Ideanomics, Inc. (OTC:IDEX) Q4 2020 Earnings Conference Call March 31, 2021 4:30 PM ET Company Participants Tony Sklar - Vice President of Communications and Head of Investor Relations Alfred Poor - Chief Executive Officer Conor McCarthy - Chief Financial Officer Conference Call Participants Craig Irwin - Roth Capital Partners Operator Greetings and welcome to Ideanomics Fourth Quarter Fiscal 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer ...

Financial Performance - Ideanomics' Q3 2020 revenues increased 230% compared to Q2 2020, reaching $106 million from $47 million[18] - Q3 2020 revenues increased 340% compared to Q3 2019, reaching $106 million from $31 million[18] - Operating expenses in Q3 2020 saw a 4% increase year-over-year, totaling $127 million[18] - EPS Diluted improved by 72% in Q3 2020, reaching $(003) from $(011)[18] - The company saved $16 million annually through operating cost discipline[16,22] - Net increase in cash and cash equivalents was $24972 million for the nine months ended September 30, 2020[20] Business Development - Treeletrik is placing orders for the first tranche of over 1000 units[11,12] - Medici Motor Works BEV vehicles are progressing towards homologation for sales in North America[11] - Solectrac develops and sells BEV tractors for agriculture and recreational markets[14] - Investment in Qingdao and Hangzhou sales teams is contributing to the growing sales pipeline[11]

Financial Data and Key Metrics Changes - In Q3 2020, the company reported revenues of $10.6 million, which is 2.3 times greater than Q2 2020 and 3.4 times greater than Q3 2019 [12][13] - The gross profit for Q3 was $2.9 million, resulting in a gross margin of 6.7% [13] - Operating expenses for Q3 were $12.7 million, slightly up from $12.3 million in the same period in 2019 [13][14] - The company ended the quarter with $27.6 million in cash [12][16] Business Line Data and Key Metrics Changes - The taxi ride-share business unit was a significant driver of growth, with unit deliveries significantly up compared to previous quarters [6][12] - The company delivered 626 units in Q3, compared to 97 units in Q2 2020, indicating strong sales performance [12] - The electric bus segment has begun executing orders, with an initial order of 13 buses as part of a larger rolling order [8] Market Data and Key Metrics Changes - The company is seeing increased inquiries from commercial fleet operators outside of China, indicating a growing interest in electric vehicles globally [6] - The agricultural tractor market is valued at $75 billion, with North America expected to reach $20 billion by 2023, highlighting a strategic investment opportunity [9] Company Strategy and Development Direction - The company is focusing on innovative financing programs to unlock its pipeline for larger ticket items such as trucks and buses [6][7] - There is a shift in the Chinese market towards financing vehicles and batteries separately, which the company is adapting to [7] - The company is expanding its sales operations in China and has successfully attracted experienced sales talent [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to benefit from the global trend towards zero-emission vehicles [11] - The company anticipates strong growth in energy revenues as commercial customers come to market [20] - Management acknowledged the challenges posed by the ongoing FCC investigation but emphasized their commitment to transparency and cooperation [23] Other Important Information - The company is actively pursuing mergers and acquisitions to support its growth strategy [41] - There are ongoing discussions regarding the financing model in the U.S. and how it can be adapted from the successful model in China [30] Q&A Session Summary Question: Where does the company see itself in the next 5 to 10 years? - Management anticipates significant growth and execution of commercial activities, particularly in the electric vehicle sector [20] Question: Can you provide updates on the FCC investigation? - Management stated they are cooperating with the FCC and cannot discuss ongoing matters but are committed to transparency [23] Question: How does the company plan to communicate with investors moving forward? - Management acknowledged the need for improved communication and is working on enhancing investor relations [22] Question: What are the plans for mergers and acquisitions? - Management confirmed that they are actively exploring opportunities and have added to their corporate development team [41] Question: Will there be insider buying or share buybacks? - Management is working on a new share plan that will allow for more structured insider buying in the future [45][47]

Table of Contents 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 ☐ 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 ( ...

