Ideanomics(US:IDEX)2023-08-03 16:00PART I - FINANCIAL INFORMATION Financial Statements Unaudited financial statements show significant revenue decline and increased net loss, raising substantial doubt about the company's going concern ability Condensed Consolidated Statements of Operations Highlights (Unaudited) | Financial Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $10,562 | $25,391 | | Gross (Loss) Profit | $(569) | $20 | | Loss from Operations | $(87,466) | $(39,324) | | Net Loss Attributable to Ideanomics, Inc. | $(84,317) | $(28,512) | | Basic and Diluted Loss Per Share | $(0.12) | $(0.06) | Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $75,513 | $114,038 | | Total Assets | $316,988 | $242,801 | | Total Current Liabilities | $128,143 | $76,861 | | Total Liabilities | $212,271 | $96,238 | | Total Equity | $89,780 | $136,451 | - The company has concluded that substantial doubt exists about its ability to continue as a going concern for the next twelve months, lacking adequate cash and with additional financing not yet probable5154 - The acquisition of VIA Motors International, Inc. on January 31, 2023, involved issuing $125.7 million in common shares, $1.2 million in convertible preferred shares, and settling $5.7 million in loans, adding $13.0 million in goodwill and $115.6 million in intangible assets6971 - Post-quarter, the company initiated divestment of several operating companies, including Timios, Energica, Wave, Solectrac, and US Hybrid, which generated $10.4 million in revenue and a $16.6 million loss from operations in Q1 2023175 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant revenue decline and widened net loss, driven by China operations restructuring and reduced title services, outlining strategic divestitures and core business focus Revenue by Source (in thousands) | Revenue Source | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | EV products | $2,723 | $14,244 | $(11,521) | | Electric motorcycle products and services | $2,773 | $379 | $2,394 | | Title and escrow services | $4,246 | $9,925 | $(5,679) | | Total Revenue | $10,562 | $25,391 | $(14,829) | - Revenue decreased primarily due to an $11.5 million reduction in EV product sales from China operations restructuring and a $5.7 million decrease in title and escrow services revenue196 - Selling, general and administrative (SG&A) expenses increased by $9.2 million to $46.2 million, primarily due to consulting fees for the VIA acquisition203 - Asset impairment losses totaled $44.1 million in Q1 2023, mainly from VIA notes receivable ($27.4 million), VIA SAFE investment ($6.9 million), and Timios intangible assets ($8.9 million)205 - As of March 31, 2023, cash totaled $18.9 million, with $16.2 million held in the PRC and unavailable for non-China operations due to regulations217 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate and foreign currency, with a hypothetical 10% currency change potentially impacting the income statement by $7.4 million - Interest rate risk is low due to short-term, low-risk cash equivalents and $1.7 million in fixed-rate convertible debt236 - Foreign currency risk from international operations could lead to an approximate $7.4 million income statement adjustment from a hypothetical 10% currency rate change237 Controls and Procedures Management concluded that the company's disclosure controls and procedures were ineffective as of March 31, 2023, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2023240 - No material changes were made to the company's internal control over financial reporting during Q1 2023241 PART II - OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, including merger-related litigation, an ongoing SEC investigation, and breach of contract lawsuits, while a shareholder class action was dismissed - The company is subject to an ongoing investigation by the SEC's Division of Enforcement regarding transactions and disclosures since 2017, with an unpredictable outcome145 - A shareholder class action lawsuit alleging misstatements regarding the Ideanomics China division was dismissed by the court on February 8, 2023143 - The company faces several breach of contract lawsuits for failure to make payments, including actions by Cantor Fitzgerald, Acuitas Capital, and 3i LP147148149150 Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - The company states that no material change in the risk factors discussed in its 2022 Form 10-K has occurred244 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the quarter, beyond those previously disclosed in Form 8-K reports - No unregistered sales of equity securities occurred during the period other than those already reported on Form 8-K245 Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period covered by this report - There were no defaults upon senior securities during the quarter245 Exhibits This section lists all exhibits filed with the Form 10-Q, including amendments to agreements, corporate governance documents, and Sarbanes-Oxley Act certifications - The report includes numerous exhibits, such as amendments to secured convertible promissory notes, the VIA merger agreement, and various corporate governance documents247248 - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed with the report248