Ideanomics(IDEX)

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Ideanomics(IDEX) - 2021 Q4 - Annual Report
2022-09-01 16:00
Part I [Business](index=10&type=section&id=ITEM%201.%20BUSINESS) Ideanomics focuses on commercial EV adoption via its Mobility unit and fintech development through its Capital unit, significantly expanding in 2021 - Ideanomics operates through two business units: **Ideanomics Mobility**, focused on accelerating commercial EV adoption, and **Ideanomics Capital**, a fintech unit supporting the financial services industry[19](index=19&type=chunk) - In 2021, Ideanomics expanded its Mobility unit by acquiring several companies: **WAVE** (wireless charging), **Solectrac** (electric tractors), and **US Hybrid** (hydrogen fuel cells and power electronics)[25](index=25&type=chunk)[26](index=26&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk) - The company has a definitive agreement to acquire **VIA Motors**, a commercial electric vehicle company, for a total consideration of up to **$630 million**, with the deal anticipated to close in **Q4 2022**[37](index=37&type=chunk)[38](index=38&type=chunk) - The Ideanomics Capital unit includes **Timios**, a nationwide title and escrow services provider acquired in 2021, and **JUSTLY** (formerly DBOT), a FINRA-registered broker-dealer focused on ESG and thematic investments[43](index=43&type=chunk)[45](index=45&type=chunk)[48](index=48&type=chunk) - The company faces significant supply chain constraints and price increases for raw materials like aluminum, copper, and steel, which has limited its ability to manufacture and deliver products in 2021 and is expected to continue into 2022[57](index=57&type=chunk)[58](index=58&type=chunk) - As of December 31, 2021, the company had **559 employees**, with the majority (**476**) located in the United States[118](index=118&type=chunk) [Risk Factors](index=27&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant operational, financial, and regulatory risks, including going concern doubts, an SEC investigation, and material internal control weaknesses - The company's auditor's report for the year ended December 31, 2021, includes an explanatory paragraph expressing **substantial doubt** about the company's ability to continue as a **going concern** due to significant recurring losses and limited working capital[173](index=173&type=chunk) - The company has identified multiple **material weaknesses** in its internal control over financial reporting and concluded its disclosure controls were **not effective** as of December 31, 2021[132](index=132&type=chunk)[195](index=195&type=chunk) - The company is subject to an **ongoing investigation by the SEC** and has responded to various information requests and subpoenas[167](index=167&type=chunk)[169](index=169&type=chunk) - The company's Timios business previously experienced a **cybersecurity incident** that resulted in a **material reduction** in orders and revenue, and the company remains subject to risks from malicious cyber-attacks[46](index=46&type=chunk)[187](index=187&type=chunk) - Due to untimely filings, the company has **lost its eligibility to use the Form S-3 registration statement**, which may make it more difficult and costly to raise capital until eligibility is regained, not expected before **August 2023**[202](index=202&type=chunk) - The company faces significant risks related to its operations in the **People's Republic of China (PRC)**, including potential government intervention, regulatory uncertainties, restrictions on currency exchange, and the inability of the PCAOB to inspect auditors, which could lead to **delisting under the Holding Foreign Companies Accountable Act (HFCA Act)**[217](index=217&type=chunk)[228](index=228&type=chunk)[246](index=246&type=chunk) [Unresolved Staff Comments](index=55&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports that it has no unresolved comments from the SEC staff - The Company has no unresolved Staff Comments[258](index=258&type=chunk) [Properties](index=55&type=section&id=ITEM%202.%20PROPERTIES) The company leases office and showroom facilities in Beijing, New York, New Jersey, and Malaysia, which management considers sufficient - The Company leases office space in Beijing, a limited amount of space in New York, and a showroom facility in New Jersey[259](index=259&type=chunk) - The Tree Technologies subsidiary has office space in Kuala Lumpur and a long-term lease on 250 acres of industrial land in Kuantan, Malaysia[259](index=259&type=chunk) [Legal Proceedings](index=55&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is involved in various legal matters, including shareholder class actions, derivative suits, an ongoing SEC investigation, and a $16.4 million judgment against Silk EV - The company is subject to an **ongoing investigation by the SEC's Division of Enforcement** regarding transactions and disclosures dating back to 2017[821](index=821&type=chunk) - The Rudani v. Ideanomics shareholder class action lawsuit was settled for **$5.0 million**, with the court granting final approval