Use of Terms

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

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

·●

“DBOT” refers to the Delaware Board of Trade Holdings, ~~Inc~~Inc. which is holding company for the Company’s FINRA Registered Broker Dealer. The Company owns ~~99%~~98% of the share capital Delaware Board of Trade Holdings, Inc.;

·●

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

·●

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

·●

“FINRA” refers to the Financial Industry Regulatory Authority;

·●

~~“HK SAR” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;~~

“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;~~EV in the PRC;

·●

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

●

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

·●

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

·●

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

·●

“~~SSF”~~SSSIG” refers to ~~Tianjin Sevenstarflix Network Technology~~Sun Seven Stars Investment Group Limited, a ~~PRC company controlled by YOD Hong Kong through contractual arrangements;~~British Virgin Islands corporation, an affiliate of Bruno Wu (“Dr. Wu,”) the former Chairman of the Company;

·●

“~~Sinotop Beijing”~~Timios” refers to ~~Beijing Sino Top Scope Technology Co., Ltd., a PRC company controlled by YOD Hong Kong through contractual arrangements;~~Timios Holdings Corp. and its affiliates which was acquired on January 8, 2021;

·●

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

·●

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

~~“VIEs” refers to our variable interest entities Sinotop Beijing, and SSF;~~

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

·●

~~“Mobile Energy Group Services” business unit refers to all other operations other than Legacy YOD business;~~

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

·●

“~~Wide Angle”~~WAVE” refers to ~~Wide Angle Group Limited, a Hong Kong company that is 55% owned by the Company;~~Wireless Advanced Vehicle Electrification, Inc. which was acquired on January 15, 2021.

~~“YOD Hong Kong” refers to 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 and a “wholly foreign-owned enterprise,” which is wholly-owned by YOD Hong Kong; and~~

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

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	5
Unaudited Condensed Consolidated Statements of Operations	6
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	7
Unaudited Condensed Consolidated Statements of Equity	8
Unaudited Condensed Consolidated Statements of Cash Flows	10
Notes to Unaudited Condensed Consolidated Financial Statements	11

Table of Contents

IDEANOMICS, INC.

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

March 31, 2020 December 31, 2019

ASSETS
Current assets:
Cash and cash equivalents $ 5,914 $ 2,633
Accounts receivable, net (due from related parties were $1,688 and $2,284 as of March 31, 2020 and December 31, 2019, respectively) 1,833 2,405
Prepayments 477 572
Amount due from related parties 1,280 1,256
Other current assets 588 587
Total current assets 10,092 7,453
Property and equipment, net 355 378
Fintech Village 12,561 12,561
Intangible assets, net 51,595 52,771
Goodwill 10,789 23,344
Long-term investments 22,618 22,621
Operating lease right of use assets 6,051 6,934
Other non-current assets 883 883
Total assets $ 114,944 $ 126,945

LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK, REDEMABLE NON-CONTROLLING INTEREST AND EQUITY
Current liabilities
Accounts payable $ 3,656 $ 3,380
Deferred revenue 500 477
Accrued salaries 952 923
Amount due to related parties 1,842 3,962
Other current liabilities 6,029 6,466
Current portion of operating lease liabilities 1,289 1,113
Current acquisition earn-out liability 5,952 12,421
Promissory note-short term 3,045 3,000
Convertible promissory note due to third parties 6,015 1,753
Convertible promissory note due to related parties 1,566 3,260
Total current liabilities 30,846 36,755
Asset retirement obligations 5,094 5,094
Convertible promissory note due to third parties-long term 5,120 5,089
Convertible promissory note due to related parties-long term 3,290 1,551
Operating lease liability-long term 6,010 6,222
Non-current acquisition earn-out liability 10,701 12,235
Total liabilities 61,061 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 March 31, 2020 and December 31, 2019 1,262 1,262
Redeemable non-controlling interest 7,153 -
Equity:
Common stock - $0.001 par value; 1,500,000,000 shares authorized, 163,460,045 shares and 149,692,953 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively 163 150
Additional paid-in capital 293,345 282,554
Accumulated deficit (260,829 ) (248,481 )
Accumulated other comprehensive loss (680 ) (664 )
Total IDEX shareholder’s equity 31,999 33,559
Non-controlling interest 13,469 25,178
Total equity 45,468 58,737
Total liabilities, convertible redeemable preferred stock, redeemable non-controlling interest and equity $ 114,944 $ 126,945


	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	355,856	$	165,764
Accounts receivable, net		5,409		7,400
Available-for-sale security		15,155		0
Inventory		960		0
Prepaid expenses		6,400		2,629
Amount due from related parties		245		240
Other current assets		479		3,726
Held for sale assets (Fintech Village)		7,068		0
Total current assets		391,572		179,759
Property and equipment, net		631		330
Fintech Village		0		7,250
Intangible assets, net		92,525		29,705
Goodwill		51,084		1,165
Long-term investments		24,179		8,570
Operating lease right of use assets		9,338		7,117
Other non-current assets		569		516
Total assets	$	569,898	$	234,412

LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK , REDEMABLE NON-CONTROLLING INTEREST AND EQUITY
Current liabilities
Accounts payable	$	9,978	$	5,057
Deferred revenue		2,225		1,129
Accrued salaries		4,831		1,750
Amount due to related parties		1,235		882
Other current liabilities		7,112		1,920
Current portion of operating lease liabilities		955		430
Current contingent consideration		8,481		1,325
Promissory note-short term		869		568
Convertible promissory note due to third parties		80,446		0
Asset retirement obligations		4,653		0
Total current liabilities		120,785		13,061
Asset retirement obligations		0		4,653
Deferred tax liabilities		1,290		0
Operating lease liability-long term		8,485		6,759
Non-current contingent consideration		8,630		7,635
Other long-term liabilities		1,175		535
Total liabilities		140,365		32,643
Commitments and contingencies (Note 18)
Convertible redeemable preferred stock and Redeemable non-controlling interest:
Series A - 7,000,000 shares issued and outstanding, liquidation and deemed liquidation preference of $3,500,000 as of March 31, 2021 and December 31, 2020		1,262		1,262
Redeemable non-controlling interest		7,600		7,485
Equity:
Common stock - $0.001 par value; 1,500,000,000 shares authorized, 419,469,800 shares and 344,906,295 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		419		345
Additional paid-in capital		761,155		531,866
Accumulated deficit		(347,457)		(346,883)
Accumulated other comprehensive loss		784		1,256
Total IDEX shareholder’s equity		414,901		186,584
Non-controlling interest		5,770		6,438
Total equity		420,671		193,022
Total liabilities, convertible redeemable preferred stock, redeemable non-controlling interest and equity	$	569,898	$	234,412

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
	March 31, 2021		March 31, 2020
Revenue from sales of products (including revenue from related party of $1 and $0 for the three months ended March 31, 2021 and 2020, respectively)	$	4,547	$	3
Revenue from sales of services		28,162		375
Total revenue		32,709		378
Cost of revenue from sales of products (including cost of revenue from related party of $7 and $0 for the three months ended March 31, 2021 and 2020, respectively)		4,354		2
Cost of revenue from sales of services		17,513		332
Total cost of revenue		21,867		334
Gross profit		10,842		44

Operating expenses:
Selling, general and administrative expenses		12,005		5,827
Research and development expense		10		0
Professional fees		5,168		1,757
Impairment losses		0		887
Change in fair value of contingent consideration, net		494		532
Litigation settlement		5,000		0
Depreciation and amortization		1,128		476
Total operating expenses		23,805		9,479

Loss from operations		(12,963)		(9,435)

Interest and other income (expense):
Interest expense, net		(417)		(3,156)
Equity in loss of equity method investees		(59)		(3)
Loss on disposal of subsidiaries, net		(212)		0
Other expense		(2)		(26)
Loss before income taxes and non-controlling interest		(13,653)		(12,620)

Income tax benefit		12,916		0

Net loss		(737)		(12,620)

Net loss attributable to non-controlling interest		164		272

Net loss attributable to IDEX common shareholders	$	(573)	$	(12,348)

Earnings (loss) per share
Basic	$	(0.00)	$	(0.08)
Diluted		(0.00)	$	(0.08)

Weighted average shares outstanding:
Basic		391,131,793		157,859,642
Diluted		391,131,793		157,859,642

Three Months Ended
March 31, 2020 March 31, 2019

Revenue from third-parties $ 378 $ 346
Revenue from related parties - 26,600
Total revenue 378 26,946
Cost of revenue from third-parties 334 258
Cost of revenue from related parties - -
Gross profit 44 26,688

Operating expenses:
Selling, general and administrative expenses 5,827 4,188
Professional fees 1,757 1,360
Impairment loss 887 -
Acquisition earn-out expense 532 -
Depreciation and amortization 476 244
Total operating expenses 9,479 5,792

Income (Loss) from operations (9,435 ) 20,896

Interest and other income (expense):
Interest expense, net (3,156 ) (735 )
Equity in loss of equity method investees (3 ) (280 )
Others (26 ) (58 )
Income (Loss) before income taxes and non-controlling interest (12,620 ) 19,823

Income tax benefit - 86

Net income (loss) (12,620 ) 19,909

Net loss attributable to non-controlling interest 272 18

Net income (loss) attributable to IDEX common shareholders $ (12,348 ) $ 19,927

Earnings (loss) per share
Basic $ (0.08 ) $ 0.19
Diluted (0.08 ) $ 0.18

Weighted average shares outstanding:
Basic 157,859,642 105,345,673
Diluted 157,859,642 116,301,236

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

Table of Contents

IDEANOMICS, INC.

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


	Three Months Ended
	March 31, 2021		March 31, 2020
Net loss	$	(737)	$	(12,620)
Other comprehensive income (loss), net of NaN tax:
Foreign currency translation adjustments		(860)		7
Comprehensive loss		(1,597)		(12,613)
Comprehensive loss (gain) attributable to non-controlling interest		552		(249)
Comprehensive loss attributable to IDEX common shareholders	$	(1,045)	$	(12,862)

Three Months Ended
March 31, 2020 March 31, 2019

Net income (loss) $ (12,620 ) $ 19,909
Other comprehensive income (loss), net of nil tax
Foreign currency translation adjustments 6 147
Comprehensive income (loss) (12,614 ) 20,056
Comprehensive loss attributable to non-controlling interest (249 ) 43
Comprehensive income (loss) attributable to IDEX common shareholders $ (12,863 ) $ 20,099

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)


	Three Months Ended March 31, 2020
						Retained		Accumulated
				Additional		Earnings/		Other		Ideanomics		Non-
	Common	Par		Paid-in		Accumulated		Comprehensive		Shareholders’		controlling		Total
	Stock	Value		Capital		(Deficit)		Loss		equity		Interest*		Equity
Balance, January 1, 2020	149,692,953	$	150	$	282,554	$	(248,481)	$	(664)	$	33,559	$	25,178	$	58,737
Share-based compensation	—		—		2,202		—		—		2,202		—		2,202
Common stock issuance for professional fee	429,000		—		240		—		—		240		—		240
Common stock issuance for convertible note	1,454,424		1		613		—		—		614		—		614
Common stock issuance for acquisition	10,883,668		11		6,737		—		—		6,748		—		6,748
Common stock issuance for warrant exercise	1,000,000		1		999		—		—		1,000		—		1,000
Measurement period adjustment	—		—		—		—		—		—		(11,454)		(11,454)
Non-controlling shareholder contribution	—		—		—		—		—		—		100		100
Net income (loss)	—		—		—		(12,348)		—		(12,348)		(378)		(12,726)
Foreign currency translation adjustments, net of nil tax	—		—		—		—		(16)		(16)		23		7
Balance, March 31, 2020	163,460,045	$	163	$	293,345	$	(260,829)	$	(680)	$	31,999	$	13,469	$	45,468

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

Three Months Ended March 31, 2019
Common
Stock Par
Value Additional
Paid-in
Capital Retained
Earnings/
Accumulated
(Deficit) Accumulated
Other
Comprehensive
Loss Ideanomics
Shareholders'
equity Non-controlling
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

Note: The above table has been revised from the original presentation for the three months ended March 31, 2019. The original presentation included the presentation of common shares which were placed in escrow, though not included in total equity. As these shares were removed from escrow and never issued, they have been removed from the above table.

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

Table of Contents

Three Months Ended March 31, 2020
Common
Stock Par
Value Additional
Paid-in
Capital Retained
Earnings/
Accumulated
(Deficit) Accumulated
Other
Comprehensive
Loss Ideanomics
Shareholders'
equity Non-controlling
Interest* Total
Equity
Balance, January 1, 2020 149,692,953 $ 150 $ 282,554 $ (248,481 ) $ (664 ) $ 33,559 $ 25,178 $ 58,737
Share-based compensation - - 2,202 - - 2,202 - 2,202
Common stock issuance for professional fee 429,000 - 240 - - 240 - 240
Common stock issuance for 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 ) 22 6
Balance, March 31, 2020 163,460,045 $ 163 $ 293,345 $ (260,829 ) $ (680 ) $ 31,999 $ 13,469 $ 45,468


	Three Months Ended March 31, 2021
						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, 2021	344,861,295	$	345	$	531,866	$	(346,883)	$	1,256	$	186,584	$	6,438	$	193,022
Share-based compensation	0		0		2,040		0		0		2,040		0		2,040
Common stock issuance for acquisition	10,181,299		10		32,367		0		0		32,377		0		32,377
Common stock issuance for professional fee	440,909		0		1,162		0		0		1,162		0		1,162
Common stock issued under employee stock incentive plan	475,000		0		251		0		0		251		0		251
Common stock issuance for at the market offering	17,615,534		18		53,389		—		—		53,407		—		53,407
Common stock issuance for convertible note	45,895,763		46		140,080		—		—		140,126		—		140,126
Net income (loss)*	—		—		—		(574)		—		(574)		(280)		(854)
Foreign currency translation adjustments, net of nil tax	0		0		0		0		(472)		(472)		(388)		(860)
Balance, March 31, 2021	419,469,800	$	419	$	761,155	$	(347,457)	$	784	$	414,901	$	5,770	$	420,671

Excludes accretion of dividend for redeemable non-controlling interest.

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)


	Three Months Ended
	March 31, 2021		March 31, 2020
Cash flows from operating activities:
Net income (loss)	$	(737)	$	(12,620)
Adjustments to reconcile net loss to net cash used in operating activities
Share-based compensation expense		2,040		2,202
Depreciation and amortization		1,128		476
Non-cash interest expense		417		3,156
Litigation settlement		5,000		0
Income tax benefit		(13,281)		0
Loss on disposal of subsidiaries, net		212		0
Equity in losses of equity method investees		59		3
Impairment losses		0		887
Change in fair value of contingent consideration		494		532
Change in assets and liabilities (net of amounts acquired):
Accounts receivable		2,600		571
Inventory		117		0
Prepaid expenses and other assets		1,653		1,928
Accounts payable		2,438		275
Deferred revenue		(613)		23
Amount due to related parties (interest)		348		856
Accrued expenses, salary and other current liabilities		696		(2,147)
Net cash provided by (used in) operating activities		2,571		(3,858)

Cash flows from investing activities:
Acquisition of property and equipment		(157)		(15)
Acquisition of subsidiaries, net of cash acquired		(55,265)		0
Investments in long-term investment		(15,707)		0
Investment in debt securities		(15,000)		0
Net cash used in investing activities		(86,129)		(15)

Cash flows from financing activities
Proceeds from issuance of convertible notes		220,000		2,000
Proceeds from exercise of warrants and issuance of common stocks		53,659		1,000
Proceeds from noncontrolling interest shareholder		0		7,147
Repayment of amounts due to related parties		0		(2,999)
Net cash provided by financing activities		273,659		7,148
Effect of exchange rate changes on cash		(9)		6
Net increase in cash and cash equivalents		190,092		3,281

Cash and cash equivalents at the beginning of the period		165,764		2,633

Cash and cash equivalents at the end of the period	$	355,856		5,914

Supplemental disclosure of cash flow information:
Cash paid for income tax	$	0	$	0
Cash paid for interest	$	0	$	0

Issuance of shares for acquisition of DBOT	$	0	$	6,748
Tree Technologies measurement period adjustment	$	0	$	11,895
Issuance of shares for acquisition	$	32,377	$	0
Issuance of shares for convertible notes conversion	$	140,126	$	0

Three Months Ended
March 31, 2020 March 31, 2019

Cash flows from operating activities:
Net income (loss) $ (12,620 ) $ 19,909
Adjustments to reconcile net loss to net cash used in operating activities
Share-based compensation expense 2,202 224
Depreciation and amortization 476 244
Non-cash interest expense 3,156 735
Equity in losses of equity method investees 3 280
Digital tokens received as payment for services - (26,600 )
Impairment loss 887 -
Acquisition earn-out expense 532 -
Change in assets and liabilities:
Accounts receivable 571 (36 )
Prepaid expenses and other assets 1,928 (124 )
Accounts payable 275 (46 )
Deferred revenue 23 203
Amount due to related parties 856 40
Accrued expenses, salary and other current liabilities (2,147 ) 400
Net cash used in operating activities (3,858 ) (4,771 )

Cash flows from investing activities:
Acquisition of property and equipment (15 ) (580 )
Payments for long-term investments - (620 )
Net cash used in investing activities (15 ) (1,200 )

Cash flows from financing activities
Proceeds from issuance of convertible notes 2,000 2,132
Proceeds from exercise of warrants and issuance of common stocks 1,000 2,500
Proceeds from noncontrolling interest shareholder 7,147 -
Proceeds from/(Repayment of) amounts due to related parties (2,999 ) 228
Net cash provided by financing activities 7,148 4,860
Effect of exchange rate changes on cash 6 17
Net increase (decrease) in cash and cash equivalents 3,281 (1,094 )

Cash and cash equivalents at the beginning of the period 2,633 3,106

Cash and cash equivalents at the end of the period $ 5,914 2,012

Supplemental disclosure of cash flow information:
Cash paid for income tax $ - $ -
Cash paid for interest $ - $ -

Issuance of shares for acquisition of DBOT $ 6,748 $ -
Tree Technologies measurement period adjustment $ 11,895 $ -
Disposal assets in exchange of GTB tokens $ - $ 20,219
Service revenue received in GTB tokens $ - $ 26,600
Advances from customer received in GTB tokens $ - $ 14,100
Issuance of shares for acquisition of intangible assets $ - $ 4,655

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

Nature of Operations

Ideanomics, Inc. (Nasdaq: IDEX) is a Nevada corporation that primarily operates in Asia and the United States through its subsidiaries and variable interest entities (“~~VIEs”~~VIEs.”). Unless the context otherwise requires, the use of the terms ~~"we," "us", "our"~~“we,” “us,” “our” and the “Company” in these notes to condensed consolidated financial statements refers to Ideanomics, ~~Inc,~~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,~~Through March 31, 2021, the Company operates in one segment with two business units, ~~the Mobile Energy Group (“MEG”),~~Ideanomics Mobility and Ideanomics Capital. As

With two acquisitions closing in the three months ended March 31, 2021, the Company anticipates that its internal management structure and the information reviewed by the chief ~~executive officer previously reviewed two~~ operating ~~segments separately~~decision maker will change such that it may, in the future, have multiple reportable segments. At a minimum these are thought to be Ideanomics Mobility, which would encompass the entities with businesses centered in the electric vehicle (“EV”) market, and Ideanomics Capital, which would encompass business centered in the finance/real estate market, and a corporate entity, with the combination/consolidation of all three comprising the consolidated operations of the Company.

Ideanomics Mobility is driving EV adoption by assembling a synergistic ecosystem of subsidiaries and investments across the three key pillars of EV: Vehicles, Charging, and Energy. These three pillars provide the foundation 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.~~

~~MEG’s mission is to use electronic vehicles~~Ideanomics Mobility’s planned offering of unique business solutions such as Charging as a Service (“~~EVs”~~CaaS”) and ~~EV battery sales and financing to attract commercial fleet operators that will generate large scale demand for energy, energy storage systems, and energy management contracts. MEG operates~~Vehicle as ~~an end-to-end solutions provider for the procurement, financing, charging and energy management needs for fleet operators of commercial EVs.~~

a Service (“VaaS.”)

Ideanomics Capital is ~~involved with areas of capital markets such as~~the Company’s fintech business unit, which focuses on leveraging technology and innovation to improve efficiency, transparency, and profitability for the financial ~~products advisory and creation, with specific focus on the application of blockchain and artificial intelligence in Fintech.~~services industry.

~~The Company also seeks to identify industries and business processes where blockchain and AI technologies can be profitably deployed to disrupt established industries and business processes.~~

Basis of Presentation

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 in consolidation. However, the results of operations included in such financial statements may not necessary be indicative of annual results.

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, ~~2019~~2020 filed with the Securities and Exchange Commission (“SEC”) on March ~~16,~~ 31, 2021 (“2020 ~~(“2019~~ Form 10-K.”)

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Use of Estimates

The preparation of condensed 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.

On an ongoing basis, management evaluates the Company’s estimates, including those related to the bad debt allowance, variable considerations, 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. 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~~2020 Form 10-K. During the three months ended March 31, ~~2020, there~~2021, the Company acquired two businesses, Timios Holdings Corp. (“Timios”) and Wireless Advanced Vehicle Electrification, Inc. (“WAVE”) which resulted in the adoption of the following accounting policies with respect to those businesses:

Timios

Title Revenue

Premiums from title insurance policies written by independent agencies are recognized when the policies are reported to Timios and not before the effective date of the policy. Regulation of title insurance rates varies by state. Premiums are charged to customers based on rates predetermined in coordination with each states’ respective Department of Insurance.

Closing Revenue

A closing or escrow is a transaction pursuant to an agreement of a buyer, seller, borrower, or lender wherein an impartial third-party, such as Timios, acts in a fiduciary capacity on behalf of the parties in accordance with the terms of such agreement in order to accomplish the directions stated therein. Services provided include, among others, acting as escrow or other fiduciary agent, obtaining releases, and conducting the actual closing or settlement. Closing and escrow fees are recognized upon closing of the escrow, which is generally at the same time of the closing of the related real estate transaction.

Appraisal Revenue

Revenue from appraisal services are primarily related to establishing the ownership, legal status and valuation of the property in a real estate transaction. In these cases, Timios does not issue a title insurance policy or perform duties of an escrow agent. Revenues from these services are recognized upon delivery of the service to the customer.

Title Plant

Title plant consists of costs incurred to construct the title plant and to obtain, organize and summarize historical information for Glenn County title searches. These costs were ~~no significant changes made~~capitalized until such time as the plant was deemed operational to ~~Ideanomics’ significant accounting~~conduct title searches and issue title insurance policies. Management has determined that the title plant has been properly maintained, has an indeterminable life, and in accordance with Accounting Standards Codification (“ASC”) Topic 950, Financial Services – Title Plant, has not been amortized. The costs to maintain the current status of the title plant are recorded as a current period expense.