Financial Performance - Ideanomics reported its largest revenues to date from MEG in Q2 2020[11] - The company finished Q2 2020 with approximately $36 million in cash[6, 11] - The principal value of convertible debt was reduced by almost $12 million[11] - Q2 2020 revenues were $4692000, a 68% decrease year-over-year compared to $14454000 in Q2 2019[12] - Gross profit for Q2 2020 was $255000, a 98% decrease year-over-year compared to $13738000 in Q2 2019[12] - Operating expenses for Q2 2020 were $16524000, a 106% increase year-over-year compared to $8024000 in Q2 2019, including a $6200000 non-cash impairment charge[12, 13] - Net cash provided by financing activities for the six months ended June 30, 2020, was $45737000, compared to $6087000 for the six months ended June 30, 2019[14] Strategic Initiatives - The company reduced its debt by approximately 50%[6] - Ideanomics removed the Going Concern qualification from its financial statements[11] - The company continued to reduce its operating cost base through rationalization of office leases[11] - The MEG Center in Qingdao was soft opened[6]

Ideanomics, Inc. (OTC:IDEX) Q2 2020 Earnings Conference Call August 10, 2020 4:30 PM ET Company Participants Tony Sklar - Head of Investor Relations Alfred Poor - Chief Executive Officer Conor McCarthy - Chief Financial Officer Conference Call Participants Peter Wright - Intro-Act Operator Greetings and welcome to Ideanomics Q2 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) Ideanomics' unaudited condensed consolidated financial statements and management's discussion for H1 2020 [Item 1. Financial Statements.](index=4&type=section&id=Item%201.%20Financial%20Statements.) Presents Ideanomics' unaudited condensed consolidated financial statements for June 30, 2020, and related notes [Unaudited Condensed Consolidated Financial Statements](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Presents Ideanomics' unaudited condensed consolidated balance sheets, statements of operations, and cash flows Condensed Consolidated Balance Sheets (Unaudited) (USD in thousands) | ASSETS (USD in thousands) | June 30, 2020 | December 31, 2019 | | :------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $36,384 | $2,633 | | Accounts receivable, net | 1,242 | 2,405 | | Total current assets | 42,537 | 7,453 | | Total assets | $147,990 | $126,945 | | | | | | LIABILITIES & EQUITY | June 30, 2020 | December 31, 2019 | | Accounts payable | $2,313 | $3,380 | | Total current liabilities | 29,319 | 36,755 | | Total liabilities | 56,117 | 66,946 | | Total IDEX shareholder's equity | 70,042 | 33,559 | | Total equity | 83,351 | 58,737 | Condensed Consolidated Statements of Operations (Unaudited) (USD in thousands) | (USD in thousands) | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $4,692 | $14,454 | $5,070 | $41,400 | | Gross profit | 255 | 13,738 | 299 | 40,426 | | Income (loss) from operations | (16,269) | 5,714 | (25,705) | 26,610 | | Net income (loss) attributable to IDEX common shareholders | $(26,578) | $5,292 | $(38,928) | $25,219 | | Basic EPS | $(0.15) | $0.05 | $(0.23) | $0.24 | | Diluted EPS | $(0.15) | $0.05 | $(0.23) | $0.22 | Condensed Consolidated Statements of Cash Flows (Unaudited) (USD in thousands) | (USD in thousands) | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :----------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(10,390) | $(5,888) | | Net cash used in investing activities | (1,879) | (2,249) | | Net cash provided by financing activities | 45,737 | 6,087 | | Net increase (decrease) in cash and cash equivalents | 33,751 | (2,046) | | Cash and cash equivalents at end of period | $36,384 | $1,060 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Details significant accounting policies, financial instrument specifics, and other disclosures for the financial statements [Note 1. Nature of Operations and Summary of Significant Accounting Policies](index=11&type=section&id=Note%201.%20Nature%20of%20Operations%20and%20Summary%20of%20Significant%20Accounting%20Policies) Ideanomics operates in MEG (EV) and Ideanomics Capital (Fintech), improving liquidity and managing COVID-19 impacts - Ideanomics operates in one segment with two business units: Mobile Energy Group (MEG) focusing on EV and EV battery sales and financing, and Ideanomics Capital focusing on blockchain and AI in Fintech[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) - The company improved its liquidity position by raising **$48.2 million** in the six months ended June 30, 2020, and reduced indebtedness by **$13.9 million** through debt conversion to common stock[21](index=21&type=chunk) Liquidity Improvements (Six Months Ended June 30, 2020) | Source | Amount (USD in millions) | | :-------------------------------- | :----------------------- | | Common stock issuance & warrant exercise | $39.1 | | Noncontrolling interest shareholders | $7.1 | | Senior secured convertible notes | $2.0 | | **Total Funds Raised** | **$48.2** | | Debt converted to common stock | $13.9 | | Cash and cash equivalents (June 30, 2020) | $36.4 | - COVID-19 caused significant disruption and operational delays, particularly in China, but the company does not anticipate significant adverse effects on its operations revenue in the near- or mid-term[22](index=22&type=chunk)[25](index=25&type=chunk)[202](index=202&type=chunk) [Note 2. New Accounting Pronouncements](index=13&type=section&id=Note%202.