in **January 2022**[817](index=817&type=chunk) - The company obtained a judgment of **$16.4 million** against Silk EV Cayman LP for non-payment of a convertible promissory note, which has not yet been paid[823](index=823&type=chunk)[824](index=824&type=chunk) [Mine Safety Disclosures](index=55&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's operations - Not applicable[261](index=261&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=56&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20SHAREHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on Nasdaq, with no cash dividends paid or anticipated, and no share repurchases in 2021 Common Stock Price Range ($) | Quarter (2021) | High ($) | Low ($) | | :--- | :--- | :--- | | 1st Quarter | 5.43 | 2.06 | | 2nd Quarter | 3.38 | 2.35 | | 3rd Quarter | 2.78 | 1.91 | | 4th Quarter | 2.11 | 1.16 | - The company has **never declared or paid a cash dividend** and does not intend to pay any in the foreseeable future[267](index=267&type=chunk) - **No repurchases** of the Company's common stock were made in the year ended December 31, 2021[270](index=270&type=chunk) [Reserved]](index=58&type=section&id=ITEM%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=59&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In 2021, revenue grew to $114.1 million from acquisitions, but net loss widened to $256.7 million due to impairments, raising substantial doubt about the company's going concern ability Consolidated Results of Operations (in millions) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | **Revenue** | $114.1M | $26.8M | | **Gross Profit** | $23.2M | $2.1M | | **Loss from Operations** | ($259.6M) | ($95.6M) | | **Net Loss** | ($256.7M) | ($111.6M) | | **Net Loss per Share** | ($0.57) | ($0.47) | - The significant increase in 2021 revenue was mainly due to the acquisition of Timios, which generated **$72.7 million** in title and escrow services revenue[320](index=320&type=chunk) - The company recorded asset and goodwill impairment charges of **$71.1 million** and **$101.5 million**, respectively, in 2021, primarily related to its recent acquisitions (Timios, WAVE, US Hybrid, Solectrac)[314](index=314&type=chunk)[339](index=339&type=chunk)[340](index=340&type=chunk) - Management has concluded that there is **substantial doubt** about the Company's ability to continue as a **going concern** due to recurring losses, an accumulated deficit, and insufficient cash to fund operations and planned acquisitions[280](index=280&type=chunk)[287](index=287&type=chunk)[495](index=495&type=chunk) - As of December 31, 2021, the Company had cash and cash equivalents of **$269.9 million**; net cash used in operating activities was **$75.5 million**, while net cash used in investing activities was **$220.1 million**, primarily for acquisitions; net cash provided by financing activities was **$399.3 million**[370](index=370&type=chunk)[375](index=375&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=92&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces limited interest rate risk from fixed-rate convertible debt, but is exposed to market risk from equity investments and foreign currency risk from RMB operations - Interest rate risk is limited as the company's **$57.8 million** of convertible debt outstanding as of December 31, 2021, has a fixed **4.0%** interest rate[422](index=422&type=chunk) - The company has market risk exposure through its investments in equity securities, which had a carrying amount of **$35.6 million** as of December 31, 2021, including publicly traded shares of Energica[423](index=423&type=chunk) - Foreign currency risk is primarily from operations denominated in RMB, but the company does not consider this risk to be material to its results of operations currently[426](index=426&type=chunk) [Financial Statements and Supplementary Data](index=94&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents consolidated financial statements and auditor reports, including a going concern doubt and adverse opinion on internal controls for 2021, with detailed notes Consolidated Balance Sheet Data (in thousands) | (In thousands) | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | $473,437 | $233,869 | | **Total Liabilities** | $106,807 | $37,688 | | **Total Equity** | $365,368 | $187,434 | | **Cash and cash equivalents** | $269,863 | $165,764 | - The auditor's report for 2021 expresses **substantial doubt** about the Company's ability to continue as a **going concern** due to recurring losses and insufficient cash[433](index=433&type=chunk) - The auditor issued an **adverse opinion** on the effectiveness of the Company's internal control over financial reporting as of December 31, 2021, due to the existence of multiple **material weaknesses**[432](index=432&type=chunk)[448](index=448&type=chunk) - In 2021, the company acquired Timios, WAVE, US Hybrid, and Solectrac; the total purchase consideration for these acquisitions was approximately **$181.6 million**, leading to the recognition of **$117.4 million** in goodwill before