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Software Development Costs

Software developed or obtained for internal use in accordance with ASC 350-40, ~~Effects~~Internal-Use Software, is capitalized during the application development stage. In accordance with authoritative guidance, the Company begins to capitalize costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed, and the software will be used as intended. Once the project has been completed, these costs are amortized to expense on a straight-line basis over the estimated useful life of ~~COVID 19~~

Inthe related asset, generally estimated to be three years. Costs incurred prior to meeting these criteria together with costs incurred for training and maintenance are expensed as incurred. The Company classifies software development costs associated with the development of the Company’s products and services as intangible assets. For the three months ended March 31, ~~2020,~~2021 the Company ~~commenced~~capitalized software development costs of $0.3 million.

Escrow and Trust Deposits

In providing escrow services, Timios holds funds for others in a fiduciary capacity, pending completion of real estate transactions. A separate, self-balancing set of accounting records is maintained by Timios to record escrow transactions. Escrow trust funds held for others are not Timios’s and, therefore, are excluded from the ~~process~~accompanying condensed consolidated balance sheet, however, Timios remains contingently liable for the disposition of ~~formulating~~these deposits. Escrow trust balances at March 31, 2021 were $77.8 million. It is a common industry practice for financial institutions where escrow funds are deposited to either reimburse or to directly provide for certain costs related to the delivery of escrow services. Timios follows the practice of non-recognition of costs borne by the financial institution where escrow funds are deposited.

WAVE

Inventory

Inventories, which include the costs of material, labor and ~~implementing~~overhead, are stated at the lower of cost or net realizable value, with cost generally computed on a ~~share-based compensation plan whereby key employees~~first-in, first-out (“FIFO”) basis. Estimated losses from obsolete and ~~certain consultants~~slow-moving inventories are recorded to reduce inventory values to their estimated net realizable value and are charged to costs of ~~its MEG business unit~~revenue. At the point of loss recognition, a new cost basis for that inventory is established and ~~wholly-owned subsidiary will benefit.~~subsequent changes in facts and circumstances do not result in a recovery in carrying value.

Revenue

~~As one component~~For product sales, WAVE considers practical and contractual limitations in determining whether there is an alternative use for the product. For example, long-term design and build contracts are typically highly customized to a customer’s specifications. For contracts with no alternative use and an enforceable right to payment for work performed to date, including a reasonable profit if the contract were terminated at the customer’s convenience for reason other than nonperformance, WAVE recognizes revenue over time. All other product sales are recognized at a point in time.

For contracts recognized over time, WAVE uses the cost-to-total cost method or the units of ~~this process,~~delivery method, depending on the ~~Company has initially transferred 10,000 common shares of MEG, representing 20.0%~~nature of the ~~overall outstanding common shares,~~contract, including length of production time.

For contracts recognized at a point in time, WAVE recognizes revenue when control passes to ~~Merry Heart Technology Limited (“MHTL”), who~~the customer, which is ~~intended~~generally based on shipping terms that address when title and risk and rewards pass to ~~act~~the customer. However, WAVE also considers certain customer acceptance provisions as certain contracts with customers include installation, testing, certification or other acceptance provisions. In instances where contractual terms include a provision for customer acceptance, WAVE considers whether they have previously demonstrated that the product meets objective criteria specified by either the seller or customer in assessing whether control has passed to the customer.

For service contracts, WAVE recognizes revenue as the services are rendered if the customer is benefiting from the service as it is performed, or otherwise upon completion of the service. Separately priced extended warranties are recognized as a ~~trustee~~separate performance obligation over ~~these shares,~~the warranty period.

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The transaction price in WAVE’s contracts consists of fixed consideration and the impact of variable consideration including returns, rebates and allowances, and penalties. Variable consideration is generally estimated using a probability-weighted approach based on historical experience, known trends, and current factors including market conditions and status of negotiations.

For design and build contracts, WAVE may at times collect progress payments from the customer throughout the term of the contract, resulting in contract assets or liabilities depending on the timing of the payments. Contract assets consist of unbilled amounts when revenue recognized exceeds customer billings. Contract liabilities consist of advance payments and billings in excess of revenue recognized.

Design and engineering costs for highly complex products to be sold under a ~~nominal amount. It is the Company’s intent that this arrangement would be structured~~long-term production-type contract are deferred and amortized in a manner ~~similar~~consistent with revenue recognition of the related contract or anticipated contract. Other design and development costs are deferred only if there is a contractual guarantee for reimbursement. Costs to ~~other trusts used~~obtain a contract (e.g., commissions) for contracts greater than one year are deferred and amortized in a manner consistent with revenue recognition of the related contract.

Product Warranties

WAVE’s standard product warranty terms generally include post-sales support and repairs or replacement of a product at no additional charge for a specified period of time. Accruals for estimated expenses related to ~~effect share-based compensation plans,~~product warranties are made at the time revenue is recognized and ~~would qualify~~are recorded as a ~~VIE~~component of costs of revenue. WAVE estimates the liability for warranty claims based on standard warranties, the historical frequency of claims and ~~consequently be consolidated.~~the cost to replace or repair products under warranty. Factors that influence the warranty liability include the number of units sold, the length of warranty term, historical and anticipated rates of warranty claims and the cost per claim. The warranty liability as of March 31, 2021 is $0.6 million and is included in “Other long-term liabilities” within the condensed consolidated balance sheet.

Effects of COVID 19

~~However,~~Novel Coronavirus 2019 (“COVID-19”) is an infectious disease cause 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 May 7, 2021, over 156.4 million cases had been reported across the globe, resulting in 3.3 million deaths.

The spread of COVID-19 has caused significant disruption ~~caused by~~to society as a whole, including the ~~COVID-19 virus, particularly~~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 ~~China, where many~~almost every country. The effects of social distancing have shut down significant parts of the ~~Company’s personnel~~local, regional, national, and ~~business advisors~~international economies, for limited or extended periods of time, with the exception of government designated essential services.

In many parts of the world, stay-at-home and work-from-home orders were relaxed during the summer of 2020 as the effects of the Coronavirus appeared to lessen, and economic activity began to recover. However, commencing in the autumn and fall of 2020 and continuing, the U.S. as well as countries in Europe, South America and Asia began to experience an increase in new COVID-19 cases, and in some cases local, state, and national governments began to reinstate restrictive measures to stem the spread of the virus. The U.S. and other countries also experienced an increase in new COVID-19 cases after the fall and winter holiday season, with new, more infectious variants of COVID-19 identified. Various vaccines have been developed, with vaccinations programs in effect worldwide, though reaching acceptable levels for worldwide immunization against COVID-19 remains challenging.

The future effects of the virus are ~~located, has delayed~~difficult to predict, due to uncertainty about the ~~Company’s efforts~~course of the virus, different variants that may evolve, and the supply of the vaccine on a local, regional, and global basis, as well as the ability to implement this share-based compensation plan. The Company’s ability to interact with personnel and business advisors was adversely impacted by temporary office closures, with personnel working remotely, and travel restrictions which prevented the Company from obtaining final and complete documentation.

vaccination programs in a short time frame.

The Company anticipates that, with travel restrictions currently lifted in China, it will complete the formation and implementation of the share-based compensation scheme by June 30, 2020. At that point, the Company will provide a full accounting of the share-based compensation plan, which, as it is expected to be consolidated, would have no material effectdoes not anticipate significant adverse effects on its ~~consolidated financial statements.~~ operations’ revenue as compared to its business plan in the near- or mid-term, although the future effects of COVID-19 may result in regional restrictive measures which may constrain the Company’s operations.

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The ~~transfer of the MEG shares~~Company continues to ~~MHTL is not believed to be substantive, and had the Company given accounting treatment to the transfer without consideration of~~monitor the overall ~~share-based compensation plan, the accounting effect would have been a reclass between additional paid-in capital~~situation with COVID-19 and non-controlling interest within the consolidated statement of equity. However, to record this entry in isolation would not be representative of the arrangement when fully consummated, as it is anticipated that the resulting shares would be consolidated at that point in time. its effects on both local, regional and global economies.

~~As of March 31, 2020, no share-based awards had been granted to employees or consultants.~~

Note 2. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements ~~Not Yet Adopted~~

In ~~June 2016,~~December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 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 adopted ASU 2019-12 effective January 1, 2021. The effect of the adoption of ASU 2019-12 was not material.

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 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 U.S. GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the 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 additional 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 adopted ASU 2020-06 effective January 1, 2021. As the Company had no outstanding convertible instruments as of that date, the adoption of ASU 2020-06 had no effect.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”) "“Financial Instruments - Credit Losses” (“ASC ~~326”~~326:”): Measurement of Credit Losses on Financial 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. In November 2019, the FASB issued ASU 2019-10 “Financial Instruments – Credit Losses (Topic ~~326),~~326,) Derivatives and Hedging (Topic ~~815),~~815,) and Leases (Topic 842)” (“ASC ~~2019-10”~~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, 2023. Management is currently evaluating the effect of the adoption of ASU 2016-13 on the consolidated financial statements. The effect will largely depend on the composition and credit quality of ~~the~~our investment portfolio and the economic conditions at the time of adoption.

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In ~~December 2019,~~May 2021, the FASB issued ASU No. ~~2019-12~~2021-04 (“ASU ~~2019-12”~~2021-04”) “~~Income Taxes~~Earnings Per Share (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”)~~260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and ~~by amending certain other requirements~~Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40)” which provides guidance on modifications or exchanges of ~~ASC 740. The changes resulting from~~a freestanding equity-classified written call option that is not within the scope of another Topic. An entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument, and provides further guidance on measuring the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. ASU ~~2019-12 will be made on a retrospective or modified retrospective basis, depending~~2021-04 also provides guidance on the ~~specific exception~~recognition of the effect of a modification or ~~amendment. For public business entities,~~an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange on the ~~amendments~~basis of the substance of the transaction, in ~~ASU 2019-12 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.~~the same manner as if cash had been paid as consideration. The Company will adopt ASU ~~2019-12 effective~~2021-04 on January 1, ~~2021.~~2022. Management is currently evaluating the effect of the adoption of ASU ~~2019-12~~2021-04 on the consolidated financial statements. The effect will largely depend on the terms of written call options or financings issued or modified in the future.

Note 3. ~~Going Concern and Management’s Plans~~Fuzhou Note Receivable

AsIn May 2020, Energy Sales provided a note receivable to Fuzhou Zhengtong Hongxin Investment Management Company Limited (“Zhengtong”) in the amount of ~~March 31, 2020,~~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 ~~Company had cash and cash equivalents of $5.9 million and an accumulated deficit of $260.8 million. Additionally, the~~disbursement date. 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.~~recorded a reserve of $0.5 million against this note receivable.

~~The Company expects to continue to raise both equity and debt finance to support the Company’s investment plans and operations.~~

Although the Company may attempt to raise funds by issuing debt or equity instruments, in the future additional 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. The Company expects to continue to raise both equity and debt finance to support the Company’s investment plans and operations.

Due to People’s Republic of China (“PRC”) regulations governing the transfer of cash outside of the PRC, management does not consider cash balances held by entities domiciled in the PRC, or subject to PRC regulation, as being available for use in, or as a source of funding, for the Company’s operations outside of the PRC. The Company’s operations outside of PRC are dependent upon continued to access to debt and equity funding in the United States and Asia outside of the PRC.

Note 4. Revenue

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

Three Months Ended
March 31, 2020 March 31, 2019

Geographic Markets
Malaysia $ 3 $ -
USA 323 26,946
China 52 -
Total $ 378 $ 26,946

Product or Service
Digital asset management services $ - $ 26,600
Digital advertising services and other 323 346
Electric vehicles* 55 -
Total $ 378 $ 26,946

Timing of Revenue Recognition
Products transferred at a point in time $ 378 $ 346
Services provided over time - 26,600
Total $ 378 $ 26,946


	Three Months Ended
	March 31,		March 31,
	2021		2020
Geographic Markets
Malaysia	$	7	$	3
USA		29,646		323
PRC		3,056		52
Total	$	32,709	$	378

Product or Service
Electric vehicles*	$	3,019	$	55
Charging and batteries*		1,882		—
Title and escrow services		27,611		—
Digital advertising services and other		197		323
Total	$	32,709	$	378

Timing of Revenue Recognition
Products and services transferred at a point in time	$	32,324	$	378
Services provided over time		385		—
Total	$	32,709	$	378

* The revenues were recorded on either a Principal or Agent basis, depending on the terms of the underlying transaction, including the ability to control the product and the level of inventory risk taken. All of the revenue from the sale of electric vehicles, as well as revenue from the sale of charging and batteries in the three months ended March 31, 2021, were recorded on a Principal basis. In the three months ended March 31, 2020, the EV revenues ~~for the current quarter~~ were recorded on an Agency (Net) basis because the Company acted as an agent rather than principal in these transactions.

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Note 5. ~~VIE Structure and Arrangements~~Available for Sale Security

~~Prior to December 31, 2019,~~On January 28, 2021, the Company ~~consolidated certain VIEs located~~invested $15.0 million in Silk EV via a convertible promissory note. Silk is an Italian engineering and design services company that has recently partnered with FAW to form a new company (“Silk-FAW”) to produce fully electric, luxury vehicles for the ~~PRC in which it held variable interests~~Chinese and ~~was~~global auto markets.

The terms of the ~~primary beneficiary through contractual agreements.~~ convertible promissory note are as follows:

●

The principal amount is $15.0 million;

●

The interest rate is 6%;

●

The maturity date is January 28, 2022;

●

Upon a qualified equity financing, as defined, the outstanding principal and accrued interest shall convert into equity securities sold in the qualified equity financing at a conversion price equal to the cash price for the equity securities times 0.80;

●

The events of default are as follows:

SILK EV fails to pay timely the principal and accrued interest due under this note;

SILK EV files any petition for relief under bankruptcy, reorganization, insolvency or similar other law; or

An involuntary petition is filed against SIK EV under bankruptcy or similar statute.

The Company was the primary beneficiary because it had the power to direct activities that most significantly affected their economic performance and had the obligation to absorb or right to receive the majority of their losses or benefits. The results of operations of these VIEs are included in the consolidated financial statementsaccounts for the ~~year ended December 31, 2019. A shareholder~~Silk EV note as an available for sale security at its fair value, with changes in ~~one of the VIEs is the spouse of Dr. Bruno Wu (“Dr. Wu”), the Chairman of the Company.~~fair value, if any, recorded in other comprehensive income.

The contractual agreements, which collectively granted the Company 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 information on an additional VIE.~~

Note 6. Acquisitions and Divestitures

~~2020 Acquisitions and Divestitures~~

~~The Company has not acquired any companies nor disposed of any subsidiaries in the three months ended March 31, 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.

The Company has not acquired any companies nor disposed of any subsidiaries in the year ended December 31, 2020, with the exception of the disposition of its remaining 10.0% interest in Amer Global Technology Limited (“Amer.”) In the three months ended September 30, 2020, the Company sold its remaining 10.0% interest in Amer to Fintalk Media Inc., a related party, for a nominal amount. As the Company had no basis in its remaining interest in Amer, the gain recognized on the sale was de minimis.

~~2019~~2021 Acquisitions

The Company has completed the below acquisitions in the three months ended March 31, 2021. The accompanying condensed consolidated financial statements include the operations of the acquired entities from their respective acquisition dates. All of the acquisitions have been accounted for as business combinations. Accordingly, consideration paid by the Company to complete the acquisitions is initially allocated to the acquired assets and liabilities assumed based upon their estimated acquisition date fair values. The recorded amounts for assets acquired and liabilities assumed are provisional and subject to change during the measurement period, which is up to 12 months from the acquisition date.

~~(a)~~
Timios Holdings Corp.

~~Acquisition of Tree Technologies Sdn. Bhd. (“Tree Technologies”)~~

On ~~December 26, 2019,~~January 8, 2021 the Company completed the acquisition of privately held Timios and its affiliates pursuant to the stock purchase agreement (the “Timios Agreement”) entered into on November 11, 2020. Pursuant to the Timios Agreement, the Company acquired 100% of the outstanding capital stock of Timios for a ~~51.0% interest~~purchase price of $40.0 million, net of cash acquired of $6.5 million. The full purchase price was paid in ~~Tree Technologies,~~cash. Pursuant to the Timios Agreement, $5.1 million of the cash consideration was paid into escrow pending a ~~Malaysian company engaged~~one year indemnification review. Timios provides title and escrow services for real estate transactions. Revenue of $27.6 million and net income of $3.4 million have been included in the EV market. The acquisition price was comprised of (1) $0.9 million in cash, (2) 9.5 million shares of Ideanomics common stock, 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 is based upon revenue targets over three 12 month periods beginning in the three months ended December 31, 2019.

The fair value of 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 was recorded as a liability on the date of acquisition. The Company 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 fromcondensed consolidated financial statements since the acquisition ~~consists largely~~date.

Table of ~~the synergies expected from the fulfillment of these contracts. None of the goodwill recognized is expected to be deductible for tax purposes.~~Contents

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 is in the process of completing the fair value analysis of the assets acquired, liabilities assumed, the noncontrolling interest, and the Earnout, and therefore the known adjustments are incorporated in the table below (in thousands).

Land use rights $ 27,140
Accounts payable (743 )
Noncontrolling interest (15,583 )
Goodwill 803
Marketing and distribution agreement 12,590
$ 24,207

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; should the Company fail to fulfill its obligations to pay the transfer tax payable it would forfeit its land use rights.

Tree Technologies had not commenced operations as of the acquisition date, therefore pro forma results as if the acquisition had occurred as of January 1, 2018, and related information, are not presented.

~~(b)~~Wireless Advanced Vehicle Electrification, Inc.

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

On ~~September 4, 2018,~~January 15, 2021 the Company completed the acquisition of ~~65.7% share~~privately held WAVE pursuant to an agreement and plan of ~~Grapevine for $2.4 million in cash. Fomalhaut Limited (“Fomalhaut”), a British Virgin Islands company and an affiliate of Dr. Wu, was the non-controlling equity holder of 34.4% in Grapevine~~merger (the ~~“Fomalhaut Interest”~~“WAVE Agreement”)~~. Fomalhaut~~ entered into ~~an option agreement, effective as~~on January 4, 2021. WAVE is a provider of ~~August 31, 2018 (the “Option Agreement”), with~~wireless charging solutions for medium and heavy-duty electric vehicles.

Pursuant to the the WAVE Agreement, the Company ~~pursuant to which the Company provided Fomalhaut with the option to sell the Fomalhaut Interest to the Company. The aggregate sale price for the Fomalhaut Interest was the fair market value~~acquired 100% of the ~~Fomalhaut Interest as~~outstanding capital stock of ~~the close~~WAVE for an aggregate purchase price of business on the date preceding the date upon which the right to sell the Fomalhaut Interest to the Company is exercised by Fomalhaut. If the option is exercised, the sale price for the Fomalhaut Interest is payable$55.0 million in a combination of ~~1/3 in~~$15.0 million of cash ~~and 2/3 in the Company’s~~plus a total of 12.6 million unregistered shares ~~of common stock at the then market value on the exercise date.~~

In May 2019, the Company entered into two amendments to the Option Agreement. The aggregate exercise price for the Option was amended to the greater 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 (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 0.6~~valued at $40.0 million ~~shares in exchange for a 34.3% ownership in Grapevine as a result of the exercise of the Option. At the completion of this transaction the Company owned 100.0% of Grapevine. At~~at the date of closing. Pursuant to the ~~transaction, the carrying amount~~Wave Agreement, $5 million of the ~~non-controlling interest in Grapevine~~cash consideration was ~~$0.5 million.~~paid into escrow pending a one year indemnification review. The difference between the value of the consideration exchanged of $1.1 million and the carrying amount of the non-controlling interest in Grapevine is recorded as a debit to additional paid-in capital based on ASC 810,~~Consolidation~~.

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

~~In April 2019, the Company entered into a securities purchase agreement to acquire 6.9 million shares in DBOT in exchange for 4.4~~WAVE Agreement provided that 3.6 million shares of the Company’s common stock be held back at ~~$2.11 per share. In July 2019,~~closing, to be released upon the ~~Company entered into another securities purchase agreement~~receipt of certain customer consents not obtained prior to ~~acquire an additional 2.2~~closing. As of March 31, 2021, 2.4 million ~~shares in DBOT in exchange for 1.4 million shares~~ of the Company’s common stock ~~at $2.11 per share. The two transactions, which increased~~remains unissued pending receipt of the ~~Company’s ownership in DBOT to 99.0%, were completed in July 2019. The securities purchase agreements required~~consents. Since receipt of the consents is probable, the Company ~~to issue additional~~has included these common shares as contingent consideration as of the ~~Company’s common stock (“True-Up Common Stock”) in~~acquisition date of $7.7 million. If any such consent is not obtained within six months following the ~~event~~closing date, the ~~stock price~~portion of the common stock ~~falls below $2.11~~allocated to such consent in the WAVE Agreement will not be issued to the sellers.

In addition to the purchase price to be paid at closing, the ~~close~~WAVE Agreement contains three earnouts that could result in additional payments of ~~trading on~~up to $30.0 million to the ~~date immediately preceding the lock-up date, which is 9 months from the closing date.~~sellers based upon: (1) revenue and gross profit margin metrics in calendar year 2021; (2) revenue and gross profit margin metrics in calendar year 2022; and (3) revenue and gross profit margin metrics for 2021 and 2022 collectively. The Company ~~accounted~~considers this earnout to be contingent consideration that as of the acquisition date is unlikely to occur and has therefore attributed zero value for purposes of the ~~additional True-Up Common Stock consideration as a liability in accordance with ASC 480,~~~~Distinguishing Liabilities from Equity~~.preliminary purchase price allocation. The Company ~~recorded this liability at~~will continue to monitor the fair value of ~~$2.2~~this contingent considerations with any changes being recorded in the statement of operations if and when a change occurs.

Ideanomics has also agreed to a performance and retention plan for the benefit of certain WAVE’s employees which could result in up to $10.0 million paid to such employees if certain gross revenue targets and certain gross profit margins are achieved for calendar years 2021 and 2022. Consistent with the conclusion on the ~~date of acquisition. As of December 31, 2019,~~earnout contingent consideration, the Company ~~remeasured~~has not accrued any of this ~~liability~~retention plan as the revenue and gross profit margin criteria are unlikely to ~~$7.3~~be met.

Revenue of $1.8 million and ~~the remeasurement~~net loss of ~~$5.1~~$0.6 million ~~was recorded in “Acquisition earn-out expense”~~have been included in the condensed consolidated financial statements since the acquisition date.

