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

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

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.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ 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 ~~and post~~ such files).

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 ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

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 financialaccounting 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).

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:~~73,142,299~~ 108,561,959 shares as of ~~August 10, 2018~~.May 1, 2019.

Except as otherwise indicated by the context, references in this report to ~~(i)~~ the “Company,” “Seven Stars Cloud,”, “SSC”, “we,” “us,” and “our” are to Seven Stars Cloud Group, Inc. (formerly known as Wecast Network, Inc.), a Nevada corporation, and its consolidated subsidiaries and variable interest entities; (ii) “CB Cayman” refers to our wholly-owned subsidiary China Broadband, Ltd., a Cayman Islands company; (iii) “YOD Hong Kong” refers to YOU On Demand (Asia) Limited (formerly known as Sinotop Group Limited), a Hong Kong company wholly-owned by CB Cayman; (iv) “YOD WOFE” refers to YOU On Demand (Beijing) Technology Co., Ltd., a PRC company wholly-owned by YOD Hong Kong; (v) “Sinotop Beijing” or “Sinotop” refers to Beijing Sino Top Scope Technology Co., Ltd, a PRC company controlled by YOD Hong Kong through contractual arrangements; (vi) “Zhong Hai Media” refers to Zhong Hai Shi Xun Media Co., Ltd., a PRC company 80% owned by Sinotop Beijing until June 30, 2017; (vii) “SSF” refers to Tianjin Sevenstarflix Network Technology Limited, a PRC company controlled by YOD Hong Kong through contractual arrangements; (viii) “Hua Cheng” refers to Hua Cheng Hu Dong (Beijing) Film and Television Communication Co., Ltd., a PRC company 39% owned by Sinotop Beijing and 20% owner of Zhong Hai Media; (ix) “Wecast Services” refers to our wholly-owned subsidiary Wecast Services Group Limited (formerly known as Sun Video Group Hong Kong Limited) a Hong Kong company; (x) “Wide Angle” refers to Wide Angle Group Limited, a Hong Kong company 55% owned by the Company; (xi) “Wecast SH” refers to Shanghai Wecast Supply Chain Management Limited, a PRC company 51% owned by the Company; (xii)“SEC” refers to the United States Securities and Exchange Commission; (xiii) “Securities Act” refers to Securities Act of 1933, as amended; (xiv) “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; (xv) “PRC” and “China” refer to People’s Republic of China; (xvi) “Renminbi” and “RMB” refer to the legal currency of China; (xvii) “U.S. dollar,” “$” and “US$” refer to United States dollars; and (xviii) “VIEs” refers to our current variable interest entities, Sinotop Beijing, and Tianjin Sevenstarflix Network Technology Limited.following:

~~SEVEN STARS CLOUD GROUP,~~IDEANOMICS, INC.~~, ITS SUBSIDIARIES AND VARIABLE INTEREST ENTITIES~~

~~Seven Stars Cloud Group, Inc., Its Subsidiaries and Variable Interest Entities~~
~~UNAUDITED~~ IDEANOMICS, INC.

	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
				(As adjusted*)						(Restated)
ASSETS
Current assets:
Cash	$	1,775,374		$	7,208,037
Restricted cash		362,418			369,280
Cash and cash equivalents							$	2,011,898		$	3,106,244
Accounts receivable, net		112,785,737			26,962,085			19,406,354			19,370,665
Licensed content		16,958,149			16,958,149
Inventory		216,453			216,453
Prepaid expenses		919,340			2,202,728
Licensed content, current								-			16,958,149
Prepayments								2,581,746			2,042,041
Other current assets		3,302,234			2,276,096			3,799,358			3,594,942
Total current assets		136,319,705			56,192,828			27,799,356			45,072,041
Property and equipment, net		172,558			127,275			15,593,255			15,029,427
Intangible assets, net		143,568			148,874			68,394,632			3,036,352
Long term investments		16,745,320			6,975,511
Goodwill								704,884			704,884
Long-term investments								22,943,594			26,408,609
Operating lease right of use assets								6,802,721			-
Other non-current assets		189,224			-			3,983,796			3,983,799
Total assets	$	153,570,375		$	63,444,488		$	146,222,238		$	94,235,112

LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK AND EQUITY
Current liabilities:(including amounts of the consolidated VIEs without recourse to Seven Stars Cloud Group, Inc. See note 3)
Current liabilities: (including amounts of the consolidated VIEs without recourse to Ideanomics, Inc. See Note 4)
Accounts payable	$	30,454,900		$	26,829,593		$	19,219,153		$	19,265,094
Deferred revenue		105,507			222,350			14,709,050			405,929
Accrued interest due to a related party		79,562			20,055
Accrued other expenses		286,858			175,618
Accrued salaries		712,500			737,072
Amount due to related parties		81,918,686			434,030			1,028,253			800,822
Other current liabilities		974,787			625,942			5,510,856			5,321,697
Convertible promissory note due to a related party		3,000,000			3,000,000
Convertible promissory note due to related parties								4,312,561			4,140,055
Total current liabilities		117,532,800			32,044,660			44,779,873			29,933,597
Other non-current liabilities		-			384,243
Deferred tax liabilities								427,531			513,935
Asset retirement obligations								8,000,000			8,000,000
Convertible note-long term								12,011,784			11,313,770
Operating lease liability								7,044,164			-
Total liabilities	$	117,532,800		$	32,428,903			72,263,352			49,761,302
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 17)
Convertible redeemable preferred stock:
Series A - 7,000,000 shares issued and outstanding, liquidation and deemed liquidation preference of $3,500,000 as of June 30, 2018 and December 31, 2017, respectively	$	1,261,995		$	1,261,995
Series A - 7,000,000 shares issued and outstanding, liquidation and deemed liquidation preference of $3,500,000 as of March 31, 2019 and December 31, 2018								1,261,995			1,261,995
Equity:
Common stock - $0.001 par value; 1,500,000,000 shares authorized, 73,092,299and 68,509,090 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively		73,092			68,509
Common stock - $0.001 par value; 1,500,000,000 shares authorized, 108,561,959 shares and 102,766,006 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively								108,561			102,765
Additional paid-in capital		176,033,510			158,449,544			205,203,264			195,779,576
Accumulated deficit		(138,734,415	)		(126,693,022	)		(130,048,787	)		(149,975,302	)
Accumulated other comprehensive loss		(936,020	)		(782,074	)		(1,492,465	)		(1,664,598	)
Total Seven Stars Cloud shareholders’ equity		36,436,167			31,042,957
Total IDEX shareholder’s equity								73,770,573			44,242,441
Non-controlling interest		(1,660,587	)		(1,289,367	)		(1,073,682	)		(1,030,626	)
Total equity		34,775,580			29,753,590			72,696,891			43,211,815
Total liabilities, convertible redeemable preferred stock and equity	$	153,570,375		$	63,444,488		$	146,222,238		$	94,235,112

*The above consolidated balance sheets present the Shanghai Guang Ming Investment Management Limited (“Guang Ming”) acquired from Tianjin Sun Seven Stars Culture Development Co. Ltd. (“Tianjin”) and Beijing Nanbei Huijin Investment Co. Ltd on April 4 2018 as if they had been owned by the Company since November 10, 2016 in accordance with ASC Subtopic 805-50 (See Note 4 “Acquisition”)

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

~~Seven Stars Cloud Group, Inc., Its Subsidiaries and Variable Interest Entities~~
~~UNAUDITED~~ IDEANOMICS, INC.

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

~~Seven Stars Cloud Group, Inc., Its Subsidiaries and Variable Interest Entities~~
~~UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS~~IDEANOMICS, INC.

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

~~Seven Stars Cloud Group, Inc., Its Subsidiaries and Variable Interest Entities~~
~~UNAUDITED~~ CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

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

~~Seven Stars Cloud Group, Inc., Its Subsidiaries and Variable Interest Entities~~IDEANOMICS, INC.

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

~~Seven Stars Cloud Group, Inc., Its Subsidiaries and Variable Interest Entities~~
~~UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY~~

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

~~Seven Stars Cloud Group,~~Note 1. Nature of Operations and Summary of Significant Accounting Policies

Ideanomics, Inc. ~~(the “Company”), formerly known as Wecast Network, Inc.,~~(Nasdaq: IDEX) is a Nevada corporation that primarily operates in ~~China~~the United States and Asia. The Company comprised of (i) our Legacy YOD business with primary operations in the PRC, and (ii) our Wecast Service business, a global financial technology (“~~PRC”~~Fintech”) advisory and Platform-as-a-Service company with the intent of offering customized services based on best-in-class blockchain, AI and other technologies to mature and emerging businesses across various industries. To do so, we are building a technology ecosystem through license agreements, joint ventures and strategic acquisitions, which we refer to as our “Fintech Ecosystem”. In parallel, through strategic acquisitions, equity investments and joint ventures, we are building a network of businesses, operating across industry verticals which we refer to as our “Industry Ventures”. We believe these industry verticals have significant potential to recognize benefits from blockchain and AI technologies that may, for example, enhance operations, address cost inefficiencies, improve documentation and standardization, unlock asset value and improve customer engagement. Our core business strategy is to promote the use, development and advancement of blockchain- and AI-based technologies, and our positioning in the fintech industry overall, by bringing technology leaders together with industry leaders and creating synergies between the businesses in our expanding Fintech Ecosystem and the businesses in our Industry Ventures.

Various aspects of the development of our Fintech Ecosystem and our Industry Ventures are still in the planning and testing phase and are generally not operational or revenue generating.

In this Form 10-Q, unless the context otherwise requires, the use of the terms "we," "us", "our" and the “Company” refers to Ideanomics, Inc, its consolidated subsidiaries and ~~consolidated~~ variable interest entities (“VIEs”). ~~The Company, its subsidiaries and consolidated VIEs are collectively referred to as Seven Stars Cloud (“SSC”, “we”, “us”, or “the Company”).~~

Starting in early 2017, SSC has been aiming to become a next generation Artificial-Intelligent (AI) & blockchain-powered, fintech company. By providing and managing an infrastructure and ecosystem that facilitates the transformation of traditional financial markets such as commodities, currency and credit into the asset digitalization era, SSC hopes to provide asset owners and holders a seamless method and platform for digital asset securitization, tokenization and trading. Separately, SSC is aiming to offer a closed supply chain trading ecosystem for corporate buyers and sellers designed to eliminate standard transactional intermediaries and create a more direct and margin-expanding path for principals.

~~Through acquisitions made in 2017 and the establishment of joint ventures with business partners, SSC’s supply chain finance and management for vertical products is fully operational.~~

On ~~January 30, 2017,~~April 24, 2018, the Company ~~entered into~~completed the acquisition of 100% equity ownership in Shanghai Guang Ming Investment Management (“Guang Ming”), a ~~Securities Purchase Agreement (the “Sun Video SPA”) with BT Capital Global Limited,~~PRC limited liability company. One of the two selling shareholders is a ~~British Virgin Islands company (“BT”) and~~related party, an affiliate of Dr. Wu. Guang Ming holds a special fund management license. The acquisition will help the ~~Company’s Chairman Bruno Wu,~~Company develop a fund management platform. Under Accounting Standard Codification (“ASC”) 805-50-05-5 and ASC 805-50-30-5, the transaction was accounted for as a reorganization of entities under common control, in a manner similar to a pooling of interest, using historical costs. As a result of the reorganization, the net assets of Guang Ming were transferred to the Company, and the accompanying consolidated financial statements as of and for the ~~purchase by~~three months ended March 31, 2018 have been prepared as if the ~~Company~~current corporate structure had been in place at the beginning of all of the outstanding capital stock of Sun Video Group Hong Kong Limited (“Wecast Services”). On January 31, 2017, the Company entered into another Securities Purchase Agreement (the “Wide Angle SPA”) with BT and Sun Seven Stars Media Group Limited, one of the Company’s largest shareholders, controlled by Mr. Wu, as guarantor, for the purchase by us of 55% of the outstanding capital stock of Wide Angle Group Limited (“Wide Angle”). Details of these two acquisitions areperiods presented in Note 4. After acquiring these two entities, other than Company’s legacy You On Demand (“YOD”) business, the Company became engaged in consumer electronics and smart supply chain management operations.

~~In 2017, the Company entered into another Securities Purchase Agreement (the “BT SPA”) with BT, pursuant to~~ which the ~~issued and outstanding stock that SSC holds in one loss-generating non-core asset, was sold to BT for zero. The detail of this transaction have been disclosed in Note 11.~~common control existed.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair ~~statement~~statements of the financial position as of ~~June 30, 2018,~~March 31, 2019, results of operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ and cash flows for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ have been made. All significant intercompany transactions and balances are eliminated on consolidation. However, the results of operations included in such financial statements may not necessary be indicative of annual results.

We use 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~~GAAP”) have been condensed or omitted. These unaudited 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, ~~2017~~2018 filed with the Securities and Exchange Commission on ~~March 30, 2018(“2017~~April 1, 2019 (“2018 Annual Report”).

~~In the first quarter~~Use of 2018, we adopted the following Accounting Standards Updates (ASU): ASU 2014-09, Revenue from Contracts with Customers (Topic 606); ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10) and ASU 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash ASU 2018-02. ASU 2014-09 has no financial impact to our unaudited financial statement, and impact by ASU 2016-01 and ASU 2016-18 has been reflected in our unaudited consolidated statements of cash flow and note 8 to this unaudited consolidated financial statements.

For the six months ended June 30, 2018 and 2017, the Company incurred loss from operations of approximately $12.7 million and $1.8 million, respectively, and incurred net loss of $12.4 million and $2.3 million, respectively, and cash used in operations was approximately $11.4 million and $1.7 million, respectively. Further, the Company had accumulated deficit of approximately $138.7 million and $126.7 million as of June 30, 2018 and December 31, 2017, respectively, due to recurring losses since the inception of its business.

The Company must continue to rely on proceeds from debt and equity issuances to pay for ongoing operating expenses in order to execute its business plan. On May 19, 2017, the Company completed a common stock financing for $2.0 million with certain investors, officers & directors and affiliates in a private placement. On October 23, 2017, the Company completed a common stock financing with Hong Kong Guo Yuan Group Capital Holdings Limited for $10 million. In March 2018, the Company entered into a common stock financing with GT Dollar Pte. Ltd., for a private placement totaling $40.0 million, which agreement was subsequently amended and restated on June 28, 2018 to reduce such investment to $10.0 million (See Note 9). The Company has received $5.3 million and expects to receive the remaining $4.7 million in the third quarter. The Company entered into a Convertible Note Purchase Agreement with Advantech Capital Investment II Limited on June 28, 2018 for $12.0 million. The funds were delivered on July 5, 2018.

Although the Company may attempt to raise funds by issuing debt or equity instruments, additional financing may not be available to the Company on terms acceptable to the Company or at all or such resources may not be received in a timely manner.

~~These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The~~preparation of consolidated financial statements ~~have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. If we are~~ in ~~fact unable to continue as a going concern, our shareholders may lose their entire investment in our Company.~~

~~To comply~~conformity with PRC laws and regulations that prohibit or restrict foreign ownership of companies that provides value-added telecommunication services, the Company provides its services through Sinotop Beijing. The Company has the ability to control Sinotop Beijing through a series of contractual agreements entered into among YOD WOFE, YOD Hong Kong, Sinotop Beijing and the legal shareholders of Sinotop Beijing.

Prior to January 2016, the Company entered into a series of contractual agreements to give it the ability to control Sinotop Beijing with Zhang Yan, the former legal shareholder of Sinotop Beijing (the spouse of its then-CEO). In January 2016, in connection with the appointment of a new CEO and in accordance with its rights under the contractual agreements, (1) the legal ownership of Sinotop Beijing was transferred from Zhang Yan to Bing Wu, the brother of its current Chairman and Yun Zhu, the former Vice President of Beijing Sun Seven Stars Culture Development Limited (“SSS”), (2) the Company terminated the series of contractual arrangements with Zhang Yan, and (3) the Company entered into new contractual agreements with Bing Wu and Yun Zhu (collectively, the “Former Sinotop VIE Agreements”). In October 2016, in accordance with its rights under contractual agreements, (1) the legal ownership of Sinotop Beijing was transferred from Bing Wu to Mei Chen, the former CFO of the Company, (2) the Company terminated the series of contractual arrangements with Bing Wu, and (3) the Company entered into new contractual agreements with Mei Chen (collectively, the “New Sinotop VIE Agreements”). Although the Former Sinotop VIE Agreements and New Sinotop VIE Agreements resulted in changes to the legal shareholders of Sinotop Beijing, there was no change in the Company’s ability to control Sinotop Beijing or the Company’s rights to 100% of the economic benefits of Sinotop Beijing. The Company was the primary beneficiary of Sinotop Beijing prior to the signing of the Former Sinotop VIE Agreements and New Sinotop VIE Agreements and the Company remained the primary beneficiary of Sinotop Beijing after the signing of the former Sinotop VIE Agreements and the New Sinotop VIE Agreements. Accordingly, the change in legal ownership of Sinotop Beijing did not have any impact to the Company’s consolidation of Sinotop Beijing. The key terms of the New Sinotop VIE Agreements are summarized as follows:

Pursuant to the Equity Pledge Agreement among YOD WOFE, Sinotop Beijing, Mei Chen and Yun Zhu (collectively, the “Nominee Shareholders”), the Nominee Shareholders pledged all of their equity interests in Sinotop Beijing (the “Collateral”) to YOD WOFE as security for the performance of the obligations of Sinotop BeijingU.S. GAAP requires management to make ~~all~~estimates and assumptions that affect the required technical service fee payments pursuant to the Technical Services Agreement and for performance of the Nominee Shareholders’ obligation under the Call Option Agreement. The terms of the Equity Pledge Agreement expire upon satisfaction of all obligations under the Technical Services Agreement and Call Option Agreement.

Pursuant to the Call Option Agreement among YOD WOFE, Sinotop Beijing and the Nominee Shareholders, the Nominee Shareholders granted an exclusive option to YOD WOFE, or its designee, to purchase, at any time and from time to time, to the extent permitted under PRC law, all or any portion of the Nominee Shareholders’ equity in Sinotop Beijing. The exercise price of the option shall be determined by YOD WOFE at its sole discretion, subject to any restrictions imposed by PRC law. The term of the agreement is until all of the equity interest in Sinotop Beijing held by the Nominee Shareholders are transferred to YOD WOFE, or its designee and may not be terminated by any part to the agreement without consent of the other parties.

Pursuant to the Power of Attorney agreements among YOD WOFE, Sinotop Beijing and each of the respective Nominee Shareholders, each of the Nominee Shareholders granted YOD WOFE the irrevocable right, for the maximum period permitted by law, all of its voting rights as shareholders of Sinotop Beijing. The Nominee Shareholders may not transfer any of its equity interest in Sinotop Beijing to any party other than YOD WOFE. The Power of Attorney agreements may not be terminated except until all of the equity in Sinotop Beijing has been transferred to YOD WOFE or its designee.

Pursuant to the Technical Service Agreement between YOD WOFE and Sinotop Beijing, YOD WOFE has the exclusive right to provide technical service, marketing and management consulting service, financial support service and human resource support services to Sinotop Beijing, and Sinotop Beijing is required to take all commercially reasonable efforts to permit and facilitate the provision of the services by YOD WOFE. As compensation for providing the services, YOD WOFE is entitled to receive service fees from Sinotop Beijing equivalent to YOD WOFE’s cost plus 30% of such costs as calculated on accounting policies generally accepted in the PRC. YOD WOFE and Sinotop Beijing agree to periodically review the service fee and make adjustments as deemed appropriate. The term of the Technical Services Agreement is perpetual, and may only be terminated upon written consent of both parties.

Pursuant to the Spousal Consent, undersigned by the respective spouse of Nominee Shareholders (collectively, the “Spouses”), the Spouses unconditionally and irrevocably agreed to the execution of the Equity Pledge Agreement, Call Option Agreement and Power of Attorney agreement. The Spouses agreed to not make any assertions in connection with the equity interest of Sinotop Beijing and to waived consent on further amendment or termination of the Equity Pledge Agreement, Call Option Agreement and Power of Attorney agreement. The Spouses further pledge to execute all necessary documents and take all necessary actions to ensure appropriate performance under these agreements upon YOD WOFE’s request. In the event the Spouses obtain any equity interests of Sinotop Beijing which are held by the Nominee Shareholders, the Spouses agreed to be bound by the New Sinotop VIE Agreements, including the Technical Services Agreement, and comply with the obligations thereunder, including sign a series of written documents in substantially the same format and content as the New Sinotop VIE Agreements.

Pursuant to the Letter of Indemnification among YOD WOFE and Mei Chen and YOD WOFE and Yun Zhu, YOD WOFE agreed to indemnify Nominee Shareholders against any personal, tax or other liabilities incurred in connection with their role in equity transfer to the greatest extent permitted under PRC law. YOD WOFE further waived and released Nominee Shareholders from any claims arising from, or related to, their role as the legal shareholder of Sinotop Beijing, provided that their actions as a nominee shareholder are taken in good faith and are not opposed to YOD WOFE’s best interests. Conversely, the Nominee Shareholders will not be entitled to dividends or other benefits generated therefrom, or receive any compensation in connection with this arrangement. The Letter of Indemnification will remain valid until either Nominee Shareholders or YOD WOFE terminates the agreement by giving the other party hereto 60 days’ prior written notice.

~~In addition to the New Sinotop VIE Agreements, the Management Service Agreement between Sinotop Beijing and YOD Hong Kong continued to remain in effect, the key terms of which are as follows:~~

Pursuant to a Management Services Agreement, as of March 9, 2010, YOD Hong Kong has the exclusive right to provide to Sinotop Beijing management, financial and other services related to the operation of Sinotop Beijing’s business, and Sinotop Beijing is required to take all commercially reasonable efforts to permit and facilitate the provision of the services by YOD Hong Kong. As compensation for providing the services, YOD Hong Kong is entitled to receive a fee from Sinotop Beijing, upon demand, equal to 100% of the annual net profits as calculated on accounting policies generally accepted in the PRC of Sinotop Beijing during the term of the Management Services Agreement. YOD Hong Kong may also request ad hoc quarterly payments of the aggregate fee, which payments will be credited against Sinotop Beijing’s future payment obligations.