impairments[606](index=606&type=chunk)[630](index=630&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=181&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The information required for this item was previously reported by the company - The information required by this item was previously reported[858](index=858&type=chunk) [Controls and Procedures](index=181&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were ineffective as of December 31, 2021, due to multiple material weaknesses in internal control over financial reporting, with a remediation plan underway - Management concluded that the company's disclosure controls and procedures were **not effective** as of December 31, 2021[859](index=859&type=chunk) - **Multiple material weaknesses** were identified in internal control over financial reporting, including a lack of sufficient experienced accounting personnel, inadequate controls over non-routine transactions, and lack of controls designed to address the risk of material misstatement[865](index=865&type=chunk)[866](index=866&type=chunk) - Additional **material weaknesses** noted include a lack of segregation of duties, ineffective IT general controls, and ineffective oversight from the Company's Audit Committee[867](index=867&type=chunk)[868](index=868&type=chunk) - Management's assessment of internal controls excluded the 2021 acquisitions of Timios, WAVE, Solectrac, and US Hybrid, as permitted by SEC guidance[863](index=863&type=chunk) [Other Information](index=185&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) There is no information reported under this item - None[874](index=874&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=185&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable - Not applicable[874](index=874&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=186&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) This section provides biographical information for directors and executive officers, detailing the Board's composition, committees, and risk oversight role - The company's key executive officers include **Shane McMahon** (Executive Chairman), **Alfred P. Poor** (CEO), and **Conor McCarthy** (CFO)[876](index=876&type=chunk)[877](index=877&type=chunk)[878](index=878&type=chunk) - The Board of Directors has **five members**, with James S. Cassano, Jerry Fan, and Harry Edelson serving as independent directors alongside Shane McMahon[887](index=887&type=chunk)[893](index=893&type=chunk) - The Board has established **Audit**, **Compensation**, and **Nominating and Governance** committees, all composed entirely of independent directors[887](index=887&type=chunk) [Executive Compensation](index=192&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) This section details 2021 and 2020 compensation for named executive officers, including CEO Alfred P. Poor's $6.7 million and CFO Conor McCarthy's $2.3 million total compensation Summary Compensation Table (in thousands) | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards () | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Alfred P. Poor** (CEO) | 2021 | 645,833 | 500,000 | 5,535,000 | 2,000,000 | 6,680,833 | | | 2020 | 291,666 | 350,000 | 0 | 1,500,000 | 641,666 | | **Conor McCarthy** (CFO) | 2021 | 422,915 | 350,000 | 1,537,500 | 750,000 | 2,310,415 | | | 2020 | 364,755 | 350,000 | 3,075,000 | 500,000 | 3,789,755 | - Effective July 23, 2021, CEO Alfred P. Poor's annual base salary was increased to **$800,000**, and CFO Conor McCarthy's was increased to **$525,000**[917](index=917&type=chunk)[918](index=918&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=194&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section details beneficial ownership of common stock, including Bruno Wu's 6.1% combined voting power and the 3.4% held by all executive officers and directors - As of August 29, 2022, all executive officers and directors as a group beneficially owned **16,814,925 shares**, representing **3.4%** of the common stock[927](index=927&type=chunk) - Bruno Wu is listed as a greater than 5% beneficial owner, holding **20,999,416 shares** of common stock (**4.3%**) and **7,000,000 shares** of Series A Preferred Stock (**100%**), for a combined voting power of **6.1%**[928](index=928&type=chunk) - As of December 31, 2021, there were **17,350,746 securities** remaining available for future issuance under the company's equity compensation plans[934](index=934&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=196&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The company's Audit Committee reviews related party transactions, including a $1.4 million service agreement with SSSIG, an affiliate of the former Executive Chairman - The **Audit Committee** is responsible for reviewing and approving all related party transactions involving directors, officers, and their immediate family members[936](index=936&type=chunk) - A service agreement was entered into with SSSIG, an affiliate of former Chairman Dr. Wu, in June 2020 for consulting services valued at **$1.4 million**[939](index=939&type=chunk) [Principal Accountant Fees