UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~September 30, 2020~~March 31, 2021

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

For the transition period from __________ to __________

Commission File Number: 001-35561

IDEANOMICS, INC.

(Exact name of registrant as specified in its charter)


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

1441 Broadway, 5^th ~~Floor,~~ Suite 5116

New York, NY 10018

(Address of principal executive offices)

212-206-1216

(Registrant’s telephone number, including area code)

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



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

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

Yes ☒ No ◻

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

Yes ☒ No ◻

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


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

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

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

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~238,971,366~~425,900,124 shares as of ~~November 5, 2020.~~May 13, 2021.

Table of Contents

QUARTERLY REPORT ON FORM 10-Q

OF IDEANOMICS, INC.

FOR THE PERIOD ENDED ~~SEPTEMBER 30, 2020~~MARCH 31, 2021

TABLE OF CONTENTS

Table of Contents

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 investment 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

●

“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;~~

●

~~“YOD Hong Kong” refers to YOU On Demand (Asia) Limited, formerly Sinotop Group Limited, a Hong Kong company,~~Wireless Advanced Vehicle Electrification, Inc. 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;~~

●

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

●

~~SEDA refers to the Standby Equity Distribution Agreement between the Company and YA II PN Ltd.~~was acquired on January 15, 2021.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

IDEANOMICS, INC.

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	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)

September 30, 2020

December 31, 2019

ASSETS

Current assets:

Cash and cash equivalents

$
27,605

$
2,633

Accounts receivable, net (including due from related parties of $586 and $2,284 as of September 30, 2020 and December 31, 2019, respectively)

4,315

2,405

Prepayments

999

572

Amount due from related parties

1,601

1,256

Notes receivable

464

0

Other current assets

581

587

Total current assets

35,565

7,453

Property and equipment, net

165

378

Fintech Village

9,337

12,561

Intangible assets, net

52,398

52,771

Goodwill

10,472

23,344

Long-term investments

22,651

22,621

Operating lease right of use assets

7,357

6,934

Other non-current assets

519

883

Total assets

$
138,464

$
126,945

LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK, REDEMABLE NON-CONTROLLING INTEREST AND EQUITY

Current liabilities

Accounts payable

$
4,738

$
3,380

Deferred revenue

1,178

477

Accrued salaries

906

923

Amount due to related parties

1,333

3,962

Other current liabilities

4,195

6,466

Current portion of operating lease liabilities

520

1,113

Current contingent consideration

4,082

12,421

Promissory note-short term

3,750

3,000

Convertible promissory note due to third-parties

9,033

1,753

Convertible promissory note due to related parties

0

3,260

Total current liabilities

29,735

36,755

Asset retirement obligations

4,653

5,094

Convertible promissory note due to third-parties-long term

0

5,089

Convertible promissory note due to related parties-long term

0

1,551

Other long-term liabilities

514

0

Operating lease liability-long term

6,820

6,222

Non-current contingent consideration

7,608

12,235

Total liabilities

49,330

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 September 30, 2020 and December 31, 2019

1,262

1,262

Redeemable non-controlling interest

7,370

0

Equity:





Common stock - $0.001 par value; 1,500,000,000 shares authorized, 238,871,366 shares and 149,692,953 shares issued and outstanding as of September 30, 2020 and December 31, 2019 , respectively

239

150

Additional paid-in capital

362,346

282,554

Accumulated deficit

(295,693)

(248,481)

Accumulated other comprehensive income (loss)

290

(664)

Total IDEX shareholders' equity

67,182

33,559

Non-controlling interest

13,320

25,178

Total equity

80,502

58,737

Total liabilities, convertible redeemable preferred stock, redeemable non-controlling interest and equity

$
138,464

$
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, except per share amounts)~~thousands)


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019		March 31, 2021		March 31, 2020
Revenue from third-parties	$	10,618	$	250	$	15,681	$	950
Revenue from related parties		2		2,854		9		43,554
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		10,620		3,104		15,690		44,504		32,709		378
Cost of revenue from third-parties		9,906		244		14,674		751
Cost of revenue from related parties		0		0		2		467
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		714		2,860		1,014		43,286		10,842		44

Operating expenses:
Selling, general and administrative expenses		7,636		7,770		20,188		18,443		12,005		5,827
Research and development		1,318		0		1,318		0
Research and development expense										10		0
Professional fees		3,968		1,389		8,096		3,918		5,168		1,757
Impairment loss		3,275		2,299		10,363		2,299
Impairment losses										0		887
Change in fair value of contingent consideration, net		(4,179)		0		(2,900)		0		494		532
Litigation settlement										5,000		0
Depreciation and amortization		695		806		1,651		1,420		1,128		476
Total operating expenses		12,713		12,264		38,716		26,080		23,805		9,479

Income (loss) from operations		(11,999)		(9,404)		(37,702)		17,206
Loss from operations										(12,963)		(9,435)

Interest and other income (expense):
Interest expense, net		(2,014)		(639)		(14,061)		(1,955)		(417)		(3,156)
Equity in income (loss) of equity method investees		7		(40)		(8)		(606)
Gain on disposal of subsidiaries		0		1,057		0		1,057
Loss on remeasurement of DBOT investment		0		(3,179)		0		(3,179)
Conversion expense		0		0		(2,266)		0
Other income (expense)		5,283		(100)		6,272		(156)
Income (loss) before income taxes and non-controlling interest		(8,723)		(12,305)		(47,765)		12,367
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		0		0		0		514		12,916		0

Net income (loss)		(8,723)		(12,305)		(47,765)		12,881
Net loss										(737)		(12,620)

Deemed dividend related to warrant repricing		0		0		(184)		0
Net loss attributable to non-controlling interest										164		272

Net loss (income) attributable to non-controlling interest		437		(1,408)		737		(1,374)

Net income (loss) attributable to IDEX common shareholders	$	(8,286)	$	(13,713)	$	(47,212)	$	11,507
Net loss attributable to IDEX common shareholders									$	(573)	$	(12,348)

Earnings (loss) per share
Basic	$	(0.03)	$	(0.11)	$	(0.25)	$	0.10	$	(0.00)	$	(0.08)
Diluted		(0.03)		(0.11)		(0.25)		0.10		(0.00)	$	(0.08)

Weighted average shares outstanding:
Basic		237,535,999		127,609,748		191,976,856		113,964,933		391,131,793		157,859,642
Diluted		237,535,999		127,609,748		191,976,856		118,319,893		391,131,793		157,859,642

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

Nine Months Ended


September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Net income (loss)

$
(8,723)

$
(12,305)

$
(47,765)

$
12,881

Other comprehensive income (loss), net of NaN tax

Foreign currency translation adjustments

1,356

24

1,639

103

Comprehensive income (loss)

(7,367)

(12,281)

(46,126)

12,984

Deemed dividend related to warrant repricing

—

—

(184)

—

Comprehensive income (loss) attributable to non-controlling interest

122

(1,470)

(51)

(1,420)

Comprehensive income (loss) attributable to IDEX common shareholders

$
(7,245)

$
(13,751)

$
(46,361)

$
11,564


	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)

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

Table of Contents

IDEANOMICS, INC.

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

Nine Months Ended September 30, 2019

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, 2019

102,766,006

$
103

$
195,780

$
(149,975)

$
(1,665)

$
44,243

$
(1,031)

$
43,212
Share-based compensation

—

—

224

—

—

224

—

224
Common stock issuance for restricted shares

129,840

—

—

—

—

—

—

—
Common stock issuance for assets (SolidOpinion, Inc)

4,500,000

5

7,150

—

—

7,155

—

7,155
Common stock issuance for convertible debt

1,166,113

1

2,049

—

—

2,050

—

2,050
Net income (loss)

—

—

—

19,927

—

19,927

(18)

19,909
Foreign currency translation adjustments, net of nil tax

—

—

—

—

172

172

(25)

147
Balance, March 31, 2019

108,561,959

109

205,203

(130,048)

(1,493)

73,771

(1,074)

72,697
Share-based compensation

—

—

3,703

—

—

3,703

—

3,703
Common stock issuance for assets (Fintalk)

2,860,963

3

5,347

—

—

5,350

—

5,350
Common stock issuance for acquisition of non-controlling interest Grapevine¹

590,671

1

491

—

—

492

(492)

—
Investment from SSSIG

575,431

—

—

—

—

—

—

—
Net income (loss)

—

—

—

5,292

—

5,292

(15)

5,277
Foreign currency translation adjustments, net of nil tax

—

—

—

—

(76)

(76)

8

(68)
Balance, June 30, 2019

112,589,024

113

214,744

(124,756)

(1,569)

88,532

(1,573)

86,959
Share-based compensation

—

—

2,547

—

—

2,547

—

2,547
Common stock issuance for acquisition of BlackHorse Ventures²

815,217

1

1,499

—

—

1,500

—

1,500
Common stock issuance for acquisition of Glory Connection

12,190,000

12

24,368

—

—

24,380

—

24,380
Common stock issuance for acquisition of DBOT

5,851,830

6

9,708

—

—

9,714

105

9,819
Common stock issuance for releasing Grapevine as collateral

250,000

—

372

—

—

372

—

372
Common stock issuance for releasing Grapevine as collateral Convertible note

1,000,000

1

2,499

—

—

2,500

—

2,500
Deconsolidation of Amer

—

—

—

—

—

—

446

446
Net income (loss)

—

—

—

(13,712)

—

(13,712)

1,407

(12,305)
Foreign currency translation adjustments, net of nil tax

—

—

—

—

11

11

13

24
Balance, September 30, 2019

132,696,071

$
133

$
255,737

$
(138,468)

$
(1,558)

$
115,844

$
398

$
116,242

~~Notes:~~

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

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


	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.

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

Table of Contents

Nine Months Ended September 30, 2020

Retained

Accumulated

Additional

Earnings/

Other

Ideanomics

Non-

Common

Par

Paid-in

Accumulated

Comprehensive

Shareholders’

controlling


Stock

Value

Capital

(Deficit)

Loss

equity

Interest*

Total Equity
Balance, January 1, 2020

149,692,953

$
150

$
282,554

$
(248,481)

$
(664)

$
33,559

$
25,178

$
58,737
Share-based compensation

—

—

2,202

—

—

2,202

—

2,202
Common stock issuance for professional fee

429,000

—

240

—

—

240

—

240
Common stock issuance for interest (ID Venturas)

29,766

—

21

—

—

21

—

21
Common stock issuance for acquisition (DBOT)

10,883,668

11

6,737

—

—

6,748

—

6,748
Common stock issued for warrant exercised (YA II)

1,000,000

1

999

—

—

1,000

—

1,000
Common stock issuance for convertible note (YA II)

1,424,658

1

592

—

—

593

—

593
Tree Technologies measurement period adjustment

—

—

—

—

—

—

(11,454)

(11,454)
Non-controlling shareholder contribution (DBOT)

—

—

—

—

—

—

100

100
Net income (loss)

—

—

—

(12,348)

—

(12,348)

(378)

(12,726)
Foreign currency translation adjustments, net of nil tax

—

—

—

—

(16)

(16)

23

7
Balance, March 31, 2020

163,460,045

163

293,345

(260,829)

(680)

31,999

13,469

45,468
Share-based compensation

—

—

3,394

—

—

3,394

—

3,394
Common stock issuance for acquisition (DBOT)

459,180

—

293

—

—

293

—

293
Common stock issuance for convertible note conversion (Mr. McMahon)

5,084,746

5

2,995

—

—

3,000

—

3,000
Common stock issuance for convertible note conversion (SSSIG)

2,656,361

3

1,565

—

—

1,568

—

1,568
Common stock issuance for debt (SSSIG)

2,577,876

3

1,515

—

—

1,518

—

1,518
Common stock issuance for debt

2,000,000

2

795

—

—

797

—

797
Common stock issuance for option exercised

23,223

—

—

—

—

—

—

—
Common stock issuance for professional fee

515,942

1

308

—

—

309

—

309
Common stock issuance for RSU vested

270,634

—

—

—

—

—

—

—
Convertible notes conversion price reset (Mr. McMahon and SSSIG)

—

—

2,265

—

—

2,265

—

2,265
Common stock issuance for warrants exercised (YA II)

1,666,667

2

2,498

—

—

2,500

—

2,500
Common stock issuance for convertible notes conversion (YA II)

9,739,021

10

5,073

—

—

5,083

—

5,083
Common stock issuance for convertible notes conversion (ID Venturas)

8,751,506

9

4,608

—

—

4,617

—

4,617
Common stock issuance for financing (SEDA)

34,473,719

34

32,466

—

—

32,500

—

32,500
Convertible notes conversion price reset (YA II)

—

—

2,661

—

—

2,661

—

2,661
Convertible notes conversion price reset (ID Venturas)

—

—

817

—

—

817

—

817
Common stock issuance for warrants exercised (ID Venturas)

5,329,239

5

3,122

—

—

3,127

—

3,127
Tree Technologies MPA adjustment

—

—

—

—

—

—

(131)

(131)
Net income (loss)**

—

—

—

(26,578)

—

(26,578)

(133)

(26,711)
Foreign currency translation adjustments, net of nil tax

—

—

—

—

172

172

104

276
Balance, June 30, 2020

237,008,159

237

357,720

(287,407)

(508)

70,042

13,309

83,351
Share-based compensation

—

—

3,252

—

—

3,252

—

3,252
Common stock issuance for acquisition (DBOT)

1,613,207

2

1,031

—

—

1,033

—

1,033
Common stock and warrants issuance for professional fee

250,000

—

343

—

—

343

—

343
Net income (loss)

—

—

—

(8,286)

—

(8,286)

(547)

(8,833)
Foreign currency translation adjustments, net of nil tax

—

—

—

—

798

798

558

1,356
Balance, September 30, 2020

238,871,366

$
239

$
362,346

$
(295,693)

$
290

$
67,182

$
13,320

$
80,502


	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

** Excludes deemed dividend related to warrant repricing

*	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)

Nine Months Ended

September 30, 2020

September 30, 2019
Cash flows from operating activities:

Net income (loss)

$
(47,765)

$
12,881
Adjustments to reconcile net loss to net cash used in operating activities

Share-based compensation expense

8,848

6,474
Depreciation and amortization

1,651

1,420
Allowance for doubtful accounts

585

0
Non-cash interest expense

14,143

2,266
Equity in losses of equity method investees

8

606
Digital tokens received as payment for services

0

(40,700)
Gain on disposal of subsidiaries

0

(1,057)
Loss on remeasurement of DBOT investment

0

3,179
Conversion expense

2,266

0
Impairment loss

4,143

2,299
Impairment of operating lease assets

6,220

0
Settlement of ROU operating lease liabilities

(5,706)

0
Change in fair value of contingent consideration, net

(2,900)

0
Change in assets and liabilities:

Accounts receivable

(2,496)

(2,814)
Prepaid expenses and other assets

(689)

2,447
Accounts payable

1,358

1,024
Deferred revenue

701

150
Amount due to related parties

1,542

(104)
Accrued expenses, salary and other current liabilities

(3,827)

3,217
Net cash used in operating activities

(21,918)

(8,712)

Cash flows from investing activities:




Acquisition of property and equipment

(45)

(1,809)
Proceeds from note receivable repayment

1,469

0
Proceeds from disposal of subsidiaries

0

694
Acquisition of subsidiaries, net of cash acquired

0

247
Payments for long-term investments

0

(870)
Notes receivable

(1,910)

0
Net cash used in investing activities

(486)

(1,738)

Cash flows from financing activities:




Proceeds from issuance of convertible notes

2,000

4,802
Proceeds from exercise of warrants and issuance of common stocks

39,128

2,500
Proceeds from noncontrolling interest shareholder

7,148

0
Borrowings from Small Business Association Paycheck Protection Program

460

0
Proceeds from/(Repayment of) amounts due to related parties

(2,999)

1,765
Net cash provided by financing activities

45,737

9,067
Effect of exchange rate changes on cash

1,639

(37)
Net increase (decrease) in cash and cash equivalents

24,972

(1,420)

Cash and cash equivalents at the beginning of the period

2,633

3,106

Cash and cash equivalents at the end of the period

$
27,605

$
1,686

Supplemental disclosure of cash flow information:

Cash paid for income tax

$
0

$
0
Cash paid for interest

311

0
Issuance of shares for acquisition of DBOT

8,074

0
Issuance of shares for convertible notes conversion

20,069

0
Tree Technologies measurement period adjustment on goodwill, non-controlling interest and intangible assets

12,848

0
Disposal of assets in exchange for GTB tokens

0

20,219
Issuance of shares for acquisition of intangible assets

0

10,005


	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

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. ~~(“Ideanomics” or the “Company”)~~ (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"~~“Company” in these notes to condensed consolidated financial statements refers to Ideanomics, Inc., its consolidated subsidiaries and VIEs.

