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Ideanomics (IDEX)

Filed: 21 Sep 22, 8:48pm
0000837852idex:USHybridCorporationMemberus-gaap:TechnologyBasedIntangibleAssetsMember2021-06-102021-06-10

As filed with the Securities and Exchange Commission on September 21, 2022.

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Ideanomics, Inc.

(Exact name of registrant as specified in our charter)

Nevada

7380

20-1778374

(State or other jurisdiction of
incorporation or organization)

(Primary Standard Industrial
Classification Code Number)

(I.R.S. Employer Identification Number)

1441 Broadway, Suite 5116

New York, NY 10018

(212) 206-1216

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

Alfred P. Poor

Chief Executive Officer

1441 Broadway, Suite 5116

New York, NY 10018

(212) 206-1216

(Name, address, including zip code, and telephone number, including

area code, of agent for service)

Copies to:

William N. Haddad, Esq.

Arif Soto, Esq.

Venable LLP

1270 Avenue of the Americas, 24th Floor

New York, NY 10020

(212) 503-9812

Approximate date of commencement of proposed sale to the public: from time to time after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:        

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.        

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.        

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.        

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling securityholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Table of Contents

SUBJECT TO COMPLETION, DATED SEPTEMBER 21, 2022

PRELIMINARY PROSPECTUS

Graphic

Ideanomics, Inc.

151,500,000 Shares of Common Stock

This prospectus relates to the offer and sale of up to 151,500,000 shares of our common stock, $0.001 par value per share (“Common Stock”), by YA II PN, LTD., a Cayman Islands exempt limited partnership (“YA,” or the “Selling Stockholder”). YA is a fund managed by Yorkville Advisors Global, LP.

The shares of Common Stock being offered by the Selling Stockholder have been and may be issued pursuant to the Standby Equity Purchase Agreement dated as of September 1, 2022, that we entered into with YA, as subsequently amended and restated on September 15, 2022 (the “Purchase Agreement”). We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of our Common Stock by the Selling Stockholder. However, we may receive up to the amount that equals or exceeds $88,500,000 in aggregate gross proceeds from sales of our Common Stock to YA that we may make under the Purchase Agreement, from time to time after the date of this prospectus. Pursuant to the Purchase Agreement, we issued 1,500,000 shares of our Common Stock (the “Commitment Shares”) to YA as consideration for its irrevocable commitment to purchase shares of our Common Stock under the Purchase Agreement. The additional shares of Common Stock that may be offered pursuant to this prospectus would be purchased by YA pursuant to the Purchase Agreement at 95% of the Market Price, as defined in the Purchase Agreement, i.e., 95% of the lowest daily VWAP during the three consecutive trading days commencing on the advance notice date, other than the daily VWAP on any day excluded pursuant to the terms of the Purchase Agreement.

See the sections titled “The YA Transaction” for a description of the transaction contemplated by the Purchase Agreement and “Selling Stockholder” for additional information regarding YA.

The Selling Stockholder may sell the shares of Common Stock included in this prospectus in a number of different ways and at varying prices. We provide more information about how the Selling Stockholder may sell the shares in the section entitled “Plan of Distribution.” The Selling Stockholder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended (the “Securities Act”).

The Selling Stockholder will pay all brokerage fees and commissions and similar expenses in connection with the offer and sale of the shares by the Selling Stockholder pursuant to this prospectus. We will pay the expenses (except brokerage fees and commissions and similar expenses) incurred in registering under the Securities Act the offer and sale of the shares included in this prospectus by the Selling Stockholder. See “Plan of Distribution.

Our Common Stock is listed on the Nasdaq Capital Market under the symbol “IDEX.” On September 20, 2022, the closing price of our Common Stock was $0.41 per share.

See the section entitled “Risk Factors” beginning on page 9 of this prospectus to read about factors you should consider before buying our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is September 21, 2022.

TABLE OF CONTENTS

Page

About This Prospectus

4

Cautionary Note Regarding Forward-Looking Statements

5

Prospectus Summary

6

The Offering

8

Risk Factors

9

The YA Transaction

11

Use of Proceeds

14

Determination of Offering Price

14

Market Information for Common Stock and Dividend Policy

15

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Business

50

Management

66

Executive and Director Compensation

73

Certain Relationships and Related Party Transactions

75

Principal Securityholders

76

Selling Stockholder

78

Description of Securities

79

Plan of Distribution

82

Material United States Federal Income Tax Consequences to Holders

84

Legal Matters

88

Experts

88

Change in Accountants

88

Where You Can Find More Information

89

Index to Financial Statements

F-1

You should rely only on the information provided in this prospectus, as well as the information incorporated by reference into this prospectus and any applicable prospectus supplement. Neither we nor the Selling Securityholder have authorized anyone to provide you with different information. Neither we nor the Selling Securityholder are making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any applicable prospectus supplement is accurate as of any date other than the date of the applicable document. Since the date of this prospectus and the documents incorporated by reference into this prospectus, our business, financial condition, results of operations and prospects may have changed.

3

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”). The Selling Stockholder may, from time to time, sell the securities described in this prospectus.