and Services](index=197&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) This section details principal accountant fees, with total audit fees increasing to $2.8 million in 2021 from $0.85 million in 2020, all pre-approved Audit Fees (in thousands) | Fees (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | **Audit Fees (BF Borgers)** | $1,365 | $850 | | **Audit Fees (Grassi)** | $1,439 | $0 | | **Total Audit Fees** | $2,804 | $850 | Part IV [Exhibits, Financial Statement Schedules](index=197&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists financial statements from Item 8 and provides an index of all exhibits filed with the Form 10-K, including merger agreements and corporate governance documents - This section contains the index of exhibits filed with the Form 10-K, including merger agreements for WAVE, US Hybrid, Solectrac, and VIA Motors[945](index=945&type=chunk)[946](index=946&type=chunk) [Form 10-K Summary](index=197&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item is not applicable and contains no information - None[945](index=945&type=chunk)
Ideanomics(IDEX) - 2021 Q3 - Quarterly Report
2021-11-22 16:00
PART I [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended September 30, 2021, reflect a significant increase in total assets to **$595.9 million** and revenue to **$87.8 million** due to acquisitions, alongside a widened net loss of **$64.5 million** from increased operating expenses and expansion costs Condensed Consolidated Balance Sheet Data (in thousands) | Account | September 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $256,930 | $165,764 | | Total current assets | $356,307 | $179,759 | | Goodwill | $111,458 | $1,165 | | Total assets | $595,879 | $234,412 | | Total current liabilities | $44,661 | $13,061 | | Total liabilities | $62,013 | $32,643 | | Total equity | $532,604 | $193,022 | Condensed Consolidated Statements of Operations Data (in thousands) | Metric | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | | Total revenue | $87,832 | $15,690 | | Gross profit | $24,671 | $1,014 | | Loss from operations | $(74,874) | $(37,702) | | Net loss attributable to Ideanomics, Inc. common shareholders | $(64,526) | $(47,212) | | Basic and Diluted EPS | $(0.15) | $(0.25) | Condensed Consolidated Statements of Cash Flows Data (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(42,238) | $(21,918) | | Net cash used in investing activities | $(191,787) | $(486) | | Net cash provided by financing activities | $325,291 | $45,737 | | Net increase in cash and cash equivalents | $91,166 | $24,972 | - The company restated its previously issued financial statements for Q1 and Q2 2021 due to errors in revenue recognition for its Timios subsidiary, accounting for its TM2 investment, purchase price allocation for acquisitions, and income tax calculations[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights the company's strategic transformation into Ideanomics Mobility and Capital, with revenue surging to **$87.8 million** primarily from acquisitions, despite a widened net loss due to higher operating expenses, while liquidity remains strong with **$256.9 million** in cash, bolstered by **$325.3 million** from financing activities, focusing the outlook on vertically integrating Mobility and recovering Capital - The company operates through two business units: **Ideanomics Mobility** (focused on EV vehicles, charging, and energy) and **Ideanomics Capital** (a fintech unit)[236](index=236&type=chunk) Nine-Month Revenue Comparison (in thousands) | Category | Nine Months 2021 (in thousands) | Nine Months 2020 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $87,832 | $15,690 | +459.9% | | Gross Profit | $24,671 | $1,014 | +2333% | - The increase in revenue was mainly driven by the acquisition of Timios, which generated **$62.4 million** in title and escrow services revenue in the first nine months of 2021[283](index=283&type=chunk) - Operating expenses for the nine months of 2021 increased to **$99.5 million** from **$38.7 million** in 2020, driven by costs from newly acquired businesses, a **$21.0 million** impairment loss, and a **$5.0 million** litigation settlement[276](index=276&type=chunk) - As of September 30, 2021, the company had **$256.9 million** in cash, with net cash used in operating activities at **$42.2 million**, while net cash provided by financing activities was **$325.3 million**, primarily from the issuance of convertible notes and common stock[314](index=314&type=chunk)[316](index=316&type=chunk)[319](index=319&type=chunk) Results of Operations For the nine months ended September 30, 2021, revenue dramatically increased to **$87.8 million** from **$15.7 million**, driven by acquisitions, with gross profit surging to **$24.7 million** at a **28.1%** margin, though offset by a significant rise in operating expenses to **$99.5 million**, including a **$21.0 million** impairment loss, leading to a widened net loss of **$64.5 million** Revenue Breakdown - Nine Months Ended Sep 30 (in thousands) | Product/Service | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Title