The Management Services Agreement also provides YOD Hong Kong, or its designee, with a right of first refusal to acquire all or any portion of the equity of Sinotop Beijing upon any proposal by the sole shareholder of Sinotop Beijing to transfer such equity. In addition, at the sole discretion of YOD Hong Kong, Sinotop Beijing is obligated to transfer to YOD Hong Kong, or its designee, any part or all of the business, personnel, assets and operations of Sinotop Beijing which may be lawfully conducted, employed, owned or operated by YOD Hong Kong, including:

(a) business opportunities presented to, or available to Sinotop Beijing may be pursued and contracted for in the name of YOD Hong Kong rather than Sinotop Beijing, and at its discretion, YOD Hong Kong may employ the resources of Sinotop Beijing to secure such opportunities;

(b) any tangible or intangible property of Sinotop Beijing, any contractual rights, any personnel, and any other items or things of value held by Sinotop Beijing may be transferred to YOD Hong Kong at book value;

(c) real property, personal or intangible property, personnel, services, equipment, supplies and any other items useful for the conduct of the business may be obtained by YOD Hong Kong by acquisition, lease, license or otherwise, and made available to Sinotop Beijing on terms to be determined by agreement between YOD Hong Kong and Sinotop Beijing;

(d) contracts entered into in the name of Sinotop Beijing may be transferred to YOD Hong Kong, or the work under such contracts may be subcontracted, in whole or in part, to YOD Hong Kong, on terms to be determined by agreement between YOD Hong Kong and Sinotop Beijing; and

(e) any changes to, or any expansion or contraction of, the business may be carried out at the sole discretion of YOD Hong Kong, and in the name of and at the expense of, YOD Hong Kong; provided, however, that none of the foregoing may cause or have the effect of terminating (without being substantially replaced under the name of YOD Hong Kong) or adversely affecting any license, permit or regulatory status of Sinotop Beijing.

~~The term of the Management Services Agreement is 20 years, and may not be terminated by Sinotop Beijing, except with the consent of, or a material breach by, YOD Hong Kong.~~

Pursuant to the above contractual agreements, YOD WOFE can have the assets transferred freely out of Sinotop Beijing without any restrictions. Therefore, YOD WOFE considers that there is no asset of Sinotop Beijing that can be used only to settle obligations of Sinotop Beijing, except for the registered capital of the entity amounting to RMB10.6 million (approximately $1.6 million) as of June 30, 2018. As Sinotop Beijing is incorporated as limited liability company under PRC Company Law, creditors of this entity do not have recourse to the general credit of other entities of the Company.

To comply with PRC laws and regulations that prohibit or restrict foreign ownership of companies that provides value-added telecommunication services, the Company plans to also provide its services through SSF, which is applying to hold the licenses and approvals to provide digital distribution and Internet content services in the PRC. The Company has the ability to control SSF through a series of contractual agreements, as described below, entered into among YOD WOFE, YOD Hong Kong, SSF and the legal shareholders of SSF.

On April 5, 2016, YOD WOFE entered into variable interest entity agreements with SSF and its nominee shareholders pursuant to the Amended Tianjin Agreement dated December 21, 2015 (see Note 12(c)) (the “SSF VIE Agreements”). Lan Yang, holder of 99% equity ownership in SSF and a party to certain of the SSF VIE Agreements, is the spouse of Bruno Zheng Wu, the Company’s Chairman. Yun Zhu, holder of 1% equity ownership in SSF and a party to certain of the SSF VIE Agreements, is the Vice President of SSS.

Pursuant to the Equity Pledge Agreement among YOD WOFE, Lan Yang and Yun Zhu (the “Nominee Shareholders”), dated April 5, 2016, the Nominee Shareholders pledged all of their capital contribution rights in SSF to YOD WOFE as security for the performance of the obligations of SSF to make all the required technical service fee payments pursuant to the Technical Services Agreement and for performance of the Nominee Shareholders’ obligation under the Call Option Agreement. The terms of the Equity Pledge Agreement expire upon satisfaction of all obligations under the Technical Services Agreement and Call Option Agreement.

Pursuant to the Call Option Agreement among YOD WOFE, SSF and the Nominee Shareholders, dated April 5, 2016, the Nominee Shareholders granted an exclusive option to YOD WOFE, or its designee, to purchase, at any time and from time to time, to the extent permitted under PRC law, all or any portion of the Nominee Shareholders’ equity in SSF. The exercise price of the option shall be determined by YOD WOFE at its sole discretion, subject to any restrictions imposed by PRC law. The term of the agreement is until all of the equity interest in SSF held by the Nominee Shareholders is transferred to YOD WOFE, or its designee and may not be terminated by any party to the agreement without consent of the other parties.

Pursuant to the Power of Attorney agreements among YOD WOFE, SSF and each of the respective Nominee Shareholders, dated April 5, 2016, each of the Nominee Shareholders granted YOD WOFE the irrevocable right, for the maximum period permitted by law, to all of its voting rights as shareholders of SSF. The Nominee Shareholders may not transfer any of their equity interest in SSF to any party other than YOD WOFE. The Power of Attorney agreements may not be terminated except until all of the equity in SSF has been transferred to YOD WOFE or its designee.

Pursuant to the Technical Service Agreement, dated April 5, 2016, between YOD WOFE and SSF, YOD WOFE has the exclusive right to provide technical service, marketing and management consulting service, financial support service and human resource support services to SSF, and SSF is required to take all commercially reasonable efforts to permit and facilitate the provision of the services by YOD WOFE. As compensation for providing the services, YOD WOFE is entitled to receive service fees from SSF equivalent to YOD WOFE’s cost plus 20-30% of such costs as calculated on accounting policies generally accepted in the PRC. YOD WOFE and SSF agree to periodically review the service fee and make adjustments as deemed appropriate. The term of the Technical Services Agreement is perpetual, and may only be terminated upon written consent of both parties.

Pursuant to the Spousal Consent, dated April 5, 2016, undersigned by the respective spouse of the Nominee Shareholders (collectively, the “Spouses”), the Spouses unconditionally and irrevocably agreed to the execution of the Equity Pledge Agreement, Call Option Agreement and Power of Attorney agreement. The Spouses agreed to not make any assertions in connection with the equity interest of SSF and to waive consent on further amendment or termination of the Equity Pledge Agreement, Call Option Agreement and Power of Attorney agreement. The Spouses further pledge to execute all necessary documents and take all necessary actions to ensure appropriate performance under these agreements upon YOD WOFE’s request. In the event the Spouses obtain any equity interests of SSF which are held by the Nominee Shareholders, the Spouses agreed to be bound by the SSF VIE Agreements, including the Technical Services Agreement, and comply with the obligations thereunder, including sign a series of written documents in substantially the same format and content as the SSF VIE Agreements.

Pursuant to the Letter of Indemnification among YOD WOFE and Lan Yang and YOD WOFE and Yun Zhu, both dated as of April 5, 2016, YOD WOFE agreed to indemnify Nominee Shareholders against any personal, tax or other liabilities incurred in connection with their role in equity transfer to the greatest extent permitted under PRC law. YOD WOFE further waived and released the Nominee Shareholders from any claims arising from, or related to, their role as the legal shareholder of SSF, provided that their actions as a nominee shareholder are taken in good faith and are not opposed to YOD WOFE’s best interests. The Nominee Shareholders will not be entitled to dividends or other benefits generated therefrom, or receive any compensation in connection with this arrangement. The Letter of Indemnification will remain valid until either the Nominee Shareholders or YOD WOFE terminates the agreement by giving the other party hereto 60 days’ prior written notice.

Pursuant to the Loan Agreement among YOD WOFE and the Nominee Shareholders, dated April 5, 2016, YOD WOFE agrees to lend RMB 19.8 million and RMB 0.2 million, respectively, to the Nominee Shareholders for the purpose of establishing SSF and for development of its business. As of June 30, 2018, RMB 27.6 million (US $4.2 million) and RMB nil have been lent to Lan Yang and Yun Zhu, respectively. Lan Yang has contributed all of the RMB 27.6 million (US $4.2 million) in the form of capital contribution. The loan can only be repaid by a transfer by the Nominee Shareholders of their equity interests in SSF to YOD WOFE or YOD WOFE’s designated persons, through (i) YOD WOFE having the right, but not the obligation to at any time purchase, or authorize a designated person to purchase, all or part of the Nominee Shareholders’ equity interests in SSF at such price as YOD WOFE shall determine (the “Transfer Price”), (ii) all monies received by the Nominee Shareholders through the payment of the Transfer Price being used solely to repay YOD WOFE for the loans, and (iii) if the Transfer Price exceeds the principal amount of the loans, the amount in excess of the principal amount of the loans being deemed as interest payable on the loans, and to be payable to YOD WOFE in cash. Otherwise, the loans shall be deemed to be interest-free. The term of the Loan Agreement is perpetual, and may only be terminated upon the Nominee Shareholders receiving repayment notice, or upon the occurrence of an event of default under the terms of the agreement. The loan extended to the Nominee Shareholders and the capital of SSF are fully eliminated in the consolidated financial statements.

In addition to the SSF VIE Agreements, the Company’s subsidiary and the parent company of YOD WOFE, YOU On Demand (Asia) Limited, a company incorporated under the laws of Hong Kong (“YOD Hong Kong”) entered into a Management Services Agreement with SSF, dated as of April 6, 2016 (the “Management Services Agreement”). Pursuant to a Management Services Agreement, YOD Hong Kong has the exclusive right to provide to SSF management, financial and other services related to the operation of SSF’s business, and SSF is required to take all commercially reasonable efforts to permit and facilitate the provision of the services by YOD Hong Kong. As compensation for providing the services, YOD Hong Kong is entitled to receive a fee from SSF, upon demand, equal to 100% of the annual net profits as calculated on accounting policies generally accepted in the PRC of SSF during the term of the Management Services Agreement. YOD Hong Kong may also request ad hoc quarterly payments of the aggregate fee, which payments will be credited against SSF’s future payment obligations.

In addition, at the sole discretion of YOD Hong Kong, SSF is obligated to transfer to YOD Hong Kong, or its designee, any part or all of the business, personnel, assets and operations of SSF which may be lawfully conducted, employed, owned or operated by YOD Hong Kong, including:

(a) business opportunities presented to, or available to SSF may be pursued and contracted for in the name of YOD Hong Kong rather than SSF, and at its discretion, YOD Hong Kong may employ the resources of SSF to secure such opportunities;

(b) any tangible or intangible property of SSF, any contractual rights, any personnel, and any other items or things of value held by SSF may be transferred to YOD Hong Kong at book value;

(c) real property, personal or intangible property, personnel, services, equipment, supplies and any other items useful for the conduct of the business may be obtained by YOD Hong Kong by acquisition, lease, license or otherwise, and made available to SSF on terms to be determined by agreement between YOD Hong Kong and SSF;

(d) contracts entered into in the name of SSF may be transferred to YOD Hong Kong, or the work under such contracts may be subcontracted, in whole or in part, to YOD Hong Kong, on terms to be determined by agreement between YOD Hong Kong and SSF; and

(e) any changes to, or any expansion or contraction of, the business may be carried out in the exercise of the sole discretion of YOD Hong Kong, and in the name of and at the expense of, YOD Hong Kong;

provided, however, that none of the foregoing may cause or have the effect of terminating (without being substantially replaced under the name of YOD Hong Kong) or adversely affecting any license, permit or regulatory status of SSF.

~~The term of the Management Services Agreement is 20 years, and may not be terminated by SSF, except with the consent of, or a material breach by, YOD Hong Kong.~~

Pursuant to the above contractual agreements, YOD WOFE can have the assets transferred freely out of SSF without any restrictions. Therefore, YOD WOFE considers that there is no asset of SSF that can be used only to settle obligation of YOD WOFE, except for the registered capital of SSF amounting to RMB 50.0 million (approximately $7.5 million), among which RMB 27.6 million (approximately $4.2 million) has been injected as of June 30, 2018. As SSF is incorporated as limited liability company under PRC Company Law, creditors of this entity do not have recourse to the general credit of other entities of the Company.

~~The following financial information of our VIEs, as applicable for the periods presented, affected the Company's consolidated financial statements.~~

~~The decrease in revenue, net income and net cash used in operating activities was mainly due to disposal of Zhong Hai Shi Xun Media in 2017.~~

On January 30, 2017, the Company entered into a Securities Purchase Agreement (the “Sun Video SPA”) with BT Capital Global Limited, a British Virgin Islands company (“BT”) which is controlled by Company’s Chairman Bruno Wu, for the purchase by SSC of all of the outstanding capital stock of Sun Video Group Hong Kong Limited, a Hong Kong corporation (“SVG”), for an aggregate purchase price of $800,000 and a $50 million Promissory Note (the “SVG Note”) with the principal and interest thereon convertible into shares of the Company’s common stock at a conversion rate of $1.50 per share. BT has guaranteed that SVG will achieve certain financial goals within 12 months of the closing. Until receipt of necessary shareholder approvals, the SVG Note is not convertible into shares of our common stock, but once the necessary shareholder approval is received, the unpaid principal and interest thereon will automatically convert. Under the terms of the Sun Video SPA, BT has guaranteed that the business of SVG and its subsidiaries (the “Sun Video Business”) shall achieve revenue of $250 million and $15 million of gross profit (collectively the “Performance Guarantees”) within 12 months of the closing. If the Sun Video Business fails to meet either of the Performance Guarantees within such time, BT shall forfeit back to the Company the shares of the Company’s common stock or the SVG Note, on a pro rata basis based on the Performance Guarantee for which the Sun Video Business achieves the lowest percentage of the respective amount guaranteed.

In addition, if the Sun Video Business achieves more than $50 million in cumulative net income within 3 years of closing, (the “Net Income Threshold”), the Company shall pay BT 50% of the amount of any cumulative net income above the Net Income Threshold. Profit share payments shall be made on an annual basis, in either cash or stock at the discretion of our Board of Directors. If the Board decides to make the payment in stock, the number of our shares of common stock to be awarded shall be calculated based on the market price of such shares.

~~After the acquisition SVG, the Company changed its name to Wecast Services Group Limited, and is therefore also referred to herein as Wecast Services.~~

On January 31, 2017, the Company entered into a Securities Purchase Agreement (the “Wide Angle SPA”) with BT and Sun Seven Stars Media Group Limited, a Hong Kong company (“SSS”), one of the Company’s largest shareholders, controlled by our Chairman Bruno Wu, as guarantor, for the purchase by the Company of 55% of the outstanding capital stock of Wide Angle for the sole consideration of the Company adding Wide Angle to the Sun Video Business acquired by the Company under the Sun Video SPA and thereby including 100% of the revenue and gross profit from Wide Angle in the calculation of the SVG Performance Guarantees set forth in the Sun Video SPA considering the Company has consolidated Wide Angle.

As of June 30, 2018, the Company recorded the $24.3 million SVG Note as additional paid in capital, as the Company believes that the Performance Guarantees can be met within 12 months of the closing. Considering the proceeds transferred were larger than carryingreported amounts of ~~the net~~ assets, received, such $24.3 million was then recognized as a reduction to the Company’s additional paid in capital. The Company has not begun accruing any reserves relating to potential Net Income Threshold earnout payments, since the Sun Video Business is currently not close to exceeding this threshold.

On December 7, 2017, the Company entered into a Securities Purchase Agreement (the “BDCG Purchase Agreement”) with Tiger Sports Media Limited, a Hong Kong limited liability company (“Tiger”) pursuant to which the Company agreed to purchase Tiger’s 20% equity ownership in BBD Digital Capital Group Ltd. (“BDCG”), a New York corporation. SSC will purchase the 20% equity from Tiger for a total purchase price of $9.8 million (the “Transaction”) which consists of $2 million in cashliabilities, revenues and $7.8 million to be paid in the form of the Company’s capital stock (valued at $2.60 per share and equal to 3 million shares of the Company’s common stock). The valuation report was received post-signing of the BDCG Purchase Agreement with both parties agreeing that there is no obligation to close the Transaction until a satisfactory valuation report has been received, evaluated and approved by the Company’s Audit Committee. On April 24, 2018, the Audit Committee approved the satisfactory valuation report provided by an independent third party and closed this transaction. The Company paid the $2 million in cash upon the execution of the BDCG Purchase Agreement and issued the 3 million shares of Company common stock upon the closing of the Transaction which is contingent upon the receipt of a valuation report satisfactory to the Audit Committee. According to the BDCG Joint Venture Agreement, Board actions shall only be valid with more than 2/3 of the directors’ approval. As the Company is only able to assign 3 directors of the 5 in the Board, it is concluded that the Company does not have control in BDCG and should use an equity method to record the investment in BDCG. A~~fter such acquisition, the Company owns 60% of BDCG. It will be consolidated once the Company changes BDCG’s article of incorporation (or that joint venture agreement) according to GAAP.~~

On December 7, 2017, the Company entered into a Securities Purchase Agreement (the “GuangMing Purchase Agreement”) with Tianjin Sun Seven Stars Culture Development Co. Ltd, a PRC limited liability company (“Tianjin SSCD”) and Beijing Nanbei Huijin Investment Co., Ltd., a PRC limited liability company (“Beijing Nanbei”), pursuant to which the Company agreed to purchase Tianjin SSCD’s 80% equity ownership in Shanghai GuangMing Investment Management (“Shanghai GuangMing”), a PRC limited liability company, and Beijing Nanbei’s 20% equity ownership in Shanghai GuangMing. SSC will purchase the 100% equity for a total purchase price of $0.36 million (the “Transaction”). The fairness opinion report, which is delivered by Deloitte & Touche Financial Advisory Services Limited, has been received, evaluated and approved by the Company’s Audit Committee in April, 2018.

The Company recorded depreciation expense of approximately $10,537 and $18,121 for the three and six months ended June 30, 2018 and $32,707 and $200,798 for the three and six months ended June 30, 2017 respectively.

~~As of June 30, 2018 and December 31, 2017, the Company’s amortizing and indefinite lived intangible assets consisted of the following:~~

(i) During the second quarter of 2017, the Company determined that one of its subsidiaries in the US would not serve the core business or generate future cash flow. As no future cash flows will be generated from using the patents owned by this subsidiary, the Company estimated the fair value of those patents to be nil as of June 30, 2017. Fair value was determined using unobservable (Level 3) inputs. Impairment loss from patents of $63,621 was recognized in 2017 to write off the entire book value of the patents.

~~The following table outlines the amortization expense for the following years:~~

~~Equity investments without readily determinable fair values as of the period ended June 30, 2018 and December 31, 2017 are as follow:~~

In the first quarter of 2018, we adopted the ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10). Under the new ASC, entities no longer use the cost method of accounting as it was applied before, but it can elect a measurement alternative for equity investments that do not have readily determinable fair values and do not qualify for the practical expedient in ASC 820 to estimate fair value using the NAV per share. After management’s assessment of each of these three equity investments, management concluded that these three investments should be accounted for using measurement alternative. Under the alternative, the Company measures these investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer, and the Company has to make a separate election to use the alternative for each eligible investment and has to apply the alternative consistently from period to period until the investment’s fair value becomes readily determinable. ASU further requires that the Company should use prospective method for all equity investments without readily determinable fair values.

On April 13, 2016, SSF entered into a Game Right Assignment Agreement with SSS for the acquisition of certain game IP rights (“Game IP Rights”) for approximately $2.7 million (RMB18 million) in cash. On April 15, 2016, SSF entered into a Capital Increase Agreement with Nanjing Tops Game Co., Ltd. (“Topsgame”) and its shareholders whereby SSF transferred the Game IP Rights acquired from SSS to Topsgame in exchange for 13% of Topsgame’s equity ownership. Topsgame is a PRC company that specializes in the independent development and operation of online, stand-alone and other gamesexpenses, as well as the ~~distribution~~related disclosure of ~~domestic~~contingent assets and ~~overseas games. The Company’s 13% ownership interest does not provide the Company with the right to nor does the Company have representation on the board of directors of Topsgame.~~

The Company has recognized the cost of the investment in Topsgame, which is a private company with no readily determinable fair value, based on the acquisition cost of Game IP Rights of approximately $2.7 million and accounts for the investment by the cost method.

On September 14, 2016, SSF increased its investment in Topsgame by RMB3,900,000 (approximately $584,000) and maintained its 13% equity ownership of Topsgame. The investment continued to be accounted for as equity investments without readily determinable fair values.

The Company expects to sell its investment interest in Topgain and other owned IP and its investment interest in Frequency (discussed in Note 8 (ii)) to an independent third party with consideration greater than its net book value in 2018. The Company has signed a letter of intent with this third party and management believes it will close this transaction in 2018 on the basis of a valuation report provided by a qualified independent valuation firm. Accordingly, the Company did not make any impairment to either of these long-lived assets as of June 30, 2018.

In April 2016, the Company and Frequency Networks Inc. (“Frequency”) entered into a Series A Preferred Stock Purchase Agreement (the “SPA”) for the purchase of 8,566,271 shares of Series A Preferred Stock, Frequency (the “Frequency Preferred Stock”) for a total purchase price of $3 million. The 8,566,271 Series A Preferred Stock represent 9% ownership and voting interest on an as converted basis and does not provide the Company with the right to nor does the Company have representation on the board of directors of Frequency.

The Frequency Preferred Stock is entitled to non-cumulative dividends at the rate of $0.02548 per share per annum, declared at the discretion of Frequency’s board of directors. The Frequency Preferred Stock is also convertible into shares of Frequency common stock at the Company’s election any time after issuance on a 1:1 basis, subject to certain adjustment. Each share of Frequency Preferred Stock also has a liquidation preference of $0.42467 per share, plus any declared but unpaid dividends.

The Company has recognized the cost of the investment in Frequency, which is a private company with no readily determinable fair value, at its cost of $3 million and accounts for the investment by the cost method.

~~There were no identified events or changes in circumstances that may have had a significant adverse effect on the fair value of this investment.~~

In August, 2017, the Company subscribed for a strategic investment of US$250,000 in the Delaware Board of Trade Holdings, Inc. (“DBOT”) to acquire 187,970 common shares. DBOT is an approved and licensed FINRA- and SEC-regulated electronic trading platform with operations in Delaware. One of our subsidiaries is powered by DBOT’s platform, trading system and technology. The Company accounts for this investment as equity investments without readily determinable fair values, as the Company owns less than 4% of the common shares and the Company has no significant influence over DBOT.

On December 18, 2017, January 12, 2018 and February 28, 2018, the Company entered into three stock purchase agreements with certain existing DBOT shareholders to acquire their owned shares of common stock of DBOT in an aggregate amount of 3,543,546 shares. To acquireliabilities. Actual results could differ from those shares, the Company agreed to issue in the aggregate amount of 2,267,869 SSC common stock. The closing of these transactions with DBOT are still pending as it is necessary to obtain approval from FINRA, and the Company has not issued the shares and recorded such as additional investments as of June 30, 2018. Therefore the Company did not change the fair value of this investment.

~~Equity method investment movement for the six months ended on June 30, 2018 is as follow:~~estimates.

~~In October 2016,~~On an ongoing basis, we evaluate our estimates, including those related to the ~~Company’s subsidiary, YOU On Demand (Asia) Ltd., invested RMB1,000,000 (approximately $149,750) in Wecast Internet Limited (“Wecast Internet”)~~bad debt allowance, variable considerations, fair values of financial instruments, intangible assets (including digital tokens) and ~~held its 50% equity ownership. In 2017, Wecast Internet closed its 100% owned subsidiary~~goodwill, useful lives of intangible assets and property and equipment, asset retirement obligations, income taxes, and contingent liabilities, among others. We base our estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the ~~Company received $35,612 from its previous capital investment,~~results of which form the basis for making judgments about the carrying values of assets and ~~expects to receive the remaining investment from Wecast Internet in 2018.~~

~~As of the period ended June 30, 2018 and December 31, 2017, the Company held 39% equity ownership in Hua Cheng, and accounted for the investment by the equity method.~~

As of the period ended June 30, 2018 and December 31, 2017, the Company held 30% equity ownership in Shandong Media, and accounts for the investment by the equity method. The investment was fully impaired as of June 30, 2018 and December 31, 2017.

