		1,166		2,048,834			-			-			2,050,000			-			2,050,000
Net income (loss)		-		-		-			19,926,515			-			19,926,515			(17,761	)		19,908,754
Foreign currency translation adjustments, net of nil tax		-		-		-			-			172,133			172,133			(25,295	)		146,838
Balance, March 31, 2019		108,561,959	$	108,561	$	205,203,264		$	(130,048,787	)	$	(1,492,465	)	$	73,770,573		$	(1,073,682	)	$	72,696,891
Share-based compensation		-		-		3,702,636			-			-			3,702,636			-			3,702,636
Common stock issuance for asset acquisition-Fintalk (Note 5(b))		2,860,963		2,861		5,347,139			-			-			5,350,000			-			5,350,000
Common stock issuance for acquisition of non-controlling interest Grapevine (Note 5(c))		590,671		591		491,027			-			-			491,618			(491,618	)		-
Investment from SSSIG¹		575,431		576		(576	)		-			-			-			-			-
Net income (loss)		-		-		-			5,292,213			-			5,292,213			(15,430	)		5,276,783
Foreign currency translation adjustments, net of nil tax		-		-		-			-			(75,851	)		(75,851	)		7,992			(67,859	)
Balance, June 30, 2019		112,589,024	$	112,589	$	214,743,490		$	(124,756,574	)	$	(1,568,316	)	$	88,531,189		$	(1,572,738	)	$	86,958,451
Share-based compensation		-		-		2,547,107			-			-			2,547,107			-			2,547,107
Common stock issuance for acquisition of BlackHorse Ventures²		815,217		815		1,499,475			-			-			1,500,290			-			1,500,290
Common stock issuance for acquisition of Glory Connection (Note 5(e))		12,190,000		12,190		24,367,810			-			-			24,380,000			-			24,380,000
Common stock issuance for acquisition of DBOT (Note 5(f))		5,851,830		5,852		9,708,186			-			-			9,714,038			104,648			9,818,686
Common stock issuance for releasing Grapevine as collateral		250,000		250		372,250			-			-			372,500			-			372,500
Common stock issuance for Convertible note (Note 12(c))		1,000,000		1,000		2,499,000			-			-			2,500,000			-			2,500,000
Deconsolidation of Amer (Note 5(h))		-		-		-			-			-						445,894			445,894
Net income (loss)		-		-		-			(13,711,867	)		-			(13,711,867	)		1,407,384			(12,304,483	)
Foreign curency translation adjustments, net of nil tax		-		-		-			-			10,970			10,970			12,532			23,502
Balance, September 30, 2019		132,696,071		132,696		255,737,318			(138,468,441	)		(1,557,346	)		115,844,227			397,720			116,241,947

	Nine Months Ended
	September 30,2019			September 30, 2018

Cash flows from operating activities:
Net income (loss)	$	12,881,054		$	(19,865,554	)
Adjustments to reconcile net income (loss) to net cash used in operating activities
Share-based compensation expense		6,474,227			3,372,447
Depreciation and amortization		1,420,480			314,737
Non-cash interest expense		2,265,921			-
Equity in losses of equity method investees		606,390			44,316
Digital currency received as payment for services		(40,700,000	)		-
Gain on disposal of subsidiaries		(1,057,363	)		-
Impairment of property and equipment		2,298,887
Loss on remeasurement of DBOT investment		3,178,702			-
Change in operating assets and liabilities, net of effects of businesses acquired:
Accounts receivable		(2,814,198	)		(78,572,438	)
Prepaid expenses and other assets		2,446,822			(3,332,696	)
Accounts payable		1,024,370			6,560,434
Deferred revenue		149,723			366,474
Amount due to related parties		(104,323	)		71,939,834
Accrued expenses, salary and other current liabilities		3,217,279			1,530,544
Net cash used in operating activities		(8,712,029	)		(17,641,902	)

Cash flows from investing activities:
Acquisition of property and equipment		(1,809,092	)		(167,891	)
Proceeds from disposal of subsidiaries		694,282			-
Acquisition of subsidiaries, net of cash acquired		246,929			(2,840,219	)
Payments for long term investments		(870,000	)		(2,035,190	)
Net cash used in investing activities		(1,737,881	)		(5,043,300	)

Cash flows from financing activities:
Proceeds from issuance of convertible note		4,802,300			12,000,000
Proceeds from issuance of shares and warrant		2,500,000			19,186,771
Borrowings from related parties		1,764,992			-
Net cash provided by financing activities		9,067,292			31,186,771
Effect of exchange rate changes on cash		(37,030	)		(48,638	)
Net (decrease)/increase in cash and restricted cash		(1,419,648	)		8,452,931