and escrow services | $62,429 | $0 | | Electric vehicles | $18,322 | $9,622 | | Charging, batteries and powertrains | $6,850 | $0 | | Combustion engine vehicles | $0 | $5,160 | | Digital advertising services and others | $231 | $908 | | **Total** | **$87,832** | **$15,690** | Gross Profit Breakdown - Nine Months Ended Sep 30 (in thousands) | Product/Service | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Title and escrow services | $23,030 | $0 | | Electric vehicles | $613 | $964 | | Charging, batteries and powertrains | $989 | $0 | | **Total** | **$24,671** | **$1,014** | - Selling, general and administrative (SG&A) expenses increased by **166%** to **$53.7 million** for the nine months of 2021, up from **$20.2 million** in 2020, due to costs from acquisitions, stock-based compensation, and increased headcount[292](index=292&type=chunk) - Professional fees rose to **$22.0 million** in the first nine months of 2021 from **$8.1 million** in 2020, largely due to M&A activity, including advice on the contemplated acquisition of Via Motors[295](index=295&type=chunk) Liquidity and Capital Resources As of September 30, 2021, Ideanomics held **$256.9 million** in cash, primarily bolstered by **$325.3 million** from financing activities, while operating activities used **$42.2 million** and investing activities used **$191.8 million** largely for acquisitions, with the company anticipating continued equity and debt financing to support its plans - The company held **$256.9 million** in cash as of September 30, 2021, with approximately **$30.5 million** held outside the United States[314](index=314&type=chunk) Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Activity | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $(42,238) | $(21,918) | | Net Cash from Investing Activities | $(191,787) | $(486) | | Net Cash from Financing Activities | $325,291 | $45,737 | - Cash used in investing activities of **$191.8 million** was primarily for the acquisitions of Timios, WAVE, Solectrac, and US Hybrid, and investments in Energica, TM2, and Via Motor[318](index=318&type=chunk) - The company expects to continue raising both equity and debt finance to support its investment plans and operations[320](index=320&type=chunk) Outlook The company's outlook focuses on expanding its Ideanomics Mobility and Capital units, with Mobility aiming for vertical integration in commercial EVs offering VaaS and CaaS, and Capital recovering Timios and relaunching DBOT as JUSTLY for ESG investments, anticipating continued investment to capture market share and achieve profitable operations - **Ideanomics Mobility:** The company aims to build a vertically integrated commercial EV company, leveraging its acquisitions (WAVE, US Hybrid, Solectrac) to offer solutions like Vehicle-as-a-Service (VaaS) and Charging-as-a-Service (CaaS)[324](index=324&type=chunk)[325](index=325&type=chunk)[327](index=327&type=chunk) - **Ideanomics Capital:** The focus is on deploying technology to disrupt financial services, with key initiatives including recovering and growing Timios after a cybersecurity incident and relaunching DBOT as JUSTLY, a FINRA-registered broker-dealer for ESG investments[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - The company plans to close its acquisition of VIA Motors in Q1 2022 and increase its investment in Energica to approximately **70%**[330](index=330&type=chunk)[331](index=331&type=chunk) - A new **48,000 sq. ft.** facility in New Jersey will serve as a center of excellence for Ideanomics Mobility, expected to come online in 2022[328](index=328&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) 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 - As a smaller reporting company, Ideanomics is not required to provide quantitative and qualitative disclosures about market risk[350](index=350&type=chunk) [Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of September 30, 2021, the company's disclosure controls and procedures were not effective due to identified material weaknesses in internal control over financial reporting, including issues with valuation models, revenue recognition, personnel expertise, and non-routine transactions, with the evaluation excluding recently acquired entities - The CEO and CFO concluded that as of September 30, 2021, the company's disclosure controls and procedures were not effective[351](index=351&type=chunk) - Material weaknesses were identified in several areas: - Controls over valuation models and specialist outputs - Revenue recognition process, specifically principal vs. agent evaluation - Lack of sufficient personnel with U.S. GAAP and SEC expertise - Controls for evaluating non-routine transactions[352](index=352&type=chunk)[353](index=353&type=chunk) - The evaluation of internal controls excluded the 2021 acquisitions of Timios, WAVE, Solectrac, and US Hybrid, which collectively represented **33.6%** of total assets and **79.4%** of revenue[355](index=355&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in several legal matters, including a **$5.0 