As of the period ended June 30, 2018 and December 31, 2017, the Company held 60% and 20% equity ownership in BDCG respectively, and accounts for the investment by the equity method, as indicated in Note 4.

On May 19, 2017, the Company entered into a subscription agreement with certain investors, including officers, directors and other affiliates of the Company, pursuant to which the Company issued and sold to such investors, in a private placement, an aggregate of 727,273 shares of the common stock of the Company, for $2.75 per share, or a total purchase price of $2.0 million. Investors in the private placement included Lan Yang, the wife of the Company’s Chairman Bruno Wu, and China Telenet Ventures Limited, an entity owned and controlled by Sean Wang, a member of the Company’s Board of Directors. As of July 18, 2017, all subscription amounts have been received by the Company.liabilities.

On October 23, 2017, the Company entered into a Securities Purchase Agreement with Hong Kong Guo Yuan Group Capital Holdings Limited. Pursuant to the terms of the agreement, the Company has agreed to sell and issue 5,494,505 shares of the Company’s common stock to the Hong Kong Guo Yuan Group Capital Holdings Limited for $1.82 per share, or a total purchase price of $10.0 million.

On March 17, 2018, the Company entered into a subscription agreement (the “Subscription Agreement”) with GT Dollar Ptd. Ltd. (“GTD”) for a private placement (“GT Financing”) in the total amount of $40.0 million, which consists of issuance of new shares in the amount of US$25,066,878.20 and issuance of two promissory notes in the amount of US$10,000,000 and US$4,933,121.80, respectively. The Subscription Agreement was subsequently amended and restated (the “Amended Agreement”) on June 28, 2018 to reduce the amount of such investment to $10.0 million and to terminate the two promissory notes. Pursuant to the terms of the Amended Agreement, the Company will issue and sell to GTD, an aggregate of 5,494,506 shares of the common stock of the Company, par value $0.001 per share (the “Common Stock”), for $1.82 per share, or a total purchase price of $10,000,000.92. The Company has received $5.3 million and expects to receive the remaining $4.7M in the third quarter. The Company has not yet issued any shares with respect to this financing.

Accounting standards require the categorization of financial assets and liabilities, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The various levels of the fair value hierarchy are described as follows:

Level 2 — Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

~~Accounting standards require~~The fair value hierarchy requires an entity to maximize the use of observable ~~market data,~~inputs and minimize the use of unobservable inputs when ~~available, in making~~measuring fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.value.

The Company reviews the valuation techniques used to determine if the fair value measurements are still appropriate on an annual basis, and evaluate and adjust the unobservable inputs used in the fair value measurements based on current market conditions and third party information.

~~Common stock is valued~~Our financial assets and liabilities that are measured at ~~closing price reported~~fair value on ~~the active market on which the individual securities are traded.~~

~~The carrying amount of~~ cash equivalents, accounts ~~receivable, notes~~ receivable, accounts payable, accrued ~~other~~ expenses, other current liabilities and convertible ~~promissory note as~~notes. The fair values of ~~June 30, 2018 and December 31, 2017,~~these assets approximate ~~fair value~~carrying values because of the ~~short maturity~~short-term nature of these instruments. If these instruments were measured at fair value in the financial statements, they would be classified as Level 1 in the fair value hierarchy.

Our financial assets that are measured at fair value on a nonrecurring basis include goodwill and other intangible assets, asset retirement obligations, and adjustment in carrying value of equity securities for which the measurement alternative of cost less impairment plus or minus observable price changes is used. There were no material impairments and no material adjustments to equity securities using the measurement alternative for the three months ended March 31, 2019 and 2018.

Digital tokens consist of GTB tokens received in connection with the services agreement and assets purchase agreement with GT Dollar Pte. Ltd. (“GTD”), our minority shareholder (Note 3 and 13 (b)). Given that there is limited precedent regarding the classification and measurement of cryptocurrencies and other digital tokens under current GAAP, the Company has determined to account for these tokens as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other until further guidance is issued by the FASB.

Indefinite-lived intangible assets are recorded at cost and are not subject to amortization, but shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If, at the time of an impairment test, the carrying amount of an intangible asset exceeds its fair value, an impairment loss in an amount equal to the excess is recognized. The fair value of GTB tokens was a Level 2 measurement (see Note 3) based upon the consideration agreed by GTD and the Company with a discount considering volatility, risk and limitations at contract inception.

Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income. Note 2 provides information about our adoption of new accounting standards for leases.

We adopted Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as of January 1, 2019, using a modified retrospective transition method and as a result, the consolidated balance sheet prior to January 1, 2019 was not restated, continues to be reported under ASC Topic 840, Leases, or ASC 840. For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease.

The lease liability is based on the present value of the remaining minimum lease payments, determined under ASC 840, discounted using our incremental borrowing rate at the effective date of January 1, 2019, using the original lease term as the tenor. As permitted under the transition guidance, we elected several practical expedients that permit us to not reassess (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. The application of the practical expedients did not have a significant impact on the measurement of the operating lease liability. Adoption of the new standard resulted in the recording of operating right of use assets and the related lease liabilities of approximately $3.6 million and $3.7 million, respectively, as of January 1, 2019. The difference between the additional lease assets and lease liabilities was immaterial. The standard did not materially impact our consolidated operating results and had no impact on cash flows. Please see Note 9.

In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which largely aligns the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees. The ASU also clarifies that any share-based payment issued to a customer should be evaluated under ASC 606,Revenue from Contracts with Customers. The ASU requires a modified retrospective transition approach. We adopted ASU 2018-07 as of January 1, 2019 and there is no impact to our consolidated financial statement because we did not have such payments in 2019.

In July 2017, the FASB issued ASU No. 2017-11, (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. The new standard applies to issuers of financial instruments with down-round features. A down-round provision is a term in an equity-linked financial instrument (i.e. a freestanding warrant contract or an equity conversion feature embedded within a host debt or equity contract) that triggers a downward adjustment to the instrument’s strike price (or conversion price) if equity shares are issued at a lower price (or equity-linked financial instruments are issued at a lower strike price) than the instrument’s then-current strike price. The purpose of the feature is typically to protect the instrument’s counterparty from future issuances of equity shares at a more favorable price. The ASU amends (1) the classification of such instruments as liabilities or equity by revising the certain guidance relative to evaluating if they must be accounted for as derivative instruments and (2) the guidance on recognition and measurement of freestanding equity-classified instruments. For the Company, this ASU was effective January 1, 2019. Please see Note 11.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13) "Financial Instruments-Credit Losses (Topic 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. We will adopt ASU 2016-13 effective January 1, 2020. We are currently evaluating the effect of the adoption of ASU 2016-13 on our consolidated financial statements. The effect will largely depend on the composition and credit quality of our investment portfolio and the economic conditions at the time of adoption.

The Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.

The majority of the Company’s revenue is derived from Wecast Service. The following table presents our revenues disaggregated by revenue source, geography (based on our business locations) and timing of revenue recognition.

Wecast Services is mainly engaged in the logistics management, including sales of crude oil, consumer electronics, and digital consulting services such as assets management and marketing services.

Revenue from the sales of crude oil and consumer electronics is recognized when the customer obtains control of the Company’s crude oil and consumer electronics, which occurs at a point in time, usually upon shipment or upon acceptance. The contracts are generally short-term contracts where the time between order confirmation and satisfaction of all performance obligations is less than one year.

The most significant judgment is determining whether we are the principal or agent for the sales of crude oil and consumer electronics. We report revenues from these transactions on a gross basis where we are the principal considering the following principal versus agent indicators:

On March 14, 2019, the Company entered into a service agreement with one of our minority shareholders, GTD to provide digital asset management services including consulting, advisory and management services which will be delivered in two phases. There are two performance obligations: (1) the development of a master plan for GTD’s assets for 7,083,333 GTB tokens agreed by both parties; and (2) exclusive marketing and business development management services for a fee as percentage (0.25%) of the total market value of GTB tokens; based on a 10-day average of the 10 business days leading up to the end of a respective calendar month, and paid on the first day of each new calendar month.

The Company recognizes revenue for the master plan development services over the contract period (expected to be completed in six months), based on the progress of the services provided towards completed satisfaction. Based on ASC 606-10-32, at contract inception, the Company considered the following factors to estimate the fair value of GTB token (noncash consideration): a) it only trades in one exchange, which operations have been less than one year; b) its historical volatility is high; c) the Company’s intention to hold the majority of GTB tokens, as part of our digital asset management services; and d) associated risks discussed in Note 18 (f). Therefore, the fair value of 7,083,333 GTB tokens using Level 2 measurement was approximately $40.7 million with a 76% discount to the fixed contract price agreed upon by both parties when signed the contract. We considered similar token exchanges in Singapore and considered the volatility of the quoted prices and determined a discount of 76%. We recognized $26.6 million for the three months ended March 31, 2019 and recognized deferred revenue in the amount of $14.1 million as of March 31, 2019.

The Company considers the payments for marketing and business development management services as performance based consideration, in accordance with ASC 606 on constraining estimates of variable consideration, including the following factors:

For the three months ended March 31, 2019, the Company only provided the development service and recognized revenue of $26.6 million.

Since 2017, we run our legacy YOD segment with limited resources. No revenue was recognized for the three months ended March 31, 2019 and 2018.

Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the observable prices charged to customers or adjusted market assessment or using expected cost plus margin when one is available. Adjusted market assessment price is determined based on overall pricing objectives taking into consideration market conditions and entity specific factors.

Certain customers may receive discounts, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. Our revenue reserves, consisting of various discounts and allowances, which are components of variable consideration as discussed above, are considered an area of significant judgment. Additionally, our digital asset management service revenue, as discussed above, is calculated as a percentage (0.25%) of the total market value of GTB tokens. For these areas of significant judgment, actual amounts may ultimately differ from our estimates and are adjusted in the period in which they become known.

We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. The increase in the deferred revenue balance for the three months ended March 31, 2019 is primarily driven by cash payments and GTB tokens received or due in advance of satisfying our performance obligations.

Our payment terms vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, we require payment before the products or services are delivered to the customer.

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

We consolidate VIEs in which we hold a variable interest and are the primary beneficiary through contractual agreements. We are the primary beneficiary because we have the power to direct activities that most significantly affect their economic performance and have the obligation to absorb the majority of their losses or benefits. The results of operations and financial position of these VIEs are included in our consolidated financial statements.

For these consolidated VIEs, their assets are not available to us and their creditors do not have recourse to us. As of March 31, 2019 and December 31, 2018, assets (mainly long-term investments) that can only be used to settle obligations of these VIEs were approximately $3.6 million and $3.5 million, respectively, and the Company is the major creditor for the VIEs.

In order to operate our Legacy YOD business in PRC and to comply with PRC laws and regulations that prohibit or restrict foreign ownership of companies that provides value-added telecommunication services, the Company entered into a series of contractual agreements with two VIEs: Beijing Sinotop Scope Technology Co., Ltd (“Sinotop Beijing”) and Tianjin Sevenstarflix Network Technology Limited (“SSF”). These contractual agreements will be expired in March 2030 and April 2036, respectively and may not be terminated by the VIEs, except with the consent of, or a material breach by us. Currently, the Company is still evaluating the overall operating strategy for YOD legacy business and does not have plan to provide any funding to these two VIEs. Please refer to Note 18(a) for associated regulatory risks.

Based on the contracts we entered with VIEs’ shareholders, we consider that there is no asset of the VIEs that can be used only to settle obligation of the Company, except for the registered capital of VIEs amounting to RMB 38.2 million (approximately $5.7 million).

On February 19, 2019, the Company completed the acquisition of certain assets from SolidOpinion in exchange for 4,500,000 shares of the Company’s common stock. The assets include cash ($2.5 million) and an intellectual property (“IP”) which is complementary to the IP of Grapevine. The parties agreed that 450,000 of such shares of common stock (“Escrow Shares”) will be held in escrow until February 19, 2020 in connection with SolidOpinion’s indemnity obligations pursuant to the agreement. SolidOpinion have the rights to vote and receive the dividends paid with respect to the Escrow Shares.

On March 5, 2019, the Company entered into the following acquisition agreements:

The transactions are conditioned upon the Company’s completion of its due diligence, customary closing conditions and regulatory approval. We paid $620,000 in March 2019 as an investment deposit and recorded in prepayments on our consolidated balance sheet as of March 31, 2019.

The Company recorded depreciation expense of approximately $16,609 and $7,584, which is included in its operating expense for the three months ended March 31, 2019 and 2018, respectively.

The Company capitalized direct costs and interest cost incurred on funds used to construct Fintech Village and the capitalized cost is recorded as part of construction in progress. Capitalized cost was approximately $586,000 for the three months ended March 31, 2019 mainly related to the legal and architect costs.

There were no acquisitions that closed during the first three months of 2019 and there is no change in the carrying amount of goodwill.

Information regarding amortizing and indefinite lived intangible assets consisted of the following:

Amortization expense relating to intangible assets was $227,568 and $2,621 for the three months ended March 31, 2019 and 2018, respectively.

The following table outlines the expected amortization expense for the following years:

Long-term investmentsconsisted of Non-marketable Equity Investment and Equity Method Investment as below:

Our non-marketable equity investments are investments in privately held companies without readily determinable fair values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The Company reviews its equity securities without readily determinable fair values on a regular basis to determine if the investment is impaired. For purposes of this assessment, the Company considers the investee’s cash position, earnings and revenue outlook, liquidity and management ownership, among other factors, in its review. If management’s assessment indicates that an impairment exists, the Company estimates the fair value of the equity investment and recognizes in current earnings an impairment loss that is equal to the difference between the fair value of the equity investment and its carrying amount. There is no impairment for the three months ended March 31, 2019.

The Company’s investment in companies accounted for using the equity method of accounting consist of the following:

All the investments above are privately held companies; therefore, quoted market prices are not available. We have not received any dividends since initial investments.

Starting from October 2016, we have 50% interest in Wecast Internet Limited (“Wecast Internet”) and initial investment was invested RMB 1,000,000 (approximately $149,750). Wecast Internet is in the process of liquidation and the remaining carrying value is immaterial.

The Company held 39% equity ownership in Hua Cheng, a company established to provide integrated value-added service solutions for the delivery of VOD and enhanced content for cable providers.

The Company held 30% equity ownership in Shandong Media, a print based media business, for Legacy YOD business. The accumulated operating loss of Shandong Media reduced the Company’s investment in Shandong Media to zero. The Company has no obligation to fund future operating losses.

In 2018, we signed a joint venture agreement with two unrelated parties, to establish BDCG located in the United States for providing block chain services for financial or energy industries by utilizing AI and big data technology in the United States. On April 24, 2018, the Company acquired 20% equity ownership in BDCG from one noncontrolling party with cash consideration of a total consideration of $9.8 million which consists of $2 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 million shares of the Company’s common stock), increasing the Company’s ownership to 60%. The remaining 40% of BDCG are held by Seasail ventures limited (“Seasail”). The accounting treatment of the joint venture is based on the equity method due to variable substantive participating rights (in accordance with ASC 810-10-25-11) granted to Seasail. The new entity is currently in the process of ramping up its operations. In April 2019, the company rebranded the name of the BDCG joint venture to Intelligenta. As part of the rebranding, Intelligenta’s strategy will now include credit services, corporation services, index services and products, and capital market services and products.

As of March 31, 2019, the Company held 36.92% equity ownership in DBOT. DBOT is an approved and licensed FINRA- and SEC-regulated electronic trading platform with operations in Delaware. One of our subsidiaries is powered by DBOT’s platform, trading system and technology.

In April, 2019, the Company entered into a securities purchase agreement to acquire additional shares in DBOT for 4,427,870 shares of the Company’s common stock at $2.11 per share, thereby becoming the majority and controlling shareholder in DBOT.

We lease certain office space and equipment from third parties. Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis over the lease term. For leases beginning in 2019 and later, at the inception of a contract we assess whether the contract is, or contains, a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the right to direct the use of the asset. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Leases entered into prior to January 1, 2019, are accounted for under ASC 840 and were not reassessed. We account for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the nonlease components (e.g.,common-area maintenance costs).

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one year or more. The exercise of lease renewal options is at our sole discretion. Our leases do not include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Certain of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. All our leases are operating lease. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The effect of short-term leases and initial direct costs on our right-of-use asset and lease liability was not material.

As of March 31, 2019, our operating lease right of use assets and operating lease liability are approximately $6.8 million and $7.0 million, respectively. The operating lease expenses including in Selling, general and administrative expense are approximately $428,000 and $216,000 for the three months ended March 31, 2019 and 2018, respectively. The weighted-average remaining lease term is 3.8 years and the average discount rate is 7.25%.

“Other current assets” were approximately $3.8 million and $3.6 million as of March 31, 2019 and December 31, 2018, respectively. Component of "Other current assets" that was more than 5 percent of total current assets: other receivable from third parties in our subsidiaries located in PRC in the amount of $3.5 million and $3.3 million respectively.

“Other current liabilities” were approximately $5.5 million and $5.3 million as of March 31, 2019 and December 31, 2018, respectively. Components of "Other current liabilities" that were more than 5 percent of total current liabilities were other payable to third parties in the amount of $4.8 million and $4.6 million respectively.

The following is the summary of outstanding convertible notes as of March 31, 2019:

On June 28, 2018, the Company entered into a convertible note purchase agreement with Advantech Capital Investment II Limited (“Advantech”) in the aggregate principal amount of $12,000,000 (the Notes). The Notes bear interest at a rate of 8%, mature on June 28, 2021, and are convertible into approximately 6,593,406 shares of the Company’s common stock at a conversion price of $ 1.82 per share. The difference between the conversion price and the fair market value of the common stock on the commitment date (transaction date) resulted in a beneficial conversion feature recorded of approximately $1.4 million. Total interest expense recognized relating to the beneficial conversion feature was $114,000 and $0.0 during the three months ended March 31, 2019 and 2018, respectively. The agreement also requires the Company to comply with certain covenants, including restrictions on the use of the proceeds and other convertible note offering. As of March 31, 2019, the Company was in compliance with all ratios and covenants.

On February 22, 2019, the Company executed a security purchase agreement with ID Venturas 7, LLC (“IDV”), whereby the Company issued $2,050,000 of senior secured convertible note. The note bears interest at a rate of 10% per year payable either in cash or in kind at the option of the Company on a quarterly basis and matures on August 22, 2020. In addition, IDV is entitled to the following: (i) the convertible note is senior secured; (ii) convertible at $1.84 per share of Company common stock at the option of IDV (approximately 1,114,130 shares), subject to adjustments if subsequent equity shares have a lower conversion price, (ii) 1,166,113 shares of common stock of the Company and (iii) a warrant exercisable for 150% of the number of shares of common stock which the Note is convertible into (approximately 1,671,196 shares) at an exercise price of $1.84 per share and will expire 5 years after issuance.

The Company received aggregate gross proceeds of $2 million, net of $50,000 for the issuance expenses paid by IDV. Total funds received were allocated to convertible note, common stocks and warrants based on their relative fair values in accordance with ASC 470-20-30. The value of the convertible note and common stocks was based on the closing price 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 relative fair value of the warrants was recorded as additional paid-in capital and reduced the carrying amount of the convertible note. The Company recognized a beneficial conversion feature discount on convertible note at its intrinsic value, which was the fair value of the common stock at the commitment date for convertible note, less the effective conversion price. The Company recognized approximately $600,000 of beneficial conversion feature as an increase in additional paid in capital and reduced (discount on) the carrying amount of the convertible note in the accompanying consolidated balance sheet.

The discounts on the convertible note for the warrants and beneficial conversion feature are being amortized to interest expense, using the effective interest method over the term of the convertible note. As of March 31, 2019, the unamortized discount on the convertible note is approximately $1,724,000. Total interest expense recognized relating to the discount was approximately $326,000 during the period ended March 31, 2019.

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

The security purchase agreement contains customary representations, warranties and covenants. The convertible note is collateralized by the Company’s equity interest in Grapevine, which had a carrying amount of $2.6 million as of March 31, 2019. The Company has the right to request for the removal of the guarantee and collateral by issuance of additional 250,000 shares of common stock. In addition, IDV has registration rights that require the Company to file and register the common stock issued or issuable upon conversion of the convertible note or the exercise of the warrants, within 180 days following the closing of the transaction.

The Company is also subject to penalty fee at 8% per annum for late payments of interests and compensation for the loss of IDV on failure to timely deliver conversion shares upon conversion.

Our board of directors has authorized 50 million shares of convertible preferred stock, $0.001 par value, issuable in series.

As of March 31, 2019 and December 31, 2018, 7,000,000 shares of Series A preferred stock were issued and outstanding and is convertible, at any time at the option of the holder, into 933,333 shares of common stock (subject to customary adjustments). The Series A preferred stock shall be entitled to ten vote per common stock on an as-converted basis and only entitled to receive dividends when and if declared by the board. On liquidation, both series of preferred stock are entitled to a liquidation preference of $0.50 per share. The shares are not redeemable except on liquidation or if there is a change in control of the Company or a sale of all or substantially all of the assets of the Company. The conversion price of the Series A may only be adjusted for standard anti-dilution, such as stock splits and similar events. The Series A preferred stocks are considered to be equity instruments and therefore the embedded conversion options have not been separated. Because the preferred stocks have conditions for their redemption that may be outside the control of the Company, they have been classified outside of Shareholders’ Equity, in the mezzanine section of our balance sheet.

Our board of directors has authorized 1,500 million shares of common stock, $0.001 par value.

On May 10, 2012, ~~the Executive~~Mr. McMahon, our Vice Chairman, ~~and Principal Executive Officer, Mr. Shane McMahon,~~ made a loan to the Company in the amount of $3,000,000. In consideration for the loan, the Company issued a convertible note to Mr. McMahon in the aggregate principal amount of $3,000,000 (the “Note”) at a 4% interest rate computed on the basis of a ~~365 day~~365-day year. ~~Upon issuance,~~We entered several amendments with respect to the effective conversion price (changed from $1.75 to $1.5), convertible stocks (changed from of ~~the Note was equal~~Series E Preferred Stock to ~~the price per share paid for securities by investors in the most recent financing (as~~Common Stock) and extension of ~~the date of conversion) of equity or equity-linked securities of the Company.~~

~~On November 9, 2017, the Board of Directors approved Amendment No. 7 to $3.0 million Note, pursuant to which~~ the maturity date ~~of the Note was extended~~ to December 31, 2019. ~~The Note remains payable on demand or convertible on demand into Common Stock at a conversion price of $1.50.~~

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018, the Company recorded interest expense of ~~$30,000~~$29,589 and ~~$59,507, respectively,~~$30,000 related to the ~~Note;~~Note. Interest payable was $169,644 and $140,055 as of March 31, 2019 and December 31, 2018, respectively.

$2.5 Million Convertible Promissory Note with Sun Seven Stars Investment Group Limited (“SSSIG”)

On February 8, 2019, the Company entered into a convertible promissory note agreement with SSSIG, an affiliate of Mr. Wu, in the aggregate principal amount of $2,500,000. The convertible promissory note bear interest at a rate of 4%, matures on February 8, 2020, and are convertible into the shares of the Company’s common stock at a conversion price of $1.83 per share anytime at the option of SSSIG.