%20New%20Accounting%20Pronouncements) The company evaluates new accounting pronouncements, including ASU 2016-13, ASU 2019-12, and ASU 2020-06 - The company will adopt ASU 2016-13, 'Financial Instruments - Credit Losses,' effective January 1, 2023, and is currently evaluating its effect on consolidated financial statements[26](index=26&type=chunk) - ASU 2019-12, 'Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes,' will be adopted effective January 1, 2021, with management evaluating its impact[26](index=26&type=chunk) - ASU 2020-06, 'Accounting for Convertible Instruments and Contracts in an Entity's Own Equity,' will be adopted effective January 1, 2024, with its effect depending on the composition and terms of financial instruments at adoption[28](index=28&type=chunk) [Note 3. Notes Receivable](index=14&type=section&id=Note%203.%20Notes%20Receivable) Energy Sales issued two notes receivable in May 2020, totaling **$1.8 million**, one collateralized and one uncollateralized - In May 2020, Energy Sales provided a **$1.4 million** (10.0 million RMB) note receivable to Mr. Jianya Zhu, collateralized by **50%** ownership of Seven Stars Founder Space Industrial Pte. Ltd., which remains unpaid[29](index=29&type=chunk) - Energy Sales also provided an uncollateralized **$0.4 million** (3.0 million RMB) note receivable to Fuzhou Zhengtong Hongxin Investment Management Company Limited in May 2020, due within three months[30](index=30&type=chunk) [Note 4. Revenue](index=15&type=section&id=Note%204.%20Revenue) Q2 2020 revenue decreased **68%** to **$4.7 million**, primarily due to the absence of digital asset management services Revenue Disaggregation (USD in thousands) | Category | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Geographic Markets** | | | | | | Malaysia | $5 | $— | $9 | $— | | USA | 105 | 14,454 | 429 | 41,400 | | China | 4,582 | — | 4,632 | — | | **Total Revenue** | **$4,692** | **$14,454** | **$5,070** | **$41,400** | | **Product or Service** | | | | | | Digital asset management services | $— | $14,100 | $— | $40,700 | | Digital advertising services & other | 105 | 354 | 428 | 700 | | Electric vehicles | 695 | — | 750 | — | | Combustion engine vehicles | 3,892 | — | 3,892 | — | - Revenue from third-parties for the three months ended June 30, 2020, decreased by **$9.8 million** (**68%**) to **$4.7 million**, primarily due to the absence of digital asset management services[7](index=7&type=chunk)[221](index=221&type=chunk) - In Q2 2020, the company recognized **$4.6 million** revenue from vehicle sales, including **$3.9 million** from traditional combustion vehicles, as it developed its EV business[223](index=223&type=chunk) [Note 5. VIE Structure and Arrangements](index=15&type=section&id=Note%205.%20VIE%20Structure%20and%20Arrangements) Ideanomics deconsolidated PRC-based VIEs on December 31, 2019, after terminating contractual agreements - Prior to December 31, 2019, Ideanomics consolidated certain PRC-based VIEs due to contractual agreements that granted the company power to direct activities and absorb/receive majority of losses/benefits[33](index=33&type=chunk) - These contractual agreements were terminated on December 31, 2019, resulting in the deconsolidation of the VIEs[34](index=34&type=chunk) [Note 6. Acquisitions and Divestitures](index=16&type=section&id=Note%206.%20Acquisitions%20and%20Divestitures) No acquisitions or divestitures in H1 2020; 2019 included Tree Technologies acquisition and DBOT stake increase - In the six months ended June 30, 2020, the Company did not acquire any companies nor dispose of any subsidiaries[36](index=36&type=chunk) - On December 26, 2019, Ideanomics acquired a **51%** interest in Tree Technologies (Malaysian EV market) for **$0.9 million** cash, **9.5 million** common shares, and an earnout of up to **$32.0 million** over three years[38](index=38&type=chunk) - In July 2019, the Company increased its ownership in Delaware Board of Trade Holdings, Inc. (DBOT) to **99.0%** through securities purchase agreements, which included a 'True-Up Common Stock' provision for stock price fluctuations[45](index=45&type=chunk) - In 2019, Ideanomics divested Red Rock Global Capital LTD for **$0.7 million** and diluted its ownership in Amer Global Technology Limited from **55.0%** to **10.0%**, recognizing a disposal gain of **$0.5 million**[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) [Note 7. Accounts Receivable](index=19&type=section&id=Note%207.%20Accounts%20Receivable) Net accounts receivable decreased to **$1.2 million** at June 30, 2020, including **$1.1 million** from a related party Accounts Receivable (USD in thousands) | Category | June 30, 2020 | December 31, 2019 | | :-------------------------- | :------------ | :---------------- | | Accounts receivable, gross | $1,242 | $2,405 | | Less: allowance for doubtful accounts | — | — | | **Accounts receivable, net**| **$1,242** | **$2,405** | - The accounts receivable balance includes **$1.1 million** (June 30, 2020) and **$2.3 million** (December 31, 2019) in taxi commission revenue receivables from the related party Guizhou Qianxi Green Environmentally Friendly Taxi Service Co[56](index=56&type=chunk) [Note 8. Property and Equipment, net](index=20&type=section&id=Note%208.