million** class action settlement in principle, an ongoing securities class action with a filed motion to dismiss, a settled shareholder derivative action involving corporate governance reforms, and an ongoing SEC investigation with which the company is cooperating - A class action lawsuit (Rudani v. Ideanomics) has reached a settlement in principle for **$5.0 million**, which is subject to final court approval[217](index=217&type=chunk) - The company is facing another consolidated securities class action (In re Ideanomics, Inc. Securities Litigation) regarding alleged misstatements in 2020, for which a motion to dismiss has been filed[218](index=218&type=chunk) - A shareholder derivative action has been settled in principle, with the company agreeing to corporate governance reforms that are not expected to have a material financial impact[219](index=219&type=chunk) - The company is subject to an ongoing investigation by the SEC and is fully cooperating with their requests[220](index=220&type=chunk) [Risk Factors](index=72&type=page&id=Item%201A.%20Risk%20Factors) This section highlights significant risks, including those from financial statement restatement and internal control weaknesses, which could erode investor confidence, alongside substantial risks from cybersecurity incidents like the one at Timios, and industry-specific risks for real estate services and wireless charging, such as dependency on market activity and intellectual property protection - **Restatement and Internal Controls:** The restatement of prior financial statements and identified material weaknesses could erode investor confidence, negatively impact the stock price, and lead to litigation[358](index=358&type=chunk)[360](index=360&type=chunk) - **Cybersecurity:** The company faces significant risks from malicious cyber-attacks, which could disrupt business, disclose confidential information, and cause financial losses, with the recent incident at the Timios subsidiary noted as a key example[369](index=369&type=chunk)[223](index=223&type=chunk) - **Real Estate Services (Timios):** Revenues are highly dependent on real estate activity levels, mortgage interest rates, and regulatory conditions, particularly in California, which is a substantial source of revenue[376](index=376&type=chunk)[381](index=381&type=chunk) - **Wireless Charging (WAVE):** The business depends on protecting proprietary technology and intellectual property through patents and other legal means, which provide only limited protection[388](index=388&type=chunk)[389](index=389&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=78&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the fiscal quarter ended September 30, 2021, there were no unregistered sales of equity securities other than those previously disclosed in the company's Current Reports on Form 8-K - No unregistered sales of equity securities occurred during the quarter beyond what was previously reported on Form 8-K[393](index=393&type=chunk) [Defaults Upon Senior Securities](index=78&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the fiscal quarter ended September 30, 2021 - There were no defaults upon senior securities during the quarter[394](index=394&type=chunk) [Mine Safety Disclosures](index=78&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[394](index=394&type=chunk) [Other Information](index=78&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company - Not applicable[394](index=394&type=chunk) [Exhibits](index=79&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including agreements related to the VIA Motors acquisition, a framework agreement, employment agreements, equity offering agreements, and various officer certifications and XBRL data files - Key exhibits include the Agreement and Plan of Merger for VIA Motors International, Inc., a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co., and officer certifications pursuant to the Sarbanes-Oxley Act[396](index=396&type=chunk)
Ideanomics(IDEX) - 2021 Q2 - Earnings Call Transcript
2021-08-17 00:42
Ideanomics, Inc. (OTC:IDEX) Q2 2021 Results Conference Call August 16, 2021 4:30 PM ET Company Participants Alfred Poor – Chief Executive Officer Tony Sklar – Senior Vice President of Investor Relations Kristen Helsel – Chief Revenue Officer Conor McCarthy – Chief Financial Officer Conference Call Participants Craig Irwin – ROTH Capital Partners Damon Felton – Unidentified Robert Wheeler – the Acorn Management Partners Robert Kieckhefer – Unidentified Operator Greetings and welcome to the Ideanomics Second ...
Ideanomics(IDEX) - 2021 Q1 - Earnings Call Transcript
2021-05-18 02:38
Ideanomics, Inc. (OTC:IDEX) Q1 2021 Earnings Conference Call May 17, 2021 4:30 PM ET Company Participants Tony Sklar - VP of Communications and Head of IR Alfred Poor - CEO Kristen Helsel - CRO Conor McCarthy - CFO Conference Call Participants Craig Irwin - ROTH Capital Partners Nelson Siu - Mackie Research Sean Macdonald - Acorn Management Partners Operator Greetings and welcome to the Ideanomics First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-an ...