The ~~Company's~~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 of 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.~~

The Company also seeks to identify industries and business processes where blockchain and artificial intelligence (“AI”) technologies can be profitably deployed to disrupt established industries and business processes.services industry.

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 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.

~~Table of Contents~~

On an ongoing basis, management evaluates the ~~Company's~~Company’s estimates, including those related to the bad debt allowance, variable ~~consideration,~~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 ~~nine~~three months ended ~~September 30, 2020, there~~March 31, 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.

Table of Contents

Software Development Costs

~~Reclassifications~~

Software developed or obtained for internal use in accordance with ASC 350-40, 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 the 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 ~~has renamed captions~~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, 2021 the Company capitalized software development costs of $0.3 million.

Escrow and Trust Deposits

In providing escrow services, Timios holds funds for others in ~~its~~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 accompanying condensed consolidated balance sheet, ~~condensed consolidated statement~~however, Timios remains contingently liable for the disposition of ~~operations, and its condensed consolidated statement of cash flows. There~~these deposits. Escrow trust balances at March 31, 2021 were ~~no changes~~$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 ~~composition~~delivery of ~~these accounts,~~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 ~~therefore~~overhead, are stated at the lower of cost or net realizable value, with cost generally computed on a first-in, first-out (“FIFO”) basis. Estimated losses from obsolete and slow-moving inventories are recorded to reduce inventory values to their estimated net realizable value and are charged to costs of revenue. At the point of loss recognition, a new cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in a recovery in carrying value.

Revenue

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 ~~change~~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 delivery method, depending on the nature of the contract, including length of production time.

For contracts recognized at a point in time, WAVE recognizes revenue when control passes to the customer, which is generally based on shipping terms that address when title and risk and rewards pass to 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 separate performance obligation over the warranty period.

Table of Contents

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 long-term production-type contract are deferred and amortized in a manner 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 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 product warranties are made at the time revenue is recognized and are recorded as a component of costs of revenue. WAVE estimates the liability for warranty claims based on standard warranties, the historical frequency of claims and 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 ~~financial accounts aside from the renaming of the captions.~~

~~Statement~~	~~Previous caption~~	~~Current caption~~
~~Condensed consolidated balance sheet~~	~~Acquisition earn-out liability~~	~~Contingent consideration~~
~~Condensed consolidated statement of operations~~	~~Acquisition earn-out/true up expense, net~~	~~Change in fair value of contingent consideration, net~~
~~Condensed consolidated statement of cash flows~~	~~Acquisition earn-out expense~~	~~Change in fair value of contingent consideration, net~~

~~Liquidity Improvements~~

In the nine months ended September 30, 2020, the Company improved its liquidity position by raising a total of $48.2 million: $39.1 million through the issuance of common stock and exercise of warrants, $7.1 million from noncontrolling interest shareholders, and $2.0 million through the issuance of senior secured convertible notes. The Company converted senior secured convertible notes of $9.4 million plus accrued interest of $0.3 million to common stock. Additionally, the Company converted $4.6 million of convertible notes payable and accrued interest to related parties and an additional $1.5 million due to related parties to common stock. As a result of these actions, the Company reduced its the principal amount of its indebtedness by $13.9 million, and as of September 30, 2020, had cash and cash equivalents of $27.6 million, $19.0 million of which is held in U. S. financial institutions.

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

Effects of ~~COVID-19~~COVID 19

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 ~~October 31, 2020,~~May 7, 2021, over ~~44.7~~156.4 million cases had been reported across the globe, resulting in ~~1.2~~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.

~~Table of Contents~~

~~Public health experts have expressed concern that~~ The U.S. and other countries also experienced an increase in new COVID-19 cases after the ~~influenza~~fall and winter holiday season, ~~in the northern hemisphere will coincide~~ with ~~a spread~~new, more infectious variants of COVID-19 ~~cases, adding further stress to the affected populations, businesses, governments, and economies.~~ 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 difficult to predict, due to uncertainty about the course of the virus, different variants that may evolve, and the ~~prospects for~~supply of the vaccine on a ~~vaccine~~local, regional, and global basis, as well as ~~its global implementation.~~the ability to implement vaccination programs in a short time frame.

The Company assesses the recoverability of goodwill and other indefinite-lived intangible assets in the fourth quarter of each year, or more frequently if circumstances warrant. The Company assesses the recoverability of other long-lived assets as circumstances warrant, and in the nine months ended September 30, 2020 did not consider any long-lived assets to be impaired other than certain right of use and fixed assets, including assets comprising a portion of Fintech Village. Many of the Company’s operations are in the development or early stage, have not had significant revenues to date, and the Company does not anticipate significant adverse effects on its operations’ revenue as compared to its business plan in the near- or mid-term, 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 Company continues to monitor the overall situation with COVID-19 and its effects on both local, regional and global economies.

~~Resulting Delay in Documentation~~

In the three months ended March 31, 2020, 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 would benefit.

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

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

The Company has determined not to proceed with the MEG share-based compensation plan described above, and the parties have declared the transfer of the MEG shares, which was not believed to be substantive, to be null and void and they have reverted to the Company.

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

Note 2. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements ~~Not Yet Adopted~~

In ~~June 2016,~~December 2019, the Financial Accounting Standards Board (“FASB”) issued ~~ASU No. 2016-13 (“ASU 2016-13”) "~~~~Financial Instruments - Credit Losses” (“ASC 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

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~~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), Derivatives and Hedging (Topic 815), and Leases (Topic 842)~~” (“ASC 2019-10”), which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for public entities which meet the definition of a smaller reporting company. The Company will adopt ASU 2016-13 effective January 1, 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 investment portfolio and the economic conditions at the time of adoption.

~~In December 2019, the FASB issued ASU~~Accounting Standards Update No. 2019-12 (“ASU 2019-12”) ~~“Income~~“Income Taxes (Topic 740) Simplifying the Accounting for Income ~~Taxes.~~Taxes.” ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions currently provided for in ASC 740, ~~“Income Taxes”~~“Income Taxes” (“ASC ~~740”~~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 ~~will adopt~~adopted ASU 2019-12 effective January 1, 2021. ~~Management does not expect~~The effect of the adoption of ASU 2019-12 ~~to have a material effect on the consolidated financial statements.~~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 ~~will adopt~~adopted ASU 2020-06 effective January 1, ~~2024.~~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:”) 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,) Derivatives and Hedging (Topic 815,) and Leases (Topic 842)” (“ASC 2019-10,”) which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for public entities which meet the definition of a smaller reporting company. The Company will adopt ASU 2016-13 effective January 1, 2023. Management is currently evaluating the effect of the adoption of ASU ~~2020-06~~2016-13 on the consolidated financial statements. The effect will largely depend on the composition and ~~terms~~credit quality of our investment portfolio and the ~~financial instruments~~economic conditions at the time of adoption.

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In May 2021, the FASB issued ASU No. 2021-04 (“ASU 2021-04”) “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40)” which provides guidance on modifications or exchanges of 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 2021-04 also provides guidance on the recognition of the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration. The Company will adopt ASU 2021-04 on January 1, 2022. Management is currently evaluating the effect of the adoption of ASU 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. ~~Notes Receivable~~

~~(a)Zhu Note Receivable~~

In May 2020, a subsidiary of the Company, Qingdao Chenyang Ainengju New Energy Sales and Service Company Limited ("Energy Sales") provided a note receivable to Mr. Jianya Zhu ("Mr. Zhu") in the amount of 10.0 million RMB ($1.4 million). Mr. Zhu, through his wholly-owned entity Prime Capital Enterprise Pte. Ltd., provided collateral in the form of its 50.0% ownership of Seven Stars Founder Space Industrial Pte. Ltd ("Founder Space.") Founder Space is also 50.0% owned by a related party, Seven Stars Innovative Industries Group Limited, an affiliate of Dr. Bruno Wu (“Dr. Wu”), the Chairman of the Company. Mr. Zhu agreed to repay 10.5 million RMB ($1.5 million) one month from the disbursement date. In September 2020, a third-party satisfied the note receivable and accrued interest in the amount of 10.5 million RMB ($1.5 million) on behalf of Mr. Zhu, and the Company terminated the note and collateral agreement.

~~(b)~~Fuzhou Note Receivable

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

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$0.5 million against this note ~~receivable has not been satisfied; however, the Company believes the note receivable to be collectible based upon discussions that have been held.~~receivable.

Note 4. Revenue

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


									Three Months Ended
	Three Months Ended				Nine Months Ended				March 31,		March 31,
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019		2021		2020
Geographic Markets
Malaysia	$	33	$	—	$	42	$	—	$	7	$	3
USA		480		250		908		41,650		29,646		323
China		10,107		2,854		14,740		2,854
PRC										3,056		52
Total	$	10,620	$	3,104	$	15,690	$	44,504	$	32,709	$	378

Product or Service
Digital asset management services	$	—	$	—	$	—	$	40,700
Electric vehicles*									$	3,019	$	55
Charging and batteries*										1,882		—
Title and escrow services										27,611		—
Digital advertising services and other		480		250		908		950		197		323
Electric vehicles*		8,872		2,854		9,622		2,854
Combustion engine vehicles*		1,268		—		5,160		—
Total	$	10,620	$	3,104	$	15,690	$	44,504	$	32,709	$	378

Timing of Revenue Recognition
Products transferred at a point in time	$	10,620	$	3,104	$	15,690	$	3,804
Products and services transferred at a point in time									$	32,324	$	378
Services provided over time		—		—		—		40,700		385		—
Total	$	10,620	$	3,104	$	15,690	$	44,504	$	32,709	$	378

* The revenues ~~for the three and the nine months ended September 30, 2020~~ were recorded on either a Principal or ~~Agency~~Agent basis, depending on the terms of the underlying transaction, including the ability to control the product and the level of inventory risk ~~taken.The combustion engine~~taken. All of the revenue from the sale of electric vehicles, ~~for~~as well as revenue from the sale of charging and batteries in the three ~~and the nine~~ months ended ~~September 30, 2020~~March 31, 2021, were recorded on a Principal ~~basis because the Company has inventory risk in the transaction.~~

basis. In the three months ended ~~September 30,~~March 31, 2020, the ~~balance of deferred revenue increased primarily due to two factors: 1)~~EV revenues were recorded on an Agency (Net) basis because the Company sold vehicles with a service warranty, and allocated a portion of the transaction price to this performance obligation and will recognize this revenue over the service period, and 2) the Company was engaged to perform advertising services pursuant to one significant contract, and such services were partially fulfilledacted as an agent rather than principal in ~~the three months ended September 30, 2020 and the remainder will be fulfilled in the future.~~these transactions.

In the three months ended September 30, 2020 the Company sold vehicles whose contractual terms contained a provision which gave rise to variable consideration. The Company has estimated the variable consideration, and will continue to revise this estimate in the future. The liability associated with this estimate is recorded as “Other long-term liabilities.”

~~Note 5. VIE Structure and Arrangements~~

Prior to December 31, 2019, the Company consolidated certain VIEs located in the People’s Republic of China (“PRC”) in which it held variable interests and was the primary beneficiary through contractual agreements. 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 statements for the year ended December 31, 2019. A shareholder in one of the VIEs is the spouse of Dr. Wu.

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

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~~to receive the majority of their losses or benefits, were terminated by all parties on December 31, 2019. As a result,~~Note 5. Available for Sale Security

On January 28, 2021, the Company ~~deconsolidated~~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 ~~VIEs~~Chinese and global auto markets.

The terms of the convertible promissory note are as ~~of December 31, 2019.~~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.

~~Refer to Note 10~~The Company accounts for ~~information on~~the Silk EV note as an ~~additional VIE.~~available for sale security at its fair value, with changes in fair value, if any, recorded in other comprehensive income.

Note 6. Acquisitions and Divestitures

~~2020 Acquisitions and Divestitures~~

The Company has not acquired any companies nor disposed of any subsidiaries in the nine months ended September 30, 2020, with the exception of the disposition of its remaining 10.0% interest in Amer Global Technology Limited ("Amer") as disclosed in Note 6(e).

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

~~2019 Acquisitions~~

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

On December 26, 2019, the Company completed the acquisition of a 51.0% interest in Tree Technologies, a Malaysian company engaged 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) contingent consideration 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 contingent consideration was initially based upon revenue targets over three 12 month periods beginning in the three months ended December 31, 2019; due to financing delays and resulting production delays, these three 12 month periods will commence on July 1, 2020. In the three and nine months ended September 30, 2020, the Company recorded remeasurement gains of $4.2 million and $4.4 million in "Change in fair value of contingent consideration, net" in the condensed consolidated statements of operations. As of September 30, 2020, the recorded balance of this liability was $10.9 million.

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

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

~~The following table summarizes the acquisition-date fair value of assets acquired and liabilities assumed, as well as the fair value of the non-controlling interest in Tree Technologies recognized.~~ The Company has ~~completed the fair value~~

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~~analysis of the assets~~not acquired ~~liabilities assumed, the noncontrolling interest, and the contingent consideration, and therefore the adjustments are incorporated in the table below (in thousands).~~

Land use rights

$
27,140
Accounts payable

(743)
Noncontrolling interest

(15,452)
Goodwill

468
Marketing and distribution agreement

12,590

$
24,003

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

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, which the Company paid in the three months ended September 30, 2020.

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, 2019, and related information, are not presented.

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

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

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 was to be paid in the form of common stock of the Company.

In June 2019, the Company issued 0.6 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 the date of the transaction, the carrying amount of the non-controlling interest in Grapevine was $0.5 million. 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~~ ~~(“ASC 810.”)~~

~~(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 million shares of the Company’s common stock at $2.11 per share. In July 2019, the Company entered into another securities purchase agreement to acquire an additional 2.2 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 the Company’s ownership in DBOT to 99.0% as of that date, were completed in July 2019. The securities purchase agreements required the Company to issue contingent consideration in the form of additional shares of the Company’s common stock in the event the stock price of the common stock falls below $2.11 at the close of trading on the date immediately preceding the lock-up date, which was 9 months from the closing date. The Company accounted for the contingent consideration as a liability in accordance with ASC 480, ~~Distinguishing Liabilities from Equity~~~~. The Company recorded this liability at fair~~

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value of $2.2 million on the date of acquisition. As of December 31, 2019, the Company remeasured this liability to $7.3 million and the remeasurement loss of $5.1 million was recorded in “Change in fair value of contingent consideration, net” in the consolidated statements of operations. In the three and nine months ended September 30, 2020, the Company recorded remeasurement losses of $0 and $1.5 million, respectively, in “Change in fair value of contingent acquisition, net” in the condensed consolidated statements of operations, and partially satisfied the liability with the issuance of 13.1 million shares of common stock. As of September 30, 2020, the recorded balance of this liability was $0.8 million. The contractual period which required periodic remeasurement has expired, and therefore the Company will not remeasure this liability in the future.