Acquisition Method Accounting Estimates

The Company initially recognizes the assets and liabilities acquired from the aforementioned acquisitions based on its preliminary estimates of ~~operations. In~~their acquisition date fair values. As additional information becomes known concerning the ~~three months ended March 31, 2020, the Company recorded an additional remeasurement loss of $0.5 million in “Acquisition earn-out expense” in the consolidated statements of operations,~~acquired assets and ~~partially satisfied the liability with the issuance of 10.9 million shares of common stock. As of March 31, 2020, the recorded balance of this liability was $1.1 million.~~

~~Immediately prior~~assumed liabilities, management may make adjustments to the ~~consummation~~opening balance sheet of the ~~transaction,~~acquired company up to the ~~Company’s investment in DBOT consisted of 37.0%~~end of the ~~common shares outstanding,~~measurement period, which ~~had~~is no longer than a ~~fair value of $3.1 million, and~~one year period following 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 consolidated statements of operations in the three and nine months ended September 30, 2019.acquisition date. 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~~fair values of the acquired assets ~~acquired~~ and liabilities ~~assumed.~~

~~DBOT operates three companies: (1) DBOT ATS LLC, an SEC recognized Alternative Trading System (“ATS”); (2) DBOT Issuer Services LLC, focused on setting~~assumed (and the related determination of estimated lives of depreciable tangible and ~~maintaining issuer standards, as well as~~identifiable intangible assets) requires significant judgment.

Table of Contents

The table below reflects the ~~provision~~Company’s provisional estimates of ~~issuer services to DBOT designated issuers; and (3) DBOT Technology Services LLC, focused on the provision of market data and marketplace connectivity. The goodwill arising from~~ the acquisition ~~consists largely~~date fair values 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 year ended December 31, 2019 include the results of 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 (in thousands):~~

March 31, 2019
Revenue $ 27,023
Net income attributable to IDEX common shareholders 19,480

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. Actual future results may vary considerably based on a variety of factors beyond the Company’s control.

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

Cash $ 247
Other financial assets 1,686
Financial liabilities (4,411 )
Noncontrolling interest (105 )
Goodwill 9,324
Intangible asset – continuing membership agreement 8,255
Intangible asset – customer list 59
$ 15,055


	Timios		WAVE
Purchase Price
Cash paid at closing, including working capital estimates	$	46,576	$	15,000
Fair value of common stock		—		32,377
Fair value of contingent consideration		—		7,657
Total purchase consideration	$	46,576	$	55,034

Purchase Price Allocation
Assets acquired
Current assets		7,292		2,130
Property, plant and equipment		429		—
Other assets		49		—
Intangible assets – tradename		7,180		12,630
Intangible assets – lender relationships		13,570		—
Intangible assets – patents		—		29,530
Intangible assets – licenses		1,000		—
Indefinite lived title plant		500		—
Goodwill		26,071		23,862
Total assets acquired		56,091		68,152

Liabilities assumed:
Current liabilities		(4,306)		(3,778)
Deferred tax liability		(5,209)		(9,340)
Total liabilities assumed		(9,515)		(13,118)

Net assets acquired	$	46,576	$	55,034


	Timios	WAVE
Intangible assets – tradename	15	15
Intangible assets – lender relationships	7	—
Intangible assets – patents	—	40
Intangible assets – licenses	15	—
Weighted average useful life	10	32.5

~~The excess of the consideration over the fair value of the net assets acquired has been recorded as goodwill, of which none is expected~~Amortization expense related to ~~be deductible for tax purposes. For all~~ intangible assets ~~acquired, continuing membership agreements have useful life of 20 years and the customer list has useful life of 3 years.~~

~~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 consideration of $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 the Company’s business plan. The transaction was completed in July 2019 and the Company recorded a disposal gain of $0.6 million recorded in “Loss on disposal of subsidiaries, net” in the consolidated statements of operations in the three and nine months ended September 30, 2019.

~~(e)~~

~~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 Internet of Things business consisting of manufacturing data, supply chain management and financing, and lease financing of industrial robotics into Amer in exchange for 71.8% of ownership interest in Amer. The parties subsequently entered into several amendments including: (1) changing the name of Amer to Logistorm Technology Limited, (2) issuing 39,500 new shares in Amer or 71.8% ownership interest to BCC instead of Tekang, (3) issuing 5,500 new shares in Amer or 10.0% ownership interest to MHTL, and (4) the Company is responsible for 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 55.0% to 10.0%. The transaction was completed on August 31, 2019.

~~The Company recognized a disposal gain of $0.5 million~~created as a result of the ~~deconsolidating Amer,~~Timios and ~~such gain was~~WAVE acquisitions of $0.8 million has been recorded in “Loss on disposal of subsidiaries, net” in the consolidated statements of operations in the three and nine months ended September 30, 2019. $0.1 million of the gain is attributable to the 10.0% ownership interest retained in Amer. In addition, on the date Amer was deconsolidated, the Company recorded a bad debt expense of $0.6 million relating to a receivable due from Amer to a subsidiary of the Company, which was recorded in “Selling, general and administrative expense” in the consolidated statements of operations in the three and nine months ended September 30, 2019.

~~Pro forma results of operations~~ for the three months ended March 31, ~~2019~~2021. Estimated amortization expense related to these intangible assets for each of the years subsequent to March 31, 2021 is as follows (amounts in thousands):


2021 remaining	$	3,159
2022		4,064
2023		4,064
2024		4,064
2025		4,064
2026 and beyond		43,710
Total	$	63,125

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Goodwill in the amount of $26.1 million and $23.9 million was recorded as a result of the acquisitions of Timios and WAVE, respectively. The goodwill from both acquisition represents future economic benefits that we expect to achieve as a result of the acquisition, Goodwill is calculated as the excess of the consideration transferred over the net assets acquired and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill is not expected to be deductible for tax purposes for either the Timios or WAVE acquisitions. Goodwill will not be amortized but instead will be tested for impairment at least annually and more frequent if certain indicators of impairment are present.

Transaction Costs

Transaction costs describe the broad category of costs the Company incurs in connection with signed and/or closed acquisitions. Transaction costs include expenses associated with legal, accounting, regulatory, and other transition services rendered in connection with acquisition, travel expense, and other non-recurring direct expenses associated with acquisitions. The Company incurred transaction costs of $0.3 million during the three months ended March 31, 2021. Transaction costs have ~~not~~ been ~~presented because they are not material to the consolidated results of operations. Amer had no revenue~~included in selling, general and ~~minimal operating~~administrative expenses in the ~~year ended December 31, 2019.~~condensed consolidated statements of operations and in cash flows from operating activities in the condensed consolidated statements of cash flows.

Pro forma Financial Information

The unaudited pro forma results presented below include the effects of the Company’s acquisitions as if the acquisitions had occurred on January 1, 2020. The pro forma adjustments are based on historically reported transactions by the acquired companies. The pro forma results do not include any anticipated synergies or other expected benefits of the acquisitions. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisitions occurred on January 1, 2020.


	Three Months		Three Months
	Ended March 31,		Ended March 31,
	2021		2020
(Amounts in thousands, except per share and share data)

Total revenue	$	34,149	$	15,216

Net loss attributable to IDEX common shareholders		(242)		(12,058)

Earnings (loss) per share
Basic and Diluted	$	(0.00)	$	(0.07)

Weighted average shares outstanding
Basic and Diluted		393,191,290		170,448,990

Note 7. Accounts Receivable

The following table summarizes the Company’s accounts receivable (in thousands):

	March 31,		December 31,
	2020		2019
Accounts receivable, gross	$	1,833	$	2,405

					March 31,		December 31,
					2021		2020
Accounts receivable					$	6,625	$	8,619
Less: allowance for doubtful accounts		-		-		(1,216)		(1,219)
Accounts receivable, net	$	1,833	$	2,405	$	5,409	$	7,400

~~There were no changes in the allowance for doubtful accounts for the three months ended March 31, 2020 and 2019.~~

The gross balance includes the taxi commission revenue receivables of ~~$1.7~~$1.2 million and ~~$2.3~~$1.2 million from the related party Guizhou Qianxi Green Environmentally Friendly Taxi Service Co, as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

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The following table summarizes the movement of the allowance for doubtful accounts (in thousands):


	March 31,		December 31,
	2021		2020
Balance at the beginning of the period	$	(1,219)	$	—
Decrease in the allowance for doubtful accounts		3		(1,219)
Balance at the end of the period	$	(1,216)	$	(1,219)

Due to the foreign exchange rate changes, there was $2,505 increase in the allowance for doubtful accounts for the three months ended March 31, 2021. In the year ended December 31, 2020, the Company fully reserved its accounts receivable of $1.2 million from the related party Guizhou Qianxi Green Environmentally Friendly Taxi Service Co.

Note 8. Property and Equipment, net

The following table summarizes the Company’s property and equipment (in thousands):


	March 31,		December 31,
	2021		2020
Furniture and office equipment	$	568	$	315
Vehicle		247		229
Leasehold improvements		339		246
Total property and equipment		1,154		790
Less: accumulated depreciation		(523)		(460)
Property and equipment, net		631		330
Fintech Village
Land		0		2,750
Assets retirement obligations - environmental remediation		0		4,500
Construction in progress (Fintech Village)		0		7,250
Property and Equipment, net	$	631	$	7,580

March 31, December 31,
2020 2019
Furniture and office equipment $ 462 $ 441
Vehicle 62 62
Leasehold improvements 212 243
Total property and equipment 736 746
Less: accumulated depreciation (381) (368)
Property and equipment, net 355 378
Fintech Village
Land 3,043 3,043
Building 309 309
Assets retirement obligations – environmental remediation 6,496 6,496
Capitalized direct development cost 2,713 2,713
Construction in progress (Fintech Village) �� 12,561 12,561
Property and Equipment, net $ 12,916 $ 12,939

The Company recorded depreciation expense of ~~$31,536~~$90,787 and ~~$16,609,~~$31,536, which is included in its operating expense, for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

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

On January 28, 2021, the Company’s Board of Directors accepted an offer of $2.75 million for Fintech Village, and subsequently signed a sale contract on March 15, 2021. The Company believes that Fintech Village met the criteria for held for sale classification on January 28, 2021. As the sale is expected to be completed within one year, the land with a carrying amount of $2.6 million and the asset retirement cost of $4.5 million are recorded as “Held for sale assets (Fintech Village”) in the current asset section of the condensed consolidated balance sheet. The Company has estimated the costs to sell Fintech Village to be $0.2 million and has recorded these costs in “Loss on disposal of subsidiaries, net.”

The Company recorded asset retirement obligations for environmental remediation matters in connection with the acquisition of Fintech Village. The asset retirement obligations are not classified as held for sale as the purchaser will not assume these liabilities. However, as the sale of Fintech Village is expected to be completed within one year, the asset retirement obligations, which will be derecognized upon the sale, have been classified as current liabilities in the condensed consolidated balance sheet.

The following table summarizes the activity in the asset retirement obligation for the three months ended March 31, ~~2020~~2021 (in thousands):


	January 1,		Liabilities		Remediation		Accretion				March 31,
	2021		Incurred		Performed		Expense		Revisions		2021
Asset retirement obligation	$	4,653	$	0	$	0	$	0	$	0	$	4,653

January 1,
2020 Liabilities
Incurred Remediation
Performed Accretion
Expense Revisions March 31,
2020
Asset retirement obligation $ 5,094 $ - $ - $ - $ - $ 5,094

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

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

Note 9. Goodwill and Intangible Assets

Goodwill

The following table summarizes changes in the carrying amount of goodwill (in thousands):

Balance as of January 1, 2019	$	705
Acquisitions		22,639
Balance as of December 31, 2019		23,344

Balance as of January 1, 2020				$	23,344
Measurement period adjustments		(12,513	)		(12,848)
Effect of change in foreign currency exchange rates		(42	)		(8)
Balance as of March 31, 2020	$	10,789
Impairment loss					(9,323)
Balance as of December 31, 2020					1,165
Acquisitions					49,933
Effect of change in foreign currency exchange rates					(14)
Balance as of March 31, 2021				$	51,084

Intangible Assets

The following table summarizes information regarding amortizing and indefinite lived intangible assets (in thousands):

March 31, 2020 December 31, 2019
Weighted
Average
Remaining
Useful Life Gross
Carrying
Amount Accumulated
Amortization Impairment
Loss Net
Balance Gross
Carrying
Amount Accumulated
Amortization Impairment
Loss Net
Balance
Amortizing Intangible Assets
Software and licenses - $ 97 $ (97 ) $ - $ - $ 97 $ (97 ) $ - $ -
Solid Opinion IP (a) 3.9 4,655 (1,009 ) - 3,646 4,655 (776 ) - 3,879
Fintalk intangible assets (b) - 635 (635 ) - 635 (635 ) - -
Influencer network (c) 8.4 1,980 (314 ) - 1,666 1,980 (264 ) - 1,716
Customer contract (c) 1.4 500 (264 ) - 236 500 (222 ) - 278
Continuing membership agreement (d) 19.3 8,255 (310 ) - 7,945 8,255 (206 ) - 8,049
Customer list 2.3 59 (15 ) - 44 59 (10 ) - 49
Trade name (c) 13.4 110 (12 ) - 98 110 (10 ) - 100
Technology platform (c) 5.4 290 (66 ) - 224 290 (55 ) - 235
Land use rights (e) 99 25,739 - - 25,739 27,079 - - 27,079
Marketing and distribution agreement (e) 20 11,944 - - 11,944 11,333 - - 11,333
Total 54,264 (2,722 ) - 51,542 54,993 (2,275 ) - 52,718
Indefinite lived intangible assets
Website name 25 - - 25 25 - - 25
Patent 28 - - 28 28 - - 28
Total $ 54,317 $ (2,722 ) $ - $ 51,595 $ 55,046 $ (2,275 ) $ - $ 52,771


	March 31, 2021								December 31, 2020
	Weighted
	Average		Gross						Gross
	Remaining		Carrying		Accumulated		Net		Carrying		Accumulated		Net
	Useful Life		Amount		Amortization		Balance		Amount		Amortization		Balance
Amortizing Intangible Assets
Influencer network (a)		1.8	$	1,137	$	(546)	$	591	$	1,137	$	(462)	$	675
Customer contract (a)		0.4		500		(431)		69		500		(389)		111
Continuing membership agreement (b)		18.3		1,179		(626)		553		1,179		(619)		560
Trade name (a)		12.4		110		(19)		91		110		(17)		93
Technology platform (a)		0.8		290		(145)		145		290		(97)		193
Land use rights (c)		97.8		27,298		(207)		27,091		28,162		(142)		28,020
Timios licenses (d)		14.8		1,000		(15)		985		—		0		0
Timios tradename (d)		14.8		7,180		(109)		7,071		—		0		0
Timios lender relationships (d)		6.8		13,570		(332)		13,238		—		0		0
Timios software in development (e)		—		305		0		305		—		0		0
WAVE patents (f)		39.8		29,530		(153)		29,377		—		0		0
WAVE tradename (f)		14.8		12,630		(174)		12,456		—		0		0
Total				94,729		(2,757)		91,972		31,378		(1,726)		29,652
Indefinite lived intangible assets
Timios Title plant (d)				500				500
Website name				25		0		25		25		0		25
Patent				28		0		28		28		0		28
Total			$	95,282	$	(2,757)	$	92,525	$	31,431	$	(1,726)	$	29,705

(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.

~~(c)~~

During the third quarter of 2018, the Company completed the acquisition of 65.7% share of Grapevine. ~~Refer~~In connection with the business analysis of Grapevine, the Company determined that the attrition rate of the influencer network had accelerated, and performed an impairment analysis, and recorded an impairment loss of $0.8 million during the year ended December 31, 2020. As a result of this analysis of the influencer network, the Company determined that the remaining useful life of the influencer network should be reduced to ~~Note 6(b).~~two years, effective January 1, 2021. also determined that remaining useful life of the technology should be reduced to one year, effective January 1, 2021.

~~(d)~~(b)

During the third quarter of 2019, the Company completed the acquisition of additional shares in DBOT, which increased its ownership to ~~90.0~~99.0 %. Intangible assets of $8.3 million were recognized on the date of acquisition. ~~Refer~~As part of the determination of the fair value of DBOT’s intangible assets during the year ended December 31, 2020, the Company utilized the cost method to ~~Note 6(c).~~determine the fair value of the continuing membership agreement, and determined the fair value was $0.6 million, and recorded an impairment loss of $7.1 million during the year ended December 31 2020.

Table of Contents

~~(e)~~(c)

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~~Tree Technologies holds the ~~completion~~land use rights for 250 acres of ~~acquisition accounting,~~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.

(d)

During the first quarter of 2021, the Company ~~revised~~completed the ~~estimated useful life~~acquisition 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 consolidated financial statements.100.0% interest in Timios. Refer to Note ~~6(a)~~6 for additional ~~information.~~information related to the acquisition.

(e)	Relates to software development costs capitalized during the first quarter of 2021 at Timios. The asset is yet to be placed into service; amortization of the completed asset will commence once it is ready to be placed into service.

(f)	During the first quarter of 2021, the Company completed the acquisition of 100.0% interest in WAVE. Refer to Note 6 for additional information related to the acquisition.

Amortization expense relating to intangible assets was ~~$0.4~~$1.0 million and ~~$0.2~~$0.4 million for the three months ended March 31, 2021 and 2020, ~~and 2019,~~ respectively.

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

	Amortization to be

			Amortization to be
Years ending December 31,	recognized			recognized

2020 (excluding the three months ended March 31, 2020)	$	1,761
2021		2,578
2021 (excluding the three months ended March 31, 2021)			$	3,755
2022		2,457		4,722
2023		2,448		4,384
2024		1,672		4,384
2025 and thereafter		40,626
2025				4,384
2026 and thereafter				70,343
Total	$	51,542	$	91,972

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 ~~(in~~(in thousands):

	March 31,		December 31,
	2020		2019

					March 31,		December 31,
					2021		2020
Non-marketable equity investments	$	5,967	$	5,967	$	8,158	$	6,014
Equity method investments		16,651		16,654		16,021		2,556
Total	$	22,618	$	22,621	$	24,179	$	8,570

Non-marketable equity investment

Non-marketable equity investments are investments in privately held companies without readily determinable fair 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.

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. Based on management’s analysis of certain investment’s performance, no0 impairment losses were recorded in the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

~~In the three months ended March 31, 2019,~~Table of Contents

On January 28, 2021, the Company ~~sold~~entered into a simple agreement for future equity (the “SAFE”) with Technology Metals Market Limited (“TM2”) pursuant to which Ideanomics invested £1.5 million ($2.1 million.) If there is an equity financing (of above one ~~non-marketable equity investment with a carrying amount~~million pounds (1,000,000) during the twelve months immediately following execution of ~~$3.2 million for GTB and recognized no gain or loss~~the SAFE, on the ~~sale. Refer~~initial closing of such equity financing the SAFE will automatically convert into the number of ordinary shares equal to ~~Note 14(b)~~the purchase amount divided by the lowest price per share of the ordinary shares paid during such equity financing. If no equity financing has taken place during the twelve-month period immediately following the date of the SAFE, the parties shall in good faith attempt for ~~additional information.~~one month to agree a fair value per ordinary share represented by the SAFE, following which the SAFE shall convert into the number of ordinary shares equal to the purchase amount divided by such fair value. If the parties are unable to establish a fair value per ordinary share within such one-month period, they shall jointly appoint and remunerate an expert valuer who shall deliver to both TM2 and Ideanomics simultaneously a written determination of fair value per ordinary share. Following receipt by both parties of such written determination, the SAFE shall convert into ordinary shares equal to the purchase amount divided by such fair value as determined by the expert valuer.

Equity method investments

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

March 31, 2020
January 1, 2020 Addition Income (loss)
on
investment Impairment losses Disposal Foreign
currency
translation
adjustments March 31,
2020
BDCG (a) $ 9,800 $ - $ - $ - $ - $ - $ 9,800
Glory (b) 6,854 - (3 ) - - - 6,851
Total $ 16,654 $ - $ (3 ) $ - $ - $ - $ 16,651


		March 31, 2021
						Income (loss)		Impairment				Dilution loss
		January 1, 2021		Addition		on investment		losses		Disposal		due to investee share issuance		March 31, 2021
Solectrac	(a)	$	2,556	$	0	$	(59)	$	0	$	0	$	(31)	$	2,466
Energica	(b)		0		13,555		0		0		0		0		13,555
Total		$	2,556	$	13,555	$	(59)	$	0	$	0	$	(31)	$	16,021

~~All the investments above are privately held companies; therefore, quoted market prices are not available.~~ The Company has received no dividends from equity method investees in the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

(a) Solectrac, Inc. (“Solectrac”)

~~(a)~~

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

In 2018, the Company signed a joint venture agreement, with two unrelated parties, to establish BDCG located in the United States for providing block chain services for financial or energy industries by utilizing artificial intelligence and big data technology in the United States. On ~~April 24, 2018,~~October 22, 2020, the Company acquired ~~20.0% equity ownership in BDCG from one noncontrolling party~~1.4 million common shares, representing 15.0% of the total common shares outstanding, of Solectrac for a purchase price of $0.91 per share, for total consideration of ~~$9.8 million which consisted of $2.0 million in cash and $7.8 million paid in the form of the Company’s capital stock (valued at $2.60 per share and equal to 3.0~~$1.3 million. On November 19, 2020, Ideanomics acquired an additional 1.3 million shares of ~~the Company’s~~ common ~~stock), increasing the Company’s~~stock for $1.00 per share, for a subsequent investment of $1.3 million. The Company’ ownership in Solectrac was diluted to 60.0%. The remaining 40.0% of BDCG are held by Seasail Ventures Limited (“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) granted to Seasail. The new entity is currently in the process of ramping up its operations. Intelligenta has yet to record revenue or earnings or losses, and therefore its statement of operations and balance sheet data are not material.

As24.3% as of March 31 ~~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, from its shareholder Beijing Financial Holding Limited, a Hong Kong registered company, for the consideration of 12.2 million restricted common shares of the Company, initially representing $24.4 million at $2.00 per share, the contract price, and subsequently revised to $20.0 million at $1.64 per share, the closing price on the date of acquisition. As part of this transaction, the 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 $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 July 19, 2021. If the option is exercised, the Company would have 20.4% indirect ownership in Glory in addition2021 due to the ~~34.0% direct ownership it already has.~~

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.

As initially contemplated, Glory, through its subsidiary Tree Manufacturing, would hold a domestic EV manufacturing license in Malaysia, a marketing and distribution agreement for EVs in the ASEAN region, as well as 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, 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 ownednew share issuance 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 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 variable interest entity, but that the Company is not the prime beneficiary. As of March 31, 2020, the Company accounts for 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 March 31, 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 income statement information of Glory for~~Solectrac during the three months ended March 31 ~~2020 (in thousands):~~2021.

Solectrac develops, assembles and distributes 100% battery-powered electric tractors-an alternative to diesel tractors-for agriculture and utility operations. Solectrac tractors provide an opportunity for farmers around the world to power their tractors by using the sun, wind, and other clean renewable sources of energy.