%20Property%20and%20Equipment%2C%20net) Net property and equipment decreased to **$177 thousand**, with **$0.2 million** impairment and Fintech Village at **$12.6 million** Property and Equipment, net (USD in thousands) | Category | June 30, 2020 (Net Balance) | December 31, 2019 (Net Balance) | | :-------------------------- | :-------------------------- | :------------------------------ | | Furniture and office equipment | $300 | $441 | | Vehicle | 120 | 62 | | Leasehold improvements | 173 | 243 | | Total property and equipment | 593 | 746 | | Less: accumulated depreciation | (416) | (368) | | **Property and equipment, net** | **$177** | **$378** | | Fintech Village | | | | Land | 3,043 | 3,043 | | Building | 309 | 309 | | Assets retirement obligations – environmental remediation | 6,496 | 6,496 | | Capitalized direct development cost | 2,714 | 2,713 | | Construction in progress (Fintech Village) | 12,562 | 12,561 | | **Property and Equipment, net (including Fintech Village)** | **$12,739** | **$12,939** | - The company recorded a **$0.2 million** impairment loss related to leasehold improvements and other fixed assets after vacating its New York City headquarters at 55 Broadway[59](index=59&type=chunk) - Fintech Village, identified as a non-core asset, includes **$4.65 million** in asset retirement obligations for environmental remediation as of June 30, 2020[60](index=60&type=chunk) [Note 9. Goodwill and Intangible Assets](index=21&type=section&id=Note%209.%20Goodwill%20and%20Intangible%20Assets) Goodwill decreased to **$10.5 million** due to a **$12.8 million** adjustment; total intangibles were **$51.5 million** Goodwill Carrying Amount (USD in thousands) | Period | Amount | | :------------------------ | :------- | | Balance as of January 1, 2019 | $705 | | Acquisitions | 22,639 | | Balance as of December 31, 2019 | 23,344 | | Measurement period adjustments* | (12,848) | | Effect of change in foreign currency exchange rates | (36) | | **Balance as of June 30, 2020** | **$10,460**| Intangible Assets, net (USD in thousands) | Category | June 30, 2020 (Net Balance) | December 31, 2019 (Net Balance) | | :-------------------------- | :-------------------------- | :------------------------------ | | Amortizing Intangible Assets | | | | Solid Opinion IP | $3,414 | $3,879 | | Influencer network | 1,617 | 1,716 | | Continuing membership agreement | 7,842 | 8,049 | | Land use rights | 25,979 | 27,079 | | Marketing and distribution agreement | 12,030 | 11,333 | | **Total Amortizing Intangible Assets** | **51,426** | **52,718** | | Indefinite lived intangible assets | | | | Website name | 25 | 25 | | Patent | 28 | 28 | | **Total Intangible Assets, net** | **$51,479** | **$52,771** | Expected Amortization Expense (USD in thousands) | Years ending December 31, | Amortization to be recognized | | :------------------------ | :---------------------------- | | 2020 (excluding six months ended June 30, 2020) | $1,320 | | 2021 | 2,585 | | 2022 | 2,464 | | 2023 | 2,454 | | 2024 | 1,678 | | 2025 and thereafter | 40,925 | | **Total** | **$51,426** | [Note 10. Long-term Investments](index=22&type=section&id=Note%2010.%20Long-term%20Investments) Long-term investments stable at **$22.6 million**, including equity method investments in BDCG (Intelligenta) and Glory Long-term Investments (USD in thousands) | Category | June 30, 2020 | December 31, 2019 | | :-------------------------- | :------------ | :---------------- | | Non-marketable equity investments | $6,005 | $5,967 | | Equity method investments | 16,639 | 16,654 | | **Total** | **$22,644** | **$22,621** | - The company holds a **60%** equity ownership in BBD Digital Capital Group Ltd. (BDCG), rebranded as Intelligenta, for blockchain services, accounted for using the equity method due to variable substantive participating rights granted to a noncontrolling party[73](index=73&type=chunk) - Ideanomics acquired a **34%** interest in Glory Connection Sdn. Bhd (Glory), a Malaysian EV company, for **$20.0 million** in restricted common shares, accounted for as an equity method investment despite being a VIE where the company is not the primary beneficiary[74](index=74&type=chunk)[76](index=76&type=chunk) [Note 11. Leases](index=24&type=section&id=Note%2011.%20Leases) Recorded **$7.2 million** in operating right-of-use assets for Qingdao and **$5.3 million** impairment on NYC headquarters - On May 1, 2020, the company took possession of a 40,000 square meter facility in Qingdao, China, provided free of charge by local governmental entities until November 30, 2034, resulting in recording **$7.2 million** in operating right-of-use assets and operating lease liabilities[78](index=78&type=chunk)[79](index=79&type=chunk) - As of June 30, 2020, operating lease right-of-use assets were **$7.6 million** and operating lease liabilities were **$13.3 million**, with a weighted-average remaining lease term of **10.1 years** and a weighted-average discount rate of **5.7%**[80](index=80&type=chunk) - The company recorded a **$5.3 million** impairment loss related to the right-of-use assets for its New York City headquarters after vacating the premises and is negotiating lease termination[85](index=85&type=chunk) [Note 12. Promissory Notes](index=26&type=section&id=Note%2012.