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

DBOT operates 3 companies: (1) DBOT ATS LLC, an SEC recognized Alternative Trading System (“ATS”); (2) DBOT Issuer Services LLC, focused on setting and maintaining issuer standards, as well as the provision of issuer services to DBOT designated issuers; and (3) DBOT Technology Services LLC, focused on the provision of market data and marketplace connectivity. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and DBOT, as the Company executes its business plan of selling digital tokens and digital assets and other commodities on an approved ATS.

The consolidated statements of operation for the 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, 2019 (in thousands):~~

Three Months Ended

Nine Months Ended


September 30, 2019

September 30, 2019

Revenue

$
3,213

$
44,612

Net income (loss) attributable to IDEX common shareholders

(15,163)

10,582

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, 2019. 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 the fair value of the non-controlling interest in DBOT recognized (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

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

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~~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 had incurred operating losses and its business was 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 “Gain on disposal of subsidiaries” in the condensed consolidated statements of operations in the three and nine months ended September 30, 2019.

~~(e)~~ ~~Amer Global Technology Limited~~

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%any companies nor disposed 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 as a result of the deconsolidating Amer, and such gain was recorded in “Gain on disposal of subsidiaries” in the condensed consolidated statements of operations in the three and nine months ended September 30, 2019. $0.1 million of the gain is attributable to the 10.0% 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 condensed consolidated statements of operations in the three and nine months ended September 30, 2019.

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

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.

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.

Timios Holdings Corp.

On 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 purchase price of $40.0 million, net of cash acquired of $6.5 million. The full purchase price was paid in cash. Pursuant to the Timios Agreement, $5.1 million of the cash consideration was paid into escrow pending a 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 condensed consolidated financial statements since the acquisition date.

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Wireless Advanced Vehicle Electrification, Inc.

On January 15, 2021 the Company completed the acquisition of privately held WAVE pursuant to an agreement and plan of merger (the “WAVE Agreement”) entered into on January 4, 2021. WAVE is a provider of wireless charging solutions for medium and heavy-duty electric vehicles.

Pursuant to the the WAVE Agreement, the Company acquired 100% of the outstanding capital stock of WAVE for an aggregate purchase price of $55.0 million in a combination of $15.0 million of cash plus a total of 12.6 million unregistered shares of the Company’s common stock, valued at $40.0 million at the date of closing. Pursuant to the Wave Agreement, $5 million of the cash consideration was paid into escrow pending a one year indemnification review. The WAVE Agreement provided that 3.6 million shares of the Company’s common stock be held back at closing, to be released upon the receipt of certain customer consents not obtained prior to closing. As of March 31, 2021, 2.4 million of the Company’s common stock remains unissued pending receipt of the consents. Since receipt of the consents is probable, the Company has included these common shares as contingent consideration as of the acquisition date of $7.7 million. If any such consent is not obtained within six months following the closing date, the portion of the common stock allocated to such consent in the WAVE Agreement will not be issued to the sellers.

In ~~light~~addition to the purchase price to be paid at closing, the WAVE Agreement contains three earnouts that could result in additional payments of up to $30.0 million to the 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 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 preliminary purchase price allocation. The Company will continue to monitor the fair value of this ~~disposition,~~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 earnout contingent consideration, the Company has not accrued any of this retention plan as the revenue and gross profit margin criteria are unlikely to be met.

Revenue of $1.8 million and net loss of $0.6 million 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 their acquisition date fair values. As additional information becomes known concerning the acquired assets and assumed liabilities, management may make adjustments to the opening balance sheet of the acquired company up to the end of the measurement period, which is ~~negotiating~~no longer than a one year period following the ~~responsibility~~acquisition date. The determination of the fair values of the acquired assets and liabilities assumed (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment.

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The table below reflects the Company’s provisional estimates of the acquisition date fair values of the assets acquired and liabilities assumed for the ~~contingent~~Timios and Wave acquisitions (in thousands):


	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

Amortization expense related to intangible assets created as a result of the Timios and WAVE acquisitions of $0.8 million has been recorded for the three months ended March 31, 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 ~~obligation disclosed above.~~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 been included in selling, general and administrative expenses in the 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):


	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Accounts receivable, gross	$	4,900	$	2,405
Accounts receivable					$	6,625	$	8,619
Less: allowance for doubtful accounts		(585)		0		(1,216)		(1,219)
Accounts receivable, net	$	4,315	$	2,405	$	5,409	$	7,400

The gross balance includes the taxi commission revenue receivables of $1.2 million and ~~$2.3~~$1.2 million from the related party Guizhou Qianxi Green Environmentally Friendly Taxi Service Co, as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

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InThe following table summarizes the ~~three months ended September 30, 2020,~~movement of the ~~Company increased its~~ allowance for doubtful accounts ~~by $0.6 million for~~(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 ~~account receivable mentioned above. There were 0~~foreign exchange rate changes, there was $2,505 increase in the allowance for doubtful accounts for the three ~~and nine~~ months ended ~~September 30, 2019.~~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):


	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Furniture and office equipment	$	309	$	441	$	568	$	315
Vehicle		121		62		247		229
Leasehold improvements		176		243		339		246
Total property and equipment		606		746		1,154		790
Less: accumulated depreciation		(441)		(368)		(523)		(460)
Property and equipment, net		165		378		631		330
Fintech Village
Land		3,043		3,043		0		2,750
Building		—		309
Assets retirement obligations - environmental remediation		6,294		6,496		0		4,500
Capitalized direct development cost		—		2,713
Construction in progress (Fintech Village)		9,337		12,561		0		7,250
Property and Equipment, net	$	9,502	$	12,939	$	631	$	7,580

The Company recorded depreciation expense of ~~$25,170~~$90,787 and ~~$65,862,~~$31,536, which is included in its operating ~~expenses,~~expense, for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $90,962 and $102,991 for the nine months ended September 30, 2020 and 2019,~~ respectively.

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

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

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 ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 (in thousands):


	January 1,		Liabilities		Remediation		Accretion				September 30,		January 1,		Liabilities		Remediation		Accretion				March 31,
	2020		Incurred		Performed		Expense		Revisions		2020		2021		Incurred		Performed		Expense		Revisions		2021
Asset retirement obligation	$	5,094	$	0	$	(441)	$	0	$	0	$	4,653	$	4,653	$	0	$	0	$	0	$	0	$	4,653

The Company capitalized direct costs incurred on Fintech Village and the capitalized cost is recorded as part of Construction in progress. Capitalized costs were $0 million and $2.7 million as of September 30, 2020 and December 31, 2019, respectively, and are primarily related to legal and architect costs.

In the three months ended September 30, 2020, in relation to Fintech Village the Company recorded an impairment loss of $2.7 million for the capitalized architect costs, and recorded an impairment loss of $0.3 million for the remaining building and $0.2 million for the related asset retirement cost associated with the remaining building.

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

2021

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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
Measurement period adjustments*

(12,848)
Effect of change in foreign currency exchange rates

(24)
Balance as of September 30, 2020

$
10,472


Balance as of January 1, 2020	$	23,344
Measurement period adjustments		(12,848)
Effect of change in foreign currency exchange rates		(8)
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

*During the three months ended December 31, 2019, the Company completed the acquisition of a 51.0% interest in Tree Technologies, a Malaysian company engaged in the EV market. The Company adjusted goodwill balance in connection with the completion of acquisition accounting. Refer to Note 6(a) for additional information.

Intangible Assets

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


			September 30, 2020								December 31, 2019								March 31, 2021								December 31, 2020
	Weighted																		Weighted
	Average		Gross								Gross								Average		Gross						Gross
	Remaining		Carrying		Accumulated		Impairment		Net		Carrying		Accumulated		Impairment		Net		Remaining		Carrying		Accumulated		Net		Carrying		Accumulated		Net
	Useful Life		Amount		Amortization		Loss		Balance		Amount		Amortization		Loss		Balance		Useful Life		Amount		Amortization		Balance		Amount		Amortization		Balance
Amortizing Intangible Assets
Software and licenses		—	$	94	$	(94)	$	0	$	0	$	97	$	(97)	$	0	$	0
Solid Opinion IP (a)		3.4		4,655		(1,474)		0		3,181		4,655		(776)		0		3,879
Fintalk intangible assets (b)		—		635		(635)		0		0		635		(635)		0		0
Influencer network (c)		7.9		1,980		(413)		0		1,567		1,980		(264)		0		1,716
Customer contract (c)		0.9		500		(347)		0		153		500		(222)		0		278
Continuing membership agreement (d)		18.8		8,255		(516)		0		7,739		8,255		(206)		0		8,049
Customer list		1.8		59		(25)		0		34		59		(10)		0		49
Trade name (c)		12.9		110		(15)		0		95		110		(10)		0		100
Technology platform (c)		4.9		290		(86)		0		204		290		(55)		0		235
Land use rights (e)		98.3		27,211		(69)		0		27,142		27,079		0		0		27,079
Marketing and distribution agreement (e)		19.8		12,385		(155)		0		12,230		11,333		0		0		11,333
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				56,174		(3,829)		0		52,345		54,993		(2,275)		0		52,718				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		0		25		25		0		0		25				25		0		25		25		0		25
Patent				28		0		0		28		28		0		0		28				28		0		28		28		0		28
Total			$	56,227	$	(3,829)	$	0	$	52,398	$	55,046	$	(2,275)	$	0	$	52,771			$	95,282	$	(2,757)	$	92,525	$	31,431	$	(1,726)	$	29,705

(a)

During the ~~three months ended March 31, 2019, the Company completed the acquisition~~third quarter 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”) would be held in escrow until February 19, 2020 in connection with SolidOpinion’s indemnity obligations pursuant to the agreement. SolidOpinion had 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 included the rights, titles, and interest in a secure mobile financial information, social, and messaging platform that had 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

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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 three months ended December 31, 2019, management determined these assets had no future use and recorded an impairment loss of $5.7 million.

~~(c)~~

~~During the three months ended September 30,~~ 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 ~~three months ended September 30,~~third quarter of 2019, the Company completed the acquisition of additional shares in DBOT, which increased its ownership to 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.

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~~(e)~~(c)

During the ~~three months ended December 31,~~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 had not commenced, the revision of the estimated useful life had no effect on the condensed 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 ~~$0.7~~$1.0 million and ~~$0.8~~$0.4 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $1.6 million and $1.3 million for the nine months ended September 30, 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 nine months ended September 30, 2020)	$	668
2021		2,615
2021 (excluding the three months ended March 31, 2021)			$	3,755
2022		2,494		4,722
2023		2,485		4,384
2024		1,709		4,384
2025 and thereafter		42,374
2025				4,384
2026 and thereafter				70,343
Total	$	52,345	$	91,972

Note 10. Long-term Investments

The following table summarizes the ~~Company's~~Company’s long-term investments (in thousands):


	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Non-marketable equity investments	$	6,005	$	5,967	$	8,158	$	6,014
Equity method investments		16,646		16,654		16,021		2,556
Total	$	22,651	$	22,621	$	24,179	$	8,570

Non-marketable equity ~~investments~~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 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, 0 impairment losses were recorded in ~~current~~the three months ended March 31, 2021 and 2020.

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~~earnings~~On January 28, 2021, the Company 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 ~~impairment loss that is~~equity financing (of above one million pounds (1,000,000) during the twelve months immediately following execution of the SAFE, on the initial closing of such equity financing the SAFE will automatically convert into the number of ordinary shares equal to the ~~difference between~~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 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 ~~equity investment~~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 ~~its carrying amount. Based on management's analysis~~remunerate an expert valuer who shall deliver to both TM2 and Ideanomics simultaneously a written determination of ~~certain investment's performance, 0 impairment losses were recorded in~~fair value per ordinary share. Following receipt by both parties of such written determination, the ~~three and nine months ended September 30, 2020 and 2019.~~

InSAFE shall convert into ordinary shares equal to the ~~nine months ended September 30, 2019,~~purchase amount divided by such fair value as determined by the ~~Company sold one non-marketable equity investment with a carrying amount of $3.2 million for GTB and recognized no gain or loss on the sale. Refer to Note 14(b) for additional information.~~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):


		September 30, 2020															March 31, 2021
						Income (loss)		Impairment				Foreign currency									Income (loss)		Impairment				Dilution loss
		January 1, 2020		Addition		on investment		losses		Disposal		translation adjustments		September 30, 2020			January 1, 2021		Addition		on investment		losses		Disposal		due to investee share issuance		March 31, 2021
BDCG	(a)	$	9,800	$	0	$	0	$	0	$	—	$	0	$	9,800
Glory	(b)		6,854		0		(8)		0		—		0		6,846
Solectrac																(a)	$	2,556	$	0	$	(59)	$	0	$	0	$	(31)	$	2,466
Energica																(b)		0		13,555		0		0		0		0		13,555
Total		$	16,654	$	0	$	(8)	$	0	$	—	$	0	$	16,646		$	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 ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020.

(a) ~~BBD Digital Capital Group Ltd.~~Solectrac, Inc. (“~~BDCG”~~Solectrac”)

In 2018, the Company signed an investment agreement, with 2 unrelated parties, to establish BDCG, subsequently renamed Intelligenta, located in the United States for providing block chain services for financial or energy industries by utilizing 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%~~24.3% as of ~~BDCG are held by Seasail Ventures Limited (“Seasail.”) The accounting treatment of the investment is based on the equity method~~March 31 2021 due to ~~variable substantive participating rights (in accordance with ASC 810) granted~~the new share issuance by Solectrac during the three months ended March 31 2021.

Solectrac develops, assembles and distributes 100% battery-powered electric tractors-an alternative to ~~Seasail. Intelligenta is currently in~~diesel tractors-for agriculture and utility operations. Solectrac tractors provide an opportunity for farmers around the ~~process~~world to power their tractors by using the sun, wind, and other clean renewable sources of developing its operations, although it has been impacted by international trade tentions. Intelligenta has yet to record revenue or earnings or losses, and therefore its statement of operations and balance sheet data are not material.energy.

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

(b) ~~Glory Connection Sdn. Bhd~~Energica Motor Company S.P.A. (“~~Glory”~~Energica”)

On ~~July 18, 2019,~~March 3, 2021, the Company entered into an ~~acquisition~~investment agreement ~~to purchase a 34.0% interest in Glory, a Malaysian company, from its shareholder Beijing Financial Holding Limited, a Hong Kong registered company,~~with Energica Motor Company S.P.A (“Energica.”) The Company invested €10.1 million ($13.6 million) for ~~the consideration of 12.2~~6.1 million ~~restricted common~~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 ~~initially representing $24.4 million at $2.00 per~~will hold 20.0% of Energica’s 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,~~capital. From March 3, 2021 through September 30, 2021 the Company ~~was also granted an option~~has the right to ~~purchase a 40.0% interest~~participate 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~~any equity financing by Energica. Ideanomics will not be able to sell any of the ~~Company. Bigfair currently holds~~shares for 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 addition 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~~period 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 developing its products and its business, and is dependent upon the business of Tree Manufacturing.

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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 to be owned by Glory. As Glory would no longer receive the land use rights to the 250 acres of vacant land, the Company evaluated its investment in Glory for impairment, and recorded an impairment loss of $13.1 million in “Impairment of and equity in loss of equity method investees” in the consolidated statements of operations in the year ended December 31, 2019.