Revenue $ 1
Gross profit (3 )
Net loss from operations (10 )
Net loss (9 )
Net loss attributable to Glory (5 )

(b) Energica Motor Company S.P.A. (“Energica”)

On March 3, 2021, the Company entered into an investment agreement with Energica Motor Company S.P.A (“Energica.”) The Company invested €10.1 million ($13.6 million) for 6.1 million ordinary shares of Energica at a subscription price of €1.78 ($2.21) for each ordinary share. Pursuant to the purchase of the shares the Company will hold 20.0% of Energica’s share capital. From March 3, 2021 through September 30, 2021 the Company has the right to participate in any equity financing by Energica. Ideanomics will not be able to sell any of the shares for a period of 90 days.

Energica is the world’s leading manufacturer of high performance electric motorcycles and the sole manufacturer of the FIM Enel MotoE^™ World Cup. Energica motorcycles are currently on sale through the official network of dealers and importers.

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The Company has decided to account for Energica on a one quarter lag as Energica, which is publicly traded on the Milan stock exchange, is only required to prepare and file semi-annual and annual financial statements, and the time frame in which the filings must be complete is much more lenient than in the U.S. Energica prepares its financial statements in accordance with Article 2423 et seq of the Italian Civil Code, rather than U.S. GAAP. Energica’s financial statements will either be prepared in or reconciled to U. S. GAAP prior to the Company recording its share of Energica’s earnings or losses, and the one quarter lag will be utilized to accomplish this, as well as related disclosure matters.

Note 11. Leases

As of March 31, ~~2020,~~2021, the Company’s operating lease right of use assets and operating lease liabilities are ~~$6.1~~$9.3 million and ~~$7.3~~$9.4 million, respectively. The weighted-average remaining lease term is ~~5.8~~11.3 years and the weighted-average discount rate is ~~7.5%~~4.2%.

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 March 31, 2019, the weighted-average remaining lease term was 3.8 years and the weighted-average discount rate was 7.25%.

The following table summarizes the components of lease expense (in thousands):


	Three Months Ended
	March 31, 2021		March 31, 2020
Operating lease cost	$	338	$	487
Short-term lease cost		88		85
Sublease income		—		(32)
Total	$	426	$	540

Three Months Ended
March 31, 2020 March 31, 2019
Operating lease cost $ 487 $ 602
Short-term lease cost 85 15
Sublease income (32 ) -
Total $ 540 $ 617

The following table summarizes supplemental information related to leases (in thousands):

The additional right of use assets were acquired in the Timios and WAVE acquisitions. The facilities acquired are office buildings in U.S. locations where they conduct business.

Three Months Ended
March 31, 2020 March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 553 $ 259
Right of use assets obtained in exchange for new operating lease liabilities 322 -

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


	Leased Property
Years ending December 31	Costs
2021	$	1,064
2022		1,262
2023		1,207
2024		897
2025		835
2026 and thereafter		6,771
Total lease payments		12,036
Less: interest		(2,596)
Total	$	9,440

Leased Property
Years ending December 31 Costs
2020 $ 1,345
2021 1,435
2022 1,423
2023 1,474
2024 1,504
2025 and thereafter 1,874
Total lease payments 9,055
Less: Interest (1,756 )
Total $ 7,299

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 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, 2020. The Company will record a gain of $0.8 million for the extinguishment of the operating lease liability in the three months ending June 30, 2020.

~~The above table summarizing the maturity of operating lease liabilities does not encompass the settlement of the above mentioned lease liability as it had not been completed as of March 31, 2020.~~

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Note 12. Promissory Notes

The following table summarizes the outstanding promissory notes as of March 31, ~~2020~~2021 and December 31, ~~2019~~2020 (dollars in thousands):

March 31, December 31,
2020 2019
Interest
Rate Principal
Amount Carrying
Amount* Principal
Amount Carrying
Amount* Maturity Date
Convertible Note-Mr. McMahon (Note 14 (a)) 4.0% $ 3,000 $ 3,290 $ 3,000 $ 3,260 December 31, 2022
Convertible Note -SSSIG (Note 14 (a)) 4.0% 1,252 1,313 1,252 1,301 February 8, 2020, in process of renewal
Convertible Note-SSSIG (Note 14 (a)) 4.0% 250 253 250 250 November 25 2020
Convertible Note-Advantech (a) 8.0% 12,000 5,120 12,000 3,193 June 28, 2021
Senior Secured Convertible Note (b) 10.0% 850 542 850 348 August 22, 2020
Senior Secured Convertible Note (c) 10.0% 3,580 2,250 3,580 1,896 March 27, 2021
Senior Secured Convertible Note (d) 4.0% 5,000 3,223 3,000 1,405 December 2020
Promissory Note (e) 6.0% 3,000 3,045 3,000 3,000 November 25, 2020
Total $ 28,932 19,036 $ 26,932 14,653
Less: Current portion 10,626 8,013
Long-term Note, less current portion $ 8,410 $ 6,640


		March 31,				December 31,
		2021				2020
	Interest Rate	Principal Amount		Carrying Amount*		Principal Amount		Carrying Amount*
Vendor Note Payable	0.25%-4%	$	105	$	105	$	105	$	105
Small Business Association Paycheck Protection Program	1.0%		760		764		460		463
Promissory Note	4.0%		80,000		80,446		0		0
Total		$	80,865		81,315	$	565		568
Less: Current portion					(81,315)				(568)
Long-term Note, less current portion				$	0			$	0

*Carrying amount includes the accrued interest.

The following table summarizes future maturities of long-term debt, contractual obligations for interest, as well as projected interest expense resulting from the amortization of debt discounts as of March 31, 2020 (in thousands):

Principal Interest
2020 $ 9,100 $ 9,658
2021 19,832 4,415
Total $ 28,932 $ 14,073

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company was in compliance with all ratios and covenants.

~~(a) $12.0 Million Convertible Note - Advantech~~

~~On June 28, 2018,~~The Company had various debt instruments outstanding as of March 31, 2020. As of March 31, 2020, the total principal amount outstanding was $28.9 million, and the carrying amount, net of debt discounts arising from beneficial conversion features and including accrued interest, was $19.0 million. These debt instruments were either converted into common stock of the Company ~~entered into a convertible note purchase agreement with Advantech Capital Investment II Limited (“Advantech”)~~or repaid on or prior to their scheduled maturity dates in the aggregate principal amount of $12.0 million (the “Advantech Note.”) The Advantech Note bears interest at a rate of 8.0% and matures on June 28, 2021, and is convertible into 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 due to the down round provision and subsequent equity issuances at $1.00.year ended December 31, 2020.

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

~~Down Round Price Adjustment on October 30, 2019~~

As a result of the additional financing on October 30, 2019, the conversion price of the Advantech Note was reduced from $1.82 to $1.00. The initial difference between the conversion price and the fair value of the common stock on the commitment date resulted in a beneficial conversion feature (“BCF”) recorded of $1.4 million and increased by $10.6 million due to the down round provision adjustment in October 2019.

~~For~~In the three months ended March 31, 2020, ~~and 2019, total interest expense recognized was $1.9~~the Company received aggregate gross proceeds of $2.0 million ~~and $0.4 million, respectively. The carrying amounts as~~from the issuance of convertible notes to YA II PN, Ltd. (“YA PN II,”) pursuant to a previous securities purchase agreement.

In the three months ended March 31, 2020, ~~and December 31, 2019 are reflected net~~the Company recorded interest expense related to these debt instruments of ~~discounts of $8.6~~$3.2 million, ~~and $10.2 million, respectively, associated with the BCF~~including amortization of the ~~Advantech Note. This amount is being amortized based on the effective interest method through the first demand redemption date as applicable.~~beneficial conversion features of $2.7 million.

~~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.~~

~~(b) $2.05~~$37.5 Million ~~Senior Secured~~ Convertible Debenture due ~~in August 2020 - ID Venturas 7~~

July 4 2021 – YA II PN

On ~~February 22, 2019,~~January 4, 2021, the Company executed a security purchase agreement with ~~ID Venturas 7, LLC (“IDV”),~~YA II PN, whereby the Company issued ~~$2.1 million of senior secured~~a convertible note ~~(“February IDV Note”). The February IDV Note bears interest at a rate~~ of ~~10.0% per year payable either in cash or in kind at the option of the Company on a quarterly basis~~$37.5 million, and matures on August 22, 2020. In addition, IDV is entitled to the following: (1) the convertible note is senior secured; (2) convertible at an adjusted $1.00 (original $1.84) per share of Company common stock at the option of IDV, subject to adjustments if subsequent equity shares have a lower conversion price, (3) 1.2 million shares of common stock of the Company; and (4) a warrant exercisable for 1.6 million shares of common stock which the February IDV Note is convertible into at an exercise price of $1.00 (original $1.84) per share and will expire in 7 years, which was extended from 5 years.

~~The Company~~ received aggregate gross proceeds of ~~$2.0 million, net~~$37.5 million. The note was scheduled to mature on July 4, 2021 and bore interest at an annual rate of ~~$50,000 for~~4.0%, which would increase to 18.0% in the ~~issuance expenses paid by IDV. Total funds received were allocated to the February IDV Note, common shares and warrants based on their relative fair values in accordance with ASC 470,~~~~Debt~~ ~~(“ASC 470.”)~~event of default. The ~~fair value of the February IDV Note and common shares was based on the closing~~note had a fixed conversion price of ~~the Company’s common stock on February 22, 2019.~~$2.00. The ~~fair value of the warrants~~conversion price 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 fair value of the warrants was recorded as additional paid-in capital and a corresponding discount on the carrying amount of the February IDV Note. The Company recognized a BCF of $0.6 million as an increase in additional paid-in capital and corresponding discount on the carrying amount of the February IDV Note, which was the fair value of the common shares at the commitment date for the February IDV Note, less the effective conversion price.

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

~~The Company is also~~not subject to ~~penalty fee at 8.0% per annum~~adjustment except for ~~late payments~~subdivisions or combinations of ~~interests and compensation for the loss of IDV on failure to timely deliver conversion shares upon conversion.~~

common stock. 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, but not the obligation, to ~~request~~redeem a portion or all amounts outstanding under this note prior to the ~~removal~~maturity date at a cash redemption price equal to the principal to be redeemed, plus accrued and unpaid interest. The note contained customary events of default, indemnification obligations of the ~~guarantee~~Company 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~~other obligations and rights 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.parties.

~~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%. This resulted in a BCF of $1.4 million.

~~Conversion~~

During the three months ended ~~December~~March 31, ~~2019, $1.2 million of~~2021, the ~~February IDV Note,~~note, plus accrued and unpaid interest, ~~were~~was converted into ~~1.2~~18.8 million shares of common stock of the Company. ~~As a result of the conversions, the Company recognized interest expense of $1.0 million with a corresponding adjustment to debt discount.~~

The discounts on the February IDV Note for the warrants and BCF are being amortized to interest expense, using the effective interest method, over the term of the February IDV Note. As of March 31, 2020, and December 31, 2019, the carrying amount is reflected net of discounts of $0.3 million and $0.5 million, respectively. Total interest expense recognized was ~~$0.2 million and $0.3 million~~$25,479 for the three months ended March 31, ~~2020 and 2019, respectively.~~2021.

~~(c) $3.58~~$37.5 Million ~~Senior Secured~~ Convertible Debenture due ~~in March~~July 15 2021 ~~- ID Venturas 7~~

– YA II PN

On ~~September 27, 2019,~~January 15, 2021, the Company executed a security purchase agreement with ~~IDV (“IDV September Agreement”),~~YA II PN, whereby the Company issued ~~$2.5 million of senior secured~~a convertible note ~~in September (“September IDV Note”)~~of $37.5 million, and ~~issued~~received aggregate proceeds of $37.5 million. The note was scheduled to mature on July 15, 2021 and bore interest at an ~~additional $1.1 million~~annual rate of ~~secured convertible notes subsequently based on additional investment rights~~4.0%, which would increase to 18.0% in the ~~IDV September Agreement.~~event of default. The ~~September IDV Notes bear interest~~note had a fixed conversion price of $3.31. The conversion price was not subject to adjustment except for subdivisions or combinations of common stock. The Company had the right, but not the obligation, to redeem a portion or all amounts outstanding under this note prior to the maturity date at a ~~rate~~cash redemption price equal to the principal to be redeemed, plus accrued and unpaid interest. The note contained customary events of ~~10.0% per year payable either in cash or in kind at the option~~default, indemnification obligations of the Company ~~on a quarterly basis~~ and ~~mature on~~other obligations and rights of the parties.

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During the three months ended March ~~27, 2021. In addition, IDV is entitled to~~31, 2021, the ~~following: (1) the convertible~~ note, is senior secured; (2) convertible at an adjusted $1.00 (original $1.84) per share of Company common stock at the option of IDV, subject to adjustments if subsequent equity shares have a lower conversion price, (3) 1.5plus accrued and unpaid interest, were converted into 11.3 million shares of common stock of the Company. Total interest expense recognized was $46,301 for the three months ended March 31, 2021.

$65.0 Million Convertible Debenture due July 28 2021 – YA II PN

On January 28, 2021, the Company executed a security purchase agreement with YA II PN, whereby the Company issued a convertible note of $65.0 million, and received aggregate proceeds of $65.0 million. The note was scheduled to mature on July 28, 2021 and bore interest at an annual rate of 4.0%, which would increase to 18.0% in the event of default. The note had a fixed conversion price of $4.12. The conversion price was not subject to adjustment except for subdivisions or combinations of common stock. The Company had the right, but not the obligation, to redeem a portion or all amounts outstanding under this note prior to the maturity date at a cash redemption price equal to the principal to be redeemed, plus accrued and unpaid interest. The note contained customary events of default, indemnification obligations of the Company and ~~(4) a warrant exercisable for 4.7~~other obligations and rights of the parties.

During the three months ended March 31, 2021, the note, plus accrued and unpaid interest, were converted into 15.8 million shares of common stock of the Company. Total interest expense recognized was $53,699 for the three months ended March 31, 2021.

$80.0 Million Convertible Debenture due August 8, 2021 – YA II PN

On February 8, 2021, the Company executed a security purchase agreement with YA II PN, whereby the Company issued a convertible note of $80.0 million, and received aggregate proceeds of $80.0 million. The note is scheduled to mature on August 8, 2021 and bears interest at an ~~exercise~~annual rate of 4.0%, which increases to 18.0% in the event of default. The note has a fixed conversion price of ~~$1.00 (original $1.84) per share and will expire in 7 years, which was extended from 5 years.~~

$4.95. The conversion price is not subject to adjustment except for subdivisions or combinations of common stock. The Company ~~received net proceeds of $3.5 million (aggregate gross proceeds of $3.6 million, net of $65,000 for~~has the ~~issuance expenses paid~~right, but not the obligation, to ~~IDV). Total gross proceeds were allocated~~redeem a portion or all amounts outstanding under this note prior to the ~~September IDV Note, common shares~~maturity date at a cash redemption price equal to the principal to be redeemed, plus accrued and ~~warrants based on their relative fair values in accordance with ASC 470.~~unpaid interest. The ~~fair value~~note contains customary events of the September IDV Note and common 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 122.44% and an average interest rate of 1.66%. The fair value of the warrants was recorded as additional paid-in capital and corresponding discount on the carrying amount of the September IDV Note. The Company recognized a BCF as a discount on September IDV Note at its intrinsic value, which was the fair value of the common shares at the commitment date, less the effective conversion price. The Company recognized $1.3 million of BCF in total as an increase in additional paid-in capital and corresponding discount on the carrying amount of the September IDV Note.

~~The September IDV Note is redeemable at the option~~default, indemnification obligations of the Company ~~in whole at an initial redemption price~~and other obligations and rights of the ~~principal amount of the September IDV Note plus additional warrants and accrued and unpaid interest to the date of redemption.~~parties.

~~The security purchase agreement contains customary representations, warranties and covenants. The September IDV Note is collateralized by the Company’s equity interest in DBOT.~~

~~The Company is also subject to penalty fee at 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 for the February IDV Note and the September IDV Note 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.

The discount on the September IDV Note for the warrants and BCF are being amortized to interest expense, using the effective interest method, over the term of the September IDV Note. As of March 31, 2020 and December 31, 2019, the carrying amount is reflected net of discounts of $1.4 million and $1.8 million, respectively. Total interest expense recognized was $0.4 million for the three months ended March 31, ~~2020.~~2021.

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

Vendor Notes Payable

On ~~December 19, 2019,~~May 13, 2020, DBOT entered into a settlement agreement with a vendor whereby the ~~Company~~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 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 amendedunsecured promissory 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.~~

~~(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% discount) in units consisting of secured convertible debentures (the “Convertible Debentures”), which shall be convertible into shares of the Company’s common stock at lower of: (1) $1.50 per share, or (2) 90% 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:

	1.	~~First Closing: $2.0 million of Convertible Debentures and 1.4 million shares of common stock closed on December 19, 2019;~~
	2.	~~Second Closing $1.0 million of Convertible Debentures and 0.7 million shares of common stock closed on December 31, 2019 upon filing the registration statement; and~~
	3.	~~Third Closing: $2.0 million of Convertible Debentures 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~~$60,000, bearing interest at ~~an 4.0% interest rate. YA II PN also received: (1) a warrant (the “Warrant I”) exercisable for 1.7 million shares~~0.25% per annum, and payable in 2 installments 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.

$30,000. 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 Convertible Debentures and common sharesfirst installment was ~~based on the closing price of the common stock~~due 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 Convertible Debentures is greater than the effective conversion price.

The Convertible Debentures are redeemable at the option of the Company in whole or in part at an initial redemption price of the principal amount of the Convertible Debentures plus a redemption premium equal to 15% 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.

The discounts on the Convertible Debentures for the warrants and BCF are being amortized to interest expense, using the effective interest method, over the term of the Convertible Debentures. As of March 31, 2020 and ~~December~~was repaid, and the remaining payment is due on August 31, ~~2019, the carrying amount is reflected net of discounts of $1.8 million and $1.6 million, respectively. Total interest expense recognized was $0.5 million for the three months ended March 31, 2020.~~2021.

~~(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. ForIn the three months ended March 31, 2020 the Company ~~recorded~~ceased to use the premises underlying one lease and vacated the real estate. 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 due and payable on December 31, 2021.

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 was originally payable in 18 installments of $18,993 commencing on November 10, 2020, with a final payment due on April 10, 2022. With several amendments, the loan is currently payable monthly commencing on September 10, 2021, with a final payment due on April 10, 2025. The Company may apply for forgiveness of this loan in the next twelve months 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.

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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 was originally payable in 18 installments of approximately $7,000 commencing on December 1, 2020, with a final payment due on May 1, 2022. With several amendments, the loan is currently payable commencing on October 1, 2021, with a final payment due on April 10, 2025. The Company is planning to repay the loan in the next few months.

On May 3, 2020 WAVE 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 was originally payable in 18 installments of $12,630 commencing on November 1, 2020, with a final payment due on May 3, 2022. After the issuance of an additional grace period, payments will commence on April 3, 2021 and will continue until the original maturity date of May 3, 2022. WAVE used the loan for qualifying expenses and the Company expects to qualify for full or partial forgiveness under the program in the next few months.

Total interest expense ~~of $45,000 related to~~recognized was $1,138 in the ~~Note. The agreement also requires the Company to comply with certain covenants, including restrictions on new indebtedness offering and liens.~~three months ended March 31, 2021.

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

Convertible Preferred Stock

The Board of Directors has authorized 50.0 million shares of convertible preferred stock, $0.001 par value, issuable in series. As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, 7.0 million shares of Series A preferred stock were issued and outstanding. The Series A preferred stock shall be entitled to one vote per common stock on an as-converted basis and is only entitled to receive dividends when and if declared by the Board.

Redeemable Non-controlling Interest

The Company and Qingdao Chengyang Xinyang Investment Company Limited (“Qingdao”) formed ~~a joint venture~~an entity named Qingdao Chengyang Mobo New Energy Vehicle Sales Service Company Limited (“~~JV”~~New Energy.”). Qingdao entered into a capital subscription agreement for a total of 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 ~~the JV~~New Energy attaining certain revenue or market value benchmarks.

The investment agreement stipulates that ~~the JV~~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.

The following table summarizes activity for the redeemable non-controlling interest ~~for the three months ended March 31, 2020~~ (in thousands):


January 1, 2020	$	-

				Three months ended
				March 31, 2021		March 31, 2020
Beginning balance				$	7,485	0
Initial investment		7,047				7,047
Accretion of dividend		106			115	106
Loss attributable to non-controlling interest		(80	)		(154)	(80)
Adjustment to redemption value		80			154	80
March 31, 2020	$	7,153
Ending balance				$	7,600	7,153

Common Stock

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

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~~2020~~2021 Equity Transactions

On February 26, 2021, the Company entered into a sales agreement with Roth Capital Partners, LLC (“Roth Capital.”) in accordance with the terms of the sales agreement, the Company may offer and sell from time to time through Roth Capital the Company’s common stock having an aggregate offering price of up to $150.0 million (the “Placement Shares.”) The Placement Shares will be offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (Registration No. 333- 252230.) The Company is not obligated to sell any Placement Shares pursuant to the sales agreement. Subject to the terms and conditions of the sales agreement, Roth Capital will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of the Nasdaq Stock Market (“Nasdaq,”) to sell the Placement Shares from time to time based upon the Company’s instructions, including any price, time or size limits or other customary parameters or conditions the Company may impose. Sales of the Placement Shares, if any, will be made on Nasdaq at market prices by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended. The Company shall pay to Roth Capital in cash, upon each sale of Placement Shares pursuant to the Agreement, an amount equal to 3.0% of the gross proceeds from each sale of Placement Shares. During the three months ended March 31, 2021, the Company issued 17.6 million shares of common stock and received net proceeds of $53.4 million after deducting $1.7 million commission and transaction fees.

Refer to Note 6 for information related to the issuance to common stock for acquisitions, Note 12 for information related to issuance of ~~commons~~common stock with convertible notes, Note 15 for information related to the issuance to common stock for ~~warrant exercise, and Note 6(c) for~~option exercise.

2020 Equity Transactions

During the ~~information~~three months ended March 31, 2020, the Company issued 10.9 million shares of common stock related to the ~~issuance~~DBOT acquisition, issued 1.5 million shares of common stock ~~for DBOT contingent consideration.~~

~~2019 Equity Transactions~~

~~Refer to Note 9 for information~~ related to ~~the issuance~~convertible notes and 1.0 million shares 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.~~warrant exercise.

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

(a)Convertible Notes

~~(a)~~

~~Convertible Note~~

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

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

~~The accumulated interest payable as of March 31, 2020 and December 31, 2019 was $0.3 million and $0.3 million, respectively.~~ For the three months ended March 31, 2020, ~~and 2019,~~ the Company recorded interest expense of $29,918 ~~and $29,589~~ related to the note.

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 ~~did not pay such~~paid the accumulated interest $0.3 million in cash prior to ~~Mr. McMahon in~~ the ~~three months ended March 31, 2020 and 2019.~~conversion.