As of March 31, 2019, the Company received $1.1 million from SSSIG. The Company has not received the remaining $1.4 million as of the date of this report. For the three ~~and six~~ months ended ~~June 30, 2017,~~March 31, 2019, the Company recorded interest expense of ~~$29,507 and $59,507, respectively,~~$10,617 related to the ~~Note.~~note.

In March 2019, the Company completed the sale of the following assets (with total carrying amount of approximately $20.4 million) to GTD, a minority shareholder based in Singapore, in exchange for 1,250,000 GTB tokens. The Company considers the arrangement is a nonmonetary transaction and the fair values of GTB tokens are not reasonably determinable due to ~~strategic~~the reasons described in Note 3. Therefore, GTB tokens received are recorded at the carrying amount of the assets exchanged and the Company ~~and BT have agreed~~did not recognize any gain or loss based on ASC 845-10-30.

Please refer to amend the BT SPA, in which the Company will neither sell to BT the equity of Nanjing Tops Game Co., Ltd, and the equity of the Pantaflix joint venture nor receive the previously agreed upon consideration for such sales. But the Company will still sell to BT 80% of the outstanding capital stock of Zhong Hai Shi Xun Media to streamline the operations of the Company and to eliminate the Company’s exposure to any liabilities and obligations of Zhong Hai Shi Xun Media.Note 3.

On December 7, 2017, the Company entered into a Securities Purchase Agreement with Shanghai Guang Ming Investment Management Limited, a PRC limited liability entity (“Guang Ming”), Tianjin Sun Seven Stars Culture Development Co. Ltd. (“Tianjin”) and Beijing Nanbei Huijin Investment Co. Ltd. SSC will purchase 100% of Guang Ming’s issued and outstanding shares for a total purchase price of RMB 2.4 million (approximately $363,436). Guang Ming holds a special fund management license and SSC’s purpose for making the acquisition is to develop a fund management platform. The closing of the acquisition is conditioned upon, among other things, the sellers, including Guang Ming, obtaining all of the necessary approvals from the Asset Management Association of China (“AMAC”), a self-regulatory organization which oversees and regulates fund management companies in China. In the event that AMAC does not accept the sellers’ submission for change of ownership, this agreement shall be rescinded, and the sellers shall continue their ownership of Guang Ming and shall refund any portion of the purchase price previously paid within 15 days of notice from the Company. This agreement was approved by the Company’s Audit Committee and the closing of the Acquisition is also subject to the receipt of a fairness opinion and valuation report satisfactory to the Company and which concludes that the purchase price of the acquisition is fair from a financial point of view to the Company. The acquisition is deemed to be a related party transaction because Tianjin is an affiliate of Bruno Wu, the Company’s Chairman and Chief Executive Officer. In April 2018, the fairness opinion was approved by Audit Committee, and the Company paid the consideration and closed this acquisition.

~~During~~For the ~~first six~~three months ofended March 31, 2018, ~~ten of our~~we purchased crude oil ~~transactions were purchased~~in the amount of approximately $162.3 million from ~~three entities~~two suppliers that a minority shareholder of ~~which our minority shareholder~~the Company has significant influence upon ~~and~~ because this minority shareholder has significant influence on both our Singapore joint venture and these ~~three entities/suppliers,~~two suppliers. The Company has recorded the ~~Company reported these ten purchases~~purchase on a separate line item referenced as “Cost of revenue from related ~~party transaction from accounting perspective and hence recorded this as separate related party costs~~parties” in its financial ~~statement. Associated amounts payable represents almost 69.6%~~statements. There is no outstanding balances due (in Accounts Payable) as of ~~total liabilities.~~March 31, 2019. No such related party transactions occurred for the same period in 2019.

On February 20, 2019, the Company accepted the resignation of former Chief Executive Officer, former Chief Investment Officer and former Chief Strategy Officer and agreed to pay approximately $837,000 in total for salary, severance and expenses. The Company paid $637,000 in the first quarter of year 2019 and recorded $200,000 in other current liabilities on our consolidated balance sheet as of March 31, 2019.

As of ~~June 30, 2018,~~March 31, 2019, the Company had ~~1,773,392~~1,646,431 options, ~~130,586~~87,586 restricted shares and ~~403,714~~1,671,196 warrants outstanding.

The Company awards common stock and stock options to employees and directors as compensation for their services, and accounts for its stock option awards to employees 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.

~~Total share-based payments expense recorded by the Company during the three and six months ended June 30, 2018 and 2017 is as follows:~~

Effective as of December 3, 2010 and amended on August 3, 2018, our Board of Directors approved the ~~Wecast Network, Inc.~~ 2010 Stock Incentive Plan (“the 2010 Plan”) pursuant to which options or other similar securities may be granted. ~~The~~As of March 31, 2019, the maximum aggregate number of shares of our common stock that may be issued under the 2010 Plan is ~~4,000,000~~31,500,000 shares. As of ~~June 30, 2018,~~March 31, 2019, options available for issuance are ~~92,499~~27,575,499 shares.

For the three months ended March 31, 2019 and 2018, total share-based payments expense was approximately $224,000 and $121,000, respectively.

Stock option activity for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 is summarized as follows:

As of ~~June 30, 2018,~~March 31, 2019, approximately ~~$110,584~~$12,448 of total unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average period of approximately ~~1.93~~0.61 years. The total fair value of shares vested for the three months ended March 31, 2019 and 2018 was $6,312 and $312,688 respectively. Cash received from options exercised during the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~ was approximately ~~$319,001~~$0.0 and ~~$19,357, respectively.~~ $2,632.

In connection with the Company’s financings, the Warner Brother Agreement and the service agreements, the Company issued warrants to service providers to purchase common stock of the Company. The warrants ~~that were~~ issued to ~~SSS has been~~Warner Brother were expired without exercise on ~~March 28, 2018.~~

~~As of June 30, 2018,~~January 31, 2019. The Company issued warrants to IDV in connection with senior secured convertible note (See Note 11) and the weighted average exercise price ~~of the warrants~~ was ~~$1.75~~$1.84 and the weighted average remaining life was ~~0.59~~5 years. ~~The following table outlines the warrants outstanding and exercisable as of June 30, 2018 and December 31, 2017:~~

~~Seven Stars Cloud Group, Inc.~~On September 24, 2018, the Company entered into an employment agreements with three executives. As part of their employment agreements, they are entitled to warrants for an aggregate of 8,000,000 shares at an exercise price of $5.375 per share (the “Exercise Price”), ~~Its Subsidiaries and Variable Interest Entities~~which is a 25% premium to the $4.30 per share closing market price of the Company’s common stock on September 7, 2018, the date upon which the terms of the employment agreements were mutually agreed. In February 2019, the rights to receive warrants were terminated due to the resignation of three executives.

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

In January ~~2017,~~2019, the Company granted 35,000 restricted shares to one employee under the “2010 Plan”. The restricted shares have a vesting period of four years with the first one-fourth vesting on the first anniversary from grant date and the remaining three-fourth vesting ratably over twelve quarters. The grant date fair value of the restricted shares was $43,750. As this employee left the Company in February, no expense was recorded.

In March and April, 2017, the Company granted 365,000 restricted shares to certain employees under the “2010 Plan”. The restricted shares have a vesting period of four years with the first one-fourth vesting on the first anniversary from grant date and the remaining three-fourth vesting ratably over twelve quarters. The grant date fair value of the restricted shares was $778,200.

~~In November, 2017, the Board of Directors approved 2017 independent board compensation plan, which approved to grant 4,488~~129,840 restricted shares to each of ~~four~~two then independent directors under the “2010 ~~Plan.”~~Plan” which was approved by the Board of Directors for year 2018 independent board compensation plan. The restricted shares were all vested immediately since commencement date. The aggregated grant date fair value of all those restricted shares was ~~$100,000.~~

In April and June, 2018, the Company granted 1,342,743 restricted shares to certain employees under the “2010 Plan”. 1,239,743 of the restricted shares were all vested immediately since commencement date. Rest of the shares have a vesting period of two years with the first half vesting on the first anniversary from grant date and the other half vesting on the second anniversary. The grant date fair value of the restricted shares was $3,469,532.$161,001.

As of March 31, 2019, there was $106,600 of unrecognized compensation cost related to unvested restricted shares. This amount is expected to be recognized over a weighted-average period of 1.01 years.

Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2018 2017 2018 2017
Net loss attributable to common stockholders $ (8,320,024 ) $ (3,803,619 ) $ (12,041,393 ) $ (1,670,624 )
Basic
Basic weighted average shares outstanding 71,785,448 61,180,365 70,309,078 58,297,202

Diluted
Diluted weighted average common shares outstanding 71,785,448 61,180,365 70,309,078 58,297,202

Net loss per share:
Basic $ (0.12 ) $ (0.06 ) $ (0.17 ) $ (0.03 )
Diluted $ (0.12 ) $ (0.06 ) $ (0.17 ) $ (0.03 )

Basic earnings (loss) per common share attributable to ~~Seven Stars Cloud~~our shareholders is calculated by dividing the net earnings (loss) attributable to ~~Seven Stars Cloud~~our shareholders by the weighted average number of outstanding common shares during the ~~applicable~~ period.

Diluted earnings (loss) per share is calculated by taking net earnings (loss), divided by the diluted weighted average common shares outstanding. ~~Diluted~~The calculations of basic and diluted earnings (loss) per share for the three ~~and six~~ months ended, ~~June 30,~~2019 and 2018 ~~and 2017 both equal to basic~~are as follows:

Diluted net loss per share ~~for respective periods~~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. ~~These~~The holders of these shares do not have a contractual obligation to share in our earnings (losses) and thus these shares were not included in the computation of diluted earnings (loss) per share because the effect was ~~either antidilutive or the performance condition was not met.~~antidilutive.

As of June 30, 2018, the Company had approximately $35.7 million of the U.S domestic cumulative tax loss carryforwards and approximately $31.3 million of the foreign cumulative tax loss carryforwards, which may be available to reduce future income tax liabilities in certain jurisdictions. No U.S. tax loss would be expired based on new Tax Law. These PRC tax loss carryforwards will expire beginning year 2019 to year 2023.Note 16. Income Taxes

During the three months ended March 31, 2019, the Company recorded an income tax benefit of $86,405 which consisted of a $4,750,449 expense related to current operations and a $4,836,854 benefit from a reduction in the beginning of the year deferred tax valuation allowance. This resulted in an effective tax rate of (1%). The effective tax rate for the ~~six~~three months ended ~~June 30, 2018 is nil because~~March 31, 2019 differs from the U.S. statutory tax rate primarily due to the effect of ~~net operating loss~~taxes on foreign earnings, non-deductible expenses and the reduction in the beginning of the year deferred tax ~~assets related to the net operating loss carryovers utilized had been offset by a valuations~~valuation allowance. Company had established a 100% valuation allowance against its net deferred tax assets due to its history of pre-tax losses and the likelihood that the deferred tax assets will not be realized. The valuation allowance was increased approximately $2.8 million during the six months ended June 30, 2018.

AsThere was no identified unrecognized tax benefit as of ~~June 30,~~March 31, 2018 ~~there are no unrecorded tax benefits which would impact our financial position or our results of operations.~~and 2019.

~~The Company is committed to paying leased property costs related to our offices as follows:~~

From time to time, we 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 our business. As of ~~June 30, 2018,~~March 31, 2019, there are no such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

The PRC market in which the Company operates poses certain macro-economic and regulatory risks and uncertainties. These uncertainties extend to the ability of the Company to conduct wireless telecommunication services through contractual arrangements in the PRC since the industry remains highly regulated. The Company conducts legacy YOD business in China through ~~Zhong Hai Media, which the Company controls as a result of~~ a series of contractual arrangements ~~entered among YOD WOFE, Sinotop Beijing as the parent company of Zhong Hai Media, SSF and the respective legal shareholders of Sinotop Beijing and SSF.~~(See Note 4). The Company believes that these contractual arrangements are in compliance with PRC law and are legally enforceable. If Sinotop Beijing, SSF or their respective legal shareholders fail to perform the obligations under the contractual arrangements or any dispute relating to these contracts remains unresolved, ~~YOD WOFE or YOD HK~~We can enforce its rights under the VIE contracts through PRC law and courts. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce these contractual arrangements. In particular, the interpretation and enforcement of these laws, rules and regulations involve uncertainties. If ~~YOD WOFE~~we had direct ownership of Sinotop Beijing and SSF, it would be able to exercise its rights as a shareholder to effect changes in the board of directors of Sinotop Beijing or SSF, which in turn could effect changes at the management level, subject to any applicable fiduciary obligations. However, under the current contractual arrangements, the Company relies on Sinotop Beijing, SSF and their respective legal shareholders to perform their contractual obligations to exercise effective control. The Company also gives no assurance that PRC government authorities will not take a view in the future that is contrary to the opinion of the Company. If the current ownership structure of the Company and its contractual arrangements with the VIEs and their equity holders were found to be in violation of any existing or future PRC laws or regulations, the Company's ability to conduct its business could be affected and the Company may be required to restructure its ownership structure and operations in the PRC to comply with the changes in the PRC laws which may result in deconsolidation of the VIEs.

In addition, the telecommunications, information and media industries remain highly regulated. Restrictions are currently in place and are unclear with respect to which segments of these industries foreign owned entities, like YOD ~~WOFE,~~WFOE, may operate. The PRC government may issue from time to time new laws or new interpretations on existing laws to regulate areas such as telecommunications, information and media, some of which are not published on a timely basis or may have retroactive effect. For example, there is substantial uncertainty regarding the Draft Foreign Investment Law, including, among others, what the actual content of the law will be as well as the adoption and effective date of the final form of the law. Administrative and court proceedings in China may also be protracted, resulting in substantial costs and diversion of resources and management attention. While such uncertainty exists, the Company cannot assure that the new laws, when it is adopted and becomes effective, and potential related administrative proceedings will not have a material and adverse effect on the Company's ability to control the affiliated entities through the contractual arrangements. Regulatory risk also encompasses the interpretation by the tax authorities of current tax laws, and the Company’s legal structure and scope of operations in the PRC, which could be subject to further restrictions resulting in limitations on the Company’s ability to conduct business in the PRC.

The Company has agreements with distribution partners, including digital cable operators, IPTV operators, OTT streaming operators and mobile smartphone manufacturers and operator. A distribution partner that individually generates more than 10% of the Company’s revenue is considered a major customer.

On October 8, 2016, the Company signed an agreement to form a partnership with Zhejiang Yanhua ("Yanhua Agreement"), where Yanhua will act as the exclusive distribution operator (within the territory of the People's Republic of China) of WCST's licensed library of major studio films. According to the Yanhua Agreement, the existing legacy Hollywood studio paid contents as well as other IP contents specified in the agreement, along with the corresponding authorized rights letter that WCST is entitled to, will be turned over to Yanhua as a whole package, which was agreed to be priced at RMB13,000,000. In addition to the above-mentioned minimal guarantee fee of RMB13,000,000 specified, there is a provision in the Yanhua Agreement which states that once the revenue recognized from the existing contents transferred from WCST to Yanhua reaches the amount of RMB13,000,000, the revenue above RMB13,000,000 will be shared with WCST from the date when this revenue threshold is reached based on certain revenue-sharing mechanism stipulated in the Yanhua Agreement.

According to the Yanhua Agreement, the total price of the Existing Contents to be transferred is RMB13,000,000. The payment is agreed to be paid in two installments, the first half of RMB6,500,000 was received on December 30, 2016. The remaining RMB6,500,000 will be paid under the scenario that the license content fees due to Studios for the existing legacy Hollywood paid contents will be settled. Due to the fact that the second installment will depend upon some future events and is contingent in nature, we deem this portion of the fee is not fixed or determinable and therefore, this portion of the revenue did not meet the revenue recognition criteria to be recognized accordingly.

In terms of the additional revenue-sharing fee over the above-mentioned RMB13,000,000 fee specified, considering that this part of arrangement fee is not fixed or determinable at the time point as of June 30, 2018, it has not met the criteria for revenue recognition, management will recognize it once it becomes determinable and meet the other revenue recognition criteria in the future.

~~Pursuant to the Yanhua Agreement, RMB6,500,000 was recognized as revenue in 2017 based on the relative fair value of licensed content delivered to Yanhua.~~

~~The holdings and businesses from Company’s two acquisitions in January 2017(Note 4) now reside under “Wecast Services”, our wholly-owned subsidiary Wecast Services Group Limited.~~ Wecast Services is currently primarily engaged with consumer electronics e-commerce and ~~crude oil~~smart supply chain management operations. The ~~Company has been engaged in~~Company’s ending customers are located across the ~~crude oil supply chain business since October 2017.~~world.

For the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, one customer individually accounted for more than 10% of the Company’s third parties revenue. Two customers individually accounted for more than 10% of the Company’s net accounts receivables as of March 31, 2018, respectively.

For the three months ended March 31, 2019, one customer individually accounted for more than 10% of the Company’s revenue. Two customers individually accounted for more than 10% of the Company’s net accounts receivables as of ~~June 30, 2017,~~March 31, 2019, respectively.

For the six months ended June 30, 2018, one customer individually accounted for more than 10% of the Company’s revenue. One customers individually accounted for more than 10% of the Company’s net accounts receivables as of June 30, 2018.

The Company relies on agreements with studio content partners to acquire video contents. A content partner that accounts for more than 10% of the Company’s cost of revenues is considered a major supplier. Since January 1, 2017, only the content that was acquired from SSS in the amount of $17.7 million were still recorded as licensed content assets and amortized into cost of sales based on revenue and gross profit margin estimates. For the ~~six~~three months ended ~~June 30, 2017, $0.8 million was recorded in cost of sales and $0.8 million was recorded as revenue. No further revenue nor cost of sales was recorded since~~ March 31, ~~2017.~~

~~The Company relies on agreements with consumer electronics manufacturers and crude oil suppliers.~~

For the six months ended June 30, 2017, three suppliers individually accounted for more than 10% of the Company’s cost of revenues. Three suppliers individually accounted for more than 10% of the Company’s accounts payable as of June 30, 2017.

~~For the six months ended June 30,~~ 2018, ~~two~~one supplier individually accounted for more than 10% of the Company’s cost of revenues. ~~Two~~One supplier individually accounted for more than 10% of the Company’s accounts payable and amount due to related parties as of ~~June 30,~~March 31, 2018.

For the three months ended March 31, 2019, two suppliers individually accounted for more than 10% of the Company’s accounts payable as of March 31, 2019.

Financial instruments that potentially subject the Company to significant concentration of credit risk primarily consist of cash and accounts receivable. As of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the Company’s cash was held by financial institutions (located in the PRC, Hong Kong, , the United States and Singapore) that management believes have acceptable credit. Accounts receivable are typically unsecured and are mainly derived from revenues from Wecast Services. 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.

~~A majority of the Company’s~~We have certain operating transactions are denominated in RMB and a ~~significant~~ portion of the Company’s assets and liabilities is denominated in RMB. RMB is not freely convertible into foreign currencies. The value of the RMB is subject to changes in the central government policies and to international economic and political developments. In the PRC, certain foreign exchange transactions are required by laws to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). 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.

~~Seven Stars Cloud Group, Inc., Its Subsidiaries and Variable Interest Entities~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

Cash consist of cash on hand and demand deposits at banks, which are unrestricted as to withdrawal.

Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term of greater than three months when purchased. Time deposits which mature over one year as of the balance sheet date are included in non-current assets.

As of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018, there were no deposits ~~of $426,399 and $398,243 were insured, respectively.~~insured. To limit exposure to credit risk relating to bank deposits, the Company primarily places bank deposits only with large financial institutions in the PRC, HK SAR, USA, Singapore and Cayman with acceptable credit rating.

As of March 31, 2019, the Company holds 8,333,333 GTB tokens. The risks related to our holdings of GTB tokens including:

For our U.S. employees, during 2011, the Company began sponsoring a 401(k) defined contribution plan ("401(k) Plan") that provides for a 100% employer matching contribution of the first 3% and a 50% employer matching contribution of each additional percent contributed by an employee up to 5% of each employee’s pay. Employees become fully vested in employer matching contributions after six months of employment. Company 401(k) matching contributions were approximately ~~$1,442~~$0.0 and ~~$2,755~~$14,486 for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018, ~~respectively and $904 and $2,100 for the three and six months ended June 30, 2017~~ respectively.

Full time employees in the PRC participate in a government-mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. PRC labor regulations require the Company to make contributions based on certain percentages of the employees’ basic salaries. Other than such contributions, there is no further obligation under these plans. The total contribution for such PRC employee benefits was ~~$372,061~~$77,199 and ~~$255,408~~$211,704 for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.

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. ~~In fiscal year 2016, the Company operated and reported its performance~~

We operate our business in ~~one segment. However, starting from fiscal year 2017, since Company has acquired Wecast Services Limited and Wide Angle Group Limited in January 2017 (see note 4), the Company has operated~~ two ~~segments including~~operating segments: Legacy YOD ~~segment~~ and Wecast ~~Service segment. Therefore, there are two reportable segments for the six months ended June 30, 2018. The two reportable segments are:~~

~~Legacy YOD~~ - Provides premium content and integrated value-added service solutions for the delivery of VOD and paid video programming to digital cable providers, Internet Protocol Television (“IPTV”) providers. The core revenues are being generated from both minimum guarantee payments and revenue sharing arrangements with distribution partners as well as subscription or transactional fees from subscribers.

~~Wecast Service~~ ~~- Wecast Services (which resides under engine 7: supply chain management) is currently primarily engaged with consumer electronics and oil crude supply chain management operations..~~

Service. Segment disclosures are on a performance basis consistent with internal management reporting. The Company does not allocate expenses below segment gross profit since these segments share the same executive team, office space, occupancy expenses, information technology infrastructures, human resources and finance department. ~~The following tables summarized~~

As of March 31, 2019, the Company had cash and cash equivalents of approximately $2.0 million and the Company has incurred losses since its inception and must continue to rely on proceeds from debt and equity issuances to pay for ongoing operating expenses in order to execute its business plan.

Management has taken several actions below to ensure that the Company will continue as a going concern through May 31, 2020, including reductions in YOD legacy segment related expenses and discretionary expenditures.

As part of the Company’s strategy, management raised these recent capital to cover short and medium term cash needs, while it plans to unlock revenue from its new fintech advisory services business in 2019. Therefore, the Company does not plan to take additional outside investments in the near term, unless there is a delay in product expectations and ~~cost generated~~sales.

Although the Company may attempt to raise funds by issuing debt or equity instruments, in the future additional financing may not be available to the Company on terms acceptable to the Company or at all or such resources may not be received in a timely manner. If the Company is unable to raise additional capital when required or on acceptable terms, the Company may be required to scale back or to discontinue certain operations, scale back or discontinue the development of new business lines, reduce headcount, sell assets, file for bankruptcy, reorganize, merge with another entity, or cease operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from ~~different revenue streams.~~the outcome of this uncertainty. If the Company is in fact unable to continue as a going concern, the shareholders may lose their entire investment in the Company.