Tree Technologies has also entered into a product supply arrangement and a product distribution arrangement with a subsidiary of Glory. The Company performed an assessment of these arrangements, and determined that Glory is a VIE, but that the Company is not the primary beneficiary. As of September 30, 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 September 30, 2020, the excess of the Company’s investment over its proportionate share of Glory’s net assets was $7.1 million. The difference primarily represents an amortizing intangible asset.

~~The following table summarizes the income statement information of Glory for the three and nine months ended September 30, 2020 (in thousands):~~

Three Months Ended

Nine Months Ended



September 30, 2020

September 30, 2020

Revenue

$
—

$
5

Gross profit

—

(6)

Net loss from operations

(8)

(56)

Net income (loss)

21

(23)

Net income (loss) attributable to Glory

11

(14)

90 days.

~~Note 11. Leases~~

~~On May 1, 2020,~~Energica is the ~~Company took possession~~world’s leading manufacturer of ~~premises in Qingdao, China in furtherance of a larger public/private initiative to promote EV business in~~high performance electric motorcycles and the region and reduce the reliance on traditional combustion engines. The premises are indirectly and partially owned by local governmental entities, and were provided to the Company at no charge. The Company, pursuant to the underlying lease, has usesole manufacturer of the ~~premises until November 30, 2034.~~FIM Enel MotoE^™ World Cup. Energica motorcycles are currently on sale through the official network of dealers and importers.

~~The Company has determined the fair value of the lease and recorded the lease in accordance with ASC 842,~~ ~~Leases(“ASC 842,”)~~ ~~ASC 845~~ ~~Nonmonetary Transactions(“ASC 845,”)~~ ~~and ASC 958,~~ ~~Not-for-Profit Entities (“ASC 958.”)~~ In connection with this lease agreement, the Company recorded operating right of use assets of $7.2 million, and an operating lease liability of $7.2 million. The fair value of the annual lease payments is $0.7 million.

As of September 30, 2020, the Company's operating lease right of use assets and operating lease liabilities are $7.4 million and $7.3 million, respectively. The weighted-average remaining lease term is 13.8 years and the weighted-average discount rate is 4.4%.

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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 ~~December~~March 31, ~~2019,~~2021, the ~~Company's~~Company’s operating lease right of use assets and operating lease liabilities ~~were $6.9~~are $9.3 million and ~~$7.3~~$9.4 million, respectively. ~~As of September 30, 2019, the~~The weighted-average remaining lease term ~~was 6.6~~is 11.3 years and the weighted-average discount rate ~~was 7.5%~~is 4.2%.

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


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019		March 31, 2021		March 31, 2020
Operating lease cost	$	519	$	391	$	1,488	$	1,264	$	338	$	487
Short-term lease cost		82		78		279		251		88		85
Sublease income		(11)		(11)		(74)		(11)		—		(32)
Total	$	590	$	458	$	1,693	$	1,504	$	426	$	540

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


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019		March 31, 2021		March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	115	$	448	$	961	$	968	$	319	$	553
Right of use assets obtained in exchange for new operating lease liabilities		—		935		—		935		1,671		322

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.

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


	Leased Property		Leased Property
Years ending December 31	Costs		Costs
2020	$	260
2021		721	$	1,064
2022		614		1,262
2023		632		1,207
2024		645		897
2025 and thereafter		7,009
2025				835
2026 and thereafter				6,771
Total lease payments		9,881		12,036
Less: Interest		(2,541)
Less: interest				(2,596)
Total	$	7,340	$	9,440

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

In the three months ended June 30, 2020 the Company ceased to use its New York City headquarters at 55 Broadway, which are subject to two leases, and vacated the real estate. As a result, the Company recorded an impairment loss related to the right of use asset of $5.3 million. The Company had an operating use liability of $5.8 million with respect to these leases, excluding $0.6 million in accounts payable. In the three months ended September 30, 2020, the Company completed negotiations with the landlord to settle the remaining amounts due of $6.4 million for a cash payment of $1.5 million. The Company recorded a gain of $4.9 million in “Other income (expense)” for the settlement of the operating lease liability in the three months ended September 30, 2020.

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Note 12. Promissory Notes

The following table summarizes the outstanding promissory notes as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (dollars in thousands):

September 30,

December 31,

2020

2019


Interest Rate

Principal Amount

Carrying Amount*

Principal Amount

Carrying Amount*

Convertible Note-Mr. McMahon (Note 14 (a))

4.0
%
$
—

—

$
3,000

$
3,260

Convertible Note -SSSIG (Note 14 (a))

4.0
%

—

—

1,252

1,301

Convertible Note-SSSIG (Note 14 (a))

4.0
%

—

—

250

250

Convertible Note-Advantech (a)

8.0
%

12,000

9,033

12,000

3,193

Senior Secured Convertible Note (b)

10.0
%

—

—

850

348

Senior Secured Convertible Note (c)

10.0
%

—

—

3,580

1,896

Senior Secured Convertible Note (d)

4.0
%

—

—

3,000

1,405

Promissory Note (e)

6.0
%

3,000

3,153

3,000

3,000

Vendor Notes Payable (f)

0.25%-4%

135

135

—

0

Small Business Association Paycheck Protection Program (g)

1
%

460

462

—

0

Total



$
15,595

12,783

$
26,932

14,653

Less: Current portion



12,783

8,013

Long-term Note, less current portion



$
—

$
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 the debt and contractual obligations (excluding the debt from the Small Business Association Paycheck Protection Program), as well as projected interest expense as of September 30, 2020 (in thousands):

Principal

Interest

Interest

Repayment

Payment

Expense
2020

$
3,030

$
180

$
1,997
2021

12,105

2,875

3,878
Total

$
15,135

$
3,055

$
5,875

As of ~~September 30, 2020~~March 31, 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~~year ended December 31, 2020.

In the ~~shares of~~three months ended March 31, 2020, the Company’s common stock at a stated conversion price, subject to adjustment if subsequent equity shares have a lower conversion price (“down round provision.”) The stated conversion price was initially $1.82 per share, which was subsequently reset to $1.00 in October 2019, $0.5869 on April 22, 2020, then further reduced to $0.36 on May 20, 2020 due to the down round provision.

~~The~~ Company received aggregate gross proceeds of ~~$12.0~~$2.0 million ~~net of $34,133 for~~from the issuance ~~expenses paid by Advantech.~~of convertible notes to YA II PN, Ltd. (“YA PN II,”) pursuant to a previous securities purchase agreement.

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.

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

~~For~~In the three months ended ~~September 30,~~March 31, 2020, the Company recorded interest expense related to these debt instruments of $3.2 million, including amortization of the beneficial conversion features of $2.7 million.

$37.5 Million Convertible Debenture due July 4 2021 – YA II PN

On January 4, 2021, the Company executed a security purchase agreement with YA II PN, whereby the Company issued a convertible note of $37.5 million, and ~~2019, total~~received aggregate gross proceeds of $37.5 million. The note was scheduled to mature on July 4, 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 $2.00. 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 other obligations and rights of the parties.

During the three months ended March 31, 2021, the note, plus accrued and unpaid interest, was converted into 18.8 million shares of common stock of the Company. Total interest expense recognized was ~~$2.0~~$25,479 for the three months ended March 31, 2021.

$37.5 Million Convertible Debenture due July 15 2021 – YA II PN

On January 15, 2021, the Company executed a security purchase agreement with YA II PN, whereby the Company issued a convertible note of $37.5 million, and ~~$0.4 million, respectively,~~received aggregate proceeds of $37.5 million. The note was scheduled to mature on July 15, 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 $3.31. The conversion price was ~~$5.8 million~~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 ~~$1.1 million for~~unpaid interest. The note contained customary events of default, indemnification obligations of the ~~nine months ended September 30, 2020~~Company and ~~2019,~~other obligations and rights of the parties.

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~~respectively. The agreement also requires the Company to comply with certain covenants, including restrictions on the use of the proceeds and other conditions of the convertible note offering.~~

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

On February 22, 2019, the Company executed a security purchase agreement with ID Venturas 7, LLC (“IDV”), whereby the Company issued $2.1 million of senior secured convertible note (“February IDV Note.”) The February IDV Note bore 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 and was scheduled to mature on August 22, 2020. In addition, IDV was entitled to the following: (1) the convertible note was senior secured; (2) convertible at an adjusted price per share of Company common stock at the option of IDV, subject to adjustments if subsequent equity shares had a lower conversion price (original $1.84, $1.00 after October 30, 2019 and $0.5869 after April 22, 2020), (3) 1.2 million shares of common stock of the Company; and (4) a warrant exercisable for 1.6 million shares of common stock which the February IDV Note was convertible into at an adjusted exercise price (original $1.84 , $1.00 after October 30, 2019 and $0.5869 after April 22, 2020) per share and initially expired in 7 years, which was extended from 5 years on December 19, 2019.

The Company received aggregate gross proceeds of $2.0 million, net of $50,000 for 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.”) The fair value of the February IDV Note and common shares was based on the closing price of the Company’s common stock on February 22, 2019. The fair value of the warrants was determined using the Black-Scholes option-pricing model, with the following assumptions: expected life of 5 years, expected dividend rate of 0%, volatility of 111.83% and an interest rate of 2.48%. The 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 was payable quarterly starting from April 1, 2019. The February IDV Note was 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 was 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.~~

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

~~Modification/Extinguishment~~

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

~~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

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dividend on warrant repricing for the difference between the fair value of the unadjusted warrants and adjusted warrants. The fair value of the adjusted warrants was determined using the Black-Scholes option-pricing model based on the following assumptions: expected life of 5 years, expected dividend rate of 0%, volatility of 112.0%, and an interest rate of 2.48%.

~~Down Round Price Adjustment on April 22, 2020~~

As a result of the additional financing on April 22, 2020, the conversion price of the February IDV Note and the exercise price of the warrants was reduced from $1.00 to $0.5869. The Company recognized $0.3 million of remeasured BCF as an increase in additional paid- in capital and a corresponding discount on the carrying amount of the February IDV Note and $59,372 of deemed dividend on warrant repricing for the difference between the fair value of the unadjusted warrants and adjusted warrants. The fair value of the adjusted warrants was determined using the Black-Scholes option-pricing model based on the following assumptions: expected life of ~~7 years, expected dividend rate of 0%, volatility of 122.4%, and an interest rate of 1.84%.~~

~~Conversion~~

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

During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, the ~~remaining $0.85 million of the February IDV~~ note, plus accrued and unpaid interest, were converted into ~~1.4~~11.3 million shares of common stock of the Company.

~~As a result of the conversions, the Company recognized associated unamortized discount at the date of conversion as interest expense.~~ Total interest expense recognized was ~~$0 and $0.2 million~~$46,301 for the three months ended ~~September 30, 2020 and 2019, respectively, and was $0.9 million and $0.7 million for the nine months ended September 30, 2020 and 2019, respectively.~~March 31, 2021.

~~(c)~~

$~~3.58~~65.0 Million ~~Senior Secured~~ Convertible Debenture due ~~in March~~July 28 2021 ~~- ID Venturas 7~~– YA II PN

On ~~September 27, 2019,~~January 28, 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 $65.0 million, and ~~issued an additional $1.1 million~~received aggregate proceeds of ~~secured convertible notes subsequently based on additional investment rights in the IDV September Agreement.~~$65.0 million. The ~~September IDV Notes bore 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 and~~note was scheduled to mature on ~~March 27, 2021. In addition, IDV~~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 ~~entitled~~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 ~~following: (1)~~maturity date at a cash redemption price equal to the ~~convertible~~principal to be redeemed, plus accrued and unpaid interest. The note ~~was senior secured; (2) convertible at an adjusted price per share~~contained customary events of Company common stock at the option of IDV, subject to adjustments if subsequent equity shares had a lower conversion price (original $1.84, $1.00 after October 30, 2019 and $0.5869 after April 22, 2020), (3) 1.5 million shares of common stockdefault, indemnification obligations of the Company and ~~(4) a warrant exercisable for 4.7 million shares of common stock at an adjusted exercise price (original $1.84, $1.00 after October 30, 2019~~other obligations and ~~$0.5869 after April 22, 2020) per share and will expire in 7 years, which was extended from 5 years.~~

The Company received net proceeds of $3.5 million (aggregate gross proceeds of $3.6 million, net of $65,000 for the issuance expenses paid to IDV). Total gross proceeds were allocated to the September IDV Note, common shares and warrants based on their relative fair values in accordance with ASC 470. The fair valuerights 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.

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The September IDV Note was redeemable at the option of the Company in whole at an initial redemption price 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 was collateralized by the Company’s equity interest in DBOT.~~

~~The Company was 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 due to the lower conversion price and exercise price agreed in the additional issuance in October, 2019. The Company recognized $0.2 million of remeasured BCF as an increase in additional paid-in capital and corresponding discount on the carrying amount of the September IDV Note and $0.1 million of deemed dividend on warrant repricing for the difference between the fair value of the unadjusted warrants and adjusted warrants.

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

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

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

~~Down Round Price Adjustment on April 22, 2020~~

As a result of the additional financing on April 22, 2020, the conversion price of the September IDV Note and the exercise price of the warrants was reduced from $1.00 to $0.5869. The Company recognized $0.3 million of remeasured BCF as an increase in additional paid- in capital and a corresponding discount on the carrying amount of the amended Note and $0.1 million of deemed dividend on warrant repricing for the difference between the fair value of the unadjusted warrants and adjusted warrants. The fair value of the adjusted warrants was determined using the Black-Scholes option-pricing model based on the following assumptions: expected life of ~~7 years, expected dividend rate of 0%, volatility of 122.4%, and an interest rate of 1.84%.~~

~~Down Round Price Adjustment on May 20, 2020~~

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

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~~Conversion~~

During the ~~nine~~three months ended ~~September 30, 2020, $3.6 million of~~March 31, 2021, the ~~amended~~ note, plus accrued and unpaid interest, were converted into ~~7.3~~15.8 million shares of common stock of the Company.

~~As a result of the conversions, the Company recognized associated unamortized discount at the date of conversion as interest expense.~~ Total interest expense recognized was ~~$0 and $2.1 million~~$53,699 for the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2021.

~~(d)~~

~~ ~~ ~~$5.0~~$80.0 Million ~~Senior Secured~~ Convertible Debenture due ~~in December 2020 -~~August 8, 2021 – YA II PN

On ~~December 19, 2019,~~February 8, 2021, the Company ~~completed the initial closing with respect to~~executed a ~~securities~~security purchase agreement with YA II PN, ~~Ltd, a company incorporated under the laws of the Cayman Islands (“YA II PN”), where YA II PN agreed to purchase from~~whereby the Company upissued a convertible note of $80.0 million, and received aggregate proceeds of $80.0 million. The note is scheduled to ~~$5.0 million (with~~mature on August 8, 2021 and bears interest at an annual rate of 4.0% ~~discount) in units consisting of secured convertible debentures (the “YA II PN Note”)~~, which ~~was convertible into shares~~increases to 18.0% in the event of ~~the Company’s common stock at lower of: (1) $1.50 per share, or (2) 90.0%~~default. The note has a fixed conversion price of ~~the lowest 10 day volume weighted average~~$4.95. The conversion price ~~(“VWAP”) with a floor price at $1.00,~~is not subject to ~~adjustments if subsequent equity shares had a lower conversion price, and shares~~adjustment except for subdivisions or combinations of ~~the Company’s~~ common stock. The ~~purchase and sale of~~Company has the ~~units occurred in three closings:~~

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

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

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

~~The YA II PN Note was scheduled~~right, but not the obligation, to ~~mature in December 2020 and accrued interest at an 4.0% interest rate. YA II PN also received: (1)~~redeem a warrant (the “Warrant I”) exercisable for 1.7 million shares of common stock at $1.50 with an expiration date 60 months from the date of the agreement, and (2) a warrant (the “Warrant II”) exercisable for 1.0 million shares of common stock at $1.00 with an expiration date of 12 months from the date of the agreement.