$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 $2.5 million. The convertible promissory note bears interest at a rate of 4.0%, was scheduled to mature on February 8, 2020, and iswas convertible into shares of the Company’s common stock at a conversion price of $1.83 per share anytime at the option of SSSIG. ~~The Company is in the process of negotiating an extended due date, and believes it has the ability to do so.~~

~~As of March 31, 2020, the Company received $1.3 million from SSSIG. The Company has not received the remaining $1.2 million as of the date of this report.~~ For the three months ended March 31, 2020, ~~and 2019,~~ the Company recorded interest expense of $12,489 ~~and $10,617, respectively,~~ related to the ~~Note.~~convertible promissory note. The Company ~~has~~did not ~~paid~~pay the interest in cash on this note.

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The Company received $1.3 million from SSSIG, and did not receive the remaining $1.2 million. On June 5, 2020, the Audit Committee and the Board of Directors approved the reduction of the 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 2.2 million shares of common stock.

$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~~bore interest at a rate of 4.0%, ~~matures~~was initially scheduled to mature on November 25, 2021, and iswas 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. ~~As of March 31, 2020, the Company received $0.25 million from SSSIG.~~ For the three months ended March 31, 2020, the Company recorded interest expense of $3,493. The Company ~~has~~did not paid the interest in cash on this note.

The Company received $0.25 million from SSSIG and did not receive the remaining 0.75 million. On June 5, 2020, the Audit Committee and the Board of Directors approved the reduction of the 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.

(b) ~~Transactions~~Severance payments

Pursuant to previous severance agreements with ~~GTD~~

~~Disposal of Assets in exchange of GTB~~

~~In March 2019,~~certain executives, the Company completed the sale of the following assets (with total carrying amount of $20.4 million) to GTD, a minority shareholder based in Singapore, in exchange for 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 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,~~Nonmonetary Transactions~~.

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

~~13% ownership interest in Nanjing Shengyi Network Technology Co., Ltd (“Topsgame”)~~

~~(carrying amount of $3.2 million which was included in long-term investment as a non-marketable equity investment)~~

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

~~Digital asset management services~~

~~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 estimate the 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% 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%. 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%. 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 $40.7paid $0.1 million in the ~~year~~three months 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 2019, and on December 31, 2019 the quoted price was $0.23. As a 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 performed an impairment analysis in the fourth quarter of 2019June 30, 2020, and recorded ~~an impairment loss of $61.1 million.~~

~~(c) 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 $0.8 million in total for salary, severance and expenses. The Company paid $0.6 million in the first quarter of 2019 and recorded $0.2remaining $0.1 million in “Other current liabilities” on its consolidated balance sheet as of December 31, 2019. The $0.8 million severance expenses were recorded in “Selling, general and administrative expenses” in the consolidated statements of operations.

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

In the three months ended March 31, 2020, the Company’s net borrowings from Dr. Wu and his affiliates decreased by $2.5 million due to repayments. The Company recorded these borrowings in “Amount due to related parties” in itscondensed consolidated balance sheet as of March 31, 2021 and December 31, 2020.

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 million transferred from Beijing Financial Holding Limited, were converted into 2.6 million shares of common stock.

As of March 31, 2021 and December 31, 2020, the Company has receivables of $0.2 million and $0.2 million, respectively, due from Dr. Wu and his affiliates and recorded in “Amounts due from related parties” in the consolidated balance sheets.

As of March 31 2021 and December 31 2020, the Company has payables of $1.0 million and $0.6 million, respectively, due to Dr. Wu and his affiliates and recorded in “Amounts due to related parties” in the consolidated balance sheets. The increase is mainly due to $0.4 million accrued service charges payable to SSSIG for the period from January 1, 2021 through March 31, 2021.

Service agreement with SSSIG

The Company entered a service agreement with SSSIG for the period from July 1, 2020 through June 30, 2021 for $1.4 million in exchange for consulting services from SSSIG. The services include but are not limited to human resources, finance and legal advice. The Company recorded the service charges of $0.4 million in “Professional fees” for the three months ended March 31, 2021, and $0.6 million in “Amount due to related parties” as of March 31, 2021. The Company is in the process of renegotiating the service agreement.

(d) Amounts due from and due to Glory

Glory has made partial payment of $0.5 million on behalf of the Company to acquire the land use rights and the Company has made payments of $0.2 million on behalf of Glory for some of its operational expenses during the year ended December 31, 2020. ~~These borrowings bear no interest.~~The net balance of $0.3 million due to Glory as result of these payments is recorded in “Amount due to related parties” as of March 31, 2021 and December 31, 2020.

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(e) Long Term Investment to Guizhou Qianxi

Green Environmentally Friendly Taxi Service Co. (“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~~for consideration of $4.9 million, which ~~will~~was to be paid in ~~six~~6 installments. Shenma ~~needs~~was required to complete the share transfer registration prior to May 31, 2020, otherwise it will be required to return the ~~investment payment~~consideration to the Company. The Company has ~~recorded the first installment~~paid $0.5 million as of March 31, 2021 and December 31, 2020 and recorded it on the “Other Non-Current Assets” since the share transfer registration is not completed yet.

~~(f) Borrowing from Beijing Financial Holdings Limited~~

The Company ~~recorded the borrowings of $0.4 million in “Amount due~~is currently taking actions to related parties” in its consolidated balance sheet as of March 31, 2020, and $0.7 million in “Other current liabilities” in its consolidated balance sheet as of December 31, 2019. Effective January 1, 2020, Beijing Financials Holding limited is considered a related party because MHTL is 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 of Beijing Financial Holdings Limited.resolve these matters.

Note 15. Share-Based Compensation

As of March 31, ~~2020,~~2021, the Company had ~~13.3~~25.8 million options, 0.1 million restricted shares and ~~8.0~~1.1 million warrants outstanding.

The Company awards common stock and stock options to employees, consultants, and directors as compensation for their services, and accounts for its stock option awards to employees, consultants, 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, 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. AsOn October 22, 2020, the Company’s shareholders approved the amendment and restatement of ~~March 31, 2020,~~ the 2010 Plan. The maximum aggregate number of shares of common stock that may be issued under the 2010 Plan increased from ~~4.0~~31.5 million shares to ~~31.5~~56.8 million shares. As of March 31, ~~2020,~~2021, options available for issuance are ~~15.8~~23.6 million shares.

For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, total share-based payments expense was $2.0 million and $2.2 million, ~~and $0.2 million,~~ respectively.

(a)

Stock Options

The following table summarizes stock option activity for the three months ended March 31, ~~2020:~~2021:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Options	Exercise		Contractual	Intrinsic
	Outstanding	Price		Life (Years)	Value
Outstanding at January 1, 2021	25,087,416	$	1.29	—	$	0
Granted	1,705,000		3.01	—		0
Exercised	(480,834)		0.54	—		0
Expired	(156,255)		0.53	—		0
Forfeited	(395,830)		0.53	—		0
Outstanding at March 31, 2021	25,759,497		1.44	7.72		39,294,450
Vested as of March 31, 2021	17,006,683		1.60	6.87		23,226,636
Expected to vest as of March 31, 2021	8,752,814		1.12	9.37		16,067,814

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 - - - -
Exercised - - - -
Expired (711,583 ) 1.95 - -
Forfeited (897,917 ) 1.98 - -
Outstanding at March 31, 2020 13,327,226 2.15 8.17 -
Vested and expected to be vested as of March 31, 2020 13,327,226 2.15 8.17 -
Options exercisable at March 31, 2020 (vested) 7,930,354 2.26 7.67 -

As of March 31, ~~2020, $8.1~~2021, $8.0 million of total unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average period of ~~0.9~~1.24 years. The total intrinsic value of shares exercised in the three months ended March 31, 2021 and 2020 was $0.5 million and $0, respectively. The total fair value of shares vested in the three months ended March 31, 2021 and 2020 was $1.9 million and ~~2019 was~~ $2.2 million, ~~and $6,312,~~ respectively. Cash received from options exercised in the three months ended March 31, 2021 and 2020 ~~and 2019~~$0were $0.3 million and $0, respectively.

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~~There were no~~The following table summarizes the assumptions used to estimate the fair values of the share options granted in the three months ended March 31, 2021 and 2020.


	Three Months Ended
	March 31, 2021		March 31, 2020
Expected term (in years)	5.51-5.53		—
Expected volatility	120%-122	%	0	%
Expected dividend yield	0	%	0	%
Risk free interest rate	0.51%-1.01	%	0	%

(b)

Warrants

In connection with certain of the Company’s ~~financings and~~ 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 andthe~~ weighted average exercise price was ~~$1.10~~$4.00 and the weighted average remaining life was 61.36 years. ~~Refer to Note 12 for additional information on promissory notes.~~


	March 31, 2021	December 31, 2020
	Number of	Number of
	Warrants	Warrants
	Outstanding and	Outstanding and	Exercise		Expiration
Warrants Outstanding	Exercisable	Exercisable	Price		Date
Service providers	200,000	200,000	$	5.00	July 1, 2022
Service providers	700,000	700,000		2.50	February 28, 2022 - October 1, 2022
Service provider	100,000	0		7.50	January 1, 2023
Service provider	100,000	0		9.00	January 1, 2023
Total	1,100,000	900,000

March 31, 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 1,671,196 $ 1.00 2/22/2026
$3.58 million IDV 4,658,043 4,658,043 1.00 9/27/2026
$5.0 million YA II PN 1,666,667 1,666,667 1.50 12/13/2024
$5.0 million YA II PN * - 1,000,000 1.00
7,995,906 8,995,906

*YA II PN exercised 1,000,000 warrants on March 31, 2020 and the Company received $1.0 million proceeds.

(c)

Restricted Shares

~~The following table summarizes the unvested restricted shares is as follows:~~

Weighted-average
Shares fair value
Non-vested restricted shares outstanding at January 1, 2020 55,086 $ 2.38
Granted - -
Forfeited - -
Vested - -
Non-vested restricted shares outstanding at March 31, 2020 55,086 2.38

As of March 31, ~~2020,~~2021, there was $0 of unrecognized compensation cost related to unvested restricted shares.

Note 16. Earnings (Loss) Per Common Share

The following table summarizes the Company’s earnings (loss) per share for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (USD in thousands, except per share amounts):


	Three Months Ended
	March 31,		March 31,
	2021		2020
Net earnings (loss) attributable to common stockholders	$	(573)	$	(12,348)
Basic weighted average common shares outstanding		391,131,793		157,859,642
Effect of dilutive securities
Convertible preferred shares- Series A		0		—
Convertible promissory notes		0		—
Diluted potential common shares		391,131,793		157,859,642
Earnings (loss) per share:
Basic	$	(0.00)	$	(0.08)
Diluted	$	(0.00)	$	(0.08)

Three Months Ended
March 31, 2020 March 31, 2019
Net earnings (loss) attributable to common stockholders $ (12,348 ) $ 19,927
Interest expense attributable to convertible promissory notes - 738
Net earnings (loss) assuming dilution $ (12,348 ) $ 20,665
Basic weighted average common shares outstanding 157,859,642 105,345,673
Effect of dilutive securities
Convertible preferred shares- Series A - 933,333
Convertible promissory notes - 10,022,230
Diluted potential common shares 157,859,642 116,301,236
Earnings (loss) per share:
Basic $ (0.08 ) $ 0.19
Diluted $ (0.08 ) $ 0.18

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

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Diluted earnings (loss) per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding. Diluted net loss per share equals basic net loss per share because the effect of securities convertible into common shares 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 the Company’s losses and thus these shares were not included in the computation of diluted loss per share because the effect was ~~antidilutive.~~antidilutive (in thousands):

	March 31,		December 31,
	2020		2019

					March 31,	December 31,
					2021	2020
Warrants		7,996		8,996	1,100	900
Options and RSUs		13,382		14,938	25,844	25,172
Series A Preferred Stock		933		933	933	933
DBOT contingent shares		818		8,501	1,013	1,013
Convertible promissory note and interest		24,218		21,678	16,162	—
Total		47,347		55,046	45,052	28,018

Note 17. Income Taxes

~~As of~~During the three months ended March 31, ~~2020,~~2021 there was an income tax benefit of $12.9 million. This principally consisted of a reduction in the Company’s valuation allowance that resulted from the acquisitions of Timios and WAVE. In both cases intangible assets were recognized for financial reporting purposes that were not recognized for income tax purposes. This, in combination with some smaller temporary differences of Timios and WAVE, resulted in the recognition of $14.5 million deferred tax liabilities, of which $10.4 million for federal and $4.1 million for state. The federal tax returns of Timios and WAVE will be included in the Ideanomics and subsidiaries consolidated U.S. federal tax return. WAVE will be included in the state tax returns of Ideanomics. The federal deferred tax liabilities, and the WAVE state deferred tax liabilities created, resulted in the valuation allowance on Ideanomics’ deferred tax assets being reduced by an equal amount. Ideanomics’ net deferred tax assets that had previously been judged to be more likely that not to be unable to reduce the Company’s income tax liability and consequently were completely offset by a valuation allowance. Once the acquisitions of Timios and WAVE occurred, a portion of Ideanomics’ deferred tax assets could be utilized in offsetting the newly acquired deferred tax liabilities, this resulted in a $13.3 million one time income tax benefit.

Timios has taxable income reported on certain separate state tax returns and consequently has related state income tax expense. The net state income tax expense for Timios was $0.4 million for the three months ended March 31, 2021. There are 0 other material income tax expenses or benefits for the three months ended March 31, 2021 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 ~~$88.2 million of the U.S domestic cumulative~~established a 100% valuation allowance against its net deferred tax ~~loss carryforwards and $29.7 million of the foreign cumulative tax loss carryforwards, which may be available to reduce future income~~assets, excluding Timios’ net state deferred tax liabilities, ~~in certain jurisdictions. No U.S.~~due to its history of pre-tax losses and the likelihood that the deferred tax ~~loss carry forwards expire after 2017 based on new tax law. These PRC tax loss carryforwards~~assets will ~~expire beginning year 2020 to year 2024.~~

not be realized.

During the three months ended March 31, 2020 income tax expense is ~~nil~~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. 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.

During the three months ended March 31, 2019, the Company recorded an income tax benefit of $0.1 million which consisted of a $4.7 million expense related to current operations and a $4.8 million benefit from a reduction in the beginning of the year deferred tax valuation allowance. This resulted in an effective tax rate of (1%). The effective tax rate for the three months ended March 31, 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.

There was no0 identified ~~unrecognized~~uncertain tax ~~benefit~~positions as of March 31, ~~2020~~2021 and December 31, ~~2019.~~ 2020.

Note 18. Commitments and Contingencies

Lawsuits and Legal Proceedings

From time to time, the 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 the business.

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Shareholder Class ~~Action~~

Actions and Derivative Litigation

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.~~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.

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 alleged 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. On November 4, 2020, the Lundy and Kim actions were consolidated and is now titled “In re Ideanomics, Inc. Securities Litigation.” In December 2020, the Court appointed Rene Aghajanian as lead plaintiff and an amended complaint was filed in February 2021, alleging 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.

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. Additionally, on September 11, 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 Elleisy, Jr. v. Ideanomics, et al, 20-cv-5333, alleging violations and allegations similar to the Toorani litigation. On October 10, 2020, the Court in the Elleisy and Toorani, consolidated these two actions. Additionally, on October 27, 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 District of Nevada, captioned Zare v. Ideanomics, et al, 20-cv-608, alleging violations and allegations similar to the Toorani and Elleisy litigation.

As previously disclosed, there was a mediation scheduled for April 21 and 22, 2021 for the above-referenced filed civil actions. In the Rudani action, the parties reached a settlement in principle, subject to finalizing a settlement agreement and approval of the Court, for $5,000,000. As to the shareholder derivative cases, the parties have advised the Court in the Southern District of New York that the parties are currently engaged in a dialogue pertaining to settlement. As to the action titled In re Ideanomics, Inc. Securities Litigation pending in the Southern District of New York, the defendants filed a motion to dismiss on May 6, 2021. While the Company believes that ~~the Class Action is~~these actions are without merit, ~~and plans to vigorously defend itself against these claims,~~ there can be no assurance that the Company will prevail in the pending lawsuits. The Company cannot currently estimate the possible loss or range of losses, if any, that it may experience in connection with ~~these~~the pending and unresolved litigations.

SEC Investigation

As previously reported, the Company is subject to an investigation by the SEC and continues to respond to various information and document requests from the SEC. The Company is fully cooperating with the SEC’s requests and cannot predict the outcome of this investigation.

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Note 19. Concentration of Credit and ~~Other~~Foreign Currency Risks

(a)

~~PRC Regulations~~

The EV industry is relatively new in China, and the PRC 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 government in 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 cannot ensure that it has all the permits or licenses required for its EV business or that the Company will be able to obtain or maintain permits or licenses in a timely manner.

~~(b)~~

Concentration of Credit Risks

Financial instruments that potentially subject the Company to significant concentration of credit risk primarily consist of cash, cash equivalents, and accounts receivable. As of March 31, ~~2020, and December 31, 2019,~~2021, the Company’s cash was held by financial institutions (located in the PRC, Hong Kong, Malaysia , the ~~United States, Malaysia~~U.S. and Singapore) that management believes have acceptable credit. Accounts receivable are typically 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)~~

(b)

Foreign Currency Risks

A ~~majority~~portion of the Company’s operating transactions are ~~denominated in RMB and a significant portion of the Company’s assets and liabilities 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”~~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.

Note 20. Fair Value Measurement

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

March 31, 2020
Level I Level II Level III Total
Acquisition earn-out liability¹ $ - $ - $ 1,096 $ 1,096


		March 31, 2021
	Level I		Level II		Level III		Total
DBOT - Contingent consideration¹	$	0	$	0	$	649	$	649
Tree Technology - Contingent consideration²		0		0		8,805		8,805
Wave - Contingent consideration³		0		0		7,657		7,657

Note

¹ This represents the liability incurred in connection with the acquisition of DBOT shares during the ~~third quarter~~three months ended September 30, 2019 and as remeasured as of April 17, 2020. The contractual period which required periodic remeasurement has expired, and therefore the Company will not remeasure this liability in the future. The fair value of DBOT contingent consideration as of March 31, 2020 was valued using the Black-Scholes Merton method. The Company issued 10.9 million shares during the three months ended months ended March 31, 2020 and partially satisfied this liability. NaN shares have been issued in the three months ended March 31, 2021.

² This represents the liability incurred in connection with the acquisition of Tree Technology shares during the three months ended December 31, 2019 and as subsequently remeasured as of March 31, ~~2020 as disclosed in Note 6(c).~~

2021. The fair value of the Tree Technology contingent consideration 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.

³ This represents the liability incurred in connection with the acquisition ~~earn-out~~of WAVE. The liability represents the combination of the hold back shares and the earnout. The hold back shares are the remaining shares to be issued as of March 31, ~~2020 and December 31, 2019~~2021 contingent on the receipt of certain customer consents as disclosed in Note 6. The fair value of this contingent consideration was valued using a scenario-based method that indicated based on the ~~Black-Scholes Merton method.~~

~~The following table summarizes~~probabilities that 100% of the ~~significant inputs and assumptions used~~consents will be received in the ~~model :~~

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 % 0 %

second quarter of 2021. The ~~significant unobservable inputs used~~earnout liability is dependent on WAVE achieving certain revenue and gross profit margin criteria in ~~the~~2021, 2022 and cumulatively 2021 and 2022. The fair value ~~measurement~~of zero has been determined using a scenario-based method indicated that none of the ~~acquisition earn-out liability includes the risk-free interest rate, expected volatility, expected term and expected dividend yield. Significant increases or decreases in any~~criteria are likely to be achieved.

Table of ~~those inputs in isolation would result in a significantly different fair value measurement.~~Contents

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

Acquisition Earn-out Liability
January 1, 2020 $ 7,311
Settlement (6,747 )
Remeasurement (loss)/gain recognized in the income statement 532
March 31, 2020 $ 1,096


	Contingent
	Consideration
January 1, 2021	$	8,960
Addition		7,657
Settlement		0
Remeasurement loss/(gain) recognized in the statement of operations		494
March 31, 2021	$	17,111

The acquisition of Tree Technologies also resulted in an acquisition earn-out liability, initially recorded as $17.3 million and subsequently revised to $15.5 million upon the completion of acquisition accounting. As the business case upon which the acquisition earn-out liability was determined assumes that manufacturing and distribution commences in July, 2020, as of yet there have been no changes in conditions which would cause the remeasurement of this liability. Refer to Note 6(a) for additional information.

Note 21. Subsequent Events

~~Standby Equity Distribution Agreement~~

Stock Purchase Agreement with FNL Technologies, Inc.

On April ~~3, 2020, the Company~~20, 2021, Ideanomics entered into a ~~Standby~~stock purchase agreement with FNL Technologies, Inc., the owner and operator of the social media platform Hoo.be (“FNL,”) pursuant to which Ideanomics made an investment into FNL which included the investment of $2.9 million cash into FNL, the issuance of 105,932 shares of Ideanomics common stock, and the sale of 100% of Grapevine Logic, Inc., a subsidiary of Ideanomics, to FNL. Ideanomics received 0.6 million shares of common stock of FNL at a subscription price of $8.09 per share of common stock, and Ideanomics also converted a $250,000 Simple Agreement for Future Equity ~~Distribution~~into 30,903 shares of common stock. Ideanomics will have approximately 20% ownership of FNL. FNL will appoint Alfred Poor, Ideanomics’ Chief Executive Officer, to be a member of its board of directors.

Stock Purchase Agreement with U.S. Hybrid Corporation

On May 12, 2021, Ideanomics entered into an agreement and plan of merger (the ~~“SEDA”~~“Agreement”) ~~with YA II PN, Ltd.,~~to acquire 100% of privately held U.S. Hybrid Corporation (“~~YA”~~U.S. Hybrid”)~~. Pursuant to the SEDA, the Company will be able to sell up to~~ for an aggregate purchase price of $50.0 million in a combination of ~~its common~~$30.0 million of cash and $20.0 million worth of Ideanomics stock atas consideration, subject to customary purchase price adjustments set forth in the ~~Company’s request any time during~~Agreement. U.S. Hybrid designs, manufactures, and markets integrated power conversion systems for battery electric, fuel cell, and hybrid vehicles, as well as systems for renewable energy generation and storage.

The Agreement contains customary representations, warranties, covenants, termination rights and indemnities of the 36parties. Non-fundamental representations and warranties survive for 18 months following the closing date and fundamental representations and warranties survive either indefinitely or for the statute of limitations. The Agreement also contains mutual indemnification obligations of the ~~SEDA’s entrance into force.~~parties thereto. The ~~shares would be purchased at 90%~~indemnification obligations of the ~~market price, which is defined as the lowest daily volume weighted average price~~parties are capped at $25.0 million for non-fundamental representations and warranties. The indemnification obligations of the ~~Company’s common stock during the 5 consecutive trading days commencing on the trading day immediately following the Company’s delivery~~parties for breaches of ~~an advance notice to YA,~~non-fundamental representations and ~~would be~~warranties are subject to a $100,000 deductible, except in the case of fraud. The Agreement contains customary covenants.