%20Promissory%20Notes) Promissory notes decreased to **$15.6 million** due to convertible note conversions, increasing interest expense Outstanding Promissory Notes (USD in thousands) | Note Type | Interest Rate | June 30, 2020 (Principal Amount) | December 31, 2019 (Principal Amount) | | :---------------------------------------- | :------------ | :------------------------------- | :------------------------------- | | Convertible Note - Advantech | 8.0% | $12,000 | $12,000 | | Senior Secured Convertible Note - ID Venturas 7 (Feb 2019) | 10.0% | — | 850 | | Senior Secured Convertible Note - ID Venturas 7 (Sep 2019) | 10.0% | — | 3,580 | | Senior Secured Convertible Note - YA II PN | 4.0% | — | 3,000 | | Promissory Note - New Castle County | 6.0% | 3,000 | 3,000 | | Vendor Notes Payable | 0.25%-4% | 135 | — | | Small Business Association Paycheck Protection Program | 1% | 460 | — | | **Total Principal Amount** | | **$15,595** | **$26,932** | - Interest expense increased by **$8.3 million** for the three months ended June 30, 2020, and **$10.7 million** for the six months ended June 30, 2020, primarily due to the recognition of unamortized beneficial conversion features upon the conversion of convertible notes to common stock[247](index=247&type=chunk)[248](index=248&type=chunk) - Various convertible notes, including those from ID Venturas 7 and YA II PN, were converted into common stock during the six months ended June 30, 2020, often after down-round price adjustments, significantly reducing the principal amount of these debts[100](index=100&type=chunk)[111](index=111&type=chunk)[118](index=118&type=chunk) [Note 13. Stockholders' Equity, Convertible Preferred Stock and Redeemable Non-controlling Interest](index=32&type=section&id=Note%2013.%20Stockholders%27%20Equity%2C%20Convertible%20Preferred%20Stock%20and%20Redeemable%20Non-controlling%20Interest) Common stock outstanding increased to **237.0 million** shares, **$30.5 million** raised via SEDA, and **$7.3 million** non-controlling interest - As of June 30, 2020, Ideanomics had **237,008,159** shares of common stock issued and outstanding, up from **149,692,953** shares at December 31, 2019[6](index=6&type=chunk) - The company entered into a Standby Equity Distribution Agreement (SEDA) with YA II PN, allowing it to issue and sell up to **$45.0 million** of common stock over 36 months; in Q2 2020, **30.1 million** shares were issued for **$30.5 million** under SEDA[129](index=129&type=chunk) Redeemable Non-controlling Interest Activity (Six Months Ended June 30, 2020) (USD in thousands) | Activity | Amount | | :------------------------------------ | :------- | | January 1, 2020 | $— | | Initial investment | 7,047 | | Accretion of dividend | 213 | | Loss attributable to non-controlling interest | (80) | | Adjustment to redemption value | 80 | | **June 30, 2020** | **$7,260** | - A redeemable non-controlling interest of **$7.3 million** was recognized for an initial investment in New Energy, which includes a **6%** dividend rate and a redemption feature after three years[126](index=126&type=chunk)[128](index=128&type=chunk) [Note 14. Related Party Transactions](index=34&type=section&id=Note%2014.%20Related%20Party%20Transactions) Related party transactions included convertible note conversions, **$61.1 million** GTB impairment, and reduced borrowings from Dr. Wu - Convertible notes from Mr. Shane McMahon (**$3.0 million**) and SSSIG (**$2.5 million** and **$1.0 million**) were converted into common stock on June 5, 2020, at a reduced conversion price of **$0.59** per share, following Audit Committee and Board approval[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - In March 2019, the company sold **$20.4 million** in assets to GTD in exchange for **1.3 million** GTBDollar Coins (GTB), recorded at the carrying amount of assets due to indeterminable fair value[138](index=138&type=chunk) - An impairment loss of **$61.1 million** was recorded in Q4 2019 on GTB due to a significant decline in its quoted price from **$17.00** to **$0.23** and inability to convert it to more liquid currencies[140](index=140&type=chunk) - Net borrowings from Dr. Wu and his affiliates decreased by **$3.5 million** in the six months ended June 30, 2020, with **$1.5 million** converted to **2.6 million** shares of common stock at **$0.59** per share[142](index=142&type=chunk)[144](index=144&type=chunk) [Note 15. Share-Based Compensation](index=36&type=section&id=Note%2015.