~~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~~portion or all amounts outstanding under this note prior to the YA II PN Note, common shares and warrants based on their relative fair values in accordance with ASC 470. The fair value of the YA II PN Note and common shares was based on the closing price of the common stock on December 19, 2019. The fair value of the warrants was determined using the Black-Scholes option-pricing model, with the following assumptions: expected life of 5 years (1 year for Warrant II), expected dividend rate of 0%, volatility of 122.44% and an interest rate of 1.66% (1.54% for Warrant II). The fair value of the warrants was recorded as additional paid-in capital andmaturity date at a corresponding discount on the carrying amount of the YA II PN Note. There was no BCF because its intrinsic value is zero since the stock price of the common shares at the commitment date for the YA II PN Note is greater than the effective conversion price.

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

~~Down Round Price Adjustment on April 22, 2020~~

As a result of the additional financing on April 22, 2020, the conversion price of the YA II PN Note was reduced from $1.00 to $0.5869. The Company recognized $2.7 million of remeasured BCF as an increase in additional paid- in capital and a corresponding discount on the carrying amount of the amended Note.

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~~Down Round Price Adjustment on May 20, 2020~~

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

~~Conversion~~

~~During the nine months ended September 30, 2020, $5.0 million of the YA II PN Note,~~be redeemed, plus accrued and unpaid ~~interest, were converted into 9.7 million shares~~interest. The note contains customary events of ~~common stock~~default, indemnification obligations of the ~~Company.~~Company and other obligations and rights of the parties.

~~As a result of the conversions, the Company recognized associated unamortized discount at the date of conversion as interest expense.~~ Total interest expense recognized was ~~$0 and $5.0~~$0.4 million for the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 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. Total interest expense recognized was $45,000 and $135,000 for the three and nine months ended September 30, 2020, respectively, and $45,000 for the three and nine months ended September 30, 2019. The agreement also requires the Company to comply with certain covenants, including restrictions on new indebtedness offering and liens.

~~(f)~~Vendor Notes Payable

On May 13, 2020, DBOT entered into a settlement agreement with a vendor whereby the existing agreement with the vendor was terminated, the vendor ceased to provide services, and all outstanding amounts were settled. In connection with this agreement, DBOT paid an initial $30,000 and executed an unsecured promissory note in the amount of $60,000, bearing interest at 0.25% per annum, and payable in ~~two~~2 installments of $30,000. The first installment iswas due on December 31, 2020 and was repaid, and the remaining payment is due on August 31, 2021.

In the three months ended March 31, 2020 the Company ceased to use the premises underlying one lease and vacated the real estate. In the three months 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.

~~(g)~~ Small Business Association Paycheck Protection Program

On April 10, 2020, the Company borrowed $0.3 million at an annual rate of 1.0% from a commercial bank through the Small Business Association Paycheck Protection Program. The loan 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 iswas 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 ~~may apply for forgiveness of this~~is planning to repay the 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.next few months.

~~Table~~On May 3, 2020 WAVE borrowed $0.3 million at an annual rate of ~~Contents~~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 recognized was $1,138 in the 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, 2021 and December 31, 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 an entity named Qingdao Chengyang Mobo New Energy Vehicle Sales Service Company Limited (“New Energy.”) Qingdao entered into a capital subscription agreement for a total of RMB 200.0 million ($28.0 million), and made the first capital contribution of RMB 50.0 million in the three months ended March 31, 2020. The remaining RMB 150.0 million ($21.0 million) are payable in three installments of RMB 50.0 million ($7.0 million) upon New Energy attaining certain revenue or market value benchmarks.

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

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

January 1, 2020

$
0
Initial investment

7,047
Accretion of dividend

323
Loss attributable to non-controlling interest

(79)
Adjustment to redemption value

79
September 30, 2020

$
7,370

~~Standby Equity Distribution Agreement (“SEDA”)~~

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

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

The SEDA contains customary representations, warranties and agreements of the Company and YA II PN, indemnification rights and other obligations of the parties. YA II PN has covenanted not to cause or engage in any direct or indirect short selling or hedging of the Company’s shares of common stock.

In connection with the SEDA, the Company issued 1.0 million shares of the Company’s common stock as a commitment fee (the “Commitment Shares”) to a subsidiary of the YA II PN on April 3, 2020. The Company recognized such

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Commitment Shares as deferred offering costs and additional paid-in capital for a total of $0.9 million and fully charged against the gross proceeds received from SEDA in the three months ended June 30, 2020 because SEDA was terminated.

~~During the three months ended June 30, 2020 under the SEDA, the Company issued 34.5 million shares of common stock for a total of $32.5 million.~~


	Three months ended
	March 31, 2021		March 31, 2020
Beginning balance	$	7,485	0
Initial investment			7,047
Accretion of dividend		115	106
Loss attributable to non-controlling interest		(154)	(80)
Adjustment to redemption value		154	80
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 common stock ~~resulting from the conversion of~~with convertible notes, ~~Note 14 for information related to the issuance of common stock resulting from the conversion of convertible notes with related parties,~~ Note 15 for information related to the issuance to common stock for ~~warrant exercise, and Note 6(c) for~~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.~~

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.warrant exercise.

Note 14. Related Party Transactions

(a) Convertible Notes

$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 ~~had previously~~ 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. For the three months ended March 31, 2020, the Company recorded interest expense of $29,918 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 paid the accumulated interest $0.3 million in cash ~~right before~~prior to the conversion. For the three months ended September 30, 2020 and 2019, the Company recorded interest expense of $0 and $30,000 related to the Note, and $50,959 and $90,000 for the nine months ended September 30, 2020 and 2019,respectively.

$2.5 Million Convertible Promissory Note with SSSIG

On February 8, 2019, the Company entered into a convertible promissory note agreement with SSSIG, an affiliate of Dr. Wu, in the aggregate principal amount of $2.5 million. The convertible promissory note ~~bore~~bears interest at a rate of 4.0%, was scheduled to mature on February 8, 2020, and was convertible into shares of the Company’s common stock at a conversion price of $1.83 per share anytime at the option of SSSIG. For the three months ended March 31, 2020, the Company recorded interest expense of $12,489 related to the convertible promissory note. The Company did not pay the interest in cash on this note.

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The Company received $1.3 million from ~~SSSIG.~~

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.

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For the three months ended September 30, 2020 and 2019, the Company recorded interest expense of $0 and $13,000, respectively, related to the Note, and $21,546 and $36,000 for the nine months ended September 30, 2020 and 2019, respectively.

$1.0 Million Convertible Promissory Note with SSSIG

On November 25, 2019, the Company entered into a convertible promissory note agreement with SSSIG, an affiliate of Dr. Wu, in the aggregate principal amount of $1.0 million. The convertible promissory note bore interest at a rate of 4.0%, ~~matures~~was initially scheduled to mature on November 25, 2021, and was convertible into the shares of the ~~Company's~~Company’s common stock at a conversion price of $1.25 per share anytime at the option of SSSIG. For the three months ended March 31, 2020, the Company recorded interest expense of $3,493. The Company did not paid the interest in cash on this note.

The Company received $0.25 million from ~~SSSIG.~~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. ~~For the three months and nine months ended September 30, 2020,~~

(b) Severance payments

Pursuant to previous severance agreements with certain executives, the Company ~~recorded interest expense of $0 and $4,301, respectively.~~

~~(b)Transactions with GTD~~

~~Disposal of Assets in exchange of GTBDollar Coins (“GTB”)~~

In March 2019, 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 considered the arrangement as a nonmonetary transaction and the fair values of GTB were not reasonably determinable due to the reasons described below. Therefore, GTB received were 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~~ ~~("ASC 845.")~~

●

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

●

13.0% 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 traded in one exchange, which had been in operation less than one year; 2) its historical volatility was high; and 3) the Company's intention at the time to hold the majority of GTB, as part of its digital asset management services; and 4) associated risks related to holding GTB. Therefore, the value of 7.1 million GTB using Level 2 measurement was $40.7 million with a 76.0% discount to the fixed contract price agreed upon by both parties when signing the contract. The Company considered similar assets exchanges in Singapore and considered the volatility of the quoted prices and determined a discount of 76.0%. The estimated value of GTB was calculated using the Black-Scholes valuation model using the following assumptions: expected terms 3.0 years; volatility 155.0%; dividend yield: 0 and risk-free interest rate 2.25%. As of December 31, 2019, all performance obligations associated with the development of the master plan for GTD's assets had been satisfied. Accordingly, the Company recognized revenue of $40.7 million in the year ended December 31, 2019.

~~Impairment loss~~

On October 29, 2019, GTB had an unexpected significant decline in quoted price, from $17.00 to $1.84. This decline continued through December 31, 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 three months ended December 31, 2019 and recorded an impairment loss of $61.1 million.

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~~(c)Severance payments~~

On February 20, 2019, the Company accepted the resignation of its 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~~$0.1 million in the three months ended ~~March 31, 2019~~June 30, 2020, and recorded ~~$0.2~~the remaining $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 condensed consolidated statements of operations.

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

In the nine months ended September 30, 2020, the Company’s net borrowings from Dr. Wu and his affiliates decreased by $3.5 million mainly due to repayments and conversion of certain amounts to common stock. The Company recorded these borrowings in “Amount due to related parties” in its condensed consolidated balance sheet as of ~~September 30,~~March 31, 2021 and December 31, 2020. ~~These borrowings bear no interest.~~

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.

~~(e)Long-Term Investment to Qianxi~~

~~In November 2019,~~As of March 31, 2021 and December 31, 2020, the Company ~~entered into a share transfer agreement with Sichuan Shenma Zhixing Technology Co. (“Shenma”) to acquire its 1.72% ownership~~has receivables of $0.2 million and $0.2 million, respectively, due from Dr. Wu and his affiliates and recorded in Qianxi with the consideration of $4.9 million, which will be paid in six installments. Shenma needs to complete the share transfer registration prior to May 31, 2020, otherwise the Company can request Shenma to return the investment payment. The Company has recorded the first installment $0.5 million on the “Other Non-Current Assets” since the share transfer registration is not completed yet.

~~(f)Borrowing~~“Amounts due from ~~Beijing Financial Holdings Limited~~

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

~~In the three months ended June 30,~~As of March 31 2021 and December 31 2020, the ~~borrowing~~Company has payables of ~~$0.4~~$1.0 million ~~from Beijing Financial Holding Limited was transferred~~and $0.6 million, respectively, due to Dr. Wu and ~~it was subsequently converted~~his affiliates and recorded in “Amounts due to ~~shares at a conversion price of $0.59 per common share on June 5, 2020.~~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.

~~(g)Zhu Note Receivable~~

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

~~(h) Disposal of the ownership in Amer~~

~~Refer to Note 6(e) for the disposal of 10.0% ownership in Amer to a related party.~~

~~(i)~~ 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~~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 ~~"Selling, general and administrative~~

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~~expenses"~~“Professional fees” for the three ~~and nine~~ months ended ~~September 30 2020,~~March 31, 2021, and ~~$0.3~~$0.6 million in ~~in "Amount~~“Amount due to related ~~parties"~~parties” as of ~~September 30 2020.~~March 31, 2021. The Company is in the process of renegotiating the service agreement.

~~(j)~~(d) Amounts due from and due to Glory

The Company has made payments on behalf of Glory for some of its operational expenses. The balance of $0.2 million due from Glory as result of these payments is recorded in "Amount due from related parties" as of September 30 2020. 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. The net balance of $0.3 million due to Glory as result of these payments is recorded it in ~~"Amount~~“Amount due to related ~~parties."~~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”)

~~(k) Research and development contract~~In November 2019, the Company entered into a share transfer agreement with ~~a related party~~

~~The Company has entered a research and development contract with an entity with~~Sichuan Shenma Zhixing Technology Co. (“Shenma”) to acquire its 1.72% ownership in Qianxi for consideration of $4.9 million, which was to be paid in 6 installments. Shenma was required to complete the ~~total amount of $2.8 million for EV design and technology development.~~share transfer registration prior to May 31, 2020, otherwise it will be required to return the consideration to the Company. The Company has paid ~~$1.3~~$0.5 million ~~in the three months ended September 30~~as of March 31, 2021 and December 31, 2020 and recorded ~~this amount in "Research and development expense." One of the shareholders of this entity holds a senior position in several of Dr. Wu’s affiliated entities.~~

~~(l) Borrowing from DBOT~~

~~During the three months ended June 30, 2019, the Company obtained several borrowings, $550,000 in total, from DBOT, and recorded these borrowings in amount due to related parties~~it on the ~~condensed consolidated balance sheet as of June 30, 2019. These borrowings bear 0 interest.~~“Other Non-Current Assets” since the share transfer registration is not completed yet. The Company ~~has repaid $300,000 in July 2019.~~

~~(m) Acquisition of Fintalk Assets~~

~~Refer~~is currently taking actions to ~~Note 9 for additional information regarding this 2019 asset acquisition.~~

~~(n) Red Rock Global Capital LTD (“Red Rock”)~~

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

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

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

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

~~Refer to Note 6(e) for additional information regarding this 2019 divestiture.~~resolve these matters.

Note 15. Share-Based Compensation

As of ~~September 30, 2020,~~March 31, 2021, the Company had ~~26.3~~25.8 million options, ~~29,586~~0.1 million restricted shares and ~~1.7~~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. ~~The maximum aggregate number of shares of common stock that may be issued under the 2010 Plan increased from 4.0 million shares to 31.5 million shares.~~ On October 22, 2020, the Company’s shareholders approved the amendment and restatement of the 2010 Plan. The maximum aggregate number of shares of common stock that may be issued under the 2010 Plan increased from 31.5 million shares to 56.8 million shares. As of March 31, 2021, options available for issuance are 23.6 million shares.

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

(a)	Stock Options

The following table summarizes stock option activity for the three months ended March 31, 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

As of March 31, 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 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 $2.2 million, respectively. Cash received from options exercised in the three months ended March 31, 2021 and 2020 were $0.3 million and $0, respectively.

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~~from 31.5 million shares~~The following table summarizes the assumptions used to ~~56.8 million shares. As~~estimate the fair values of ~~September 30, 2020,~~the share options ~~available for issuance are 0.5 million shares.~~

~~For~~granted in the three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019, total share-based compensation expense was $3.3 million and $2.5 million, respectively, and $8.8 million and $6.5 million for the nine months ended September 30, 2020 and 2019, respectively.~~2020.

~~(a)~~

~~Stock Options~~

~~The following table summarizes stock option activity for the nine months ended September 30, 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	%

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

$
0
Granted

13,750,000

0.53

9.45

5,225,000
Exercised

(60,000)

1.83

—

0
Expired

(1,144,326)

2.59

—

0
Forfeited

(1,153,333)

1.70

—

0
Outstanding at September 30, 2020

26,329,067

1.29

8.75

5,141,400
Vested as of September 30, 2020

13,684,070

1.74

8.17

1,258,592
Expected to vest at September 30, 2020

12,644,997

0.81

9.38

3,882,808

As of September 30, 2020, $7.3 million of total unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average period of 1.2 years. The total fair value of shares vested in the nine months ended September 30, 2020 and 2019 was $8.8 million and $6.0 million, respectively. NaN cash was received from options exercised.