The Agreement is subject to customary closing conditions, including, among other things, that certain ~~limitations,~~employees of U.S. Hybrid enter into non-competition and solicitation agreements, including ~~that YA~~one employee who has agreed to a 5 year period of non-competition and non-solicitation. Ideanomics will have agreed to fund $25.0 million in growth capital to U.S. Hybrid over the course of the two years following closing. Under the terms of the Agreement, the stock consideration, $20.0 million of the purchase price, shall be placed in an indemnity escrow to satisfy future indemnification obligations of the parties (if any).

Ideanomics has agreed to a performance and retention plan for the benefit of certain U.S. Hybrid’s employees which could ~~not purchase any shares that would~~ result in ~~it owning more than 4.99%~~up to $15.0 million paid to such employees if certain performance targets are achieved over a three year period.

Table of ~~the Company’s common stock.~~Contents

Pursuant to the SEDA, the Company shall use the net proceeds from any sale of the shares for working capital purposes, including the repayment of outstanding debt. There are no other restrictions on future financing transactions. The SEDA does not contain any right of first refusal, participation rights, penalties or liquidated damages. The Company did not pay any additional amounts to reimburse or otherwise compensate YA in connection with the transaction, except for a commitment fee equivalent to 1.0 million shares of Ideanomics’ common stock to be issued and offered to a subsidiary of YA, and which shares are also registered pursuant to the Company’s effective shelf registration statement on Form S-3, File No. 333- 237251.

~~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.

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"~~“may”, ~~"will"~~“will”, ~~"expect"~~“expect”, ~~"anticipate"~~“anticipate”, ~~"estimate"~~“estimate”, ~~"believe"~~“believe”, ~~"continue"~~“continue”, or other similar words. You should read statements that contain these words carefully because they discuss the Company’s future expectations, contain projections of the Company’s future results of operations or financial condition or state other ~~"forward-looking"~~“forward-looking” information. The Company believes that it is important to communicate its future expectations to 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 the Company’s products, and the product-development and marketing efforts of its competitors. Examples of these events are more fully described in the Company’s 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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following management’s discussion and analysis is presented in four sections as below and should be read in conjunction with the condensed consolidated financial statements and the notes thereto and the other financial information appearing elsewhere in this 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.
·● Overview
·● Results of Operations
·● Liquidity and Capital Resources
·● Outlook
OVERVIEW
Ideanomics, Inc. (Nasdaq: IDEX) was incorporated in the State of Nevada on October 19, 2004. ~~From 2010 through 2017,~~
Through March 31, 2021, the Company operates in one segment with two business units, Ideanomics Mobility and Ideanomics Capital. Ideanomics Mobility is driving EV adoption by assembling a synergistic ecosystem of subsidiaries and investments across the 3 key pillars of EV: Vehicles, Charging, and Energy. These three pillars provide the foundation for Ideanomics Mobility’s planned offering of unique business solutions such as Charging as a Service (“CaaS”) and Vehicle as a Service (“VaaS.”)
Ideanomics Capital is the Company’s ~~primary~~fintech business ~~activities were providing premium content video~~unit, which focuses on ~~demand (“VOD”) services, with primary operations in the People’s Republic of China (“PRC,”) through its subsidiaries~~leveraging technology and ~~variable interest entities 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~~innovation to ~~become a next-generation financial technology (“fintech”) company. The Company built a network of businesses, operating principally in the trading of petroleum products~~improve efficiency, transparency, and ~~electronic components that the Company believed had significant potential to recognize benefits from blockchain and artificial intelligence (“AI”) technologies including,~~profitability for example, enhancing operations, addressing cost inefficiencies, improving documentation and standardization, unlocking asset value and improving customer engagement. During 2018 the Company ceased operations in the petroleum products and 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.
Significant Transactions in the Three Months Ended March 31, 2021
Since December 31, 2020 the Company has completed a number of transactions that have expanded the scope of the Company’s EV and fintech activities, and has entered into a contract regarding the sale of Fintech Village.
WAVE
On January 15, 2021 acquired 100% of privately held Wireless Advanced Vehicle Electrification, Inc. (“WAVE.”)
Founded in 2011, and headquartered in Salt Lake City, Utah, WAVE is a leading provider of inductive (wireless) charging solutions for medium and heavy-duty EVs. Embedded in roadways and depot facilities, the WAVE system automatically charges vehicles during scheduled stops. The hands-free WAVE system eliminates battery range limitations and enables fleets to achieve driving ranges that match that of internal combustion engines.
Deployed since 2012, WAVE has demonstrated the capability to develop and integrate high-power charging systems into heavy-duty EVs from leading commercial EV manufacturers. With commercially available wireless charging systems up to 250kW and higher power systems in development, WAVE provides custom fleet solutions for mass transit, logistics, airport and campus shuttles, drayage fleets, and off-road vehicles at ports and industrial sites.
Wireless charging systems offer several compelling benefits over plug-in-based charging systems, including reduced maintenance, improved health and safety, and expedited energy connection and are important to the deployment of autonomous driving vehicles. Furthermore, wireless in-route charging enables greater route lengths or smaller batteries while also maintaining battery life, thereby reducing costs for fleet operators. WAVE customers include what is currently the largest EV bus system in the U.S., the Antelope Valley Transit Authority, and its partnerships include Kenworth, Gillig, BYD, Complete Coach Works and the Department of Energy.

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Energica Motor Company, S.P.A. (“Energica”)

On March 3, 2021 the Company purchased 20% of Energica, the world’s leading manufacturer of high-performance electric motorcycles and the sole manufacturer of the FIM Enel MotoE^™ World Cup. Energica has combined zero emission EV technology with the pedigree of high-performance mobility synonymous with Italy’s Motor Valley to create a range of exceptional products for the high-performance motorcycle market. To support its products, it has developed proprietary EV battery and DC fast-charging in-house that has applications and synergies with Ideanomics’ broader interests in the global EV sector.

Silk EV Cayman LP (“Silk”)

On January 28, 2021, the Company invested $15.0 million in Silk EV via a promissory note. Silk is an Italian engineering and design services company that has recently partnered with FAW to form a new company (“Silk-FAW”) to produce fully electric, luxury vehicles for the Chinese and Global auto markets. Silk-FAW has exclusive rights to develop Hongqi-S brand high-end electric sports cars. The Hongqi brand is the most well known luxury auto brand in China. Silk-FAW vehicles are being designed in Italy’s Motor Valley and is attracting talent from the luxury and high performance auto market. Partnering with Silk provides access to Silk-FAW’s Innovation Centers providing us insight into technological advancements and all best-in-breed technology evaluated at those centers to support the development of high-performance sportscars (battery tech, power management systems, high performance motors.)

Timios Holdings Corp.

On January 8, 2021 the Company acquired 100% of privately-held Timios Holdings Corp. (“Timios.”) Timios, a US nationwide title and escrow services provider, which has been expanding in recent years through offering innovative and freedom-of-choice-friendly solutions for real estate transactions. The products include residential and commercial title insurance, closing and settlement services, as well as specialized offerings for the mortgage process industry.

Ideanomics expects that Timios will become one of the cornerstones of Ideanomics Capital. Timios combines difficult to obtain local and state licenses, a knowledgeable and experienced team, and a scalable platform to deliver best-in-class services through both centralized processing and localized branch networks. Ideanomics will assist Timios in scaling its business in various ways, including referring client acquisitions and product innovation.

Founded in 2008 by real estate industry ~~particularly~~veteran Trevor Stoffer, Timios’ vision is to bring transparency to real estate transactions. The company offers title and settlement, appraisal management, and real-estate-owned (“REO”) title and closing services in 44 states and currently serves more than 280 national and regional clients.

Technology Metals Market Limited (“TM2”)

TM2 is a London based digital commodities issuance and trading platform for technology metals. It connects institutional investors, proprietary traders and retail investors with metals suppliers – miners, refiners, recyclers and mints. The platform focuses specifically on new metals that currently don’t have an active trading marketplace, such as ~~it relates~~rhodium, lithium, cobalt, rhenium, etc. The Company’s ownership interest in TM2 provides valuable data and insight into the global technology metals market, which is critical to ~~deploying blockchain~~the future of the Cleantech and ~~AI technologies.~~EV industries. TM2 connects both pillars of Cleantech and Fintech. The types of metals and materials traded on the TM2 platform are critical to Cleantech (for EV battery production, energy storage systems, solar cells, etc.,) while the Fintech platform is innovative in representing these commodities which do not exist on traditional exchanges.

On January 28, 2021, the Company entered into a simple agreement for future equity with TM2 pursuant to which Ideanomics invested $2.1 million. This investment is a follow-on investment further the Company’s prior investment of $1.2 million in stock-based consideration in December 2019.

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Fintech Village

On January 28, 2021, the Company’s Board of Directors accepted an offer of $2.75 million for Fintech Village, and subsequently signed a sale contract on March 15, 2021. The Company believes that Fintech Village met the criteria for held for sale classification on January 28, 2021. As the ~~Company looked~~sale is expected to ~~deploy fintech solutions in late 2018~~be completed within one year, the land with a carrying amount of $2.5 million and ~~into 2019, management found a unique opportunity~~the asset retirement cost of $4.5 million are recorded as “Held for sale assets (Fintech Village”) in the ~~Chinese Electric Vehicle~~current asset section of the condensed consolidated balance sheet. The Company has estimated the costs to sell Fintech Village to be $0.2 million and has recorded these costs in “Loss on disposal of subsidiaries, net.”

Recent Developments

U.S. Hybrid

On May 12, 2021, Ideanomics, Inc. (“~~EV”~~Ideanomics”) entered into an agreement to acquire U.S. Hybrid Corporation (“US Hybrid.”) Founded in 1999, and headquartered in Torrance, California, U.S. Hybrid has been providing innovative solutions including components, drive trains, and fuel cells to medium and heavy-duty commercial fleet operators. U.S. Hybrid designs, manufactures, and markets integrated power conversion systems for battery electric, fuel cell, and hybrid vehicles, as well as systems for renewable energy generation and storage. The company has been leading the clean-tech revolution by offering integrated power conversion components and integrated motor drives, motors and controllers, distributed energy management systems, and DC-DC boost converters - equipment that is vital to the growth of the broader EV industry. In addition to its relationships with leading original equipment manufacturers, U.S. Hybrid has delivered projects for the private and public sectors, including the defense industry and governmental customers.

U.S. Hybrid has reliably demonstrated proven powertrain technology, along with DC-DC converters which possess high efficiency ratings and fast dynamic response capabilities. U.S. Hybrid enjoys long-term commercial relationships in various industries including Commercial, Defense and Aerospace, and Transit/Municipal for its battery electric vehicle,fuel cell energy, and hybrid platforms.

The acquisition of U.S. Hybrid brings to ~~facilitate large scale conversion~~Ideanomics the application of ~~fleet~~U.S.-built technology, for use in its own vehicles, and significantly extends the company's capabilities in zero-emission transportation. U.S. Hybrid will continue to service its existing customer base, and Ideanomics will assist them in scaling their business operations within the Ideanomics Mobility business division. U.S. Hybrid operates from ~~internal combustion engines to EV. This led the Company to establish its Mobile Energy Global (“MEG”) business unit.~~locations in California, Connecticut, and Massachusetts.

Principal Factors Affecting the Company’s Financial Performance

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 its operations in ~~2020~~2021 and ~~2019:~~

2020:

·●

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

Table of Contents

·●

The Company’s ability to remain competitive. The Company will continue to face intense competition: these new technologies are constantly evolving, and the Company’s competitors may introduce new platforms and solutions that are superior. In addition, 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 the 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 deployment of the ~~Mobile Energy Group Services business unit~~Company’s services through acquisitions, strategic equity investments, the formation of joint ventures, and ~~in-licenses~~through licenses of technology.The Company’s results of operations may fluctuate from period to period based on the entry into new transactions to expand the business. In addition, while management intends to contribute cash and other assets to the Company’s ~~joint ventures,~~various investments, the Company does not intend for its holding company to conduct significant research and development activities. The Company intends research and development activities to be conducted by its technology partners and licensors. These fluctuations in growth or costs and in the ~~joint ventures and partnerships~~Company’s various investments may contribute to significant fluctuations in the results of the Company’s operations.

Effects of COVID 19

Novel Coronavirus 2019 (“~~COVID 19”~~COVID-19”) is an infectious disease ~~cause~~caused by severe acute respiratory syndrome ~~coronavirus 2.~~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~~COVID-19 pandemic. As of ~~April 30, 2020,~~May 7, 2021, over ~~3.0~~156.4 million cases had been reported across the ~~globe.~~

globe, resulting in 3.3 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~~have shut down significant parts of the local, regional, national, and international economies, for limited or extended periods of time, with the exception of government designated essential services.

~~The Company’s operations, including certain key personnel~~In many parts of the world, stay-at-home and ~~business advisors~~work-from-home orders were relaxed during the summer of 2020 as the effects of the Coronavirus appeared to lessen, and ~~partners, are largely based~~economic activity began to recover. However, commencing in ~~China, a country which was subject~~the autumn and fall of 2020, the U. S. as well as countries in Europe , South America and Asia began to ~~a wide-ranging government shutdown as a result of~~experience an increase in new COVID-19 cases, and in some cases local, state, and national governments began to reinstate restrictive measures to stem the spread of ~~COVID 19~~the virus. The U.S. and other countries also experienced an increase in ~~January 2020. Consequently,~~new COVID-19 cases after the ~~country was effectively shuttered~~fall and winter holiday season, with new, more infectious variants of COVID-19 identified. Various vaccines have been developed, with vaccinations programs 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.

effect worldwide, though reaching acceptable levels for worldwide immunization against COVID-19 remains challenging.

The ~~Company has experienced delays in~~future effects of the ~~preparation and execution of certain key documents~~virus are difficult to predict, due to ~~stay-at-home and work-from home measures which limited~~uncertainty about the Company’s abilities in these areas. As disclosed in Note 1 to the Consolidated Financial Statements, the Company 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 will benefit. However, the Company was unable to complete the preparation and executioncourse of the ~~necessary documents,~~virus, different variants that may evolve, and ~~is therefore unable~~the supply of the vaccine on a local, regional, and global basis, as well as the ability to provide a holistic accounting of this share-based compensation plan. As no share-based awards had been granted to employees or consultants as of March 31, 2020, the Company does not anticipate that the accounting for the initial plan formation will not have a material effect on its consolidated financial statements.

~~Additionally, the Company was unable to obtain an executed document for an investment~~implement vaccination programs in a subsidiary by a non-controlling shareholder made in the three months ended March 31, 2020, which is a required exhibit to this Form 10-Q. The Company anticipates that it will obtain the executed contract in the near-term, and file the required exhibit.

~~As a result of the overall economic condition in China in the first quarter of 2020, minimal sales of EV’s occurred during that~~short time frame. Ideanomics’ recorded total sales in China of $0.1 million during this time frame. 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.

As disclosed in Note 3 to the Consolidated Financial Statements, as of March 31, 2020, the Company had cash and cash equivalents of $5.9 million and an accumulated deficit of $260.8 million. Additionally, 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.

As a result, the Company expects to continue to 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 quarter of 2020, and this activity continues. The Company does not anticipate ~~that the COVID 19 pandemic will adversely affect~~significant adverse effects on its ~~ability~~operations’ revenue as compared to ~~raise funds~~its business plan in the ~~near-term,~~near- or mid-term, although ~~no assurances can be provided on this matter.~~

the future effects of COVID-19 may result in regional restrictive measures which may constrain the Company’s operations.

The Company ~~does not currently anticipate that~~continues to monitor the ~~COVID 19 pandemic will have a material adverse effect~~overall situation with COVID-19 and its effects on ~~its assets, including its long-term investments,~~both local, regional and ~~goodwill and other intangible assets.~~global economies.

~~Governmental and other organizations are currently forecasting a resurgence~~Table of 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 world.Contents

Information about ~~segments~~

Segment Presentation

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,~~Through March 31, 2021, the Company operates in one segment with two business ~~units: MEG~~units, Ideanomics Mobility and Ideanomics Capital. As

With two acquisitions closing in the three months ending March 31, 2021, the Company anticipates that its internal management structure and the information reviewed by the chief ~~executive officer previously reviewed two~~ operating ~~segments separately for this purpose,~~decision maker will change such that it may, in the ~~Company has changed its presentation accordingly, from two~~future, have multiple reportable ~~segments~~segments. At a minimum these are thought to ~~one reportable segment.~~be Ideanomics Mobility, which would encompass the entities with businesses centered in the electric vehicle (“EV”) market, and Ideanomics Capital, which would encompass business centered in the finance/real estate market, and a corporate entity, with the combination/consolidation of all three comprising the consolidated operations of the Company.

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

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

The investments where the Company exercises significant influence, but not control, 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 its share of undistributed earnings or losses of the investee. Investment losses are recognized until the investment is written down to nil, provided that the Company does not guarantee the investee’s obligations or is committed to provide additional funding. Refer to Note 10 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~~

~~United States~~

~~Ideanomics, Inc., M.Y. Products, LLC, Grapevine Logic, Inc., Delaware Board~~Table 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. No provision for income taxes has been provided as 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 March 31, 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 March 31, 2020 and consequently U.S. income tax expense or benefit for the Company as a whole.Contents

The Tax Cut and Jobs Act (“TCJA”) of 2017 includes provision for Global Intangible Low-Taxed Income (“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”) under which taxes are imposed on certain base eroding payments to related foreign companies, subject to certain requirements.

~~Based on the results of operations for the three months ended March 31, 2020, the Company has determined that there is no GILTI nor BEAT tax liability.~~

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

~~Cayman Islands and the British Virgin Islands~~

Under current laws of the Cayman Islands and the British Virgin Islands, the 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 subsidiaries incorporated in Hong Kong are subject to Profits Tax of 16.5%. $0.1 million tax expense was recorded in 2019 relating to the income on one Hong Kong subsidiary relating to a gain recorded on the sale of variable interest entity (“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 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 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 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.

Consolidated Results of Operations

Comparison of Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020 (USD in thousands):

Three Months Ended

March 31,

March 31,

Amount

%


2021

2020

Change

Change

Revenue

$
32,709

$
378

$
32,331

n/m
Cost of revenue

21,867

334

21,533

n/m
Gross profit

10,842

44

10,798

n/m

Operating expenses:



Selling, general and administrative expenses

12,005

5,827

6,178

n/m
Research and development expense

10

—

10

Professional fees

5,168

1,757

3,411

n/m
Impairment losses

—

887

(887)

n/m
Change in fair value of contingent consideration, net

494

532

(38)

(7.1)
Litigation settlement

5,000

—

5,000

n/m
Depreciation and amortization

1,128

476

652

n/m
Total operating expenses

23,805

9,479

14,326

n/m

Loss from operations

(12,963)

(9,435)

(3,528)

37.4

Interest and other income (expense):

Interest expense, net

(417)

(3,156)

2,739

(86.8)
Equity in loss of equity method investees

(59)

(3)

(56)

n/m
Loss on disposal of subsidiaries, net

(212)

—

(212)

n/m
Other income (expense), net

(2)

(26)

24

(92.3)
Loss before income taxes and non-controlling interest

(13,653)

(12,620)

(1,033)

8.2
Income tax benefit

12,916

—

12,916

n/m

Net loss

(737)

(12,620)

11,883

(94.2)
Net loss attributable to non-controlling interest

164

272

(108)

(39.7)

Net loss attributable to IDEX common shareholders

$
(573)

$
(12,348)

$
11,775

(95.4)

Earnings (loss) per share

Basic

$
(0.00)

$
(0.08)

Diluted

$
(0.00)

$
(0.08)





Three Months Ended
March 31, 2020 March 31, 2019 Amount Change % Change

Revenue $ 378 $ 26,946 $ (26,568 ) (99 %)
Cost of revenue 334 258 76 29 %
Gross profit 44 26,688 (26,644 ) n/m

Operating expenses:
Selling, general and administrative expenses 5,827 4,188 1,639 39 %
Professional fees 1,757 1,360 397 29 %
Impairment loss 887 - 887 n/m
Acquisition earn-out expense 532 - 532 n/m
Depreciation and amortization 476 244 232 95 %
Total operating expenses 9,479 5,792 3,687 64 %

Income (Loss) from operations (9,435 ) 20,896 (30,331 ) n/m

Interest and other income (expense):
Interest expense, net (3,156 ) (735 ) (2,421 ) n/m
Equity in loss of equity method investees (3 ) (280 ) 277 n/m
Others (26 ) (58 ) 32 (55 %)
Earnings (Loss) before income taxes and non-controlling interest (12,620 ) 19,823 (32,443 ) n/m

Income tax benefit - 86 (86 ) n/m

Net income (loss) (12,620 ) 19,909 (32,529 ) n/m

Net loss attributable to non-controlling interest 272 18 254 n/m

Net earnings (loss) attributable to IDEX common shareholders $ (12,348 ) $ 19,927 $ (32,275 ) n/m

Earnings (loss) per share
Basic $ (0.08) $ 0.19 (0.27) n/m
Diluted $ (0.08) $ 0.18 (0.27) n/m
35
Revenues (USD in thousands)

Three Months Ended
March 31, 2020 March 31, 2019 Amount Change % Change
Electric vehicles $ 55 $ - $ 55 n/m
Digital asset management services - 26,600 (26,600 ) n/m
Other 323 346 (23) (7) %
Total $ 378 $ 26,946 $ (26,568 ) n/m

Three Months Ended


March 31,

March 31,

Amount

%



2021

2020

Change

Change

Electric vehicles

$
3,019

$
55

$
2,964

n/m

Charging and batteries

1,882

—

1,882

n/m

Title and escrow services

27,611

—

27,611

n/m

Digital advertising services

197

323

(126)

(39)

Total

$
32,709

$
378

$
32,331

n/m

n/m = Not Meaningful

Table of Contents

Revenue for the three months ended March 31, ~~2020~~2021 was ~~$0.4~~$32.7 million as compared to ~~$26.9~~$0.4 million for the same period in ~~2019, a decrease~~2020, an increase of ~~$26.6 million, or 99%.~~$32.3 million. The ~~decrease~~increase was mainly due to the Company’s ~~focus on~~acquisition of Timios, which generated revenue of $27.6 million from the ~~EV business in 2020 and no~~acquisition closing date through March 31, 2021. No revenue was generated related to ~~digital assets management~~title and escrow services for the three months ended March 31, 2020.

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 asset management services. The revenue was recognized based on the progress of completion of services. The Company recognized $26.6 million for the period ended March 31, 2019 and the remaining $14.1 million was recognized in the remainder of 2019.

In the first quarter of 2020, the Company is gradually ~~ramping~~ramped up its business related to EVs and recognized $0.1 million revenue from the sales of EVs. The EV revenues for the ~~current~~ quarter were recorded on an Agency (Net) basis because the Company acted as an agent rather than principal in these transactions.