The Company evaluated subsequent events through May 2, 2019, the date the unaudited consolidated financial statements were issued. With the exception of the matter discussed in Notes 8 (v), there were no material subsequent events that required recognition or additional disclosure in the consolidated financial statements.

~~Seven Stars Cloud Group, Inc., Its Subsidiaries and Variable Interest Entities~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

On July 3, 2018, Seven Stars Cloud announced that it will be establishing its global headquarters for technology and innovation called Chain Valley, in Connecticut, transforming UConn’s former campus in West Hartford into a thriving center for research, training, and business development. The $283 million project is expected to create 330 jobs over the next five years.

Seven Stars Cloud entered into a Purchase and Sale Agreement, effective July 11, 2018 (the “P&S Agreement”), with the State of Connecticut acting by and through the University of Connecticut pursuant to which the Company is purchasing the parcel of land formerly known as the University of Connecticut Greater Hartford campus, including buildings and improvements (the “Acquisition”) for purposes of creating the Company’s global headquarters for technology and innovation. The Company delivered a deposit of $520,000 and the balance of the $5,200,000 purchase price is deliverable when the purchase contemplated by the P&S Agreement is closed. Such closing will be subject to typical closing conditions and shall occur within 30 days after the satisfaction of all closing conditions.

In connection with the Acquisition, the Company also entered into an Assistance Agreement by and between the State of Connecticut, acting by the Department of Economic and Community Development (the “Assistance Agreement"), pursuant to which the State of Connecticut may provide up to $10,000,000 of financial assistance (the “Funding”) which in such case shall be evidenced by a promissory note, provided, however, that the aggregate principal of the funding shall not exceed 50% of the cost of the project. The Company will provide security for its obligation to repay the Funding to the State of Connecticut in the form of a first position mortgage. The Company agrees that in exchange for the Funding it will provide a minimum number of jobs at a minimum annual amount of compensation by December 31, 2021. Failure of the Company to do so will subject it to certain cash penalties for each employee below the minimum employment threshold. If the Company meets the employment obligations it is eligible for forgiveness of up to $10,000,000 of the Funding. The Company will agree to certain covenants with respect to the Funding and such Funding may become immediately due and payable upon the occurrence of certain standard events of default.

Effective July 18, 2018, Seven Stars Cloud entered into an Interim Agreement with C4 Holdco, Ltd., an England and Wales Private Limited Company (“C4”) (the “Interim Agreement”), pursuant to which the Company and C4 set forth their interim agreement with respect to the joint venture which the parties desire to establish and operate and for which the parties are in good faith discussions to form and operate under the name GenXPlus (the “Joint Venture”). It is expected that pursuant to the Joint Venture SSC will contribute up to $700,000 and certain intellectual property and C4 will contribute services and intellectual property. It is expected that the Company will own 75% of the proposed joint venture and C4 will own 25% subject to a potential adjustment to 65% and 35%, respectively.

Pursuant to the Interim Agreement, the Company shall form a private limited company, named Genxplus Global Ltd. (“Genx Global”) under the laws of England and Wales. Genx Global will be a wholly owned subsidiary of the Company until such time as C4 becomes a shareholder of Genx Global. The Company has agreed to fund $350,000 to GenxGlobal as soon as practicable and to fund an additional $350,000 to GenxGlobal if a definitive agreement is reached with respect to the Joint Venture; provided, however, that the Company may choose to fund the remaining $350,000 in the event that a definitive agreement has not been reached. The Company and C4 acknowledge that the $700,000 represents initial capital to meet the priority objectives and the management team will create the business plan and requirements for the business, to be funded by the Company in a manner to be determined. During the term of the Interim Agreement C4 has agreed to provide certain services. The Interim Agreement is terminable on 15 days prior written notice by either party if the definitive Joint Venture agreement is not reached on or prior to 30 days following July 17, 2018.

On July 18, 2018, Seven Stars Cloud Group, Inc. (the “Company”), entered into an Agreement and Plan of Merger with GLI Acquisition Corp. (the “Merger”), a Delaware corporation and wholly owned subsidiary of the Company (the “Merger Sub”), and Grapevine Logic, Inc., a Delaware corporation (“GLI”), and Mr. Grant Deken, as the representative of the holders of capital stock of GLI, pursuant to which the Company agreed to acquire GLI for an aggregate cash payment of $2,400,000 to the holders of capital stock of GLI. On or prior to July 22, 2018, the Company was required to make aggregate payments of $2,400,000 (the “Purchase Price”) in separate payments of $240,000 and $2,160,000, each to separate entities to be held in escrow pending the closing. The GLI selling stockholders are entitled to $240,000 as liquidated damages if the Merger does not close due to a Company breach. The Merger is to be closed as soon as possible following the satisfaction of the closing conditions to the Merger. The Purchase Price is subject to a closing adjustment. An aggregate of $530,000 will be held in escrow following the closing with respect to potential indemnifications claims.

An affiliate of Bruno Wu, the CEO of the Company, is a 34.5% equity holder of non-voting stock in GLI. Mr. Wu will not receive any part of the Purchase Price, however, Mr. Wu, or an affiliate, is expected to remain a rights holder in GLI after the Merger is closed. While Mr. Wu will relinquish his common stock in GLI for no consideration pursuant to this transaction, he is expected to receive stock rights pursuant to an agreement to be finalized prior to closing pursuant to which Mr. Wu, or an affiliate, will have a right to acquire 34.5% of GLI Class A Common Stock for zero consideration.

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", "will", "expect", "anticipate", "estimate", "believe", "continue", or other similar words. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or financial condition or state other "forward-looking" information. We believe that it is important to communicate our future expectations to our 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 our products, and the ~~product–development~~product-development and marketing efforts of our competitors. Examples of these events are more fully described in the Company’s ~~2017~~2018 Annual Report under Part I. Item 1A. Risk Factors.

Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However, readers should carefully review the reports and documents the Company files from time to time with the SEC, particularly its Quarterly Reports on Form 10-Q, Annual Report on Form 10-K, , Current Reports on Form 8-K and all amendments to those reports.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management’s discussion and analysis (“MD&A”) should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report. 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.

~~Seven Stars Cloud~~Ideanomics is ~~aiming~~a holding company comprised of (i) our Legacy YOD business with primary operations in the PRC, and (ii) our Wecast Service business, a global financial technology (“Fintech”) advisory and Platform-as-a-Service company with the intent of offering customized services based on best-in-class blockchain, AI and other technologies to ~~become~~mature and emerging businesses across various industries. To do so, we are building a ~~next generation Artificial-Intelligent (AI) & Blockchain-Powered,~~technology ecosystem through license agreements, joint ventures and strategic acquisitions, which we refer to as our “Fintech Ecosystem”. In parallel, through strategic acquisitions, equity investments and joint ventures, we are building a network of businesses, operating across industry verticals which we refer to as our “Industry Ventures”. We believe these industry verticals have significant potential to recognize benefits from blockchain and AI technologies that may, for example, enhance operations, address cost inefficiencies, improve documentation and standardization, unlock asset value and improve customer engagement. Our core business strategy is to promote the use, development and advancement of blockchain- and AI-based technologies, and our positioning in the fintech industry overall, by bringing technology leaders together with industry leaders and creating synergies between the businesses in our expanding Fintech ~~company. By providing~~Ecosystem and ~~managing an infrastructure and ecosystem that facilitates~~ the transformation of traditional financial markets such as commodities, currency and credit into the asset digitalization era, SSC provides asset owners and holders a seamless method and platform for digital asset securitization, tokenization and trading. Separately, SSC offers a closed supply chain trading ecosystem for corporate buyers and sellers designed to eliminate standard transactional intermediaries and create a more direct and margin-expanding path for principals.

~~2017 was a year of transition from the Company’s legacy business to the Company’s new business.~~businesses in our Industry Ventures. .

Pertaining to the Company’s efforts to become a next generation Artificial-Intelligent (AI) & Blockchain-Powered, Fintech company, in early Q1 2017, the Company completed the acquisition of Sun Video Group HK Limited ("SVG"), which had a 51% ownership stake in M.Y. Products, LLC ("MYP"), a global, smart supply chain management operator. Functioning as a global smart supply chain management company, the acquisition was consummated in an effort to support the Company's brand licensing and video commerce business with B2B services. With the aforementioned service offerings under one roof, the Company could now provide Chinese manufacturers the opportunity to improve profitability within the distribution chain and allowing manufacturers to capture more robust margins as well as reapportioning cost savings to marketing and branding, thereby improving revenue volume.

Also in early February 2017, the Company announced it had acquired 55% of Wide Angle Group Limited ("WAG"). Coupling WAG's capabilities and offerings with those already existing under the SVG/MYP deal, including Supply Chain Management, Manufacturer Sourcing, Supply Chain Financing, VR (virtual reality)-Enabled Commerce Technology and AI-driven Big Data Technology Management, the Company was seeking to creating a diversified and robust business division, separate from the VOD business.

For 2017, through the acquisition and operation of the SVG and WAG the two current revenue sources were initiated. They are supply chain management & structured finance and alternative finance & carry trade businesses. The Company is ~~currently primarily engaged with consumer electronics and smart supply chain management operations. Our end customers include about 15~~in a transition period from the Legacy YOD business to ~~20 corporations across the world. Starting from October 2017, through partnership with another business partner,~~ our newly controlled Singapore joint venture has been conducting oil trading business in Singapore. Other than the trading business that Company already operated in 2017, the Company also intends to run the engine upon its Venus blockchain based platform, which includes TPaaS & VPaaS system. As of fourth quarter of 2017, TPaaS system went into trial operation. A significant portion of our operations will consist of these new lines of business, however since these are new business lines, customer demand is in the process of being validated, and the global regulatory environment is constantly adapting to these new fintech ~~products and technologies. As a result, it is not possible to make a definitive prediction on the rate of growth and profitability of these operations at this time. These~~ services ~~will be offered globally from our New York and China offices.~~

As part of our overall strategy, the Company is focused on trying to establish 4 digital asset product categories which are expected to trade on 4 digital asset global trading platforms and exchanges and are expected to be distributed and monetized through 4 digital asset global partner sales and monetization networks.

The 4 digital asset product categories are expected to be (i) financial, (ii) vertical industry, (iii) consumer and (iv) media. The products within these groups are in development and are expected to represent new digital financial assets that can be used for store of value, application platform-based transactions, supply chain transactions, transaction incentivization, and general payments. By nature, their storage and transactability in the various use cases that they are created and are expected to produce new value and fungibility with other digital assets and in some cases, fiat currency.

~~The 4 digital asset global trading platforms and exchanges are expected to be:~~

~~Our digital asset trading platforms are expected to represent owned and partner exchanges that will support our digital asset products.~~

~~The 4 digital asset global partner sales and monetization networks are expected to be:~~

~~iii. Partnerships with highly scalable, transparent and decentralized digital asset exchange platforms~~

~~iv. Launch of scalable, transparent and decentralized financial exchange platforms~~

~~The Company’s global partner sales and monetization networks are expected to enable the unlocking of value through fractionalization, tokenization and securitization of assets in digital form.~~

~~Our dgital asset trading platforms are expected to represent owned and partner exchanges that will support our digital asset products.~~

In support of the Company’s overall strategy, in August, 2017, the Company subscribed to a strategic investment of US$250,000 in the Delaware Board of Trade Holdings, Inc. (“DBOT”) to acquire 187,970 common shares. DBOT is an SEC recognized Alternative Trading System, which SSC believes can be developed into a distributed network. On December 18, 2017, the Company subscribed for another 27% purchase of DBOT, which would make the Company the largest shareholder of DBOT, and as part of this purchase, the Company’s President, Robert G. Benya, is expected to become a DBOT Board Director. DBOT (http://dbottrading.com/) operates three business, lines: (i) DBOT ATS LLC, a FINRA Member Firm, a member of the Securities Investor Protection Corporation ("SIPC") and an SEC recognized fully automated, auto-execution Alternative Trading System ("ATS"); (ii) DBOT Issuer Services LLC, focused on setting and maintaining issuer standards, as well as the provision of issuer services to DBOT designated issuers; and (iii) DBOT Technology Services LLC, focused on the provision of market data and marketplace connectivity. These transactions are still pending and have not yet closed. These transactions will not close until DBOT gets FINRA’s approval. We will not be able to consolidate the results of DBOT.

Also, in support of the Company’s overall strategy, on October 19, 2017 the Company announced an agreement to establish a Joint Venture, BBD Digital Capital Group Ltd ("BDCG"), with management partners Tiger Sports Media Limited and Seasail Ventures Limited, ("Seasail") an affiliate of parent company BBD (https://en.bbdservice.com/introduction). The BDCG will focus on artificial intelligence-driven financial data services as well as transactional platforms for index, futures and derivative trading, for both global commodity and energy clients. By leveraging Seasail's technology, BDCG will look to capitalize on commodity and energy provider's needs for more precise risk management services, more informed operational planning and more strategic decision-making, specifically as they all relate to the trading of index, futures and commodities. In December 2017, the Company acquired 20% equity interest of BDCG from Tiger Sports Media Limited, which gave the Company 60% total equity interest, and BDCG would become one subsidiary of the Company. The valuation report of BDCG was received post-signing of the BDCG Purchase Agreement with both parties agreeing that there is no obligation to close the Transaction until a satisfactory valuation report has been received, evaluated and approved by the Company’s Audit Committee. On April 24, 2018, the Audit Committee approved the satisfactory valuation report provided by an independent third party and closed this transaction.

~~The Company has strategically secured a management team with diversified expertise in operations, technology, fintech, blockchain, AI, capital markets and the financial services industry.~~

The Company’s Chairman and Chief Executive Officer, Dr. Bruno Wu is an experienced investor, technology and media entrepreneur, and philanthropist. Dr. Wu has been actively involved with blockchain based and big data technologies since October 2011. After four years of investment and research, in 2015, Dr. Wu and his companies proceeded to execute the strategy of becoming a leader in fintech and asset digitization services by aggregating AI, blockchain and other big data and Cloud based technologies, carefully sourced and selected on a global basis through joint ventures and partnerships. These partnerships focus on customizing and enabling actual business use case applications. Dr. Wu actively participated inincluding the build out of the ~~worlds leading big data hub in Guiyang, China, particularly by endorsing~~human capital needed to transform the ~~integration with AI~~business and ~~blockchain. Currently Dr. Wu has committed~~the infrastructure needed to ~~transforming~~build out the ~~Company into a flagship for fintech and asset digitization services, with multiple use case technology engines to be rolled out.~~

The Company’s Chief Financial Officer, Mr. Federico Tovar, is a seasoned business professional and subject matter expert in AI, FinTech, Blockchain, IoT and cybersecurity. He was previously the Chief Financial and Strategy Officer of Global Data Sentinel Inc, a privately held and high growth cybersecurity and AI technology company that supports data security across domains, including network, Cloud, mobile and IoT, with AI capabilities and next-generation applications in Blockchain, FinTech, energy, insurance, healthcare, and media industries, amongst others. He previously was a Director at Grant Thornton LLP, where he was responsible for advisory assignments during the global financial crisis, advising global private equity firms, hedge funds, and other large-scale financial institutions and insurance companies on their investment portfolios and matters related to complex financial instruments, derivatives, and other hard to price securities. In addition, he wasU.S. operations. As part of ~~large-scale~~our transition strategy, we are identifying promising technologies and ~~global multidisciplinary audit assignments involving companies~~use cases for operations as a next-generation fintech company. As we further develop our FinTech services business and this business continues to mature, we have been gradually phasing out of our logistics management and financing business for strategic reasons, as further described below. During the fourth quarter of 2018 we began experiencing market demand for non-logistics management revenue generating opportunities and have begun focusing our efforts on these new market FinTech services opportunities, while phasing out of the oil trading and electronics trading businesses. These new FinTech services market opportunities are in line with our FinTech Ecosystem and Industry Ventures strategy. We intend to continue to capitalize on our efforts and learning from logistics management business so that we can leverage the applications of our technologies and FinTech Ecosystem across this business and as part of our Industry Ventures strategy. Various other aspects of the development of our Fintech Ecosystem and our Industry Ventures, as described below, are still in the ~~United States, Europe~~planning and ~~Asia,~~testing phase and served as a subject matter expert to audit teams on various Fair Value and IFRS matters. He also spent time with Ernst & Young’s Corporate Finance practice in New York, where he provided M&A, valuation, and corporate restructuring advisory to large-scale Fortune 500 technology companies. He started his career in strategy and management consulting at Booz Allen Hamilton, exposing him to technology and innovation early on in his career, advising some of the world’s largest private and government organizations. In addition, he spent time at the World Bank, working closely on fixed income securities and debt instruments with Central Banks and Finance Ministers across emerging markets in Asia and Latin America.are generally not operational or revenue generating.

Mr. Tovar has managed corporate, financial reporting, legal and investor relations matters, along with all daily operations and fiduciary duties at the executive and board level; including financial reporting and accounting pursuant to GAAP and IFRS, as well as tax and international transfer pricing matters across foreign tax jurisdictions. Mr. Tovar has developed strategic plans and business models, structured various intellectual property and technology licensing deals, closed on various M&A transactions and debt and equity financing rounds, and formulated corporate growth and financial strategies for technology companies which have resulted in measurable execution strategies. He is a seasoned finance professional and entrepreneur in the technology ecosystem, and a subject matter expert in FinTech, Blockchain, AI, IoT, and cybersecurity.

Chad Arroyo, the Company’s Chief Marketing Officer, is well-versed in blockchain technology, its uses in fintech platforms, financial transactions and various technology implementations on both public and private blockchain systems, and has developed operational and systems level experience in transaction management, order routing and management, digital securities, issuers services and funding portal operations, custodial wallet management, exchange operations, KYC/AML procedures.

Mr. Arroyo was deeply involved with marketing as well as general consulting and project management for Fundamental Interactions and the Delaware Board of Trade that together deliver a suite of blockchain capabilities for the issuance, trading and settlement of digital assets. Mr. Arroyo was previously a startup cofounder of SaaS-based platforms that were designed to integrate 3rd party payment and reporting systems for B2B transactions. Mr. Arroyo has worked with startups that are developing fintech solutions and has gained substantial experience in enterprise technology systems design, development and implementation through his experience as a Deloitte Technology Strategy Consultant as well as during his military career where he specialized in Defense telecommunications following his graduation from the US Naval Academy.

Our ~~operating~~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 ~~are primarily affected by~~of our operations for the ~~following factors:~~three months ended March 31, 2019:

Our business strategy and the primary goal for entering certain industries, such as logistics management for crude oil trading and electronics, was to learn about the needs of buyers and sellers in industries and to promote the use, development and advancement of blockchain- and AI-based technologies.

In parallel, and for strategic reasons, after the fourth quarter of 2018, we also chose to focus our resources and efforts on other non-logistics management revenue generating opportunities that we identified in the market. These new market opportunities also involve the use of our technologies in our FinTech Ecosystem and their application across Industry Ventures. We intend to continue to capitalize on our efforts and learning from overall logistics management business, but it is not intended to be our core business. Therefore, for comparability purposes, the financial results may not be comparable as we phase out of the logistics management business going forward.

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

As we transition to becoming an AI- and blockchain-enabled fintech company, we will continue to face intense competition: these new technologies are constantly evolving, and our competitors may introduce new platforms and solutions that are superior to ours. In addition, our 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 we can.

Our results of operations may fluctuate from period to period based on our entry into new transactions to expand our Fintech Ecosystem and Industry Ventures. There could be an increase in value in the Wecast Services segment as a result of increases in value from our investment in DBOT or other unconsolidated entities. In addition, while we intend to contribute cash and other assets to our joint ventures, we do not intend for our holding company to conduct significant research and development activities. We intend research and development activities to be conducted by our technology partners and licensors. These fluctuations in growth or costs and in our joint ventures and partnerships may contribute to significant fluctuations in the results of our operations.

The Company has moved into a fintech advisory services and Platform-as-a-Service model. Our technology in this area of our ecosystem is new and constantly evolving and thus it has taken longer than anticipated to implement these technologies. Innovation is an integral part of our ecosystem and, while we strive to be first to market, it is also important to be best in class.

We are currently evaluating various assets and investments previously done as part of the Legacy YOD business, and their ability to contribute to the business strategy of our new fintech advisory and services business, to our cash flows, and the overall recoverability of these assets.

Information about segments

Wecast Services Segment

Within the Wecast Services segment, we are engaged in (1) the trading of consumer electronics starting from January 2018, which is operated out of Hong Kong through our subsidiary, Amer and crude oil trading business commenced in October 2018 when we formed our Singapore joint venture, SSE; and (2) digital asset management services. We have engaged in the crude oil trading (i.e. the sale of crude oil) and consumer electronics businesses with the primary goal of learning about the needs of buyers and sellers in industries that rely heavily on the shipment of goods in order to (i) inform our understanding of the features a blockchain platform would need to serve the logistics management and finance market, (ii) identify inefficiencies in this market and (iii) generate data to support the potential future application of AI solutions. As we further develop our FinTech services business and this business continues to mature, we have been gradually phasing out of our logistics management and financing business for strategic reasons.

Legacy YOD Segment

Since 2017, we run our legacy YOD segment with limited resources. No revenue was recognized for the three months ended March 31, 2019 and 2018.

Our Unconsolidated Equity Investments

For the investments where we may exercise 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 our share of undistributed earnings or losses of the investee. Investment losses are recognized until the investment is written down to nil, provided that we do not guarantee the investee’s obligations or we are committed to provide additional funding. Please refer to Note 8 of the notes to unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

Ideanomics, Inc., M.Y. Products, LLC, Grapevine Logic, Inc. and ~~M. Y. Products, LLC~~Red Rock Global Capital Ltd. are United States companies subject to ~~United States tax.~~the provisions of the Internal Revenue Code. The $86,405 income tax benefit for the three months ended March 31, 2019 includes an expense of $4,836,854 on Ideanomics, Inc.’s pre-tax income offset by a equivalent benefit resulting from the reduction of the beginning of the year Ideanomics, Inc. deferred tax valuation allowance and an $86,405 income tax benefit resulting from losses of Grapevine Logic, Inc. offsetting deferred tax liabilities that were recognized on the acquisition of Grapevine Logic, Inc. No provision for income taxes has been provided for M.Y. Products, LLC or Red Rock Global Capital Ltd. as neither of the companies had taxable profit since inception.

The Tax Cut and Jobs Act (TCJA) of 2018 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.

There are substantial uncertainties in the ~~United States~~interpretation of BEAT and GILTI and while certain formal guidance has been issued by the U.S. tax authorities, there are still aspects of the TCJA that remain unclear and additional clarification is expected in 2019. Future guidance may result in changes to the interpretations and assumptions the company made ~~as both companies had no taxable profit in~~and actions it may have to take, which may impact amounts recorded with respect to international provisions of the ~~United States since inception. Under U.S. Tax Reform Seven Stars Cloud Group, Inc. is required to pay, a one-time transition tax~~TCJA.

Based on ~~certain unrepatriated earnings from non-U.S. subsidiaries that is payable over eight years. We have subsequently~~current year financial results, the company has determined that there is no GILTI nor BEAT tax liability.