(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 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. The~~ weighted average exercise price ~~for all warrants~~ was ~~$1.65~~$4.00 and the weighted average remaining life was ~~4.3~~1.36 years. ~~Refer to Note 12 for additional information on promissory notes.~~


	September 30, 2020	December 31, 2019				March 31, 2021	December 31, 2020
	Number of	Number of				Number of	Number of
	Warrants	Warrants				Warrants	Warrants
	Outstanding and	Outstanding and	Exercise		Expiration	Outstanding and	Outstanding and	Exercise		Expiration
Warrants Outstanding	Exercisable	Exercisable	Price		Date	Exercisable	Exercisable	Price		Date
$2.05 million IDV**	0	1,671,196	$	1.00	2/22/2026
$3.58 million IDV**	1,000,000	4,658,043		0.5869	9/27/2026
$5.0 million YA II PN*	0	1,666,667		1.50	12/13/2024
$5.0 million YA II PN*	0	1,000,000		1.00
Service providers	200,000	0		5.00	7/1/2022	200,000	200,000	$	5.00	July 1, 2022
Service providers	450,000	0		2.50	2/28/2022 - 7/1/2022	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	1,650,000	8,995,906				1,100,000	900,000

(c)	Restricted Shares

* YA II PN exercised 1.0 million and 1.7 million warrants onAs of March 31, ~~2020 and June 22, 2020 and the Company received $1.0 million and $2.5 million proceeds, respectively.~~2021, there was $0 of unrecognized compensation cost related to unvested restricted shares.

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

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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, 2021 and 2020 (USD in thousands, except per share amounts):


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,		September 30,		September 30,		September 30,		March 31,		March 31,
	2020		2019		2020		2019		2021		2020
Net earnings (loss) attributable to common stockholders	$	(8,286)	$	(13,713)	$	(47,212)	$	11,507	$	(573)	$	(12,348)
Interest expense attributable to convertible promissory note		0		0		0		125
Net earnings (loss) assuming dilution	$	(8,286)	$	(13,713)	$	(47,212)	$	11,632
Basic weighted average common shares outstanding		237,535,999		127,609,748		191,976,856		113,964,933		391,131,793		157,859,642
Effect of dilutive securities
Convertible preferred shares- Series A		—		—		—		933,333		0		—
Conversion of restricted shares and employee stock options		—		—		—		22,823
Convertible promissory notes		—		—		—		2,777,687		0		—
Contingently issuable shares		—		—		—		621,117
Diluted potential common shares		237,535,999		127,609,748		191,976,856		118,319,893		391,131,793		157,859,642
Earnings (loss) per share:
Basic	$	(0.03)	$	(0.11)	$	(0.25)	$	0.10	$	(0.00)	$	(0.08)
Diluted	$	(0.03)	$	(0.11)	$	(0.25)	$	0.10	$	(0.00)	$	(0.08)

Basic earnings (loss) per common share attributable to the Company’s shareholders is calculated by dividing the net ~~earnings (loss)~~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 ~~earnings (loss) attributable to the Company’s shareholders,~~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):


	Three Months Ended		Nine Months Ended
	September 30,	September 30,	September 30,	September 30,	March 31,	December 31,
	2020	2019	2020	2019	2021	2020
Warrants	1,650	3,709	1,650	3,709	1,100	900
Options and RSU	26,359	14,971	26,359	14,966
Options and RSUs					25,844	25,172
Series A Preferred Stock	933	933	933	—	933	933
DBOT contingent consideration	1,197	2,323	1,197	2,323
DBOT contingent shares					1,013	1,013
Convertible promissory note and interest	38,650	12,418	37,315	9,325	16,162	—
Total	68,789	34,354	67,454	30,323	45,052	28,018

Note 17. Income Taxes

During the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 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 ~~is NaN~~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 established a 100% valuation allowance against its net deferred tax assets, excluding Timios’ net state deferred tax liabilities, due to its history of pre-tax losses and the likelihood that the deferred tax assets will not be realized.

During the ~~nine~~three months ended ~~September 30, 2019, the Company recorded an~~March 31, 2020 income tax ~~benefit~~expense is NaN because of ~~$0.5 million, $0.2 million resulting from losses of Grapevine which offset deferred tax liabilities that were recognized on its acquisition~~net operating loss and

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~~a $0.4 million reduction of the valuation allowance on Ideanomics’~~ deferred tax assets ~~in excess of those reversed~~related to the net operating loss carryovers utilized had been offset ~~Ideanomics’ income. The reduction in~~by a valuation allowance. Company had established a 100% valuation allowance resulted from Ideanomics’ acquisition of additional ownership interests in Grapevine which caused Grapevine to be included in a consolidated tax return with Ideanomics beginning June 30, 2019. This meant that $0.4 million of Ideanomics’against its net deferred tax assets ~~could be utilized~~due to ~~offset Grapevine’s remaining~~its history of pre-tax losses and the likelihood that the deferred tax liabilities. This resulted in an effective tax rate of (4.43%). The effective tax rate for the nine months ended September 30, 2019 differs from the U.S. statutory tax rate primarily due to the effect of taxes on foreign earnings, non-deductible expenses and the reduction in the beginning of the year deferred tax valuation allowance.assets will not be realized.

There was 0 identified ~~unrecognized~~uncertain tax ~~benefit~~positions as of ~~September 30, 2020~~March 31, 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.

~~Vendor Settlement~~33

~~In the three months ended September 30, 2020, Ideanomics preliminarily settled a payable~~Table of $1.7 million with one vendor for $1.3 million. The settlement is conditioned upon factors which do not expire until three months from the date of the settlement; therefore, should these factors expire without coming to fruition, the Company will recognize the contingent gain in the three months ended December 31, 2020.Contents

Shareholder Class ~~Action~~Actions and Derivative Litigation

On July 19, 2019, a purported class action, now captioned Rudani v. Ideanomics, et al. Inc., was filed in the United States District Court for the Southern District of New York against the Company and certain of its current and former officers and directors. The Amended Complaint alleges violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934. Among other things, the Amended Complaint alleges purported misstatements made by the Company in 2017 and 2018.

On June 28, 2020, a purported securities class action, captioned Lundy v. Ideanomics et al. Inc., was filed in the United State District Court for the Southern District of New York against the Company and certain current officers and directors of the Company. Additionally, on July 7, 2020, a purported securities class action captioned Kim v. Ideanomics, et al, was filed in the Southern District of New York against the Company and certain current officers and directors of the Company. Both cases ~~allege~~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.~~

~~On July 10,~~consolidated and is now titled “In re Ideanomics, Inc. Securities Litigation.” In December 2020, the ~~Company~~Court appointed Rene Aghajanian as lead plaintiff and an amended complaint 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~~February 2021, alleging violations of Section ~~14(a)~~10(b) and 20(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,arising from certain purported misstatements by the Company ~~was named as a nominal defendant, and certain of~~beginning in March 2020 regarding 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~~ ~~litigations.~~

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

~~The~~As previously reported, the Company is subject to an investigation by the ~~SEC. The~~SEC and continues to respond to various information and document requests from the ~~SEC are focused primarily in relation to the Company’s overseas operations, including historical transactions and revenues associated with those operations.~~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 adopts 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 ~~September 30, 2020 and December~~March 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 of the Company's operating transactions are denominated in RMB and a significant~~ portion of the Company’s ~~assets and liabilities is~~operating transactions 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

~~Table of Contents~~

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 and which includes $0.2 million which was received in advance of a future investment.~~

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):


		September 30, 2020								March 31, 2021
	Level I		Level II		Level III		Total		Level I		Level II		Level III		Total
Contingent consideration¹	$	0	$	0	$	777	$	777
Contingent consideration²		0		0		10,913		10,913
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 three months ended September 30, 2019 and as remeasured as of April 17, ~~2020 as disclosed in Note 6(c).~~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 ~~1.6~~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 ~~September 30, 2020 and partially satisfied this liability.~~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 ~~September 30, 2020 as disclosed in Note 6(a).~~

~~The fair value of the DBOT contingent consideration as of December 31, 2019 and~~ March 31, ~~2020 was valued using the Black-Scholes Merton model.~~

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

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

2021. The fair value of the Tree Technology contingent consideration ~~as of September 30, 2020 and December 31, 2019~~ 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 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, 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 probabilities that 100% of the consents will be received in the second quarter of 2021. The earnout liability is dependent on WAVE achieving certain revenue and gross profit margin criteria in 2021, 2022 and cumulatively 2021 and 2022. The fair value of zero has been determined using a scenario-based method indicated that none of the criteria are likely to be achieved.

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~~The following table summarizes the significant inputs and assumptions used in the scenario-based method:~~


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

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

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


	Contingent		Contingent
	Consideration		Consideration
January 1, 2020	$	24,656
Measurement period adjustment		(1,990)
January 1, 2021			$	8,960
Addition				7,657
Settlement		(8,076)		0
Remeasurement (loss)/gain recognized in the income statement		(2,900)
September 30, 2020	$	11,690
Remeasurement loss/(gain) recognized in the statement of operations				494
March 31, 2021			$	17,111

Note 21. Subsequent Events

~~Acquisition of Solectract,~~

Stock Purchase Agreement with FNL Technologies, Inc. ~~(“Solectract”) common shares~~

On ~~October 22, 2020,~~April 20, 2021, Ideanomics entered into a stock purchase agreement with FNL Technologies, Inc., the ~~Company acquired 1.4 million common shares, representing 15.0%~~owner and operator of the ~~total~~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 ~~outstanding,~~ of ~~Solectrac~~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 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 “Agreement”) to acquire 100% of privately held U.S. Hybrid Corporation (“U.S. Hybrid”) for an aggregate purchase price of ~~$0.91 per share, for total~~$50.0 million in a combination of $30.0 million of cash and $20.0 million worth of Ideanomics stock as consideration, ~~of $1.3 million.~~

~~Solectrac develops, assembles and distributes 100% battery-powered electric tractors-an alternative~~subject 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.

~~With this investment in Solectrac, Ideanomics expands its global footprint~~customary purchase price adjustments set forth in the ~~EV industry, specifically~~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 parties. 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 parties thereto. The indemnification obligations of the parties are capped at $25.0 million for non-fundamental representations and warranties. The indemnification obligations of the parties for breaches of non-fundamental representations and warranties are subject to a $100,000 deductible, except in the ~~category~~case of ~~specialty commercial vehicles. This investment marks its first~~fraud. The Agreement contains customary covenants.

The Agreement is subject to customary closing conditions, including, among other things, that certain employees of U.S. Hybrid enter into non-competition and solicitation agreements, including 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 ~~existing US-based original equipment manufacturer,~~indemnity escrow to satisfy future indemnification obligations of the parties (if any).

Ideanomics has agreed to a performance and ~~Ideanomics will assume~~retention plan for the benefit of certain U.S. Hybrid’s employees which could result in up to $15.0 million paid to such employees if certain performance targets are achieved over a ~~seat on Solectrac's Board of Directors.~~

three year period.

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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 ~~Securities and Exchange Commission ("SEC”),~~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.

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Overview

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Results of Operations

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Liquidity and Capital Resources

●

Outlook

OVERVIEW

Ideanomics, Inc. ~~(“Ideanomics” or the “Company”)~~ (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 (“VIEs”) under the brand name You-on-Demand (“YOD”). The Company closed the YOD business during 2019.~~

~~Starting in early 2017, the Company transitioned its business model~~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 an 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:

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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.

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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.

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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 ~~investments, 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 and~~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,~~Company’s various investments ~~and partnerships~~ may contribute to significant fluctuations in the results of the Company’s operations.

~~Business Update and Liquidity Improvements~~

In the third quarter the Company recorded revenues of $10.6 million, of which $10.1 million were generated by the Company’s MEG business unit; this represents the largest revenues earned by MEG since the Company commenced business.

In the nine months ended September 30, 2020, the Company improved its liquidity position by raising a total of $48.2 million: $39.1 million through the issuance of common stock and exercise of warrants, $7.1 million from noncontrolling interest shareholders, and $2.0 million through the issuance of senior secured convertible notes. The Company converted senior secured convertible notes of $9.4 million plus accrued interest of $0.3 million to common stock. Additionally, the Company converted $4.6 million of convertible notes payable and accrued interest to related parties and an additional $1.5 million due to related parties to common stock. As a result of these actions, the Company reduced its principal amount of its indebtedness by $13.9 million, and as of September 30, 2020, had cash and cash equivalents of $27.6 million, $19.0 million of which is held in U. S. financial institutions.

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

On May 1, 2020, the Company’s MEG business unit commenced operations in a 40,000 square meter facility in the city of Qingdao. The facilities are provided free of charge to Ideanomics through November 30, 2034 by the government with the objective of establishing a regional hub for the sale EVs. An additional 60,000 square meters are available for future expansion. MEG is in the process of building its sales force to facilitate the sale of new and used EVs, both to fleets and individuals.

In July 2020 the Company’s Tree Technologies subsidiary completed the acquisition of a long term lease of 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

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

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The Company continues to review its cost base and as part of this process has reevaluated its real estate needs. The Company has vacated the office space previously used by DBOT in Wilmington, Delaware, and recorded an impairment charge of $0.9 million in the three months ended March 31, 2020, and a gain on the settlement of the lease liability of $0.8 million in the three months ended June 30, 2020. In the three months ended June 30, 2020, the Company determined that, with its New York workforce under a stay-at-home and work-from-home mandate, the square footage provided in the leases for its New York headquarters was excessive. The Company has vacated its New York office space, and recorded an impairment charge of $5.3 million. The Company had an operating lease liability of $5.8 million with respect to these leases, excluding $0.6 million in accounts payable. In the three months ended September 30, 2020, the Company completed negotiations with the landlord to settle the remaining amounts due of $6.4 million for a cash payment of $1.5 million. The Company recorded a gain of $4.9 million in the three months ended September 30, 2020. In October, 2020 the Company signed leases for the use of office and meeting space in midtown Manhattan.

~~The third quarter the Company sold its loss making EKAR ETF for a de minimis amount, this sale eliminated approximately $0.4 million of annual operating expense.~~

Effects of ~~COVID-19~~COVID 19

Novel Coronavirus 2019 (“COVID-19”) is an infectious disease caused by severe acute respiratory syndrome coronavirus. The disease was first identified in December 2019 in Wuhan, the capital of China’s Hubei province, and has since spread globally, resulting in the ongoing COVID-19 pandemic. As of ~~October 31, 2020,~~May 7, 2021, over ~~44.7~~156.4 million cases had been reported across the globe, resulting in ~~1.2~~3.3 million deaths.

The spread of ~~COVID-19~~COVID 19 has caused significant disruption to society as a whole, including the workplace. The resulting impact to the global supply chain has disrupted most aspects of national and international commerce, with government-mandated social distancing measures imposing stay-at-home and work-from-home orders in almost every country. The effects of social distancing have shut down significant parts of the local, regional, national, and international economies, 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, 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 ~~Company’s operations, including certain key personnel and business advisors and partners, are largely based in China, a country which was subject to a wide-ranging government shutdown as a result~~future effects of the spread of COVID-19 in January 2020. Consequently, the country was effectively shuttered in the first quarter of 2020, resulting in China introducing a series of significant economic stimulus packages upon the easing of shutdown measures. The economic stimulus was designedvirus are difficult to ~~rebuild China’s economic infrastructure, which rebounded in the second quarter of 2020, and which is expected to continue in the near- to medium term.~~

~~The Company had experienced delays in the preparation and execution of certain key documents~~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 Condensed Consolidated Financial Statements, the Company had commenced the process of formulating and implementing a share-based compensation plan whereby key employees and certain consultants of its MEG business unit and wholly-owned subsidiary would benefit, but travel and other limitations prevented the Company from executing the formation and operationcourse of the ~~stock-based compensation plan.~~

~~Subsequently, the Company has determined not to proceed with the MEG share-based compensation plan described above,~~virus, different variants that may evolve, and the ~~parties have declared the transfer~~supply of the ~~MEG shares, which was not believed to be substantive, to be null~~vaccine on a local, regional, and ~~void and~~global basis, as well as the ~~shares have reverted to the Company.~~

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

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As a result of the overall economic condition in China in the first quarter of 2020, minimal sales of EV’s occurred during that time frame. During the second quarter, China relaxed its stay-at-home and work-at-home orders, and the Company was able to open its Qingdao Sales Center on May 1, 2020, which was subsequently rebranded the MEG center. Ideanomics’ recorded total sales in China of $10.6 million in the third quarter. The Company’s expectation is that its sales would increase as China’s economy continues to improve, although the Company is a recent entrant in the EV market in China and can provide no assurances on future sales.