In the first quarter of 2021, the Company recognized $27.6 million revenue from the sales of title and escrow services, $3.0 million revenue from the sales of EVs, and $1.9 million revenue from sales of charging and batteries. The EV revenues for the quarter were recorded on a Principal (Gross) basis because the Company acted as principal in these transactions.

Cost of revenues (USD in thousands)

	Three Months Ended
	March 31, 2020		March 31, 2019		Amount Change		% Change

										Three Months Ended
										March 31,		March 31,		Amount		%
										2021		2020		Change		Change
Electric vehicles	$	2	$	-	$	2		n/m		$	3,019	$	2	$	3,017	n/m
Other		332		258		74		29	%
Charging and batteries											1,540		—		1,540	n/m
Title and escrow services											17,132		—		17,132	n/m
Digital advertising services and other											176		332		(156)	(47)
Total	$	334	$	258	$	76		29	%	$	21,867	$	334	$	21,533	n/m

Cost of revenues was ~~$0.3~~$21.9 million for the three months ended March 31, ~~2020,~~2021, as compared to $0.3 million for the three months ended March 31, ~~2019.~~

2020. The ~~majority of the cost associated with digital asset management services had already been incurred in 2018. In 2018,~~increase was mainly due to the ~~uncertainty associated with~~Company’s acquisition of Timios, which had recorded cost of $17.1 million related to Title and escrow service from the ~~future economic benefits when such costs were incurred,~~acquisition closing date through March 31, 2021. No cost related to title and escrow services for the ~~Company expensed those costs during 2018.~~three months ended March 31, 2020.

Gross profit (USD in thousands)

	Three Months Ended
	March 31, 2020		March 31, 2019		Amount Change			% Change

										Three Months Ended
										March 31,		March 31,		Amount		%
										2021		2020		Change		Change
Electric vehicles	$	53	$	-	$	53			n/m	$	—	$	53	$	(53)	n/m
Digital asset management services		-		26,600		(26,600	)		n/m
Other		(9)		88		(97)			n/m
Charging and batteries											342		—		342	n/m
Title and escrow services											10,479		—		10,479	n/m
Digital advertising services and other											21		(9)		30	n/m
Total	$	44	$	26,688	$	(26,644	)		n/m	$	10,842	$	44	$	10,798	n/m

~~Gross profit ratio~~

Three Months Ended
March 31, 2020 March 31, 2019
Electric vehicles 96 % -
Digital asset management services - 100 %
Other (3) % 26 %
Total 12 % 99 %

Gross profit for the three months ended March 31, ~~2020~~2021 was ~~$44,000,~~$10.8 million, as compared to gross profit in the amount of ~~$26.7 million~~$44,000 during the same period in ~~2019.~~ 2020. The increase was mainly due to the Company’s acquisition of Timios, which generated profit of $10.5 million related to Title and escrow service from the acquisition closing date through March 31, 2021. No gross profit related to title and escrow services for the three months ended March 31, 2020.

Table of Contents

Gross profit ratio

Three Months Ended


March 31,

March 31,



2021

2020

Electric vehicles

—
%
96.4
%
Charging and batteries

18.2

—

Title and escrow services

38.0

—

Digital advertising services and other

10.7

(2.8)

Total

33.1
%
11.6
%

The gross profit ratio for the three months ended March 31, ~~2020~~2021 was ~~12%~~33%, while in ~~2019,~~2020, it was ~~99%~~12%. The ~~decrease~~increase was mainly due ~~to: 1) digital asset management service revenue recognized in 2019 has higher gross margin than~~to the ~~gross margin in EVs; and 2) the negative~~high gross margin from the ~~Delaware Board~~sales of ~~Trade (“DBOT”) business~~title and escrow services for the three months ended March 31, ~~2020 due to the business is still in development stage.~~2021.
Selling, general and administrative expenses
Selling, general and administrative ~~expenses~~expense for the three months ended March 31, ~~2020~~2021 was ~~$5.8~~$12.0 million as compared to ~~$4.2~~$5.8 million for the same period in ~~2019,~~2020, an increase of ~~$1.6 million or 39%.~~$6.2 million. The ~~majority of the~~ increase was principally due to
· ~~an increase of $2.0 million in share-based compensation expense~~
· ~~an increase of $0.3 million in salary and employee benefits~~ the inclusion of selling, general and administrative expenses ~~resulting from the acquisition of DBOT and Tree Technology in late 2019, partially offset by~~
· ~~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~~
~~Professional fees~~
~~Professional fees are generally~~ related to ~~public company reporting~~Timios, which was acquired on January 8, 2021 and ~~governance expenses~~WAVE which was acquired on January 15, 2021 and increases in compensation costs within existing businesses reflecting increased head count as ~~well as legal~~these operations are expanded.
Professional fees ~~related to business transition and expansion.~~
Professional fees for the three months ended March 31, ~~2020~~2021 were ~~$1.8~~$5.2 million as compared to ~~$1.4~~$1.8 million for the same period in ~~2019,~~2020, an increase of ~~$0.4~~$3.4 million. The increase was related to an increase in legal ~~valuation, audit~~fees, consulting services and ~~tax as well as~~investors relations related expense. The increase in legal fees ~~associated with establishing the MEG operation, continuing~~was related to ~~build out our technology ecosystem and Ideanomics Capital, and also establishing strategic partnerships and~~advice on general corporate matters, responding to regulatory enquiries, advice on merger and ~~acquisition activity for these business units.~~   acquisitions, and advice in relation to the class action lawsuits. Consulting fees increased as a result of a shared services agreement with SSSIG and general advice related to the expansion of the Company’s operations in the current quarter including investors relations services.
Impairment ~~loss~~
losses
The Company recorded impairment losses of $0.9 million ~~impairment of~~related to DBOT right of use assets because the Company ceased to use the office and vacated the space on March 31, 2020.
~~Acquisition earn-out expense~~
Change in fair value of contingent consideration, net
The ~~acquisition earn-out expense~~change in fair value of contingent consideration, net of $0.5 million for the three months ended March 31, 2021 represents the remeasurement of the contingent consideration payable related to the acquisition of Tree Technologies.
The change in in fair value of contingent consideration, net of $0.5 million for the three months ended March 31, 2020 represents the remeasurement of the contingent consideration payable to the former DBOT shareholders.
Litigation Settlements
The Company recorded $5.0 million litigation settlement as a result of the agreement reached by both parties on the mediation in April, 2021.
Depreciation and amortization
Depreciation and amortization for the three months ended March 31, ~~2020~~2021 was ~~$0.5~~$1.1 million as compared to ~~$0.2~~$0.5 million for the same period in ~~2019,~~2020, an increase of ~~$0.3~~$0.7 million. The increase was mainly due to the increase in amortization expense ~~from intangible assets~~recorded by Timios and WAVE, which were acquired in the ~~third~~first quarter of ~~year 2019.~~2021.

Table of Contents

Interest expense, net

Interest expense ~~increased $2.5~~decreased $2.7 million to ~~$3.2~~$0.4 million for the three months ended March 31, ~~2020,~~2021, from ~~$0.7~~$3.2 million during the same period of ~~2019.~~2020. The interest expense ~~increase during~~in the prior quarter related to convertible debt that was either converted or repaid in 2020 ~~was primarily due to the amortization of beneficial conversion features and the~~with a resulting decrease in interest ~~associated with convertible notes issued in 2019. The following table summarizes the breakdown of the interest expense~~expense. (in thousands):

Three Months Ended



March 31,

March 31,

2021

2020

Interest, net

$
417

$
443

Amortization of discount

—

2,713

Total

$
417

$
3,156

37
Three Months Ended
March 31, 2020 March 31, 2019
Interest, net $ 443 $ 295
Amortization of beneficial conversion feature 2,713 440
Total $ 3,156 $ 735
Equity in loss of equity method investees
Equity in loss of equity method investees ~~decreased $0.3~~of $0.1 million related to recording Solectrac’s net loss for the three months ended March 31, ~~2020 in comparison~~2021.
Loss on disposal of subsidiaries, net
Loss on disposal of subsidiaries, net represents the estimated costs to ~~the same period of 2019 as DBOT was an equity method investment until July 2019, at which date the Company increased its ownership to 99.0% and consolidated DBOT.~~sell Fintech Village.
Income tax ~~expense~~benefit
~~As of~~During the three months ended March 31, ~~2020,~~2021, the income tax benefit of $12.9 million is mainly due to a reduction in the Company’s valuation allowance of $13.3 million that resulted from the acquisitions of Timios and WAVE, partially offset by the $0.4 million state income taxes mainly from Timios that has taxable income reported on certain separate state tax returns and consequently has related state income tax expense. The Company had ~~$88.2 million~~established a 100% valuation allowance against its net deferred tax assets due to its history of pre-tax losses and the ~~U.S domestic cumulative~~likelihood that the deferred tax ~~loss carryforwards and $29.7 million of the foreign cumulative tax loss carryforwards, which may~~assets will not be available to reduce future income tax liabilities in certain jurisdictions. No U.S. tax loss would be expired after 2017 based on new Tax Law. These PRC tax loss carryforwards will expire beginning year 2020 to year 2024.
realized.
During the three months ended March 31, 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. 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.
During the three months ended March 31, 2019, the Company recorded an income tax benefit of $0.1 million which consisted of a $4.7 million expense related to current operations and a $4.8 million benefit from a reduction in the beginning of the year deferred tax valuation allowance. This resulted in an effective tax rate of (1%). The effective tax rate for the three months ended March 31, 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.
~~There was no identified unrecognized tax benefit as of March 31, 2020 and December 31, 2019.~~
Net loss attributable to non-controlling interest
Net loss attributable to non-controlling interests was ~~$0.3~~$0.2 million for the three months ended March 31, ~~2020~~2021 compared to a net loss of ~~$17,761~~$0.3 million in ~~2019.~~the same period in 2020. The decrease of loss is ~~primarily~~mainly due to ~~net~~the decrease in loss ~~from~~of our ~~joint ventures formed and acquired~~investment with iUnicorn, partially offset by the slight increase in ~~late 2019.~~loss of Tree Technologies.
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Liquidity and Capital Resources
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 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.

As of March 31, ~~2020, the Company~~2021, we had cash of ~~$5.9~~$355.9 million. ~~On that date, $2.0 million was held in the Company’s Hong Kong, U.S. Malaysia, and Singapore entities and~~Approximately $3.9 million was held in accounts outside of the ~~Company’s PRC entities. The Company does not consider cash balances~~United States, primarily in the PRC.

Due to the strict regulations governing the transfer of funds held in the PRC to other jurisdictions, the Company does not consider funds held in its PRC entities to be available ~~for use outside of the PRC. The Company’s~~to fund operations and investment outside of the PRC ~~will continue to be dependent upon access to debt~~ and ~~equity funding raised~~consequently does not include them when evaluating the liquidity needs of its businesses operating outside of the PRC. ~~There~~

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Timios holds various regulatory licenses related to its business as a title insurance agency and is ~~no guarantee that debt and equity funds will be available~~required to ~~the Company when they are required.~~

hold a minimum cash balance of $2.0 million. As a broker-dealer, DBOT has minimum capital requirements. DBOT had cash of $0.3 million as of March 31, ~~2020,~~2021, which was necessary for DBOT to meet its minimum capital requirements. The Company consolidates a 51.0% ~~joint venture~~owned investment in an entity which is based in Singapore. This ~~joint venture~~entity had cash of ~~$0.6~~$0.5 million as of March 31, ~~2020.~~2021. The agreement of the Company’s ~~joint venture~~ partner in this entity is required prior to disbursement of this ~~joint venture’s funds.~~entity’s funds for certain defined expenditures.

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

	Three Months Ended
	March 31, 2020			March 31, 2019
Net cash used in operating activities	$	(3,858	)	$	(4,771	)

							Three Months Ended
							March 31,		March 31,
							2021		2020
Net cash generated (used) in operating activities							$	2,571	$	(3,858)
Net cash used in investing activities		(15	)		(1,200	)		(86,129)		(15)
Net cash provided by financing activities		7,148			4,860			273,659		7,148
Effect of exchange rate changes on cash		6			17			(9)		6
Net increase/(decrease) in cash and cash equivalents		3,281			(1,094	)		190,092		3,281
Cash and cash equivalents at beginning of period		2,633			3,106			165,764		2,633
Cash and cash equivalents at end of period	$	5,914		$	2,012		$	355,856	$	5,914

Operating Activities

Cash ~~used~~generated in operating activities ~~decreased by $0.9~~was $2.6 million for the three months ended March 31, ~~2020~~2021 as compared to cash used in operations of $3.9 million in the same period in ~~2019,~~2020. This change of $6.4 million was primarily due to: (1) ~~an decrease~~a reduction in ~~operating results from~~ net ~~gain $19.9~~loss to $0.7 million in the ~~first quarter of 2019~~current period as compared to a net loss of $12.6 million in the first quarter of 2020, (2) total non-cash adjustments increase (decrease) to net ~~income (loss)~~loss was ~~$7.3~~$(3.9) million and ~~$(25.1)~~$7.3 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively; and (3) total changes in operating assets and liabilities resulted in an increase of ~~$1.5~~$7.2 million and of ~~$0.4~~$1.5 million in cash used in operations activities for the three months ended March 31, 2021 and 2020, ~~and 2019, respectively.~~respectively

Investing Activities

Cash used in investing activities ~~decreased by $1.2~~was $86.1 million, primarily due to ~~costs~~expenditures incurred for ~~Fintech Village~~the acquisition of ~~$0.6 million~~Timios and ~~acquisitions~~WAVE, the investment in Energica and the acquisition of ~~long-term investments of $0.6 million for~~ the ~~three months ended March 31, 2019.~~convertible note with Silk EV.

Financing Activities

The Company received ~~$2.0~~$273.7 million from financing activities in the current quarter versus $7.1 million in the same quarter in the prior year. The issuance of convertible notes ~~$1.0~~generated $220.0 million ~~from~~in the current quarter as compared to $2.0 million in the same period of 2020. The exercise of warrants and issuance of common stock generated $53.7 million as compared to $1.0 million in the same period of 2020. In the quarter ended March 31, 2020 the Company received $7.1 million from ~~noncontrolling~~a non-controlling shareholders contribution and made a repayment of $3.0 million to a related parties for the three months ended March 31, 2020. While in the same period in 2019, the Company received $2.1 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 three months ended March 31, 2019, to certain investors, including officers, directors and other affiliates.

party.

The Company expects to continue to raise both equity and debt finance to support the Company’s investment plans and operations.

The Company’s independent registered public accounting firm’s report of the financial statements for year ended December 31, 2019, contained an explanatory paragraph regarding the Company’s ability to continue as a going concern.

~~Effects of Inflation~~

Inflation and changing prices have had an effect on the business and management expects that inflation or changing prices could materially affect the business in the foreseeable future. Company management will closely monitor the price 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 interests in investments accounted for under the equity method of accounting. The Company does not control these investments and therefore does not consolidate them.

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The Company does not have other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on 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 its securities.

~~Contractual Obligations and Commitments~~

Seasonality

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

~~Seasonality~~

~~The Company’s MEG division operates in the market for fleet sales of commercial EVs and the~~ Company expects that orders and sales in its Ideanomics Mobility business unit will be influenced by the amount and timing of budgeted expenditure by its customers. Typically, the Company would expect to see higher sales at the start of the year when companies start executing on their capital programs and at the end of the 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~~operating businesses are in the early stage of their development and ~~has~~consequently do not ~~generated~~have sufficient ~~orders~~trading histories to ~~allow it to establish~~project seasonal buying patterns with any degree of ~~certainty~~confidence.

Orders and sales in our Ideanomics Capital business unit will principally be influenced by changes in interest rates and the resulting impact on in the U.S. housing market particularly as it relates to purchases of homes and the refinancing of existing mortgages which are central to our Timios business.

OUTLOOK

The Company believes that the investment made to build out its sales capacity in China and a related capability in sourcing and supply chain and related logistics in China will help drive growth in China using the Company’s S2F2C business model and enable the Company to source high quality components and completed vehicles at competitive prices for its Medici, Treeletrik, WAVE and Solectrac businesses outside of China. The global focus on climate change and the related regulatory changes to encourage the adoption of EVs is very favorable for the Company’s business, particularly the charging and battery businesses, which are critical to the widespread adoption of EVs. Providing customers with easy access to financing options for their purchases of vehicles, batteries and charging infrastructure is an ~~expected pattern~~important enabler for the deployment of ~~seasonality.~~EV and related technologies and the Company will continue to work to develop funding sources in conjunction with manufactures and established lenders.

The Company’s Tree Technologies subsidiary secured a large order to supply up to 200,000 units of its 100% electric motorbikes to Indonesia through PSE, its exclusive distributor, during a 3 year term. As part of supplying this order the Company anticipates entering into arrangements to assemble these motorbikes in Indonesia and setting up a battery swap business.

~~OUTLOOK~~

Fintech continues to provide opportunities which could generate high rates of return through the deployment of technology to disrupt existing business models. The Company’s acquisition of Timios in the first quarter of 2021 marks the first entrance into the real estate title agency and closing market. Management believes that through deployment of advanced technology and complimentary acquisitions it can increase Timios’ value. The regulatory environment for the adoption of digital securities is improving with regulators and central bankers in the world’s most developed economies acknowledging that digital securities should be part of the financial ecosystem. This change favors companies like Ideanomics that have assets, such as DBOT, that are fundamental building blocks of any move towards digital securities.

The Company anticipates ~~that its MEG~~making continued investments in both the Ideanomics Mobility and Ideanomics Capital business unit will be the largest contributor to revenues 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 PRC and the rest of Asia returns to pre Covid-19 levels.units.

The Company will continue to seek ways to deploy its DBOT Alternative Trading System (“ATS”) as a platform for the issuance of digital securities and tokens, trading of commodities and origination and distribution of private placements. The Company does not anticipate that DBOT will generate material amounts of revenue in 2020 due to the developmental stage the business is in.

Environmental Matters

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. ~~The Company has~~We have made, and ~~expects~~expect to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. ~~The Company~~We may also incur fines and penalties from time to time associated with noncompliance with such laws and regulations. ~~In 2018, the Company accrued $8.0 million accrued for asset retirement obligations, which are related to the legal contractual obligation in connection with the acquisition~~

Table of ~~Fintech Village.~~Contents

New Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note 2 to the Condensed Consolidated Financial ~~Statements.~~Statements of this Quarterly Report on Form 10Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and 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~~chief executive officer and ~~Chief Financial Officer,~~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~~chief executive officer and ~~Chief Financial Officer,~~chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, ~~2020.~~2021. Based on that evaluation, our ~~Chief Executive Officer~~chief executive officer and ~~Chief Financial Officer~~chief financial officer concluded that as of March 31, 2021, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were effective asto satisfy the objectives for which they are intended.

Our evaluation excluded Timios and WAVE which were acquired in January 2021. As of and for the ~~end~~three months ended March 31, 2021 Timios represented 11.6% of total assets and 84.4% of revenue and WAVE represented 12.1% of total assets and 5.8% of revenue, respectively. In accordance with guidance issued by the ~~period covered by this report.~~SEC, we expect to exclude the acquisitions from our assessment of internal controls over financial reporting during the first year following the acquisition.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the ~~quarter~~three months ended March 31, ~~2020,~~2021, 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.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For a description of the Company’s legal proceedings, see Note 18,Commitments and Contingencies, to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

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~~“Item 1A. Risk ~~Factors"~~Factors” in the ~~2019~~2020 Form 10-K which could materially affect the Company’s business, financial condition or future results. The risks described in the ~~2019~~2020 Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to management or that management currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition or future results.

Risks Related to Our Information Technology Systems and Cyber-Security

Defects or disruptions in our technology or services could diminish demand for our products and services and subject us to liability.

Because our technology, products and services are complex and use or incorporate a variety of computer hardware, software and databases, both developed in-house and acquired from third-party vendors, our technology, products and services may have errors or defects. Errors and defects could result in unanticipated downtime or failure and could cause financial loss and harm to our reputation and our business. We have from time to time found defects and errors in our technology, products and service and defects and errors in our technology, products or services may be detected in the future. In addition, our customers may use our technology, products and services in unanticipated ways that may cause a disruption for other customers. As we acquire companies, we may encounter difficulty in incorporating the acquired technologies, products and services, and maintaining the quality standards that are consistent with our technology, products and services. Since our customers use our technology, products and services for important aspects of their businesses and for financial transactions, any errors, defects, or disruptions in such technology, products and services or other performance problems with our technology, products and services could subject our customers to financial loss and hurt our reputation.

Our platform functions on software that is highly technical and complex and may now or in the future contain undetected errors, bugs, or vulnerabilities. Some errors in our software code may only be discovered after the code has been deployed. Any errors, bugs or vulnerabilities discovered in our code after deployment, inability to identify the cause or causes of performance problems within an acceptable period of time or difficultly maintaining and improving the performance of our platform, particularly during peak usage times, could result in damage to our reputation or brand, loss of revenues, or liability for damages, any of which could adversely affect our business and financial results.

We expect to continue to make significant investments to maintain and improve the availability of our platform and to enable rapid releases of new features and products. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business and operating results may be harmed.

We have previously experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, third-party service providers, human or software errors and capacity constraints. If our application is unavailable when customers attempt to access it or it does not load as quickly as they expect, customers may seek other services.

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Malicious cyber-attacks and other adverse events affecting our operational systems or infrastructure, or those of third parties, could disrupt our businesses, result in the disclosure of confidential information, damage our reputation and cause losses or regulatory penalties.

Developing and maintaining our operational systems and infrastructure are challenging, particularly as a result of us and our clients entering into new businesses, jurisdictions and regulatory regimes, rapidly evolving legal and regulatory requirements and technological shifts. Our financial, accounting, data processing or other operating and compliance systems and facilities may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our control, including malicious cyber-attack or other adverse events, which may adversely affect our ability to process these transactions or provide services or products.

In addition, our operations rely on the secure processing, storage and transmission of confidential and other information on our computer systems and networks. Although we take protective measures, such as software programs, firewalls and similar technology, to maintain the confidentiality, integrity and availability of our and our customers’ information, and endeavor to modify these protective measures as circumstances warrant, the nature of cyber threats continues to evolve. As a result, our computer systems, software and networks may be vulnerable to unauthorized access, loss or destruction of data (including confidential customer information), account takeovers, unavailability or disruption of service, computer viruses, acts of vandalism, or other malicious code, ransomware, hacking, phishing and other cyber-attacks and other adverse events that could have an adverse security impact. Despite the defensive measures we have taken, these threats may come from external forces, such as governments, nation-state actors, organized crime, hackers, and other third parties, including outsource or infrastructure-support providers and application developers, or may originate internally from within us. Given the high volume of transactions, certain errors may be repeated or compounded before they are discovered and rectified.