In addition, the TCJA now entitles US companies that own 10% or more of a foreign corporation a 100% dividends-received deduction for the foreign-source portion of dividends paid by such foreign corporation. Also, net operating losses (NOLs) arising after December 31, 2018 are deductible only ~~less than $150,000 unrepatriated earnings for each non-U.S. subsidiary in aggregate. Therefore, only a minimal tax is due under this provision.~~to the extent of 80% of the taxpayer’s taxable income, and may be carried forward indefinitely but generally not allowed to be carried back.

Under ~~the~~ current laws of the Cayman Islands and the British Virgin Islands, ~~we are~~the company is not subject to tax on ~~our~~its income or capital gains. In addition, dividend payments are not subject to withholding tax in the Cayman Islands or British Virgin Islands.

~~Our~~The company’s subsidiaries ~~that were~~ incorporated in ~~Hong Kong were under the current laws of~~ Hong Kong are subject to Profits Tax of 16.5%. No provision for Hong Kong Profits Tax has been made as ~~net operating loss~~NOL carryovers offset current taxable income.

Under the PRC’s Enterprise Income Tax Law, ~~our~~the company’s Chinese subsidiaries and VIEs are subject to an ~~earned income tax~~EIT of 25.0%.

~~Our~~The company’s future effective income tax rate depends on various factors, such as tax legislation, ~~the~~ geographic composition of ~~our~~its pre-tax income and non-tax deductible expenses incurred. ~~Our~~The company’s management ~~carefully~~regularly monitors these ~~legal~~legislative developments to determine if there ~~will be any change~~are changes in the statutory income tax rate.

Comparison of Three Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~

For 2017, through the acquisition and operation of the SVG and WAG, two new revenue sources were acquired and started to generate financial results – supply chain management and structured/alternative finance for carry trade businesses. The Company is currently primarily engaged with consumer electronics and smart supply chain management operations. Our end customers include about 15 to 20 corporations across the world. Starting from October 2017, through partnership with another business partner, our newly controlled Singapore joint venture has been conducting oil trading business in Singapore. Other than the trading business that Company already operated in 2017, the Company also intends to run the engine upon its Venus blockchain based platform, which includes TPaaS & VPaaS system. As of fourth quarter of 2017, TPaaS system went into trial operation. A significant portion of our operations will consist of these new lines of business, however since these are new business lines, customer demand is in the process of being validated, and the global regulatory environment is constantly adapting to these new fintech products and technologies so it is not reasonable to make a definitive prediction at this time. These services will be offered globally from our New York and China offices.

On January 30, 2017, the Company completed the acquisition of Sun Video Group HK Limited ("SVG"), which has a 51% ownership stake in Shanghai Wecast Supply Chain Management Limited ("Wecast SH"). On January 31, 2017, the Company acquired 55% of the outstanding capital stock of Wide Angle Group Limited (“Wide Angle”). The holdings and businesses from both of these aforementioned acquisitions now reside under “Wecast Services”, our wholly-owned subsidiary Wecast Services Limited. Wecast Services business unit, is currently primarily engaged with consumer electronics and smart supply chain management operations. Our ending customers are about 15 to 20 other corporations across the world. Starting from October 2017, through partnership with another business partner, our newly controlled Singapore joint venture has been conducting oil trading business in Singapore.

Revenue for the three months ended ~~June 30, 2018~~March 31, 2019 was ~~$133.0~~$26.9 million as compared to ~~$43.3~~$185.9 million for the same period in ~~2017, an increase~~2018, a decrease of approximately ~~$89.7~~$159.0 million, or ~~207%~~86%. The ~~increase~~decrease was mainly due to a change to our ~~expanding~~ business focus from logistics management to digital business consulting services. Our business strategy and the primary goal for entering the crude oil and electronic trading businesses was to learn about the needs of buyers and sellers in these industries that rely heavily on the shipment of goods. Our activities in the crude oil trading ~~initiated~~and electronic trading business have been successful in ~~October 2017.~~various aspects in 2018, and for strategic reasons we have now phased out of our crude oil trading business and electronics trading business so that we can work towards enabling the application of our Fintech Ecosystem for other useful cases that we have identified. We intend to continue to capitalize on our efforts and learning from logistic management business so that we can leverage the applications of our technologies and FinTech Ecosystem across this business and as part of our Industry Ventures strategy.

In March 2019, the Company entered into an agreement with GTD, one of our minority shareholders and strategic investors, whereby the Company will provide digital asset management services. According to the agreement, an advanced payment with a market value equivalent to approximately $40.7 million for the master plan development services, which payment was received by the Company. The revenue will be recognized based on the progress of completion of services. The Company recognized $26.6 million for the period ended March 31, 2019 and the remaining revenue is expected to be recognized in 2019.

Please see Note 3 to the unaudited consolidated financial statements included in this report.

We did not generate any revenue from YOD Legacy business in 2018 and for the three months ended March 31, 2019 since our new fintech services business strategy limits the support of the Legacy YOD business.

Cost of revenues was approximately ~~$131.5~~$0.3 million for the three months ended ~~June 30, 2018,~~March 31, 2019, as compared to ~~$43.3~~$185.5 million for the three months ended ~~June 30, 2017.~~March 31, 2018. Our cost of revenues ~~increased~~decreased by ~~$88.2~~$185.2 million, from a comparability perspective, the cost of revenue during 2018 is not necessarily indicative of the new FinTech business in 2019. The cost of revenue during 2018 was primarily associated with the logistics management business (oil trading and electronics trading), which traditionally has a very high cost of revenue and low gross margin, while the cost of revenue during the first 3 months of 2019 is ~~in line~~primarily associated with our ~~increase~~digital asset management services as part of our new FinTech services business. The majority of the cost associated with the development of the master plan services have already been incurred in ~~revenues. Our cost of revenues is primarily comprised of~~2018. In 2018, due to the uncertainty associated with the future economic benefits when such costs ~~to purchase electronics products and crude oil from suppliers in our supply chain.~~were incurred, the Company expensed those costs during 2018

Our gross profit for the three months ended ~~June 30, 2018~~March 31, 2019 was approximately ~~$1.5~~$26.7 million, as compared to gross profit in the amount of ~~$0.06~~$0.4 million during the same period in ~~2017.~~2018. The gross profit ratio for the three months ended ~~June 30, 2018~~March 31, 2019 was ~~1.15%~~99%, while in ~~2017,~~2018, it was ~~0.13%~~0%. The increase was mainly due to: 1) the Company recorded service revenue from digital asset management services in the first quarter of 2019; in first quarter of 2018, the company recognized one-time consulting service fees as most of our gross profit; and 2) due to the low cost of revenue in digital asset management services, the gross profit ~~ratio~~margin of first quarter of 2019 increased significantly, compare to the low gross profit margin of the logistics management business which the Company has primarily focused its activities in this area with the intent of learning the logistics management business so that we could develop use cases for the applications of our ~~consumer electronics increased compared~~technologies and the overall benefit of our long-term strategy, not necessarily with a focus on deriving margin improvement. The reasons of high gross margin of the digital assets management services provided to GTD are as follows:

Selling, general and administrative ~~expense~~expenses for the three months ended ~~June 30, 2018~~March 31, 2019 was ~~$8.8~~$4.2 million as compared to ~~$3.0~~$3.7 million for the same period in ~~2017,~~2018, an increase of approximately ~~$5.8~~$0.5 million or ~~194%~~12%.

The majority of the increase was due to 1) an increase in headcounts and relevant traveling expense in the amount of $1.2 million; 2) an increase of approximately $3.4 million in share based compensation that were paid to our employees; 3) an increase in our sales and marketing expense in the amount of $0.7 million relating to the introduction and promotion of our business models to various potential investors and business partners, as well as the marketing of Wecast Services, which was acquired in January 2017; 4) an increase in office rent expense of $0.4 million in 2018 Q2 related to an increase in headcount.

~~Professional fees are generally related to public company reporting~~Research and governance expenses as well as legal fees related to business transition and expansion. Professional fees for the three months ended June 30, 2018 were $0.6 million as compared to $0.8 million for the same period in 2017, a decrease of approximately $0.2 million. This decrease was mainly related to the decrease in auditing service fees in 2018Q2.

Depreciation and amortization for the three months ended June 30, 2018 was $0.01 million as compared to $0.06 million for the same period in 2017, a decrease of approximately $0.05 million. The decrease was mainly due to the sale of our Beijing office building in 2017.

Certain of our warrants are recognized as derivative liabilities and re-measured at the end of every reporting period and upon settlement, with the change in value reported in the statement of operations. We reported a gain in the fair value of warrant liabilities of $0.03 million for the three months ended June 30, 2017. All the remaining warrant liabilities have been expired as of August 30, 2017.

The income tax expense for the three months ended June 30, 2018 is nil because net operating loss carryovers offset current taxable income and deferred tax assets related to the net operating loss carryovers utilized had been offset by a valuation allowance.

Hua Cheng previously had a 20% non-controlling interest in Zhong Hai Media and accounting for that interest under the equity method was recognized by recording 20% of the operating losses of Zhong Hai Media. For the three months ended June 30, 2017, operating loss attributable to Hua Cheng was approximately $0.1 million. The Company sold Zhong Hai Media on June 30, 2017 and there have been no more such allocations since then.

Dillon Yu has a 49% non-controlling interest in Shanghai Wecast Supply Chain Management Limited (“Wecast SH”) and as such we allocate 49% of the operating loss of Wecast SH to Dillon Yu. During the three months ended June 30, 2018, approximately $760 of our operating loss from Wecast SH was allocated to Dillon Yu, which was approximately $0.2 million in the same period in 2017.

Swiss Guorong Limited has a 45% non-controlling interest in Wide Angle and as such we allocate 45% of the operating profit of Wide Angle to Swiss Guorong Limited. During the three months ended June 30, 2018, approximately $0.2 million of our operating loss from Wide Angle was allocated to Swiss Guorong Limited, which was approximately $0.01 million in the same period in 2017.

Revenue for the six months ended June 30, 2018 was $318.9 million as compared to $76.5 million for the same period in 2017, an increase of approximately $242.4 million, or 317%. The increase was mainly due to our expanding business of crude oil trading initiated in October 2017. This increase was partially offset by a decrease of our legacy YOD business in the amount of $0.8 million, as the legacy YOD business shifts to a new exclusive distribution agreement with Zhejiang Yanhua Culture Media Co., Ltd., or Yanhua, which was announced in the fourth quarter of 2016.

In October, 2016, the Company signed an agreement to form a five years’ partnership with Yanhua, where Yanhua will act as the exclusive distribution operator (within the territory of PRC) of the Company’s licensed library of major studio films. Pursuant to the Yanhua agreement, the existing legacy Hollywood studio paid content as well as other IP content specified in the agreement, along with the corresponding authorized rights letter that the Company is entitled to, will be transferred over to Yanhua, which was agreed to be priced at RMB13,000,000 (approximately $2 million). According to the agreement, as a whole package, the payment is agreed to be paid in two installments equally in the amount of RMB6,500,000. As of the June 30, 2018, the Company only received the first installments and recorded it as revenue within Legacy YOD business, however, considering the second installment was due to be received if the license content fees due to studios for the existing legacy Hollywood paid contents was settled, while the Company did not expect and did not make the payment to the studios, we deemed this portion of the fee to be not fixed or determinable and therefore, this portion of the revenue did not meet the revenue recognition criteria to be recognized as of June 30, 2018. Meanwhile, as revenue generated by Yanhua did not exceed the revenue sharing threshold, no additional revenue was recorded.

In January, 2017, the Company completed acquisitions of SVG and Wide Angle. Within the Wecast Services segment, the Company conducted its supply chain business in different industrial vehicles. As of June 30, 2018, the Company had already set up two industrial vehicles for commercial electronics in Hong Kong and crude oil trading in Singapore. The Company expects to use its own platforms to expand its supply chain business.

Our gross profit for the six months ended June 30, 2018 was approximately $1.9 million, as compared to gross profit in the amount of $3.9 million during the same period in 2017. The gross profit ratio for the six months ended June 30, 2018 was 0.60%, while in 2017, it was 5.07%. The decrease was mainly due to the low gross profit margin of the crude oil trading business which has expanded and caused our gross profit margin ratio to decrease significantly.

Our selling, general and administrative expenses for the six months ended June 30, 2018 increased approximately $8.2 million, or 189%, as compared with the amount for the six months ended June 30, 2017. The majority of the increase was due to 1) an increase in headcounts and relevant traveling expense in the amount of $2.3 million; 2) an increase of approximately of $3.4 million in share based compensation that were paid to our employees; 3) an increase of approximately of $0.9 million in consulting service fees that were paid to our external consultants who provided various consulting services with respect to our on-going financial digital assets business; 4) an increaseNo material changes in our ~~sales~~research and marketing expense in the amount of $1.6 million relating to the introduction and promotion of our business models to various potential investors and business partners, as well as the marketing of Wecast Services, which was acquired in January 2017.development expense.

Professional fees are generally related to public company reporting and governance expenses as well as legal fees related to business transition and expansion. Our ~~costs for~~ professional fees ~~increased approximately $0.3 million, or 29%, to~~for the three months ended March 31, 2019 was $1.4 million ~~for the six months ended June 30, 2018,~~as compared ~~with~~to $0.7 million for the same period in ~~2017.~~2018, an increase of approximately $0.7 million. The increase was related to an increase in ~~auditing service~~legal, valuation, audit and tax as well as fees associated with continuing to build out our technology ecosystem and ~~the valuation service fees incurred in relation to the acquisitions in 2018Q1.~~establishing strategic partnerships and M&A activity as part of this technology ecosystem.

Depreciation and amortization for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 was ~~$0.02~~$0.2 million as compared to ~~$0.26~~$0.01 million for the same period in ~~2017, a decrease~~2018, an increase of approximately ~~$0.24~~$0.19 million. The ~~decrease~~increase was mainly due to the ~~sale~~increase in amortization expense from intangible assets acquired after the third quarter of ~~our Beijing office building~~year 2018.

Our interest expense increased $0.7 million to $0.7 million for the three months ended March 31, 2019, from $0.03 million during the same period of 2018. The increase in ~~2017.~~interest expense was primarily because we issued convertible notes in amortization of beneficiary conversion features associated with convertible notes issued in June 2018 and February 2019.

Certain of our warrants are recognized as derivative liabilities and re-measured at the end of every reporting period and upon settlement, with the change in value reported in the statement of operations. We reported a loss in the fair value of warrant liabilities of $0.2 million for the six months ended June 30, 2017. All the remaining warrant liabilities have been expired as of August 30, 2017.

As of March 31, 2019, the Company had approximately $26.3 million of the U.S domestic cumulative tax loss carryforwards and approximately $30.3 million of the foreign cumulative tax loss carryforwards which may be available to reduce future income tax liabilities in certain jurisdictions. $14.2 million U.S. tax loss carryforwards will expire beginning year 2027 through 2037 and the remaining U.S. tax loss is not subject to expiration under the new Tax Law. The foreign tax loss carryforwards will expire beginning year 2019 through 2023. We had utilized tax loss carryforwards against net income before income tax and therefore, there is no income tax for the three months period ended March 31, 2019.

We are not aware of any unrecorded tax liabilities which would impact our financial position or our results of operations.

Equity in loss of equity method investees

Loss of equity method investees increased $0.3 million for the three months ended March 31, 2019 by comparing to the same period of 2018 is due to net loss incurred in DBOT (see Note 8 to the Consolidated Financial Statements).

Hua Cheng previously had a 20% non-controlling interest in Zhong Hai Media and accounting for that interest under the equity method was recognized by recording 20% of the operating losses of Zhong Hai Media. During the six months ended June 30, 2017, approximately $0.03 million of our operating profit from Zhong Hai Media was allocated to Hua Cheng. The Company sold Zhong Hai Media on June 30, 2017 and there have therefore no more such allocations since then.No material changes.

Dillon Yu has a 49% non-controlling interest in Shanghai Wecast Supply Chain Management Limited (“Wecast SH”) and as such we allocate 49% of the operating loss of Wecast SH to Dillon Yu. During the six months ended June 30, 2018, approximately $1,035 of our operating loss from Wecast SH was allocated to Dillon Yu, which was $0.6 million in the same period in 2017.

Swiss Guorong Limited has a 45% non-controlling interest in Wide Angle and as such we allocate 45% of the operating profit of Wide Angle to Swiss Guorong Limited. During the six months ended June 30, 2018, approximately $0.2 million of our operating loss from Wide Angle was allocated to Swiss Guorong Limited, which was $0.03 million in the same period in 2017.

As of ~~June 30, 2018, the Company~~March 31, 2019, we had cash of approximately ~~$1.8~~$2.0 million. Approximately ~~$0.8~~$1.5 million was held in our Hong Kong, US and Singapore entities and ~~$1.0~~$0.5 million was held in our ~~mainland China~~PRC entities. ~~The Company has no plans to repatriate these funds.~~

~~As discussed~~The following table provides a summary of our net cash flows from operating, investing and financing activities (unaudited).

Cash used in ~~Note 2~~operating activities increased by $1.4 million for the three months ended March 31, 2019 compared to the ~~consolidated~~same period in 2018, primarily due to (1) an increase in operating results from net loss $3.8 million in the first quarter of 2018 to net income $19.9 million in the first quarter of 2019, (2) total non-cash adjustments increase (decrease) to net income (loss) was $(25.1) million and $0.15 million for the three months ended March 31, 2019 and 2018, respectively; and (3) total changes in operating assets and liabilities resulted in an increase of $0.4 million and of $0.3 million in cash used in operations activities for the three months ended March 31, 2019 and 2018, respectively.

Cash used in investing activities increased by $0.8 million, primarily used for the additional costs incurred for Fintech Village, the related costs (approximately $0.6 million) and an increase of approximately $0.2 million related to acquisitions of long term investments.

We received $2.1 million from the issuance of convertible notes and $2.5 million in proceeds in a private placement from the issuance of restricted shares for the three months ended March 31, 2019, to certain investors, including officers, directors and other affiliates. While in the same period in 2018, we received $0.5 million.

Currently, our primary source of liquidity is cash on hand and we have relied on debt and equity financings to fund our operations to date. We believe that our cash balance and our expected cash flow will be sufficient to meet all of our financial ~~statements included~~obligations for the twelve months from the date of this report. As described above, in ~~this report,~~March 2019, we received 1,250,000 GTB tokens under asset purchase agreement and 7,083,333 GTB tokens under our Digital Asset Management Services Agreement with GTD.

In the ~~Company has~~future, it is possible that we will need additional capital to fund our operations and growth initiatives, which we expect we would raise through a combination of equity offerings, debt financings, related party or third-party funding. We may also convert all or a portion of our GTB tokens to fiat currency or U.S. Dollars as needed.

The fact that we have incurred significant continuing losses ~~in 2018~~ and 2017, and total accumulated deficits were $138.7 million and $126.7 million as of June 30, 2018 and December 31, 2017, respectively. The Company also used cash for operations of approximately $11.4 million and $1.7 million for the six months ended June 30, 2018 and 2017, respectively. We must continue to rely on proceeds from debt and equity issuances to fund ongoing operating expenses to date, which could raise substantial doubt about ~~the Company’s~~our ability to continue as a going concern. ~~Management’s plans regarding these matters are also described in Note 2 to the consolidated financial statements in this report.~~ The unaudited consolidated financial statements included in this report have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any ~~adjustment~~adjustments that might result from the outcome of this uncertainty.

On March 28, 2016, we completed a common stock financing for $10.0 million. On July 19, 2016, we completed a stock financing with SSW for $4.0 million. On August 12, 2016, we completed a common stock financing with Harvest Alternative Investment Opportunities SPC for $4.0 million. On November 17, 2016, we completed a common stock financing with SSSHK for $2.0 million. On May 19, 2017, we completed a common stock financing with certain investors, including officers, directors and other affiliatesThe Company’s independent registered public accounting firm’s report of the ~~Company~~financial statements for ~~$2.0 million. In addition, we completed~~year ended December 31, 2018, contained an explanatory paragraph regarding the Company’s ability to continue as a common stock financing with Hong Kong Guo Yuan Group Capital Holdings Limited for $10 million on October 23, 2017. In March 2018, the Company entered into a common stock financing with GT Dollar Pte. Ltd., for a private placement totaling $40.0 million, which agreement was subsequently amended and restated on June 28, 2018 to reduce such investment to $10.0 million (See Note 9). The Company has received $5.3 million and expects to receive the remaining $4.7 million in the third quarter. The Company entered into a Convertible Note Purchase Agreement with Advantech Capital Investment II Limited on June 28, 2018 for $12.0 million. The funds were delivered on July 5, 2018. Although the Company may attempt to raise funds by issuing debt or equity instruments, additional financing may not be available to the Company on terms acceptable to the Company or at all or such resources may not be received in a timely manner.going concern.

~~The following table provides a summary of our net cash flows from operating, investing and financing activities.~~

Cash used in operating activities increased by $9.7 million for the six months ended June 30, 2018 compared to 2017, primarily due to an increase in accounts receivable because of a longer turnover period.

We received $6.5 million proceeds in a private placement from the issuance of common shares, warrant and options for six months period ended June 30, 2018, to certain investors, including officers, directors and other affiliates.

Inflation and changing prices have had an effect on our business and we expect that inflation or changing prices could materially affect our business in the foreseeable future. Our management will closely monitor the price change and make efforts to maintain effective cost control in operations.

Off-balance sheet arrangements are obligations the Company has with nonconsolidated entities related to transactions, agreements or other contractual arrangements. The Company holds variable interests in joint ventures accounted for under the equity method of accounting. The Company is not the primary beneficiary of these joint ventures and therefore is not required to consolidate these entities (see Note 8 to the Consolidated Financial Statements).

We do not have ~~any~~other off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our 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 our securities.

~~Our operating results~~As of the date of this report, other than changes related to adoption of the new lease accounting standard as described in Note 2 to the unaudited consolidated financial statements, there were no material changes to our contractual obligations and ~~operating cash flows historically have not been~~commitments outside the ordinary course of business since April 1, 2019 as reported in our 2018 Form 10-K.

In order to meet market demands, the Company has identified various areas that we intend to develop as part of our overall fintech services strategy, which are complementary to both our FinTech Ecosystem and Industry Ventures. These areas will focus primarily around (i) an Ideanomics AI Engine Group, (ii) a Digital Banking Advisory Group, and (iii) a Digital Asset Management Group.

Through these groups, we intend to further leverage our core business strategy, which is to promote the use, development and advancement of blockchain- and AI-based technologies, by bringing technology leaders together with industry leaders and creating synergies in our Fintech Ecosystem and the business in our network of Industry Ventures.

We are subject to ~~seasonal variations. However, we~~various federal, state and local laws and regulations governing, among other things, hazardous materials, environmental contamination and the protection of the environment. We have made, and expect ~~a disproportionate~~to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. We may also incur fines and penalties from time to time associated with noncompliance with such laws and regulations. Starting from year 2018, we had $8 million accrued for Asset Retirement Obligations which is related to our ~~revenues generated from Wecast Services quarter over quarter to be subject to seasoned fluctuations at holiday periods and due to introduction~~legal contractual obligation in connection with the acquisition of ~~new products. This pattern may change, however, as a result of new market opportunities or new product introductions.~~Fintech Village.