The Company expects to continue to 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 nine months of 2020, and this activity continues. In the three months ended June 30, 2020, the Company raised $39.1 million through the issuance of common stock and exercise of warrants . The Company does not anticipate that the COVID-19 pandemic will adversely affect its ability to ~~raise funds~~implement vaccination programs in ~~the near-term, although no assurances can be provided on this matter.~~a short time frame.

The Company assesses the recoverability of goodwill and other indefinite-lived intangible assets in the fourth quarter of each year, or more frequently if circumstances warrant. The Company assesses the recoverability of other long-lived assets as circumstances warrant, and in the nine months ended September 30, 2020 did not consider any long-lived assets to be impaired, other than certain right of use and fixed assets, including assets comprising a portion of Fintech Village. Many of the Company’s operations are in the development or early stage, have not had significant revenues to date, and the Company does not anticipate significant adverse effects on its ~~operations~~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.

~~Public health experts have expressed concern that~~The Company continues to monitor the ~~influenza season in the northern hemisphere will coincide~~overall situation with ~~a spread~~COVID-19 and its effects on both local, regional and global economies.

Table of COVID-19 cases, adding further stress to the affected populations, businesses, governments, and economies. The future effects of the virus are difficult to predict, due to uncertainty about the course of the virus, and the prospects for a vaccine as well as its global implementation. 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.~~

~~The segment reporting changes were retrospectively applied 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 ~~periods presented.~~three comprising the consolidated operations of the Company.

~~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.

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~~Taxation~~Consolidated Results of Operations

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

Ideanomics, Inc., M.Y. Products, LLC, Grapevine Logic, Inc., Delaware Board of Trade Holdings, Inc., Fintech Village, LLC and Red Rock Global Capital Ltd. are United States companies subject to the provisions of the Internal Revenue Code. 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.


	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)

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

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.


	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

~~Based on the results of operations for the nine months ended September 30, 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 progressive Profits Tax rate up to 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 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%.~~n/m = Not Meaningful

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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 nine months ended September 30, 2020, one of the Company’s PRC subsidiaries incurred a taxable income in the amount of $2.6 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 valuation 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 and Nine Months Ended September 30, 2020 and 2019 (USD in thousands)~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

Amount

%


September 30,

September 30,

Amount

%

2020

2019

Change

Change


2020

2019

Change

Change

Revenue

$
10,620

$
3,104

$
7,516

n/m

$
15,690

$
44,504

$
(28,814)

(65)
%

Cost of revenue

9,906

244

9,662

n/m

14,676

1,218

13,458

n/m

Gross profit

714

2,860

(2,146)

(75)
%

1,014

43,286

(42,272)

(98)

Operating expenses:





Selling, general and administrative expenses

7,636

7,770

(134)

(2)

20,188

18,443

1,745

9

Research and development expenses

1,318

—

1,318

n/m

1,318

—

1,318

n/m

Professional fees

3,968

1,389

2,579

n/m

8,096

3,918

4,178

n/m

Impairment loss

3,275

2,299

976

42

10,363

2,299

8,064

n/m

Change in fair value of contingent consideration, net

(4,179)

—

(4,179)

n/m

(2,900)

-

(2,900)

n/m

Depreciation and amortization

695

806

(111)

(14)

1,651

1,420

231

16

Total operating expenses

12,713

12,264

449

4

38,716

26,080

12,636

48

Income (Loss) from operations

(11,999)

(9,404)

(2,595)

28

(37,702)

17,206

(54,908)

n/m

Interest and other income (expense):

Interest expense, net

(2,014)

(639)

(1,375)

n/m

(14,061)

(1,955)

(12,106)

n/m

Equity in income (loss) of equity method investees

7

(40)

47

n/m

(8)

(606)

598

(99)

Gain on disposal of subsidiaries

—

1,057

(1,057)

n/m

—

1,057

(1,057)

n/m

Loss on remeasure of DBOT investment

—

(3,179)

3,179

n/m

—

(3,179)

3,179

n/m

Conversion expense

—

—

—

(2,266)

-

(2,266)

n/m

Other income (expense)

5,283

(100)

5,383

n/m

6,272

(156)

6,428

n/m

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

(8,723)

(12,305)

3,582

(29)

(47,765)

12,367

(60,132)

n/m

Income tax benefit

—

—

—

n/m

—

514

(514)

n/m

Net income (loss)

(8,723)

(12,305)

3,582

(29)

(47,765)

12,881

(60,646)

n/m

Deemed dividend related to warrant repricing

—

(184)

—

(184)

n/m

Net (income) loss attributable to non-controlling interest

437

(1,408)

1,845

n/m

737

(1,374)

2,111

n/m

Net income (loss) attributable to IDEX common shareholders

$
(8,286)

$
(13,713)

$
5,427

(40)
%

$
(47,212)

$
11,507

$
(58,719)

n/m

~~Revenues (USD in thousands)~~

Three Months Ended

Nine Months Ended


September 30,

September 30,

Amount

%

September 30,

September 30,

Amount

%


2020

2019

Change

Change

2020

2019

Change

Change

Electric Vehicles

$
8,872

$
2,854

$
6,018

n/m

$
9,622

$
2,854

$
6,768

n/m

Combustion engine vehicles

1,268

—

1,268

n/m

5,160

—

5,160

n/m

Digital asset management services

—

—

—

n/m

—

40,700

(40,700)

n/m

Other

480

250

230

92
%

908

950

(42)

n/m

Total

$
10,620

$
3,104

$
7,516

n/m

$
15,690

$
44,504

$
(28,814)

(65)
%

~~n/m = Not Meaningful~~

~~Table of Contents~~

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

Revenue for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~$10.6~~$32.7 million as compared to ~~$3.1~~$0.4 million for the same period in ~~2019,~~2020, an increase of ~~$7.5~~$32.3 million. The increase was ~~principally~~mainly due to the ~~increase in~~Company’s acquisition of Timios, which generated revenue of $27.6 million from the ~~sales of vehicles.~~acquisition closing date through March 31, 2021. No revenue was generated related to title and escrow services for the three months ended March 31, 2020.

In the ~~third~~first quarter of 2020, the Company ~~continued~~gradually ramped up its business related to ~~develop its EV business~~EVs and recognized ~~$10.6~~$0.1 million revenue from the sales of ~~vehicles, which included revenue of $1.3 million from~~EVs. The EV revenues for the ~~sale of traditional combustion engine vehicles. In the third~~ quarter ~~of 2020~~were recorded on an Agency (Net) basis because the Company acted as an agent rather than principal in both a Principal and Agent capacity in relation to vehicle sales. For those contracts in which it acted in a Principal capacity revenues were recorded on a Gross basis and for those contracts where it acted in an Agent capacity the revenues were recorded on a Net basis.these transactions.

~~Nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019~~

Revenue for the nine months ended September 30, 2020 was $15.7 million as compared to $44.5 million for the same period in 2019, a decrease of $28.8 million The decrease was due to the lack of revenues from digital asset management services in the nine months ended September 30, 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 to GTD. The revenue was recognized based on the progress of completion of services. The Company recognized revenue of $40.7 million in the nine months ended September 30, 2019. The Company recognized no revenue from the provision of digital asset management services in the nine months ended September 30, 2020 and does not anticipate earning revenue from provision of digital asset management services in the foreseeable future.

In the ~~nine months ended September 30, 2020,~~first quarter of 2021, the Company ~~continued to develop its EVs business and~~ recognized ~~$14.8~~$27.6 million revenue from the sales of ~~vehicles, which included~~title and escrow services, $3.0 million revenue ~~of $5.2 million~~ from the ~~sale~~sales of ~~traditional combustion vehicles. In~~EVs, and $1.9 million revenue from sales of charging and batteries. The EV revenues for the ~~nine months ended September 30, 2020 the Company acted in both a Principal and Agent capacity in relation to vehicle sales. For those contracts in which it acted in a Principal capacity revenues~~quarter were recorded on a ~~Gross~~Principal (Gross) basis ~~and for those contracts where it~~because the Company acted as principal in ~~an Agent capacity the revenues were recorded on a Net basis.~~these transactions.

Cost of revenues (USD in thousands)


	Three Months Ended								Nine Months Ended								Three Months Ended
	September 30,		September 30,		Amount		%		September 30,		September 30,		Amount		%		March 31,		March 31,		Amount		%
	2020		2019		Change		Change		2020		2019		Change		Change		2021		2020		Change		Change
Electric vehicles	$	8,226	$	—	$	8,226	n/m		$	8,658	$	—	$	8,658	n/m		$	3,019	$	2	$	3,017	n/m
Combustion engine vehicles		1,229		—		1,229	n/m			5,121		—		5,121	n/m
Digital asset management services		—		—		—	n/m			—		467		(467)	n/m
Other		451		244		207	85	%		897		751		146	19	%
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	$	9,906	$	244	$	9,662	n/m		$	14,676	$	1,218	$	13,458	n/m		$	21,867	$	334	$	21,533	n/m

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

Cost of revenues was ~~$9.9~~$21.9 million for the three months ended ~~September 30, 2020,~~March 31, 2021, as compared to ~~$0.2~~$0.3 million for the three months ended ~~September 30, 2019 an increase of $9.7 million.~~March 31, 2020. The increase ~~in the cost of revenues~~ was ~~principally due to increased revenues from the sales of vehicles.~~

~~In the third quarter of 2020, the Company continued to develop its EV business and recognized $9.5 million in cost of revenues from the sales of vehicles.~~

~~Table of Contents~~

~~Nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019~~

Cost of revenues was $14.7 million for the nine months ended September 30, 2020, as compared to $1.2 million for the nine months ended September 30, 2019 an increase of $13.5 million. The increase in the cost of revenues wasmainly due to the ~~change in~~Company’s acquisition of Timios, which had recorded cost of $17.1 million related to Title and escrow service from the ~~mix of revenues. Revenues recognized in~~acquisition closing date through March 31, 2021. No cost related to title and escrow services for the ~~nine~~three months ended ~~September 30, 2020 arose from the sale of vehicles which have a significantly lower margin than the digital asset management services revenues recognized in the corresponding period of the prior year.~~March 31, 2020.

The majority of the cost associated with digital asset management services had already been incurred in 2018. In 2018, due to the uncertainty associated with the future economic benefits when such costs were incurred, the Company expensed those costs during 2018.

Gross profit (USD in thousands)


	Three Months Ended								Nine Months Ended								Three Months Ended
	September 30,		September 30,		Amount		%		September 30,		September 30,		Amount		%		March 31,		March 31,		Amount		%
	2020		2019		Change		Change		2020		2019		Change		Change		2021		2020		Change		Change
Electric vehicles	$	646	$	2,854	$	(2,208)	(77)	%	$	964	$	2,854	$	(1,890)	(66)	%	$	—	$	53	$	(53)	n/m
Combustion engine vehicles		39		—		39	n/m			39		—		39	n/m
Digital asset management services		—		—		—	n/m			—		40,233		(40,233)	n/m
Other		29		6		23	n/m			11		199		(188)	(94)
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	$	714	$	2,860	$	(2,146)	(75)	%	$	1,014	$	43,286	$	(42,272)	(98)	%	$	10,842	$	44	$	10,798	n/m

~~Gross profit ratio~~

Three Months Ended

Nine Months Ended


September 30,

September 30,

September 30,

September 30,


2020

2019

2020

2019

Electric vehicles

7
%
100
%
10
%
100
%
Combustion engine vehicles

3
%
—

1
%
—

Digital asset management services

—

—

—

99

Other

6
%
2
%
1
%
21
%
Total

7
%
92
%
6
%
97
%

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

Gross profit for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~$0.7~~$10.8 million, as compared to gross profit in the amount of ~~$2.9 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 ~~ratio~~related to title and escrow services for the three months ended September 30, 2020 was 7%, while in 2019, it was 92%. The decrease was mainly due to digital asset management service revenue recognized in 2019 having higher gross margins than the gross margin in vehicles.

~~Nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019~~

Gross profit for the nine months ended September 30, 2020 was $1.0 million, as compared to $43.3 million during the same period in 2019. The gross profit ratio for the nine months ended September 30, 2020 was 6%, while in 2019, it was 97%. The decrease was mainly due to the digital asset management service revenue recognized in 2019 having a higher gross margin than the gross margin on vehicles.March 31, 2020.

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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, 2021 was 33%, while in 2020, it was 12%. The increase was mainly due to the high gross margin from the sales of title and escrow services for the three months ended March 31, 2021.

Selling, general and administrative expenses

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

Selling, general and administrative expense for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~$7.6~~$12.0 million as compared to ~~$7.8~~$5.8 million for the same period in ~~2019, a decrease~~2020, an increase of ~~$0.1 million or 2.6%.~~$6.2 million. The ~~decrease~~increase was ~~mainly~~principally due to

●

~~A decrease of $1.6 million in general operations expense (including reduced travel and entertainment expense due to Covid-19), partially offset by~~

●

~~An increase of $0.7 million in share-based compensation expense due to the new option grants; and~~

●

~~An increase of $0.9 million in salary and employee benefit expense due to the increase in number of sales staff employed in the the MEG business and increased headcount in the New York head office.~~

~~Nine months ended September 30, 2020 as compared~~ to the ~~nine months ended September 30, 2019~~

~~Selling,~~inclusion of selling, general and administrative expenses ~~for the nine months ended September 30, 2020~~related to Timios, which was ~~$20~~.2 ~~million~~acquired on January 8, 2021 and WAVE which was acquired on January 15, 2021 and increases in compensation costs within existing businesses reflecting increased head count as ~~compared to $18.4 million for the same period in 2019, an increase of $1.7 million or 9%. The majority of the increase was due to~~these operations are expanded.

●

~~An increase of $2.6 million in share-based compensation expense due to the new option grants;~~

●

~~An increase of $1.5 million in salary and employee benefit expense due to the increase in number of sales staff employed in the MEG business and increased headcount in the New York head office; and~~

●

~~A decrease of $2.3 million in general operations expense (including less travel and entertainment expense due to Covid-19),~~

Professional fees

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

~~Professional fees are generally related to public company reporting and governance expenses as well as legal fees related to business transition and expansion.~~ Professional fees for the three months ended ~~September 30, 2020~~March 31, 2021 were ~~$4.0~~$5.2 million as compared to ~~$1.4~~$1.8 million for the same period in ~~2019,~~2020, an increase of ~~$2.6~~$3.4 million. The increase was related to an increase in ~~investor relations expense of $1.0 million,~~ legal fees, ~~of $0.9 million including $0.5 million incurred~~consulting services and investors relations related expense. The increase in legal fees was related to advice on general corporate matters, responding to regulatory enquiries, advice on merger and acquisitions, and advice in relation to the ~~Class Action lawsuits and related matters, consulting expenses~~class action lawsuits. Consulting fees increased as a result of ~~$0.7 million including $0.4 million related to~~ a shared services agreement with SSSIG aand general advice related ~~party.~~

~~Nine months ended September 30, 2020 as compared~~ to the ~~nine months ended September 30, 2019~~expansion of the Company’s operations in the current quarter including investors relations services.