We also face the risk of operational disruption, failure, termination or capacity constraints of any of the third parties that facilitate our business activities, including vendors, customers, counterparties, exchanges, clearing agents, clearinghouses or other financial intermediaries. Such parties could also be the source of a cyber-attack on or breach of our operational systems, network, data or infrastructure.

There have been an increasing number of ransomware, hacking, phishing and other cyber-attacks in recent years in various industries, including ours, and cyber-security risk management has been the subject of increasing focus by our regulators. Like other companies, we have on occasion experienced, and may continue to experience, threats to our systems, including viruses, phishing and other cyber-attacks. The number and complexity of these threats continue to increase over time. The techniques used in these attacks are increasingly sophisticated, change frequently and are often not recognized until launched. If one or more cyber-attacks occur, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, as well as our customers’ or other third parties’ operations, which could result in reputational damage, financial losses, customer dissatisfaction and/or regulatory penalties, which may not in all cases by covered by insurance. If an actual, threatened or perceived cyber-attack or breach of our security occurs, our clients could lose confidence in our platforms and solutions, security measures and reliability, which would materially harm our ability to retain existing clients and gain new clients. As a result of any such attack or breach, we may be required to expend significant resources to repair system, network or infrastructure damage and to protect against the threat of future cyber-attacks or security breaches. We could also face litigation or other claims from impacted individuals as well as substantial regulatory sanctions or fines.

The extent of a particular cyber- attack and the steps that we may need to take to investigate the attack may not be immediately clear, and it may take a significant amount of time before such an investigation can be completed and full and reliable information about the attack is known. While such an investigation is ongoing, we may not necessarily know the full extent of the harm caused by the cyber-attack, and any resulting damage may continue to spread. Furthermore, it may not be clear how best to contain and remediate the harm caused by the cyber-attack, and certain errors or actions could be repeated or compounded before they are discovered and remediated. Any or all of these factors could further increase the costs and consequences of a cyber-attack.

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Our regulators in recent years have increased their examination and enforcement focus on all matters of our businesses, especially matters relating to cyber-security threats, including the assessment of firms’ vulnerability to cyber-attacks. In particular, regulatory concerns have been raised about firms establishing effective cyber-security governance and risk management policies, practices and procedures that enable the identification of risks, testing and monitoring of the effectiveness of such procedures and adaptation to address any weaknesses; protecting firm networks and information; data loss prevention, identifying and addressing risk associated with remote access to client information and fund transfer requests; identifying and addressing risks associated with customers business partners, counterparties, vendors, and other third parties, including exchanges and clearing organizations; preventing and detecting unauthorized access or activities; adopting effective mitigation and business continuity plans to timely and effectively address the impact of cyber-security breaches; and establishing protocols for reporting cyber-security incidents. As we enter new jurisdictions or different product area verticals, we may be subject to new areas of risk or to cyber-attacks in areas in which we have less familiarity and tools. A technological breakdown could also interfere with our ability to comply with financial reporting requirements. The SEC has issued guidance stating that, as a public company, we are expected to have controls and procedures that relate to cybersecurity disclosure, and are required to disclose information relating to certain cyber-attacks or other information security breaches in disclosures required to be made under the federal securities laws. While any insurance that we may have that covers a specific cyber-security incident may help to prevent our realizing a significant loss from the incident, it would not protect us from the effects of adverse regulatory actions that may result from the incident or a finding that we had inadequate cyber-security controls, including the reputational harm that could result from such regulatory actions.

Additionally, data privacy is subject to frequently changing rules and regulations in countries where we do business. For example, the European Union adopted a new regulation that became effective in May 2018, the General Data Protection Regulation (“GDPR,”) which requires entities both in the European Economic Area and outside to comply with new regulations regarding the handling of personal data. We are also subject to certain U.S. federal and state laws governing the protection of personal data. These laws and regulations are increasing in complexity and number. In addition to the increased cost of compliance, our failure to successfully implement or comply with appropriate processes to adhere to the GDPR and other laws and regulations relating to personal data could result in substantial financial penalties for non-compliance, expose us to litigation risk and harm our reputation.

Risks Related to the Real Estates Services Industry

If adverse changes in the levels of real estate activity occur, the revenues of our Timios subsidiaries may decline.

Title insurance, settlement services, and appraisal revenue is closely related to the level of real estate activity, which includes, among other things, sales, mortgage financing and mortgage refinancing. The levels of real estate activity are primarily affected by the average price of real estate sales, the availability of funds to finance purchases and mortgage interest rates. Both the volume and the average price of residential real estate transactions have increased substantially in many parts of the country over the past year. Due to the unprecedented nature of activity, these trends are unlikely to continue at the same level in the long term.

We have found that residential real estate activity generally decreases in the following situations:

●

Mortgage interest rates are high or increasing;

●

Mortgage funding supply is limited; and

●

The United States economy is weak, including high unemployment levels.

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If there is a decline in the level of real estate activity or the average price of real estate sales may adversely affect our title insurance, settlement services, and appraisal management revenues. In 2020, the mortgage interest rate reached record lows increasing mortgage refinancing to the highest levels in history. In 2021, the mortgage interest rate has increased, which may negatively impact the amount of mortgage refinancing activity in comparison to 2020. Sales and mortgage financing remain elevated and the interest rate remains low in respect to historical averages. This activity may be adversely impacted if the economy does not continue to perform well, mortgage rates increase greatly, or lending institutions experience losses that prohibit their ability to lend. Our revenues in future periods will continue to be subject to these and other factors which are beyond our control and, as a result, are likely to fluctuate.

If financial institutions at which we hold escrow funds fail, it could have a material adverse impact on our company.

We hold customers’ assets in escrow at various financial institutions, pending completion of real estate transactions. These assets are maintained in segregated bank accounts. Failure of one or more of these financial institutions may lead us to become liable for the funds owed to third parties and there is no guarantee that we would recover all of the funds deposited, whether through Federal Deposit Insurance Corporation coverage or otherwise.

If we experience changes in the rate or severity of title insurance claims, it may adversely impact our ability to conduct business.

By their nature, claims are often complex, vary greatly in dollar amounts and are affected by economic and market conditions and the legal environment existing at the time of settlement of the claims. We are an underwritten title company, and if our claims exceed the threshold established by the title companies that underwrite the insurance we offer, it may be cause to have our appointments revoked and negatively impact our ability to conduct business.

Because our Timios subsidiary is dependent upon California for a substantial portion of our title insurance premiums, our business may be adversely affected by regulatory conditions in California.

California is the largest source of revenue for the title insurance industry and, in 2020, California-based premiums accounted for a substantial portion of the premiums earned by our Timios subsidiary. A significant part of our revenues and profitability are therefore subject to our operations in California and to the prevailing regulatory conditions in California. Adverse regulatory developments in California, which could include reductions in the maximum rates permitted to be charged, cost of employment regulations, inadequate rate increases or more fundamental changes in the design or implementation of the California title insurance regulatory framework, could have a material adverse effect on our results of operations and financial condition.

The title insurance business is highly competitive.

Competition in the title insurance and appraisal management industry is intense, particularly with respect to price, service and expertise. Business comes primarily by referral from real estate agents, lenders, developers and other settlement providers. The sources of business lead to a great deal of competition among title agents and appraisal management companies. There are numerous national companies and smaller companies at the regional and local levels. The smaller companies are an ever-present competitive risk in the regional and local markets where their business connections can give them a competitive edge. Although we are not aware of any current initiatives to reduce regulatory barriers to entering our industry, any such reduction could result in new competitors, including financial institutions, entering the title insurance business. From time to time, new entrants enter the marketplace with alternative products to traditional title insurance, although many of these alternative products have been disallowed by title insurance regulators. These alternative products, if permitted by regulators, could adversely affect our revenues and earnings. Competition among the major title insurance companies and any new entrants could lower our premium and fee revenues.

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Industry regulatory changes and scrutiny could adversely affect our ability to compete for or retain business or increase our cost of doing business.

The title insurance industry has recently been, and continues to be, under regulatory scrutiny in a number of states with respect to pricing practices, and alleged Real Estate Settlement Procedures Act violations and unlawful rebating practices. The regulatory environment could lead to industry-wide reductions in premium rates and escrow fees, the inability to get rate increases when necessary, as well as to changes that could adversely affect the Company’s ability to compete for or retain business or raise the costs of additional regulatory compliance. Further, if regulatory decrees delaying foreclosures are extended, it will continue to impact our ability to recognize revenue and profitability from our default title and settlement services department.

We may pursue opportunities that involve business, regulatory, legal or other complexities.

We may pursue unusually complex opportunities. This can often take the form of substantial business, regulatory or legal complexity. Our tolerance for complexity presents risks, as such contracts can be more difficult, expensive and time-consuming to execute; it can be more difficult to manage or realize value from the assets managed in such activity; and such activity sometimes entail a higher level of regulatory scrutiny or a greater risk of contingent liabilities. Any of these risks could harm the results of our operations.

Our business depends upon our ability to keep pace with the latest technological changes, and our failure to do so could make us less competitive in our industry.

The market for our products and services is characterized by rapid change and technological change, frequent new product innovations, changes in customer requirements and expectations and evolving industry standards. Products using new technologies or emerging industry standards could make our products and services less attractive. Failure to respond in a timely and cost-effective way to these technological developments may result in serious harm to our business and operating results. As a result, our success will depend, in part, on our ability to develop and market product and service offerings that respond in a timely manner to the technological advances available to our customers, evolving industry standards and changing preferences.

Rapid technological changes in our industry require timely and cost-effective responses. Our earnings may be adversely affected if we are unable to effectively use technology to increase productivity.

Technological advances occur rapidly in the title insurance industry as industry standards evolve and title insurers introduce new products and services. We believe that our future success depends on our ability to anticipate technological changes and to offer products and services that meet evolving standards on a timely and cost-effective basis. Successful implementation and customer acceptance of our technology-based services will be crucial to our future profitability. There is a risk that the introduction of new products and services, or advances in technology, could reduce the usefulness of our products and render them obsolete.

Risks Related to the Wireless Charging System Industry

The success of our business depends in large part on our ability to protect our proprietary information and technology and enforce our intellectual property rights against third parties.

We rely on a combination of patent, copyright, service mark, trademark and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protection. We cannot assure you that any patents will issue with respect to our currently pending patent applications, in a manner that gives us the protection that we seek, if at all, or that any future patents issued to us will not be challenged, invalidated or circumvented. Our currently issued patents and any patents that may issue in the future with respect to pending or future patent applications may not provide sufficiently broad protection or they may not prove to be enforceable in actions against alleged infringers. Also, we cannot assure you that any future service mark registrations will be issued with respect to pending or future applications or that any registered service marks will be enforceable or provide adequate protection of our proprietary rights.

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We endeavor to enter into agreements with our employees and contractors and agreements with parties with whom we do business to limit access to and disclosure of our proprietary information. We cannot be certain that the steps we have taken will prevent unauthorized use of our technology or the reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive to ours or infringe our intellectual property. The enforcement of our intellectual property rights also depends on our legal actions against these infringers being successful, but we cannot be sure these actions will be successful, even when our rights have been infringed.

Further, effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which our services are available over the Internet. In addition, the legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in EV-related industries are uncertain and still evolving.

Changes to existing federal, state or international laws or regulations applicable to us could cause an erosion of our current competitive strengths.

Our business is subject to a variety of federal, state and international laws and regulations, including those with respect government incentives promoting fuel efficiency and alternate forms of energy, electric vehicles and others. These laws and regulations, and the interpretation or application of these laws and regulations, could change. Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, fiscal tightening or other reasons may result in diminished revenues from government sources and diminished demand for our products. In addition, new laws or regulations affecting our business could be enacted. These laws and regulations are frequently costly to comply with and may divert a significant portion of management’s attention. If we fail to comply with these applicable laws or regulations, we could be subject to significant liabilities which could adversely affect our business.

There are many federal, state and international laws that may affect our business, including measures to regulate EVs and charging systems. If we fail to comply with these applicable laws or regulations, we could be subject to significant liabilities which could adversely affect our business.

There are a number of significant matters under review and discussion with respect to government regulations which may affect business and/or harm our customers, and thereby adversely affect our business, financial condition and results of operations.

Item 2. Unregistered Sales of Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the fiscal quarter ended March 31, ~~2020,~~2021, other than those that were previously reported in the Company’s Current Reports on Form 8-K.

Item 3. Defaults Upon Senior Securities

There were no defaults upon senior securities during the fiscal quarter ended March 31, ~~2020.~~2021.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~On May 10, 2012, at the request~~Not applicable.

Table of Wecast Network, Inc. (the “Company’), Mr. McMahon made a loan to the Company in the amount of $3,000,000. In consideration for the loan, the Company issued a convertible note to Mr. McMahon in the principal amount of $3,000,000, as amended on May 18, 2012, October 19, 2012, May 10, 2013, January 31, 2014, December 30, 2014, December 31, 2016, November 9, 2017 and May 7, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “McMahon Note”).Contents

On May 9, 2020, the Company and Mr. McMahon entered into Amendment No. 9 to the McMahon Note pursuant to which the McMahon Note will be, at Mr. McMahon’s option, payable on demand or convertible on demand into shares of the Company’s Series E Preferred Stock, provided that the Note will no longer be convertible into Series E Preferred Stock upon the conversion of the Series E Preferred stock owned by C Media into the Company’s Common Stock (pursuant to which all Series E Preferred Stock will be automatically converted) but then convertible only into Common Stock at a conversion price of $1.50, until December 31, 2022.

The foregoing description of Amendment No. 9 to the McMahon Note is qualified in its entirety by reference to the actual Amendment No. 9 to the McMahon Note, a copy of which is filed as Exhibit 10.1 to this Form 10-Q.

Item 6. Exhibits

Exhibit
No.	Description	~~Description~~
10.1	Amendment No. 9 to Convertible Promissory Note in $3,000,000 principal amount issued to Shane McMahonAgreement and Plan of Merger, dated January 4, 2021, by and between Ideanomics, Inc. and Wireless Advanced Vehicle Electrification, Inc.
~~10.2~~ 31.1	Strategic Coorperation agreement between Qingdao Chengyang Xingyang Development and Investment Co., Ltd., Beijing Seven Star Global Culture Development Co., Ltd. and Ideanomics.*
~~10.3~~	Convertible Note, dated February 14, 2020, in the amount of $2,000,000 with YA II PN, Ltd.*
~~10.4~~	Convertible Note, dated December 31, 2019, in the amount of $1,000,000 with YA II PN, 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

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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 May ~~11, 2020.~~17, 2021.

IDEANOMICS, INC.


By:	/s/ Conor McCarthy

	Conor McCarthy
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

~~Nevada~~		~~20-1778374~~
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~~Capital Market


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

~~PART I~~	~~-FINANCIAL INFORMATION~~
PART I	-FINANCIAL INFORMATION
~~Item 1.~~	~~Financial Statements~~	4
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32 38
Item 3	Quantitative and Qualitative Disclosures About Market Risk	41 49
Item 4.	Controls and Procedures	41 49

PART II	-OTHER INFORMATION

Item 1.	Legal Proceedings	42 50
Item 1A.	Risk Factors	42 50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42 55
Item 3.	Defaults Upon Senior Securities	42 55
Item 4.	Mine Safety Disclosures	42 55
Item 5.	Other Information	42 55
Item 6.	Exhibits	42 56
Signatures		43 57

	March 31, 2020			December 31, 2019

ASSETS
Current assets:
Cash and cash equivalents	$	5,914		$	2,633
Accounts receivable, net (due from related parties were $1,688 and $2,284 as of March 31, 2020 and December 31, 2019, respectively)		1,833			2,405
Prepayments		477			572
Amount due from related parties		1,280			1,256
Other current assets		588			587
Total current assets		10,092			7,453
Property and equipment, net		355			378
Fintech Village		12,561			12,561
Intangible assets, net		51,595			52,771
Goodwill		10,789			23,344
Long-term investments		22,618			22,621
Operating lease right of use assets		6,051			6,934
Other non-current assets		883			883
Total assets	$	114,944		$	126,945

LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK, REDEMABLE NON-CONTROLLING INTEREST AND EQUITY
Current liabilities
Accounts payable	$	3,656		$	3,380
Deferred revenue		500			477
Accrued salaries		952			923
Amount due to related parties		1,842			3,962
Other current liabilities		6,029			6,466
Current portion of operating lease liabilities		1,289			1,113
Current acquisition earn-out liability		5,952			12,421
Promissory note-short term		3,045			3,000
Convertible promissory note due to third parties		6,015			1,753
Convertible promissory note due to related parties		1,566			3,260
Total current liabilities		30,846			36,755
Asset retirement obligations		5,094			5,094
Convertible promissory note due to third parties-long term		5,120			5,089
Convertible promissory note due to related parties-long term		3,290			1,551
Operating lease liability-long term		6,010			6,222
Non-current acquisition earn-out liability		10,701			12,235
Total liabilities		61,061			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 March 31, 2020 and December 31, 2019		1,262			1,262
Redeemable non-controlling interest		7,153			-
Equity:
Common stock - $0.001 par value; 1,500,000,000 shares authorized, 163,460,045 shares and 149,692,953 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively		163			150
Additional paid-in capital		293,345			282,554
Accumulated deficit		(260,829	)		(248,481	)
Accumulated other comprehensive loss		(680	)		(664	)
Total IDEX shareholder’s equity		31,999			33,559
Non-controlling interest		13,469			25,178
Total equity		45,468			58,737
Total liabilities, convertible redeemable preferred stock, redeemable non-controlling interest and equity	$	114,944		$	126,945

	Three Months Ended March 31, 2019
	Common Stock		Par Value		Additional Paid-in Capital		Retained Earnings/ Accumulated (Deficit)			Accumulated Other Comprehensive Loss			Ideanomics Shareholders' equity		Non-controlling 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

	Three Months Ended March 31, 2020
	Common Stock		Par Value		Additional Paid-in Capital		Retained Earnings/ Accumulated (Deficit)			Accumulated Other Comprehensive Loss			Ideanomics Shareholders' equity			Non-controlling Interest*			Total Equity
Balance, January 1, 2020		149,692,953	$	150	$	282,554	$	(248,481	)	$	(664	)	$	33,559		$	25,178		$	58,737
Share-based compensation		-		-		2,202		-			-			2,202			-			2,202
Common stock issuance for professional fee		429,000		-		240		-			-			240			-			240
Common stock issuance for 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	)		22			6
Balance, March 31, 2020		163,460,045	$	163	$	293,345	$	(260,829	)	$	(680	)	$	31,999		$	13,469		$	45,468

Land use rights	$	27,140
Accounts payable		(743	)
Noncontrolling interest		(15,583	)
Goodwill		803
Marketing and distribution agreement		12,590
	$	24,207

	March 31, 2019
Revenue	$	27,023
Net income attributable to IDEX common shareholders		19,480

Cash	$	247
Other financial assets		1,686
Financial liabilities		(4,411	)
Noncontrolling interest		(105	)
Goodwill		9,324
Intangible asset – continuing membership agreement		8,255
Intangible asset – customer list		59
	$	15,055

	January 1, 2020		Liabilities Incurred		Remediation Performed		Accretion Expense		Revisions		March 31, 2020
Asset retirement obligation	$	5,094	$	-	$	-	$	-	$	-	$	5,094

	March 31, 2020											December 31, 2019
	Weighted Average Remaining Useful Life		Gross Carrying Amount		Accumulated Amortization			Impairment Loss		Net Balance		Gross Carrying Amount		Accumulated Amortization			Impairment Loss		Net Balance
Amortizing Intangible Assets
Software and licenses		-	$	97	$	(97	)	$	-	$	-	$	97	$	(97	)	$	-	$	-
Solid Opinion IP (a)		3.9		4,655		(1,009	)		-		3,646		4,655		(776	)		-		3,879
Fintalk intangible assets (b)		-		635		(635	)		-				635		(635	)		-		-
Influencer network (c)		8.4		1,980		(314	)		-		1,666		1,980		(264	)		-		1,716
Customer contract (c)		1.4		500		(264	)		-		236		500		(222	)		-		278
Continuing membership agreement (d)		19.3		8,255		(310	)		-		7,945		8,255		(206	)		-		8,049
Customer list		2.3		59		(15	)		-		44		59		(10	)		-		49
Trade name (c)		13.4		110		(12	)		-		98		110		(10	)		-		100
Technology platform (c)		5.4		290		(66	)		-		224		290		(55	)		-		235
Land use rights (e)		99		25,739		-			-		25,739		27,079		-			-		27,079
Marketing and distribution agreement (e)		20		11,944		-			-		11,944		11,333		-			-		11,333
Total				54,264		(2,722	)		-		51,542		54,993		(2,275	)		-		52,718
Indefinite lived intangible assets
Website name				25		-			-		25		25		-			-		25
Patent				28		-			-		28		28		-			-		28
Total			$	54,317	$	(2,722	)	$	-	$	51,595	$	55,046	$	(2,275	)	$	-	$	52,771


Revenue	$	1
Gross profit		(3	)
Net loss from operations		(10	)
Net loss		(9	)
Net loss attributable to Glory		(5	)

	Leased Property
Years ending December 31	Costs
2020	$	1,345
2021		1,435
2022		1,423
2023		1,474
2024		1,504
2025 and thereafter		1,874
Total lease payments		9,055
Less: Interest		(1,756	)
Total	$	7,299

	Principal		Interest
2020	$	9,100	$	9,658
2021		19,832		4,415
Total	$	28,932	$	14,073

						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		-			-		-		-
Exercised		-			-		-		-
Expired		(711,583	)		1.95		-		-
Forfeited		(897,917	)		1.98		-		-
Outstanding at March 31, 2020		13,327,226			2.15		8.17		-
Vested and expected to be vested as of March 31, 2020		13,327,226			2.15		8.17		-
Options exercisable at March 31, 2020 (vested)		7,930,354			2.26		7.67		-

	March 31, 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		1,671,196	$	1.00	2/22/2026
$3.58 million IDV		4,658,043		4,658,043		1.00	9/27/2026
$5.0 million YA II PN		1,666,667		1,666,667		1.50	12/13/2024
$5.0 million YA II PN *		-		1,000,000		1.00
		7,995,906		8,995,906

			Weighted-average
	Shares		fair value
Non-vested restricted shares outstanding at January 1, 2020		55,086	$	2.38
Granted		-		-
Forfeited		-		-
Vested		-		-
Non-vested restricted shares outstanding at March 31, 2020		55,086		2.38

	March 31, 2020
	Level I		Level II		Level III		Total
Acquisition earn-out liability¹	$	-	$	-	$	1,096	$	1,096

	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	%		0	%

	Acquisition Earn-out Liability
January 1, 2020	$	7,311
Settlement		(6,747	)
Remeasurement (loss)/gain recognized in the income statement		532
March 31, 2020	$	1,096

Three Months Ended

March 31, 2021

March 31, 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Right of use assets obtained in exchange for new operating lease liabilities