Cash and cash equivalents at the beginning of the period		3,106,244			7,577,317

Cash and cash equivalents at the end of the period	$	1,686,596		$	16,030,248

Supplemental disclosure of cash flow information:
Disposal of assets in exchange of GTB	$	20,218,920		$	-
Service Revenue received in GTB	$	40,700,000		$	-
Issuance of shares for acquisition of intangible assets	$	10,005,000		$	-

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Revenue	$	2,041	$	3,936
Gross Profit		1,379		769
Net loss from operations		173,465		354,502
Net loss		171,719		352,606
Net loss attributable to Glory	$	95,477	$	195,121

	September 30, 2019		December 31, 2018
Within 90 days	$	2,941,245	$	1,219,526
91-180 days		-		633
181-365 days		-		12,385,193
More than 1 year		-		5,765,313
Total	$	2,941,245	$	19,370,665

	Nine months ended September 30, 2019		Year Ended December 31, 2018
At the beginning of the year		704,884		-
Goodwill Acquired¹		9,323,189		704,884
At the end of the period		10,028,073		704,884

			September 30, 2019										December 31, 2018
	Weighted Average Remaining		Gross Carry		Accumulated			Accumulated Impairment			Net		Gross Carry		Accumulated			Accumulated Impairment			Net
	Useful Life		Amount		Amortization			Loss			Balance		Amount		Amortization			Loss			Balance
Amortizing Intangible Assets
Animation Copyright (Note 14 (b))		-	$	-	$	-		$	-		$	-	$	301,495	$	(64,606	)	$	-		$	236,889
Software and licenses		-		97,308		(97,308	)		-			-		97,308		(93,251	)		-			4,057
SolidOpinion IP (Note 5 (a))		4.4		4,655,000		(543,084	)		-			4,111,916		-		-			-			-
Fintalk intangible assets (Note 5 (b))		4.8		6,350,000		(317,500	)		-			6,032,500		-		-			-			-
Influencer network		8.9		1,980,000		(214,500	)		-			1,765,500		1,980,000		(66,000	)		-			1,914,000
Customer contract¹		2.0		558,830		(185,458	)		-			373,372		500,000		(55,556	)		-			444,444
Continuing Membership Agreement¹		19.8		8,255,440		(103,193	)		-			8,152,247		-		-			-			-
Trade name		13.9		110,000		(7,944	)		-			102,056		110,000		(2,444	)		-			107,556
Technology platform		5.9		290,000		(44,881	)		-			245,119		290,000		(13,808	)		-			276,192
Total amortizing intangible assets			$	22,296,578	$	(1,513,868	)	$	-		$	20,782,710	$	3,278,803	$	(295,665	)	$	-		$	2,983,138
Indefinite lived intangible assets
Website name				159,504		-			(134,290	)		25,214		159,504		-			(134,290	)		25,214
Patent				28,000		-			-			28,000		28,000		-			-			28,000
GTB (Note 14 (b))				61,124,407		-			-			61,124,407		-		-			-			-
Total intangible assets			$	83,608,489	$	(1,513,868	)	$	(134,290	)	$	81,960,331	$	3,466,307	$	(295,665	)	$	(134,290	)	$	3,036,352

		September 30, 2019
												Foreign currency
		December 31,				Loss on			Reclassification			translation			September 30,
		2018		Addition		investment			to subsidiaries			adjustments			2019
Wecast Internet	(i)	$	4,114	$	-	$	(5	)	$	-		$	1,930		$	6,039
Hua Cheng	(ii)		308,666		-		(32,890	)		-			(37,210	)		238,566
Shandong Media	(iii)		-		-		-			-			-			-
BDCG	(iv)		9,800,000		-		-			-			-			9,800,000
DBOT	(v)		6,843,726		-		(3,719,735	)		(3,123,991	)		-			-
Glory	(vi)		-		23,000,000		(32,462	)		-			-			22,967,538

Total		$	16,956,506	$	23,000,000	$	(3,785,092	)	$	(3,123,991	)	$	(35,280	)	$	33,012,143

Maturity of Lease Liability	Operating Lease
2019 (excluding the nine months ended September 30, 2019)	$	332,549
2020		1,307,783
2021		1,328,160
2022		1,422,965
2023		1,474,391
2024 and thereafter		3,377,653
Total lease payments		9,243,501
Less: Interest		(2,001,696	)
Total	$	7,241,805

				Weighted-average
	Shares			fair value
Non-vested restricted shares outstanding at January 1, 2019		87,586		$	2.46
Granted		129,840		$	1.24
Forfeited		(3,000	)	$	2.60
Vested		(158,840	)	$	1.49
Non-vested restricted shares outstanding at September 30, 2019		55,586		$	2.37