%20Share-Based%20Compensation) **26.3 million** stock options and **1.2 million** warrants outstanding, with **$5.6 million** in share-based compensation - As of June 30, 2020, the company had **26.3 million** options, **29,586** restricted shares, and **1.2 million** warrants outstanding[151](index=151&type=chunk) - Total share-based compensation expense was **$5.6 million** for the six months ended June 30, 2020, compared to **$3.9 million** for the same period in 2019[153](index=153&type=chunk) Stock Option Activity (Six Months Ended June 30, 2020) | Category | Options Outstanding | | :-------------------------- | :------------------ | | Outstanding at January 1, 2020 | 14,936,726 | | Granted | 13,750,000 | | Exercised | (60,000) | | Expired | (711,583) | | Forfeited | (1,657,917) | | **Outstanding at June 30, 2020** | **26,257,226** | - ID Venturas exercised **5.3 million** warrants in June 2020, generating **$3.1 million** in proceeds; YA II PN exercised **1.0 million** and **1.7 million** warrants, generating **$1.0 million** and **$2.5 million** in proceeds, respectively[157](index=157&type=chunk)[158](index=158&type=chunk) [Note 16. Earnings (Loss) Per Common Share](index=39&type=section&id=Note%2016.%20Earnings%20(Loss)%20Per%20Common%20Share) H1 2020 basic and diluted loss per share was **$(0.23)**, with **168.9 million** weighted average common shares Earnings (Loss) Per Common Share (USD in thousands, except per share amounts) | (USD in thousands, except per share amounts) | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------------- | :----------------------------- | :----------------------------- | | Net earnings (loss) attributable to common stockholders | $(38,928) | $25,219 | | Basic weighted average common shares outstanding | 168,946,960 | 107,029,448 | | Diluted potential common shares | 168,946,960 | 117,605,184 | | Basic EPS | $(0.23) | $0.24 | | Diluted EPS | $(0.23) | $0.22 | - Diluted net loss per share equals basic net loss per share because the effect of securities convertible into common shares was anti-dilutive[160](index=160&type=chunk) Potential Dilutive Common Shares (in thousands) | Category | June 30, 2020 | December 31, 2019 | | :------------------------------------------- | :------------ | :---------------- | | Warrants | 1,150 | 8,996 | | Options | 26,287 | 14,938 | | Series A Preferred Stock | 933 | 933 | | DBOT True-up shares | 2,810 | 8,501 | | Convertible promissory note and interest | 37,315 | 21,678 | | **Total** | **68,495** | **55,046** | [Note 17. Income Taxes](index=39&type=section&id=Note%2017.%20Income%20Taxes) No income tax expense for H1 2020 due to net operating losses and **100%** valuation allowance, contrasting with H1 2019 benefit - Income tax expense was nil for the three and six months ended June 30, 2020, due to net operating losses and a **100%** valuation allowance against net deferred tax assets[162](index=162&type=chunk)[254](index=254&type=chunk)[256](index=256&type=chunk) - For the six months ended June 30, 2019, the company recorded a **$0.5 million** income tax benefit, primarily from offsetting deferred tax liabilities with Grapevine's losses and a **$0.4 million** reduction in the valuation allowance on Ideanomics' deferred tax assets[164](index=164&type=chunk)[257](index=257&type=chunk) [Note 18. Commitments and Contingencies](index=40&type=section&id=Note%2018.%20Commitments%20and%20Contingencies) Ideanomics faces multiple shareholder class actions and a derivative action, which it plans to vigorously defend - The company is a defendant in three purported shareholder class actions (Rudani v. Ideanomics, Lundy v. Ideanomics, Kim v. Ideanomics) alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934[166](index=166&type=chunk) - A shareholder derivative action (Toorani v. Ideanomics) was filed, naming the company as a nominal defendant and certain former officers/directors as defendants, alleging breach of fiduciary duties, unjust enrichment, and corporate waste[166](index=166&type=chunk) - The company believes the class actions are without merit and plans to vigorously defend itself, but cannot currently estimate the possible loss or range of losses[166](index=166&type=chunk) [Note 19. Concentration, Credit and Other Risks](index=41&type=section&id=Note%2019.%20Concentration%2C%20Credit%20and%20Other%20Risks) Ideanomics faces regulatory uncertainty in China's EV industry, credit risk, and foreign currency risks from RMB transactions - The EV industry in China is relatively new, and the PRC government has not adopted a clear regulatory framework, leading to uncertainty regarding regulatory requirements[168](index=168&type=chunk) - The company faces significant concentration of credit risk in cash held by financial institutions and unsecured accounts receivable, mitigated by regular credit evaluations[169](index=169&type=chunk) - A majority of the company's operating transactions, assets, and liabilities are denominated in RMB, which is not freely convertible and subject to PRC government policies and exchange rates, posing foreign currency risks[170](index=170&type=chunk) [Note 20. Fair Value Measurement](index=41&type=section&id=Note%2020.