~~Professional fees for the nine months ended September 30, 2020 were $8.1 million as compared to $3.9 million for the same period in 2019, an increase~~Impairment losses

The Company recorded impairment losses of ~~$4.2 million. The increase was related to an increase in investor relation expense of $1.4 million, legal fees of $1.4 million including~~ $0.9 ~~million incurred responding to the Class Action lawsuit, $0.5~~ million related to ~~regulatory matters and $0.6 million related to general corporate advice reflecting the companies increased level of activity.~~

~~Research and Development Expense~~

~~Research and development expense for the three and nine months ended September 30, 2020 represents the fee paid for the EV technical development and design.~~

~~Table of Contents~~

~~Impairment loss~~

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

In the third quarter of 2020, the Company recorded an impairment loss of $3.2 million related to Fintech Village assets after performing an impairment analysis. In the third quarter of 2019, $2.3 million of the impairment loss was related to four of the five existing buildings in Fintech Village which were expected to be demolished.

~~Nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019~~

For the nine months ended September 30, 2020, the Company recorded an impairment loss of $3.2 million related to Fintech Village assets because the Company decided not to continue the development of Fintech Village, an impairment loss of $1.0 million related to the DBOT right of use assets ~~and $5.9 million related to the New York headquarters’ right of use assets, leasehold improvement and fixed assets~~ because the Company ~~decided~~ceased to ~~cease~~ use the office and vacated the space subsequently. The Company also recorded an impairment loss of $0.3 million related to another current asset. In the third quarter of 2019, $2.3 million of the impairment loss related to four of the five existing buildings in Fintech Village which were expected to be demolished.on March 31, 2020.

Change in fair value of contingent consideration, net

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

The change in fair value of contingent consideration, net of ~~$4.2~~$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 ~~Tree Technology shareholders.~~

~~Nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019~~

~~The change in fair value of contingent consideration, net of $2.9 million represents the remeasurement loss of $1.5 million of the contingent consideration payable to~~ the former DBOT ~~shareholder and remeasurement gain of $4.4~~shareholders.

Litigation Settlements

The Company recorded $5.0 million litigation settlement as a result of the ~~contingent consideration payable to~~agreement reached by both parties on the ~~Tree Technology shareholders.~~mediation in April, 2021.

Depreciation and amortization

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

Depreciation and amortization for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~$0.7~~$1.1 million as compared to ~~$0.8~~$0.5 million for the same period in 2019, a decrease of $0.1 million. The decrease was due to the decrease of amortization expense $0.3 million from the intangible assets that were impaired at 2019 year end, partially offset by the increase in amortization expense $0.2 million from intangible assets acquired in the fourth quarter of year 2019.

~~Nine months ended September 30,~~ 2020, ~~as compared to the nine months ended September 30, 2019~~

~~Depreciation and amortization for the nine months ended September 30, 2020 was $1.7 million as compared to $1.4 million for the same period in 2019,~~ an increase of ~~$0.2~~$0.7 million. The increase was mainly due to the increase in amortization expense ~~$0.4 million from intangible assets~~recorded by Timios and WAVE, which were acquired in the ~~second half year~~first quarter of ~~year 2019, partially offset by the decrease of amortization expense $0.2 million from the intangible assets impaired at 2019 year end.~~2021.

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Interest expense, net

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

Three Months Ended

Nine Months Ended


September 30,

September 30,

September 30,

September 30,

2020

2019

2020

2019

Interest, net

$
289

$
347

$
887

$
982

Amortization of debt discounts

1,725

292

13,174

973

Total

$
2,014

$
639

$
14,061

$
1,955

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

Interest expense ~~increased $1.4~~decreased $2.7 million to ~~$2.0~~$0.4 million for the three months ended ~~September 30, 2020,~~March 31, 2021, from ~~$0.6~~$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 increased amortization of beneficial conversion features~~with a resulting ~~from the down round financing provision adjustment~~decrease in ~~October 2019.~~interest expense. (in thousands)

~~Nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019~~


	Three Months Ended
	March 31,		March 31,
	2021		2020
Interest, net	$	417	$	443
Amortization of discount		—		2,713
Total	$	417	$	3,156

Interest expense increased $12.1 million to $14.0 million for the nine months ended September 30, 2020, from $2.0 million during the same period of 2019. The interest expense increase during 2020 was primarily due to the remaining unamortized beneficial conversion features recognized as interest expense immediately upon conversion of convertible notes to common stock, and the increased amortization of beneficial conversion features resulting from the down round provision adjustment in October 2019.

Equity in ~~income (loss)~~loss of equity method investees

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

Equity in ~~income (loss)~~loss of equity method investees ~~decreased $47,463~~of $0.1 million related to recording Solectrac’s net loss for the three months ended ~~September 30, 2020 in comparison to the same period~~March 31, 2021.

Loss on disposal of ~~2019 as one~~subsidiaries, net

Loss on disposal of ~~the entities had a slight foreign exchange gain.~~

~~Table of Contents~~

~~Nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019~~

Equity in income (loss) of equity method investees decreased $0.6 million for the nine months ended September 30, 2020 in comparison to the same period of 2019 as DBOT was an equity method investment until July 2019, at which date the Company increased its ownership and consolidated DBOT.

~~Conversion expense~~

~~Conversion expense for the three and nine months ended September 30, 2020~~subsidiaries, net represents the ~~expense recognized as a result of the reduction of conversion price~~estimated costs to ~~induce the conversion of the convertible notes from the related parties.~~

~~Other income (expense)~~

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

Other income (expense) increased $5.4 million for the three months ended September 30, 2020 in comparison to the same period of 2019 mainly because the Company has reached agreement with landlord to terminate its New York City headquarters lease at 55 Broadway and recorded a gain of $4.9 million, and sublease income $0.2 million

~~Nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019~~

Other income (expense) increased $6.4 million for the nine months ended September 30, 2020 in comparison to the same period of 2019 mainly because of a gain of $4.9 million from the lease settlement of its New York City headquarters at 55 Broadway with landlord, a gain of $0.8 million from the DBOT lease settlement with landlord and sublease income $0.3 million.sell Fintech Village.

Income tax ~~expense~~benefit

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

During the three months ended ~~September 30,~~March 31, 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 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, 2020, income tax expense is nil because of net operating loss and deferred tax assets related to the net operating loss carryovers utilized had been offset by a valuation allowance. ~~The~~ Company had established a ~~100.0%~~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.

~~Nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019~~

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

During the nine months ended September 30, 2019, the Company recorded an income tax benefit of $0.5 million, $0.2 million resulting from losses of Grapevine Logic, Inc. offsetting deferred tax liabilities that were recognized on the acquisition of Grapevine and a $0.4 million reduction of the valuation allowance on Ideanomics’ deferred tax assets in excess of those reversed to offset Ideanomics’ income as discussed above.

Net loss attributable to non-controlling interest

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

Net loss attributable to non-controlling interests was ~~$0.4~~$0.2 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to a net ~~income~~loss of ~~$1.4~~$0.3 million in ~~2019.~~the same period in 2020. The decrease of loss ~~for the three months ended September 30 2020~~ is ~~primarily~~mainly due to ~~net~~the decrease in loss ~~from~~of our ~~investments~~investment with iUnicorn, partially offset by the slight increase in loss of Tree Technologies.

Liquidity and Capital Resources

As of March 31, 2021, we had cash of $355.9 million. Approximately $3.9 million was held in accounts outside of the 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 ~~formed~~to be available to fund operations and ~~acquired in late 2019. The income for~~investment outside of the ~~three months ended September 30~~PRC and consequently does not include them when evaluating the liquidity needs of its businesses operating outside of the PRC.

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~~2019~~Timios holds various regulatory licenses related to its business as a title insurance agency and is ~~primarily due~~required to ~~the taxis commission revenue recognized in an entity we have 51% ownership during the third quarter~~hold a minimum cash balance of ~~2019.~~

~~Nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019~~

Net loss attributable to non-controlling interests was $0.7 million for the nine months ended September 30, 2020 compared to net income of $1.4 million in 2019. The loss for the nine months ended September 30 2020 is primarily due to net loss from our investments in entities formed and acquired in late 2019. for the three months ended September 30 2020 is primarily due to the taxis commission revenue recognized in an entity we have 51% ownership during the third quarter of 2019.

~~Liquidity and Capital Resources~~

~~As of September 30, 2020, the Company had cash of $27.6~~$2.0 million. On that date, $20.4 million was held in the Company’s Hong Kong, U.S. Malaysia, and Singapore entities and $7.2 million which includes $0.2 million which was received in advance of a future investment, was held in the Company’s PRC entities. The Company does not consider cash balances held in the PRC to be available for use outside of the PRC. The Company’s operations outside of the PRC will continue to be dependent upon access to debt and equity funding raised outside of the PRC. There is no guarantee that debt and equity funds will be available to the Company when they are required.

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

As a broker-dealer, DBOT has minimum capital requirements. DBOT had cash of ~~$0.2~~$0.3 million as of ~~September 30, 2020,~~March 31, 2021, which was necessary for DBOT to meet its minimum capital requirements. The Company consolidates a 51.0% owned investment in an entity which is based in Singapore. This entity ~~venture~~ had cash of ~~$0.6~~$0.5 million as of ~~September 30, 2020.~~March 31, 2021. The agreement of the Company’s partner in this entity is required prior to disbursement of this 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):


	Nine Months Ended				Three Months Ended
	September 30,		September 30,		March 31,		March 31,
	2020		2019		2021		2020
Net cash used in operating activities	$	(21,918)	$	(8,712)
Net cash generated (used) in operating activities					$	2,571	$	(3,858)
Net cash used in investing activities		(486)		(1,738)		(86,129)		(15)
Net cash provided by financing activities		45,737		9,067		273,659		7,148
Effect of exchange rate changes on cash		1,639		(37)		(9)		6
Net increase/(decrease) in cash and cash equivalents		24,972		(1,420)		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	$	27,605	$	1,686	$	355,856	$	5,914

Operating Activities

Cash ~~used~~generated in operating activities ~~increased by $13.2~~was $2.6 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 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 ~~income of $12.9~~loss to $0.7 million in the ~~third quarter of 2019~~current period as compared to a net loss of ~~$47.8~~$12.6 million in the first quarter of 2020, (2) total non-cash adjustments increase (decrease) to net ~~income (loss)~~loss was ~~$29.3~~$(3.9) million and ~~$(25.5)~~$7.3 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively; and

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(3) total changes in operating assets and liabilities resulted in an ~~(decrease)~~increase of ~~$(3.4)~~$7.2 million and of ~~$3.9~~$1.5 million in cash used in ~~operating~~operations activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively.~~respectively

Investing Activities

Cash used in investing activities was ~~$0.5~~$86.1 million, ~~for the nine months ended September 30, 2020, which is~~ primarily due to expenditures incurred for the ~~Company entering into two notes receivable~~acquisition of ~~$1.9 million~~Timios and ~~receipt one~~WAVE, the investment in Energica and the acquisition of the convertible note repayments of $1.5 million for the nine months ended September 30, 2020. Cash used in investing activities was $1.7 million for the nine months ended September 30, 2019, which is primarily due to the payment of $1.8 million for Fintech Village, $0.9 million of long term investment payment, partially offset by the proceeds of $0.7 million from the disposal of the subsidiary.with Silk EV.

Financing Activities

The Company received ~~$39.1~~$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 generated $220.0 million in the current quarter as compared to $2.0 million in the same period of 2020. The exercise of warrants and ~~the~~ 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 ~~$2.0 million from the issuance of convertible notes, and~~ made a repayment of $3.0 million to a related parties for the nine months ended September 30, 2020. While in the same period in 2019, the Company received $4.8 million from the issuance of convertible notes, $2.5 million in proceeds in a private placement from the issuance of restricted shares and increased $1.8 million borrowings from the related party for the nine months ended September 30, 2019, to certain investors, including officers, directors and other affiliates.party.

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

~~Effects of Inflation~~

Inflation and changing prices may have an effect on the business and management expects that inflation or changing prices could materially and adversely 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~~

~~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, changes in government subsidy programs promoting the conversion to EV and government regulations relating to vehicle emission standards.~~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 an expected pattern~~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 ~~seasonality. Additionally, as~~homes and the ~~PRC is~~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 ~~principal~~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 ~~revenues we anticipate that revernues~~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 important enabler for the deployment of 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 ~~first~~Company anticipates entering into arrangements to assemble these motorbikes in Indonesia and ~~fourth quarters~~setting up a battery swap business.

Fintech continues to provide opportunities which could generate high rates of return through the ~~year will be impacted by the Chinese New Year celebrations~~deployment of technology to disrupt existing business models. The Company’s acquisition of Timios in the first quarter of 2021 marks the ~~year~~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 ~~annual National Day holidays~~adoption of digital securities is improving with regulators and central bankers in ~~fourth quarter~~the world’s most developed economies acknowledging that digital securities should be part of the ~~year.~~

~~Table~~financial ecosystem. This change favors companies like Ideanomics that have assets, such as DBOT, that are fundamental building blocks of ~~Contents~~

~~OUTLOOK~~any move towards digital securities.

The Company anticipates ~~that its MEG business unit will be~~making continued investments in both 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, which is not assured, and the speed at which business in the PRC and the rest of Asia returns to pre COVID-19 levels.

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 while the Company continues to develop its plan to use DBOT for sale of digital securities and brokering of commodity products subject to obtaining the required regulatory approvals.

~~The Company continues to look for acquisitions that will accelerate the growth of its MEG~~Ideanomics Mobility and Ideanomics Capital business units.

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 for asset retirement obligations, which are related to the legal contractual obligation in connection with the acquisition~~

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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 ~~September 30, 2020.~~March 31, 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.~~

~~Table~~SEC, we expect to exclude the acquisitions from our assessment of ~~Contents~~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 ~~nine~~three months ended ~~September 30, 2020,~~March 31, 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 ~~September 30, 2020.~~March 31, 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 ~~September 30, 2020.~~March 31, 2021.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Table of Contents

Item 6. Exhibits

Exhibit
No.		Description
10.1		Agreement and Plan of Merger, dated January 4, 2021, by and between Ideanomics, Inc. and Wireless Advanced Vehicle Electrification, Inc.*
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

5956

Table of Contents

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on ~~November 9, 2020.~~May 17, 2021.

IDEANOMICS, INC.


By:	/s/ Conor McCarthy

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

6057


PART I	-FINANCIAL INFORMATION

Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4438
Item 3	Quantitative and Qualitative Disclosures About Market Risk	5849
Item 4.	Controls and Procedures	5849

PART II	-OTHER INFORMATION

Item 1.	Legal Proceedings	5950
Item 1A.	Risk Factors	5950
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5955
Item 3.	Defaults Upon Senior Securities	5955
Item 4.	Mine Safety Disclosures	5955
Item 5.	Other Information	5955
Item 6.	Exhibits	5956
Signatures		6057


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


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


Balance as of January 1, 2019	$	705
Acquisitions		22,639
Balance as of December 31, 2019		23,344
Measurement period adjustments*		(12,848)
Effect of change in foreign currency exchange rates		(24)
Balance as of September 30, 2020	$	10,472


	Principal		Interest		Interest
	Repayment		Payment		Expense
2020	$	3,030	$	180	$	1,997
2021		12,105		2,875		3,878
Total	$	15,135	$	3,055	$	5,875


	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	%