The discussion and analysis of our financial condition and results of operation are based upon our unaudited consolidated financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates, and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. ~~We have identified certain~~Note 2 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 describes the significant accounting policies ~~that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition~~ and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgmentsmethods used in the preparation of ~~our~~the consolidated financial statements. Since December 31, 2018, besides new accounting policy adopted (see Note 2 to the Consolidated Financial Statements), there have been no material changes in the Company’s accounting policies that are impacted by judgments, assumptions and estimates. Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Periodically, we review our critical accounting estimates with the Audit Committee of our Board of Directors.

See the discussion in this section for information regarding the Company's accounting policy with respect to digital tokens.

Digital tokens consist of GTB tokens received in connection with the services agreement and assets purchase agreement with GTD. Given that there is limited precedent regarding the classification and measurement of cryptocurrencies and other digital tokens under current GAAP, the Company has determined to account for these tokens as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other until further guidance is issued by the FASB.

Indefinite-lived intangible assets are recorded at cost and are not subject to amortization, but shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If, at the time of an impairment test, the carrying amount of an intangible asset exceeds its fair value, an impairment loss in an amount equal to the excess is recognized. The fair value of GTB tokens was a Level 2 measurement based upon the consideration agreed by GTD and the Company with a discount considering volatility, risk and limitations at contract inception.

We account for entities qualifying as variable interest entities (“VIEs”) in accordance with Financial Accounting Standards Boards (“FASB”) Accounting Standards Codification (“ASC”) Topic 810,~~Consolidation~~. For our consolidated VIEs, management has made evaluations of the relationships between our VIEs and the economic benefit flow of contractual arrangement with VIEs. In connection with such evaluation, management also took into account the fact that, as a result of such contractual arrangements, we control the legal shareholders’ voting interests and have power of attorney in the VIEs, and therefore we are ableRefer to ~~direct all business activities of the VIEs. As a result of such evaluation, management concluded that we are the primary beneficiary of our consolidated VIEs.~~

We have consulted our PRC legal counsel in assessing our ability to control our PRC VIEs. Any changes in PRC laws and regulations that affect our ability to control our PRC VIEs may preclude us from consolidating these companies in the future.

In the first quarter of 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method. Topic 606 requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Because the Company's primary source of revenues is from industrial trading business, the impact on its consolidated financial statements is not material.

Product sales, including electronic products and crude oil sales are recognized when or as we transfer control of the promised products to our customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. Sales orders are confirmed after negotiation on price between customers and us. Purchase orders are confirmed after careful selection of suppliers and negotiation on price. Company purchases finished goods from suppliers in accordance with sales orders from customers. Our suppliers then deliver goods to our customers directly. Company is required to bear the direct risk of damageNote 2 to the ~~goods that the direct default risk that cannot be delivered~~Consolidated Financial Statements for a description of accounting standards adopted related to the customer. When the delivery is completed, company recognizes revenue and the related cost at the same time. According to purchase orders with suppliers, company, as the owner of the goods, becomes the first responsible party for the goods. Therefore, the Company accounts for revenue from sales of goods on a gross basis. The Company is the primary obligor in the arrangements, as company has the ability to establish prices, and has discretion in selecting the independent suppliers and other third-party that will perform the delivery service, the Company is responsible for the defective products and the Company bears credit risk with customer payments. Accordingly, all such revenue billed to customers is classified as revenue and all corresponding payments to suppliers are classified as cost of revenues.

For certain contracts that involve sub-licensing content within the specified license period, revenue is recognized upon delivery of films when the arrangement includes a nonrefundable minimum guarantee, delivery is complete and we have no substantive future obligations to provide future additional services. Payments received from customers for the performance of future services are recognized as deferred revenue, and subsequently recognized as revenue in the period that the service obligations are completed.

We obtain content through content licensing agreements with studios and distributors. We recognize licensed content when the license fee and the specified content titles are known or reasonably determinable. Prepaid license fees are classified as an asset on the consolidated balance sheets as licensed content and accrued license content fees payable are classified as a liability on the consolidated balance sheets.

We amortize licensed content in cost of revenues over the contents contractual window of availability based on the expected revenue derived from the licensed content, beginning with the month of first availability, such that our revenues bear a representative amount of the cost of the licensed content. We review factors that impact the amortization of licensed content on a regular basis, including factors that may bear direct impact on expected revenue from specific content titles. We estimate expected revenue by reviewing relevant factors, including marketing considerations, programming efforts, relationship with our channel partners, expected customer renewals and content offered by other distributors on the same platform. Changes in our expected revenue from licensed content could have a significant impact on our amortization pattern.

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The new standard is effective for reporting periods beginning after December 15, 2018 and early adoption is permitted. The standard will require lessees to report most leases as assets and liabilities on the balance sheet, while lessor accounting will remain substantially unchanged. The standard requires a modified retrospective transition approach for existing leases, whereby the new rules will be applied to the earliest year presented.leases. We do not expect ~~the new lease standard to~~any other recently issued accounting pronouncements will have a material effect on our financial ~~position, results of operations or cash flows.~~statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326)”. The pronouncement changes the impairment model for most financial assets, and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. We do not expect a material impact to its consolidated financial statement upon adoption of this ASU.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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 and 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 and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~June 30, 2018.~~March 31, 2019. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that ~~as of June 30, 2018, 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 not effective ~~to satisfy~~as of the ~~objectives for which they are intended, as a result~~end of ~~one material weakness described below.~~the period covered by this report.

On April 6, 2018, Mr. Simon Wang resigned from his position as Chief Financial Officer (“CFO”) of the Company. On April 11, 2018, the Board unanimously appointed its previous Finance Director, Mr. Jason Wu, as the interim CFO and principal accounting officer of the Company, effective immediately. On June 1, 2018, the Board appointed Mr. Federico Tovar as CFO of the Company.

~~In 2016, a material weakness identified~~There were no changes in ~~the~~our internal control ofover financial reporting ~~related to~~that occurred during the design, documentation and implementation of effective internal controls over the review of the cash flow forecasts used in the accounting for licensed content recoverability. Specifically, the Company did not design and maintain effective internal controls related to management’s review of the data inputs and assumptions used in its cash flow forecasts for licensed content recoverability. Management believes that this material weakness still exists even though we may no longer operate any license content business in the future. Management believes this material weakness still exists as of the issuance of this quarterly report.

~~Other than the changes stated above, there have been no other significant changes in internal control for the six months~~quarter ended ~~June 30, 2018,~~March 31, 2019, 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.

There are no material pending legal proceedings to which we are a party or to which any of our property is subject. To the best of our knowledge, no such actions against us are contemplated or threatened.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our ~~2017~~2018 Annual Report which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K ~~are~~is not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. ~~Other than as noted below, there have been no material changes in the risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2017.~~

~~The Company is in the process~~We are subject to risks related to holding cryptocurrencies and accepting cryptocurrencies as a form of ~~transforming its business model and this transformation may not be successful.~~payment.

~~2018~~We have formed strategic partnerships with third parties and entered into service agreements that provided us with cryptocurrencies as compensation for our services. Cryptocurrencies are not considered legal tender or backed by any government and have experienced price volatility, technological glitches and various law enforcement and regulatory interventions. The use of cryptocurrency such as bitcoin has been ~~a year of transition from the Company’s legacy business~~prohibited or effectively prohibited in some countries. If we fail to ~~the Company’s new business. The Company is aiming~~comply with prohibitions applicable to ~~become a next generation Artificial-Intelligent (AI) & Blockchain-Powered, Fintech company. By managing~~us, we could face regulatory or other enforcement actions and ~~providing an infrastructure~~potential fines and environment that facilitates the transformation of traditional financial markets such as commodities, currency and credit into the asset digitalization era, SSC hopes to provide asset owners and holders a seamless method and platform for digital asset securitization, tokenization and trading. Separately, SSC is aiming to offer a closed supply chain trading ecosystem for corporate buyers and sellers designed to eliminate standard transactional intermediaries and create a more direct and margin-expanding path for principals.other consequences.

As part of our strategy ~~to become a leading AI~~of forming strategic alliances with other companies in the blockchain and ~~Blockchain enabled Fintech~~FinTech services ~~company, SSC aims to be a~~industry, we may receive cryptocurrency or tokens as compensation for services. For instance, as part of our digital asset ~~manager~~management services agreement with GTD, our compensation was paid in GTB tokens. The prices of cryptocurrency, including GTB tokens, are typically highly volatile and subject to exchange rate risks, as well as the risk that regulatory or other developments may adversely affect their value. However, our GTB tokens will be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. As a ~~portfolio~~result, fluctuations in the market value of ~~digital assets across industry verticals. In this capacity,~~GTB tokens could cause us to record an impairment charge on the ~~Company’s strategy utilizes AI~~value of our GTB tokens, which would directly impact our balance sheet and ~~Blockchain technologies~~statements of operations. We currently expect to ~~build out its ecosystem.~~hold our GTB tokens unless we need cash to support our operations, at which time we may determine to convert to fiat currency and U.S Dollars.

In ~~connection with this transformation,~~particular, our GTB tokens may experience periods of extreme volatility due to (i) GTB tokens having a very limited trading history, (ii) a lack of adoption of GTB tokens by cryptocurrency holders, including a lack of adoption of cryptocurrencies generally due to the ~~Company~~expense of mining cryptocurrencies in the current cryptocurrency price environment and (iii) GTB tokens trading on one cryptocurrency exchange which has ~~recently assembled~~limited operating histories. Speculators and investors who seek to profit from trading and holding GTB tokens currently account for a ~~new experienced management team, stabilized~~significant portion of GTB tokens demand. Such speculation regarding the ~~foundation, capitalized~~potential future appreciation in the value of GTB tokens may artificially inflate their price. Fluctuations in the value of our GTB tokens or any other cryptocurrencies that we hold may also lead to fluctuations in the value of our common stock. In addition, because of converting our holdings to fiat currency would likely take an extended period of time. If the exchange where GTB tokens trades was to cease operations or no longer quote GTB tokens, there would be no trading platform for GTB tokens and rebranded the Company, reconfigured the business structure, expanded the Company’s mission and business lines, made several key investments and finally, injected several privately held and revenue producing assetsit would likely be impossible to convert GTB tokens into the corporation. It is uncertain whether these efforts will prove beneficial or whether we will be able to develop the necessary business models, infrastructure and systems to support the business. This includes having or hiring the right talent to execute our business strategy. Market acceptance of new product and service offerings will be dependent in part on our ability to include functionality and usability that address customer requirements, and optimally price our products and services to meet customer demand and cover our costs.fiat currency.

~~Any failure~~In addition, there is substantial uncertainty regarding the future legal and regulatory requirements relating to ~~implement this plan~~cryptocurrency or transactions utilizing cryptocurrency. For instance, governments may in ~~accordance with our expectations~~the near future curtail or outlaw the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. These uncertainties, as well as future accounting and tax developments, or other requirements relating to cryptocurrency, could have a material adverse effect on our business.

The cryptocurrency exchange on which our GTBtokens trade has limited operating histories and, in most cases, is largely unregulated and, therefore, may be more exposed to fraud and failure than established, regulated exchanges for traditional securities and other products. To the extent that such exchange involved in fraud or experience security failures or other operational issues, it may result in negative impact to our financial results, or the loss or destruction of, our GTB tokens.

The cryptocurrency exchange on which the GTB tokens trade has limited operating histories and, in most cases, are largely unregulated. Furthermore, the cryptocurrency exchange does not provide the public with significant information regarding their ownership structure, management team, corporate practices or regulatory compliance. As a result, the marketplace may lose confidence in or may experience problems relating to such exchange. Cryptocurrency exchanges may impose daily, weekly, monthly or customer-specific transaction or distribution limits, or they may suspend withdrawals entirely, rendering the exchange of GTB tokens for other digital assets or for fiat currency difficult or impossible.

Over the past few years, a number of cryptocurrency exchanges have been closed due to fraud, failure or security breaches. In many of these instances, the customers of such exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. The AsiaEDX, which is the principal exchange for the GTB tokens, launched in 2018 and is less likely to have the infrastructure and capitalization that make larger cryptocurrency exchanges more stable. As a result, the AsiaEDX may be at risk for cybersecurity attacks or may suffer from a greater exposure to technical failure.

A lack of stability in the AsiaEDX or the other exchanges upon which GTB tokens trade and their closure or temporary shutdown due to fraud, business failure, hackers or malware, or government-mandated regulation could result in us losing all or a portion of our GTB tokens or may reduce confidence in the GTB tokens and result in greater volatility in their pricing. If the GTB tokens are delisted from the AsiaEDX or any other cryptocurrency exchange, or if any of the cryptocurrency exchanges that list GTB tokens shut down or cease to continue operations, there may cease to be a liquid market for GTB tokens. These potential consequences could also have a material adverse impact on our financial results. ~~Even if~~Moreover, the ~~anticipated benefits~~exchange that list GTB tokens operate outside of the United States. Accordingly, in the event of fraud, we may have difficulty successfully pursuing claims against these exchanges in the courts of the countries in which they are organized.

Currently, there are no regulated trading markets for our GTB tokens or the other tokens that we hold, and ~~savings are substantially realized,~~therefore our ability to sell such tokens may be limited.

As of the date of this report, the online trading platforms on which the tokens we hold trade, including, with respect to our GTB tokens, the AsiaEDX, currently does not qualify as registered exchanges within the meaning of federal securities laws or regulated alternative trading systems. To the extent the tokens trading on these platforms meet the definition of a security under federal securities laws, the platform is generally required to register with the SEC as a national securities exchange or be exempt from such registration requirements. The failure of these platforms to register as national securities exchanges or properly comply with registration exemptions could result in the SEC bringing an enforcement action seeking to prohibit, suspend or limit their operations. In such event, the tokens we hold may be tradable on a very limited range of venues, or not at all, and there may be periods where trading activity in tokens that we hold is minimal or non-existent. These potential consequences ~~internal control issues, or business impacts~~could have a material adverse impact on the trading price of the tokens that ~~were not expected. Additionally, as a result~~we hold and could render the exchange of our ~~restructuring efforts in connection with our business transformation plan, we may experience a loss of continuity, loss of accumulated knowledge~~tokens for other digital assets or ~~loss of efficiency during transitional periods. Reorganization and restructuring can require a significant amount of management~~fiat currency difficult or impossible.

GTB tokens and other ~~employees' time and focus, which~~cryptocurrencies that we hold may ~~divert attention from operating activities and growing our business. If we fail~~be subject to ~~achieve~~loss, theft or restriction on access.

There is a risk that some or all of our cryptocurrencies could be lost or stolen. Access to our coins could also be restricted by cybercrime. We currently hold all of our GTB tokens in cold storage. Cold storage refers to any cryptocurrency wallet that is not connected to the ~~expected benefits~~internet. Cold storage is generally more secure but is not ideal for quick or regular transactions. We expect to continue to hold the majority of our cryptocurrencies in cold storage to reduce the risk of malfeasance, but this risk cannot be eliminated.

Hackers or malicious actors may launch attacks to steal, compromise or secure cryptocurrencies, such as by attacking the cryptocurrency network source code, exchange servers, third party platforms, cold and hot storage locations or software, or by other means. We are in control and possession of one of the more substantial holdings of GTB tokens, and we may in the future hold substantial positions in other cryptocurrencies. As we increase in size, we may become a more appealing target of hackers, malware, cyber-attacks or other security threats. Any of these ~~activities, it~~events may adversely affect our operations and, consequently, our investments and profitability. The loss or destruction of a private key required to access our digital wallets may be irreversible and we may be denied access for all time to our cryptocurrency holdings or the holdings of others. Our loss of access to our private keys or our experience of a data loss relating to our digital wallets could adversely affect our investments and assets.

Cryptocurrencies are controllable only by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held, which wallet’s public key or address is reflected in the network’s public blockchain. We will publish the public key relating to digital wallets in use when we verify the receipt of transfers and disseminate such information into the network, but we will need to safeguard the private keys relating to such digital wallets. To the extent such private keys are lost, destroyed or otherwise compromised, we will be unable to access our cryptocurrency coins and such private keys may not be capable of being restored by any network. Any loss of private keys relating to digital wallets used to store our cryptocurrencies could have a material adverse effect on our ~~competitive position,~~ business, ~~financial condition, results of~~prospects or operations and ~~cash flows.~~

~~The Company experiences significant competitive pressure, which may negatively impact its results~~.the value of any GTB tokens or other cryptocurrencies we hold for our own account.

~~The market~~Because there has been limited precedent set for financial accounting of cryptocurrencies and other digital assets, the determination that we have made for how to account for our GTB toekns and any other digital assets we may acquire may be subject to change.

Because there has been limited precedent set for the ~~Company’s products~~accounting classification and ~~services~~measurement of cryptocurrency and other digital tokens and related revenue recognition, it is ~~very competitive~~unclear how companies may in the future be required to account for digital asset transactions and assets and related revenue recognition. We are currently accounting for our GTB tokens as indefinite-lived intangible assets in accordance with Accounting Standard Codification No. 350: Intangibles—Goodwill and Other. Indefinite-lived intangible assets are recorded at cost and are not subject to ~~rapid technological advances, new market entrants, non-traditional competitors,~~amortization, but shall be tested for impairment annually and more frequently if events or changes in ~~industry~~circumstances indicate that it is more likely than not that the asset is impaired. However, a change in regulatory or financial accounting standards could result in the necessity to change our accounting methods and changes in customer needs and consumption models. Not only does the Company compete with global distributors, it also competes for customers with regional distributors and some of the Company’s own suppliers that maintain direct sales efforts. In addition, as the Company expands its offerings and geographies, the Company may encounter increased competition from current or new competitors. The Company’s failure to maintain and enhance its competitive positionrestate our financial statements. Such a restatement could adversely affect ~~its business and prospects. Furthermore,~~ the ~~Company’s efforts to compete in the marketplace could cause deterioration of gross profit margins and, thus, overall profitability.~~

The size of the Company’s competitors varies across market sectors, as do the resources the Company has allocated to the sectors and geographic areas in which it does business. Therefore, some competitorsaccounting for our GTB tokens or other cryptocurrencies that we may have greater resources or a more extensive customer or supplier base than the Company has in one or more of its market sectors and geographic areas, which may result in the Company not being able to effectively compete in certain markets which could impact the Company’s profitability and prospects.

Our international activities are significant to our revenues and profits, and we plan to further expand internationally. In certain international market segments, we have relatively little operating experienceacquire and may ~~not benefit from any first-to-market advantages or otherwise succeed. It is costly to establish, develop, and maintain international operations and platforms, and promote~~more generally negatively impact our ~~brand internationally.~~

~~Our international sales and operations are subject to a number of risks, including:~~

~~We may face challenges in expanding our international and cross-border businesses and operations.~~

As we expand our international and cross-border businesses into an increasing number of international markets, we will face risks associated with expanding into markets in which we have limited or no experience and in which we may be less well-known. We may be unable to attract a sufficient number of customers and other participants, fail to anticipate competitive conditions or face difficulties in operating effectively in these new markets. The expansion of our international and cross-border businesses will also expose us to risks inherent in operating businesses globally, including:

As we expand further into new regions and markets, these risks could intensify, and efforts we make to expand our international and cross-border businesses and operations may not be successful. Failure to expand our international and cross-border businesses and operations could materially and adversely affect our business, prospects, financial condition and results of ~~operations.~~operation.

Transactions conducted through our international and cross-border platforms may be subject to different customs, taxes and rules and regulations, and we may be adversely affected by the complexity of and developments in customs and import/export laws, rules and regulations in the PRC and other jurisdictions. For example, effective as of April 8, 2016, the Notice on Tax Policies of Cross-Border E-Commerce Retail Importation, or the New Cross-Border E-commerce Tax Notice, replaced the previous system for taxing consumer goods imported into the PRC and introduced a 17% value-added tax, or VAT, on most products sold through e-commerce platforms and consumption tax on high-end cosmetics.

Changes to trade policies, treaties and tariffs in the jurisdictions in which we operate, or the perception that these changes could occur, could adversely affect our international and cross-border operations, our financial condition and results of operations. For example, the U.S. administration under President Donald Trump has advocated greater restrictions on trade generally and significant increases on tariffs on goods imported into the United States, particularly from China.

We may also have operations in various markets with volatile economic or political environments and may pursue growth opportunities in a number of newly developed and emerging markets. These investments may expose us to heightened risks of economic, geopolitical, or other events, including governmental takeover (i.e., nationalization) of our manufacturing facilities or intellectual property, restrictive exchange or import controls, disruption of operations as a result of systemic political or economic instability, outbreak of war or expansion of hostilities, and acts of terrorism, each of which could have a substantial adverse effect on our financial condition and results of operations. Further, the U.S. government, other governments, and international organizations could impose additional sanctions that could restrict us from doing business directly or indirectly in or with certain countries or parties, which could include affiliates.

~~Our Results could be adversely affected by the trade tensions between the United States and China~~

With the increasing interconnectedness of global economic and financial systems and our business related to China, trade tensions between the United States and China can have an immediate and material adverse impact on our business. Changes to trade policies, treaties and tariffs in the jurisdictions in which we operate, or the perception that these changes could occur, could adversely affect our international and cross-border operations, our financial condition and results of operations. For example, the U.S. administration under President Donald Trump has advocated greater restrictions on trade generally and significant increases on tariffs on goods imported into the United States, particularly from China. Further, the U.S. or China could impose additional sanctions that could restrict us from doing business directly or indirectly in either country. Such actions could have material adverse impact on our profitability and 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 ~~June 30, 2018,~~March 31, 2019, other than those that were previously reported in our Current Reports on Form 8-K.

There were no defaults upon senior securities during the fiscal quarter ended ~~June 30, 2018.~~March 31, 2019.

On April 30, 2019, the Company, its Board of Directors, and the Audit committee unanimously accepted the resignation of Mr. Federico Tovar, the Company’s Chief Financial Officer. In light of the above, effective May 1, 2019, Mrs. Cecilia Xu, our Corporate Controller, will assume the duties of interim Chief Financial Officer of Ideanomics, Inc. and will continue to receive an annual base salary of $195,000. Mrs. Xu, 41, joined the Company in October 2018 as Corporate Controller, and has served in that role until present.

Cecilia Xu, has over 15 years of experience in areas of finance and accounting. She was the financial reporting director at Axiom Global Inc from April 2017 to October 2018. She was formerly the SEC reporting manager of the Ubiquiti Networks (Nasdaq: UBNT) from May 2016 to April 2017. Prior to that, she was the global audit manager and corporate accounting manager at the China and U.S. offices of Unisys (NYSE: UIS) from 2007 to 2016. In addition, she worked at PricewaterhouseCoopers from 2001 to 2007 most recently as an audit manager in the Shanghai office. She is a certified public accountant in the U.S. and China.

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 ~~August 13, 2018.~~May 2, 2019.