%20Fair%20Value%20Measurement) Financial instruments at fair value include acquisition true-up (**$1.8 million**) and earn-out (**$15.1 million**) liabilities using Level 3 inputs Financial Instruments Measured at Fair Value (USD in thousands) | Financial Instrument | June 30, 2020 (Level III) | Total | | :-------------------------- | :------------------------ | :------ | | Acquisition true-up liability | $1,798 | $1,798 | | Acquisition earn-out liability | 15,104 | 15,104 | - The fair value of the Tree Technology acquisition earn-out liability (Level 3) is valued using a scenario-based method, incorporating estimates such as projected gross revenue, probability estimates, and discount rates[173](index=173&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Ideanomics' business transformation, COVID-19 impact, and financial performance for H1 2020 [Overview](index=43&type=section&id=Overview) Ideanomics transitioned to fintech and EV, improved liquidity, commenced MEG operations, and managed COVID-19 disruptions - Ideanomics transitioned from premium content VOD services (YOD) to a financial technology (fintech) company, focusing on blockchain and AI, and established its Mobile Energy Global (MEG) business unit for the Chinese Electric Vehicle (EV) industry[179](index=179&type=chunk)[180](index=180&type=chunk) - The company's financial performance is significantly impacted by its ability to transform its business, remain competitive in evolving technology markets, and manage fluctuations from strategic equity investments and joint ventures in the MEG business unit[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) - In the six months ended June 30, 2020, Ideanomics improved its liquidity by raising **$48.2 million** and converting **$13.9 million** of debt to common stock, resulting in **$36.4 million** in cash and cash equivalents[187](index=187&type=chunk) - MEG commenced operations in a 40,000 square meter facility in Qingdao, China, provided free by the government, and generated **$4.6 million** in Q2 2020 revenue, with **$3.9 million** from traditional combustion engine vehicles[186](index=186&type=chunk)[189](index=189&type=chunk)[200](index=200&type=chunk) - COVID-19 caused significant disruption and operational delays, particularly in China, but the company does not anticipate significant adverse effects on its operations revenue compared to its business plan in the near- or mid-term[192](index=192&type=chunk)[193](index=193&type=chunk)[196](index=196&type=chunk)[202](index=202&type=chunk) [Consolidated Results of Operations](index=49&type=section&id=Consolidated%20Results%20of%20Operations) H1 2020 revenue and gross profit declined significantly due to absence of digital asset management services and increased operating expenses Consolidated Results of Operations (USD in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Change (Amount) | Change (%) | | :------------------------------------------- | :------------------------------- | :------------------------------- | :-------------- | :--------- | | Revenue | $4,692 | $14,454 | $(9,762) | (68)% | | Cost of revenue | 4,437 | 716 | 3,721 | 520% | | Gross profit | 255 | 13,738 | (13,483) | (98)% | | Selling, general and administrative expenses | 6,725 | 6,485 | 240 | 4% | | Professional fees | 2,372 | 1,169 | 1,203 | 103% | | Impairment loss | 6,200 | — | 6,200 | n/m | | Acquisition earn-out expense | 746 | — | 746 | n/m | | Depreciation and amortization | 481 | 370 | 111 | 30% | | Total operating expenses | 16,524 | 8,024 | 8,500 | 106% | | Income (Loss) from operations | (16,269) | 5,714 | (21,983) | (385)% | | Interest expense, net | (8,890) | (581) | (8,309) | n/m | | Net income (loss) attributable to IDEX common shareholders | $(26,578) | $5,292 | $(31,870) | n/m | - Revenue for the three months ended June 30, 2020, decreased by **$9.8 million** (**68%**) to **$4.7 million**, primarily due to the absence of digital asset management services revenue present in the prior year[221](index=221&type=chunk) - Gross profit for the three months ended June 30, 2020, was **$0.3 million** (**5%** ratio), a significant decrease from **$13.7 million** (**95%** ratio) in the prior year, mainly due to the shift from high-margin digital asset management services to lower-margin vehicle sales and negative gross margin from the DBOT business[236](index=236&type=chunk) - Total operating expenses increased by **$8.5 million** (**106%**) for the three months ended June 30, 2020, driven by impairment losses (**$6.2 million**), increased professional fees (**$1.2 million**), and higher share-based compensation[218](index=218&type=chunk)[238](index=238&type=chunk)[240](index=240&type=chunk)[243](index=243&type=chunk) - Interest expense, net, increased by **$8.3 million** for the three months ended June 30, 2020, primarily due to the recognition of unamortized beneficial conversion features upon the conversion of convertible notes to common stock[247](index=247&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) Ideanomics held **$36.4 million** in cash, with increased cash used in operating activities and significant cash provided by financing - As of June 30, 2020, Ideanomics had **$36.4 million** in cash, with **$34.0 million** held in Hong Kong, U.S., Malaysia, and Singapore entities, and **$2.4 million** in PRC entities, which is not available for use outside the PRC[260](index=260&type=chunk) Summary of Net Cash Flows (USD in thousands) | Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(10,390) | $(5,888) | | Net cash used in investing activities | (1,879) | (2,249) | | Net cash provided by financing activities | 45,737 | 6,087 | | Effect of exchange rate changes on cash | 283 | 4 | | Net increase/(decrease) in cash and cash equivalents | 33,751 | (2,046) | | Cash and cash equivalents at end of period | $36,384 | $1,060 | - Net cash used in operating activities increased by **$4.5 