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

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

Large accelerated filer¨	Accelerated filer ¨
Non-accelerated filer ¨x	Smaller reporting companyx
~~Emerging growth company~~ ¨

PART I	-FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3027
Item 3	Quantitative and Qualitative Disclosures About Market Risk	4336
Item 4.	Controls and Procedures	4336

PART II	-OTHER INFORMATION

Item 1.	Legal Proceedings	4437
Item 1A.	Risk Factors	4437
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4639
Item 3.	Defaults Upon Senior Securities	4639
Item 4.	Mine Safety Disclosures	4639
Item 5.	Other Information	4639
Item 6.	Exhibits	4739
Signatures		4840

	Page
Unaudited Consolidated Balance Sheets	4
Unaudited Consolidated Statements of Operations	5
Unaudited Consolidated Statements of Comprehensive Income (Loss)	6
Unaudited Consolidated Statements of Cash Flows	79
Unaudited Consolidated Statements of Equity	87
Notes to Unaudited Consolidated Financial Statements	10

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
				(As adjusted*)						(As adjusted*)
Revenue	$	132,986,538		$	43,327,868		$	318,920,359		$	76,495,611
Cost of revenue from third parties		49,603,626			43,272,723			72,884,557			72,615,141
Cost of revenue from related parties		81,850,378			-			244,110,132			-
Gross profit		1,532,534			55,145			1,925,670			3,880,470

Operating expenses:
Selling, general and administrative expense		8,790,167			2,992,230			12,528,166			4,337,076
Research and development expense		679,587			-			725,609			-
Professional fees		640,365			777,583			1,353,298			1,048,525
Depreciation and amortization		13,020			61,100			23,225			257,320
Impairment of other intangible assets		-			63,621			-			63,621
Total operating expense		10,123,139			3,894,534			14,630,298			5,706,542

Loss from operations		(8,590,605	)		(3,839,389	)		(12,704,628	)		(1,826,072	)

Interest and other income (expense)
Interest expense, net		(28,137	)		(3,448	)		(56,172	)		(44,750	)
Change in fair value of warrant liabilities		-			26,117			-			(243,999	)
Equity in loss of equity method investees		(10,691	)		(33,090	)		(30,434	)		(76,836	)
Other		18,512			(11,030	)		367,500			(110,600	)
Loss before income taxes		(8,610,921	)		(3,860,840	)		(12,423,734	)		(2,302,257	)

Income tax benefit		-			-			-			-

Net loss		(8,610,921	)		(3,860,840	)		(12,423,734	)		(2,302,257	)

Net loss attributable to non-controlling interest		290,897			57,221			382,341			631,633

Net loss attributable to Seven Stars Cloud shareholders	$	(8,320,024	)	$	(3,803,619	)	$	(12,041,393	)	$	(1,670,624	)

Basic loss per share	$	(0.12	)	$	(0.06	)	$	(0.17	)	$	(0.03	)
Diluted loss per share	$	(0.12	)	$	(0.06	)	$	(0.17	)	$	(0.03	)

Weighted average shares outstanding:
Basic		71,785,448			61,180,365			70,309,078			58,297,202
Diluted		71,785,448			61,180,365			70,309,078			58,297,202

	Three Months Ended
	March 31, 2019			March 31, 2018
				(restated)
Revenue from third parties	$	345,564		$	185,933,821
Revenue from related party		26,600,000			-
Total revenue		26,945,564			185,933,821
Cost of revenue from third parties		257,406			23,280,931
Cost of revenue from related parties		-			162,259,754
Gross profit		26,688,158			393,136

Operating expenses:
Selling, general and administrative expenses		4,187,868			3,737,999
Research and development expense		-			46,022
Professional fees		1,360,214			712,933
Depreciation and amortization		244,178			10,205
Total operating expenses		5,792,260			4,507,159

Income (Loss) from operations		20,895,898			(4,114,023	)

Interest and other income (expense):
Interest expense, net		(735,205	)		(28,035	)
Equity in loss of equity method investees		(280,486	)		(19,743	)
Others		(57,858	)		348,988
Income (Loss) before income taxes and non-controlling interest		19,822,349			(3,812,813	)

Income tax benefit		86,405			-

Net income (loss)		19,908,754			(3,812,813	)

Net loss attributable to non-controlling interest		17,761			91,444
					-
Net income (loss) attributable to IDEX common shareholders	$	19,926,515		$	(3,721,369	)

Earnings (loss) per share
Basic	$	0.19		$	(0.05	)
Diluted		0.18		$	(0.05	)

Weighted average shares outstanding:
Basic		105,345,673			68,816,303
Diluted		116,301,236			68,816,303

	Three Months Ended March 31, 2018
	Common Stock		Par Value		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Ideanomics Shareholders' equity			Non-controlling Interest			Total Equity
Balance, January 1, 2018 (restated)		68,509,090	$	68,509	$	158,449,544		$	(126,693,022	)	$	(782,074	)	$	31,042,957		$	(1,289,367	)	$	29,753,590
Share-based compensation		-		-		121,190			-			-			121,190			-			121,190
Common stock issuance for RSU vested		13,464		13		(13	)		-			-			-			-			-
Common stock issued for warrant exercised		300,000		300		524,700			-			-			525,000			-			525,000
Common stock issuance for option exercised		42,501		43		2,589			-			-			2,632			-			2,632
Acquisition of Guangmin		-		-		(36,646	)		-			-			(36,646	)		-			(36,646	)
Net loss		-		-		-			(3,721,369	)		-			(3,721,369	)		(91,444	)		(3,812,813	)
Foreign currency translation adjustments, net of nil tax		-		-		-			-			(32,481	)		(32,481	)		(9,148	)		(41,629	)
Balance, March 31, 2018 (restated)		68,865,055	$	68,865	$	159,061,364		$	(130,414,391	)	$	(814,555	)	$	27,901,283		$	(1,389,959	)	$	26,511,324

	Three Months Ended March 31, 2019
	Common Stock		Par Value		Common Stock in Escrow Account		Par Value		Additional Paid-in Capital		Retained Earnings/ Accumulated (Deficit)			Accumulated Other Comprehensive Loss			Ideanomics Shareholders' equity		Non-controlling Interest			Total Equity
Balance, January 1, 2019		102,766,006	$	102,765		-	$	-	$	195,779,576	$	(149,975,302	)	$	(1,664,598	)	$	44,242,441	$	(1,030,626	)	$	43,211,815
Share-based compensation		-		-		-		-		224,484		-			-			224,484		-			224,484
Common stock issuance for restricted shares		129,840		130		-		-		(130)		-			-			-		-			-
Common Stock issuance for acquisition (SolidOpinion, Inc)		4,500,000		4,500		-		-		7,150,500		-			-			7,155,000		-			7,155,000
Common stock issuance for convertible debt		1,166,113		1,166		-		-		2,048,834		-			-			2,050,000		-			2,050,000
Net income (loss)		-		-		-		-		-		19,926,515			-			19,926,515		(17,761	)		19,908,754
Foreign currency translation adjustments, net of nil tax		-		-		-		-		-		-			172,133			172,133		(25,295	)		146,838
Balance, March 31, 2019		108,561,959	$	108,561		25,500,000	$	25,500	$	205,203,264	$	(130,048,787	)	$	(1,492,465	)	$	73,770,573	$	(1,073,682	)	$	72,696,891

	Six Months Ended
	June 30, 2018			June 30, 2017
				(As adjusted*)

Cash flows from operating activities:
Net loss	$	(12,423,734	)	$	(2,302,257	)
Adjustments to reconcile net loss to net cash used in operating activities
Share-based compensation expense		3,360,917			147,652
Provision for doubtful accounts		-			103,043
Depreciation and amortization		23,225			257,320
Equity in loss of equity method investees		30,434			76,836
Loss on disposal of assets		-			679,091
Change in fair value of warrant liabilities		-			243,999
Impairment of intangible assets		-			63,621

Change in assets and liabilities:
Accounts receivable		(85,823,652	)		(33,765,572	)
Licensed content		-			759,698
Prepaid expenses and other assets		(1,931,974	)		3,699,840
Accounts payable		3,625,307			29,200,687
Amount due to related parties		81,850,378			-
Accrued expenses, salary and other current liabilities		(17,769	)		(264,918	)
Deferred revenue		(116,843	)		(626,396	)
Net cash used in operating activities		(11,423,711	)		(1,727,356	)

Cash flows from investing activities:
Acquisition of property and equipment		(64,828	)		(53,031	)
Proceeds from disposal of property and equipment		-			743
Disposal of Zhong Hai Shi Xun, net of cash disposed		-			(115,060	)
Cash paid for the acquisition of subsidiaries		(391,610	)		(693,187	)
Net cash used in investing activities		(456,438	)		(860,535	)

Cash flows from financing activities
Proceeds from issuance of warrant and shares		6,427,632			1,866,301
Borrowings from related parties		25,888			90,979
Net cash provided by financing activities		6,453,520			1,957,280
Effect of exchange rate changes on cash		(12,896	)		40,130
Net increase (decrease) in cash, cash equivalents and restricted cash		(5,439,525	)		(590,481	)

Cash, cash equivalents and restricted cash at beginning of period		7,577,317			4,079,769

Cash, cash equivalents and restricted cash at end of period	$	2,137,792		$	3,489,288

Supplemental Cash Flow Information:

Exchange of Series E Preferred Stock for common stock	$	-		$	7,155

	Series E Preferred Stock			Series E Par Value			Common Stock		Par Value		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Seven Stars Cloud Shareholders' Equity			Non- controlling Interest			Total Equity
Balance, January 1, 2017 (As adjusted*)		7,154,997		$	7,155			53,918,523	$	53,918	$	152,792,855		$	(115,829,451	)	$	(1,371,498	)	$	35,652,979		$	(5,325,481	)	$	30,327,498
Share-based compensation		-			-			-		-		147,652			-			-			147,652			-			147,652
Common stock issuance		-			-			538,182		538		1,479,463			-			-			1,480,001			-			1,480,001
Common stock issuance for RSU vested		-			-			105,215		105		(105	)		-			-			-			-			-
Common stock issuance for option exercised		-			-			11,035		11		(11	)		-			-			-			-			-
Common stock issued for warrant exercised		-			-			236,105		236		563,261			-			-			563,497			-			563,497
Common stock issued from conversion of series E preferred stock		(7,154,997	)		(7,155	)		7,154,997		7,155		-			-			-			-			-			-
Disposal of Zhong Hai Shi Xun		-			-			-		-		(9,993,734	)		(360,518	)		(220,717	)		(10,574,969	)		3,947,477			(6,627,492	)
Acquisition of Guang Ming												78,630									78,630						78,630
Net loss		-			-			-		-		-			(1,670,624	)		-			(1,670,624	)		(631,633	)		(2,302,257	)
Foreign currency translation adjustments, net of nil tax		-			-			-		-		-			-			735,947			735,947			(32,958	)		702,989
Balance, June 30, 2017 (As adjusted*)		-		$	-			61,964,057	$	61,963	$	145,068,011		$	(117,860,593	)	$	(856,268	)	$	26,413,113		$	(2,042,595	)	$	24,370,518

	June 30,		December 31,
	2018		2017
ASSETS
Current assets:
Cash	$	2,737	$	3,898
Prepaid expenses		869		3,604
Other current assets		1,511		1,537
Intercompany receivables due from the Company's subsidiaries⁽ⁱ⁾		2,452,736		2,494,505
Total current assets		2,457,853		2,503,544
Long term investments		3,690,884		3,719,467
Total assets	$	6,148,737		6,223,011

LIABILITIES
Current liabilities:
Other current liabilities	$	41		41
Intercompany payables due to the Company's subsidiaries⁽ⁱ⁾		3,541,150		3,601,454
Total current liabilities		3,541,191		3,601,495
Total liabilities	$	3,541,191		3,601,495

	June 30, 2018			December 31, 2017
Balance at the beginning of the period	$	(3,646	)		(2,828,796	)
Additions charged to bad debt expense		-			(145,512	)
Write-off of bad debt allowance		15			89,851
Disposal of Zhong Hai Shi Xun		-			2,880,811
Balance at the end of the period	$	(3,631	)		(3,646	)

	June 30, 2018										December 31, 2017
	Gross Carrying		Accumulated			Impairment			Net		Gross Carrying		Accumulated			Impairment			Net
Amortizing Intangible Assets	Amount		Amortization			Loss			Balance		Amount		Amortization			Loss			Balance
Software and licenses		213,857		(204,579	)		-			9,278		214,210		(199,626	)		-			14,584
Patent and trademark (i)		92,965		(39,943	)		(53,022	)		-		92,965		(39,943	)		(53,022	)		-
Total amortizing intangible assets	$	306,822		(244,522	)		(53,022	)		9,278	$	307,175	$	(239,569	)	$	(53,022	)	$	14,584

Indefinite lived intangible assets
Website name		134,290		-			-			134,290		134,290		-			-			134,290
Patent (i)		10,599		-			(10,599	)		-		10,599		-			(10,599	)		-
Total intangible assets	$	451,711		(244,522	)		(63,621	)		143,568	$	452,064	$	(239,569	)	$	(63,621	)	$	148,874

	Amortization to be
Years ending December 31,	Recognized
2018 (6 months)	$	5,061
2019		4,217
Total amortization to be recognized	$	9,278

	June 30, 2018
			December 31, 2017		Addition		Loss on investment			Foreign currency translation adjustments		June 30, 2018
Wecast Internet		(i)		6,044				(1,608	)		-		4,436
Hua Cheng		(ii)		353,498				(28,826	)		243		324,915
Shandong Media		(iii)		-				-			-		-
BDCG		(iv)		-		9,800,000		-			-		9,800,000
Total			$	359,542		9,800,000		(30,434	)		243		10,129,351

	March 31,			December 31,
	2019			2018
Furniture and office equipment	$	345,541		$	357,064
Vehicle		64,632			63,135
Leasehold improvements		198,584			200,435
Total property and equipment		608,757			620,634
Less: accumulated depreciation		(196,566	)		(186,514	)
Construction in progress (Fintech Village)		15,181,064			14,595,307
Property and Equipment, net	$	15,593,255		$	15,029,427

			March 31, 2019									December 31, 2018
	Weight Average Remaining		Gross Carry		Accumulated			Impairment		Net		Gross Carry		Accumulated			Impairment			Net
	Useful Life		Amount		Amortization			Loss		Balance		Amount		Amortization			Loss			Balance
Amortizing Intangible Assets
Animation Copyright (Note 13 (b))		-	$	-	$	-		$	-	$	-	$	301,495	$	(64,606	)	$	-		$	236,889
Software and licenses		-		97,308		(95,648	)		-		1,660		97,308		(93,251	)		-			4,057
Intellectual property (Note 5 (a))		4.9		4,655,000		(77,583	)		-		4,577,417		-		-			-			-
Influencer network		9.5		1,980,000		(115,500	)		-		1,864,500		1,980,000		(66,000	)		-			1,914,000
Customer contract		2.5		500,000		(97,223	)		-		402,777		500,000		(55,556	)		-			444,444
Trade name		14.5		110,000		(4,277	)		-		105,723		110,000		(2,444	)		-			107,556
Technology platform		6.5		290,000		(24,165	)		-		265,835		290,000		(13,808	)		-			276,192
Total amortizing intangible assets			$	7,632,308	$	(414,396	)	$	-	$	7,217,912	$	3,278,803	$	(295,665	)	$	-		$	2,983,138
Indefinite lived intangible assets
Website name				25,214		-			-		25,214		159,504		-			(134,290	)		25,214
Patent				28,000		-			-		28,000		28,000		-			-			28,000
GTB Tokens (Note 13 (b))				61,123,506		-			-		61,123,506		-		-			-			-
Total intangible assets			$	68,809,028	$	(414,396	)	$	-	$	68,394,632	$	3,466,307	$	(295,665	)	$	(134,290	)	$	3,036,352

	Amortization to be
Years ending December 31,	recognized

2019 (excluding the three months ended March 31, 2019)	$	1,198,499
2020		1,344,429
2021		1,288,873
2022		1,177,762
2023 and thereafter		2,208,350
Total amortization to be recognized	$	7,217,913

		March 31, 2019
											Foreign currency
		December 31,				Loss on			Impairment		translation
		2018		Addition		investment			loss		adjustments			March 31, 2019
Wecast Internet	(i)	$	4,114	$	-	$	(5	)	$	-	$	1,930		$	6,039
Hua Cheng	(ii)		308,666		-		(14,598	)		-		(1,236	)		292,832
BDCG	(iv)		9,800,000		-		-			-		-			9,800,000
DBOT	(v)		6,843,726		-		(265,883	)		-		-			6,577,843
Total		$	16,956,506	$	-	$	(280,486	)	$	-	$	694		$	16,676,714

Maturity of Lease Liability	Operating Lease
2019	$	1,320,442
2020		1,177,261
2021		1,202,496
2022		1,294,781
2023		1,343,668
After 2024		2,529,735
Total lease payments		8,868,383
Less: Interest		(1,824,219	)
Total	$	7,044,164

						Weighted Average									Weighted
						Remaining		Aggregated					Weighted		Average
	Options			Weighted Average		Contractual Life		Intrinsic					Average		Remaining		Aggregated
	Outstanding			Exercise Price		(Years)		Value		Options			Exercise		Contractual		Intrinsic
Outstanding at January 1, 2018		1,853,391		$	3.20		2.99		0.02
										Outstanding			Price		Life (Years)		Value
Outstanding at January 1, 2019											1,706,431		$	3.28		4.08	$	-
Granted		-			-						-			-		-		-
Exercised		(70,000	)		1.99						-			-		-		-
Expired		(9,999	)		1.58						-			-		-		-
Forfeited		-			-						(60,000	)		1.91		-		-
Outstanding at June 30, 2018		1,773,392			3.26		4.55		0.02
Vested and expected to vest as of June 30, 2018		1,773,392			3.26		4.55		0.02
Options exercisable at June 30, 2018 (vested)		1,682,559			3.34		4.30		0.02
Outstanding at March 31, 2019											1,646,431		$	3.33		3.66	$	54,565
Vested and expected to be vested as of March 31, 2019											1,646,431		$	3.33		3.66	$	54,565
Options exercisable at March 31, 2019 (vested)											1,634,348		$	3.34		3.63	$	53,365

	Shares			Weighted-average fair value					Weighted-average
Restricted shares outstanding at January 1, 2018		109,586			1.92
						Shares			fair value
Non-vested restricted shares outstanding at January 1, 2019							87,586		$	2.46
Granted		1,342,743			2.58		129,840		$	1.24
Forfeited		(57,000	)		2.02		-		$	-
Vested		(1,264,743	)		2.57		(129,840	)	$	1.24
Restricted shares outstanding at June 30, 2018		130,586			2.39
Non-vested restricted shares outstanding at March 31, 2019							87,586		$	2.46

For the periods ended March 31,	2019		2018
Net earnings (loss) attributable to common stockholders	$	19,926,515	$	(3,721,369	)
Interest expense attributable to convertible promissory notes		738,219		-
Net earnings (loss) assuming dilution	$	20,664,734	$	(3,721,369	)
Basic weighted average common shares outstanding		105,345,673		68,816,303
Effect of dilutive securities
Convertible preferred shares- Series A		933,333		-
Convertible promissory notes		10,022,230		-
Diluted potential common shares		116,301,236		68,816,303
Earnings (loss) per share:
Basic	$	0.19	$	(0.05	)
Diluted	$	0.18	$	(0.05	)

	Leased Property
Years ending December 31,	Costs
2018(6 months)		602,230
2019		715,164
2020		360,394
Thereafter		93,376
Total	$	1,771,164

	2018Q2					2017Q2		Diff
	USD		%			USD		USD		%
Wecast Services		132,986,538		100	%		43,327,868		89,658,670		207	%
Total		132,986,538		100	%		43,327,868		89,658,670		207	%

	Three Months Ended
For the Period ended	March 31, 2019		March 31, 2018		Amount Change			% Change
-Wecast Service
Crude oil	$	-	$	22,601	$	(22,601	)		(100	)
Consumer electronics		-		268,535		(268,535	)		(100	)
Digital asset management services		26,600,000		-		26,600,000			-
Other		88,158		102,000		(13,842	)		(14	)
		26,688,158		393,136		26,295,022			6,689
-Legacy YOD		-		-		-			-
Total	$	26,688,158	$	393,136	$	26,295,022			6,689

	Six months ended June 30, 2018					Six months ended June 30, 2017		Diff
	USD		%			USD		USD			%
Legacy YOD		-		-			794,273		(794,273	)		(100	)%
Wecast Services		318,920,359		100	%		75,701,338		243,219,021			321	%
Total		318,920,359		100	%		76,495,611		242,424,748			317	%

	2018 1-6					2017 1-6		Diff
	USD		%			USD		USD			%
Legacy YOD		-		-			31,659		(31,659	)		(100	)%
Wecast Services		1,925,670		100	%		3,848,811		(1,923,141	)		(50	)%
Total		1,925,670		100	%		3,880,470		(1,954,800	)		(50	)%

Exhibit
No.		Description
31.1*10.1		Trade Finance Services Agreement, dated January 9, 2019, by and among the Company, Ningbo Free Trade Zone Cross-Border Supply Chain Management and Settlement Technology Co., Ltd.
10.2		Asset Purchase Agreement, dated February 19, 2019, by and between the Company and Solid Opinion, Inc
10.3		Registration Rights Agreement, dated February 19, 2019, by and between the Company and Solid Opinion, Inc.
10.4		Convertible Note Purchase Agreement, dated February 22, 2019, by and between the Company and ID Venturas 7, LLC
10.5		Convertible Note, dated February 22, 2019, by and between the Company and ID Venturas 7, LLC
10.6		Warrant, dated February 22, 2019, by and between the Company and ID Venturas 7, LLC
10.7		Registration Rights Agreement, dated February 22, 2019, by and between the Company and ID Venturas, LLC
10.8		Acquisition Agreement, dated March 5, 2019, by and between the Company and Tree Motion Sdn. Bhd.
10.9		Asset Purchase Agreement, March 14, 2019, by and between the Company and GT Dollar PTE Ltd
10.10		Employment Agreement, dated February 15, 2019, by and between the Company and Mr. Alfred Poor
10.11		Termination Agreement, dated February 12, 2019 by and between the Company and Brett McGonegal
10.12		Termination Agreement, dated February 12, 2019 by and between the Company and Evangelos Kalimtgis
10.13		Termination Agreement, dated February 12, 2019 by and between the Company and Uwe Henke
10.14		GT Dollar Service Agreement, dated March 14, 2019 by and between the Company, Thai Setakij Insurance Plc and GT Dollar Ltd
31.1		Certifications of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2*31.2		Certifications of Interim Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1**32.1		Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2**32.2		Certification ofInterim PrincipalFinancial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS*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

~~Seven Stars Cloud Group, Inc.~~By:	/s/ Cecilia Xu

~~By: /s/ Federico Tovar~~	Cecilia Xu

~~Name: Federico Tovar~~ Interim Chief Financial Officer
~~Title: Chief Financial Officer~~��
(Principal Financial ~~Officer~~ and ~~an Authorized Officer)~~Accounting Officer)