million** to **$(10.4) million** for the six months ended June 30, 2020, primarily due to a decrease in operating results from net income to a net loss[264](index=264&type=chunk) - Net cash provided by financing activities significantly increased to **$45.7 million** for the six months ended June 30, 2020, driven by **$39.1 million** from warrant exercises and common stock issuance, and **$7.1 million** from noncontrolling shareholders[266](index=266&type=chunk) [Outlook](index=57&type=section&id=Outlook) MEG is expected to be the largest revenue contributor in 2020, with continued DBOT development and strategic acquisitions - The MEG business unit is expected to be the largest contributor to revenues in 2020, with its growth correlated to the development of financing structures for commercial EVs and the economic recovery in the PRC and Asia post-COVID-19[273](index=273&type=chunk) - The company plans to continue deploying its DBOT Alternative Trading System (ATS) for digital securities, tokens, commodities trading, and private placements, but does not anticipate material revenue from DBOT in 2020 due to its developmental stage[274](index=274&type=chunk) - Ideanomics will continue to seek acquisitions to accelerate the growth of its MEG and Ideanomics Capital business units[274](index=274&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Ideanomics is not required to provide market risk disclosures - Ideanomics is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[278](index=278&type=chunk) [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Ideanomics' disclosure controls and procedures were effective as of June 30, 2020, with no material changes in internal control - Management, including the CEO and CFO, concluded that Ideanomics' disclosure controls and procedures were effective as of June 30, 2020[280](index=280&type=chunk) - There were no material changes in internal control over financial reporting during the six months ended June 30, 2020, and the company continues to invest resources to upgrade internal controls[281](index=281&type=chunk) [PART II - OTHER INFORMATION](index=58&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) For details on legal proceedings, refer to Note 18, Commitments and Contingencies, in the financial statements - For details on legal proceedings, refer to Note 18, Commitments and Contingencies, in the Condensed Consolidated Financial Statements[282](index=282&type=chunk) [Item 1A. Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) Investors should carefully consider the risk factors from the 2019 Form 10-K, as they could materially affect the business - Investors should carefully consider the risk factors outlined in Part I, Item 1A. Risk Factors of the 2019 Form 10-K, as well as additional unknown risks, which could materially affect the company's business and financial condition[284](index=284&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the fiscal quarter ended June 30, 2020 - No unregistered sales of equity securities occurred during the fiscal quarter ended June 30, 2020[285](index=285&type=chunk) [Item 3. Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the fiscal quarter ended June 30, 2020 - There were no defaults upon senior securities during the fiscal quarter ended June 30, 2020[285](index=285&type=chunk) [Item 4. Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Ideanomics - This item is not applicable[285](index=285&type=chunk) [Item 5. Other Information](index=59&type=section&id=Item%205.%20Other%20Information) Key personnel changes, amended employment agreements, and a new cooperation agreement replaced a financial advisory agreement - Mr. Steven Fadem resigned from the board of directors, effective August 10, 2020, and entered into a 12-month consulting agreement for **$4,000** per month[285](index=285&type=chunk) - Employment agreements for Mr. Alfred Poor and Mr. Conor McCarthy were amended, extending their terms to **2 years**, increasing base salaries to **$500,000** and **$350,000** respectively, and including future option grants and performance bonuses[285](index=285&type=chunk) - The Financial Advisory Agreement with National Transport Capacity Co., Ltd. was terminated and replaced by a Cooperation Agreement with Shenzhen National Transportation Service Co., Ltd. for new energy vehicle projects, including supply chain finance and ABS[285](index=285&type=chunk) [Item 6. Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various agreements and required certifications - The exhibits include various agreements such as letter agreements, debenture amendments, subscription agreements, and employment/consulting agreements[287](index=287&type=chunk) - Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are also included[287](index=287&type=chunk) - XBRL Instance Document and Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents are provided[287](index=287&type=chunk) [Signatures](index=61&type=section&id=Signatures) The report was signed by Conor McCarthy, CFO of Ideanomics, Inc. on August 10, 2020 - The report was signed by Conor McCarthy, Chief Financial Officer (Principal Financial and Accounting Officer) of Ideanomics, Inc. on August 10, 2020[288](index=288&type=chunk)[289](index=289&type=chunk)