You should rely only on the information provided in this prospectus, as well as the information incorporated by reference into this prospectus and any applicable prospectus supplement. Neither we nor the Selling Stockholder have authorized anyone to provide you with different information. Neither we nor the Selling Stockholder have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or any applicable prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor the Selling Stockholder take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. You should not assume that the information in this prospectus or any applicable prospectus supplement is accurate as of any date other than the date of the applicable document. Since the date of this prospectus and the documents incorporated by reference into this prospectus, our business, financial condition, results of operations and prospects may have changed. Neither we nor the Selling Stockholder will make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. We may also provide a prospectus supplement or post-effective amendment to the registration statement to add information to, or update or change information contained in, this prospectus. You should read both this prospectus and any applicable prospectus supplement or post-effective amendment to the registration statement together with the additional information to which we refer you in the section of this prospectus entitled “Where You Can Find More Information.

Unless the context indicates otherwise, references in this prospectus to the “Company,” “Ideanomics,” “we,” “us,” “our,” and similar terms refer to Ideanomics, Inc. and its consolidated subsidiaries.

This prospectus contains our registered and unregistered trademarks and service marks, as well as trademarks and service marks of third parties. Solely for convenience, these trademarks and service marks are referenced without the®, ™ or similar symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and service marks. All brand names, trademarks and service marks appearing in this prospectus are the property of their respective holders.

4

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”). We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning our transition to become a next-generation Fintech company; our expectations regarding the market for our new and existing products and industry segment growth; our expectations regarding demand for and acceptance of our new and existing products or services; our expectations regarding our partnerships and joint ventures, acquisitions, investments; our business strategies and goals; any projections of sales, earnings, revenue, margins or other financial items; any statements regarding the plans, strategies, and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in the PRC; and all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including, and without limitation, those identified in “Risk Factors” included herein, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements included herein are made as of the date of this prospectus. We undertake no obligation to update any of these forward-looking statements, whether written or oral, that may be made, from time to time, after the date of this prospectus to conform our prior statements to actual results or revised expectations.

5

PROSPECTUS SUMMARY

This summary highlights selected information appearing elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that may be important to you. To understand this offering fully, you should read this entire prospectus carefully, including the information set forth under the headings “Risk Factors” and “Business” and in our financial statements, together with any accompanying prospectus supplement.

Ideanomics, Inc.

Ideanomics is an operating company incorporated in 2004 under the laws of the State of Nevada. Our evolution has been driven by technological innovation and numerous strategic acquisitions of businesses to act as our operating subsidiaries that expanded our product offerings and complemented our existing solutions. Currently, Ideanomics conducts its operations globally in one segment with two business units – Ideanomics Mobility and Ideanomics Capital. Ideanomics Mobility has as its mission the acceleration of commercial adoption of electric vehicles. Ideanomics Capital is the Company’s business focused on the financial services and title and agency services in the real estate market. Over time, it is Ideanomics intention to focus Ideanomics Capital solely as the financial services arm of Ideanomics Mobility and to divest its other fintech assets accordingly.

Our Common Stock is listed on the NASDAQ Capital Market under the symbol “IDEX.”

See the section titled “Business” for a description of our business.

Corporate Information

The mailing address of our principal executive office is 1441 Broadway, Suite 5116, New York, NY 10018. Our telephone number is (212) 206-1216. Our website address is www.ideanomics.com. Information contained on our website or connected thereto does not constitute part of, and is not incorporated by reference into, this prospectus.

Standby Equity Purchase Agreement

On September 1, 2022, the Company entered into the Purchase Agreement with the Selling Stockholder. The Purchase Agreement was subsequently amended and restated on September 15, 2022. The Company will be able to sell up to 150,000,000 shares of Common Stock at the Company’s request any time during the 36 months following the date of the SEPA’s entrance into force. Pursuant to the Purchase Agreement, we issued 1,500,000 shares of our Common Stock to YA as consideration for its irrevocable commitment to purchase shares of our Common Stock under the Purchase Agreement.

The shares would be purchased at 95% of the Market Price, as defined in the Purchase Agreement, i.e., 95% of the lowest daily VWAP during the three consecutive trading days commencing on the advance notice date, other than the daily VWAP on any day excluded pursuant to the terms of the Purchase Agreement and would be subject to certain limitations, including that:

(i)YA could not purchase any shares that would result in it owning more than 4.99% of Common Stock; and
(ii)The Company cannot issue the number of shares of Common Stock exceeding 19.9% of shares of Common Stock issued and outstanding as of September 1, 2022, i.e., 98,440,733 shares of Common Stock, without approval of the Company’s stockholders.

Pursuant to the Purchase Agreement, the Company is required to register all shares which YA may acquire. The Company agreed to file with the SEC a Registration Statement registering all of the shares of common stock that are to be offered and sold to YA pursuant to the Purchase Agreement. Pursuant to the Purchase Agreement, the use of proceeds from the sale of the shares of Common Stock by the Company to YA shall be used by the Company in the manner as will be set forth in this prospectus. YA has agreed that neither it nor any of its affiliates shall engage in any short-selling or hedging of our Common Stock during any time prior to the public disclosure of the Purchase Agreement.

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There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. In addition, YA has agreed that, during the term of the Purchase Agreement, neither YA or its affiliates will engage in any short sales or hedging transactions with respect to our common stock, provided that upon receipt of an Advance Notice, YA may sell shares that it is obligated to purchase under such Advance Notice prior to taking possession of such shares.

The Purchase Agreement contains customary representations, warranties, conditions and indemnification obligations of the parties. The representations, warranties and covenants were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the contracting parties.

Unless earlier terminated as provided under the Purchase Agreement, the Purchase Agreement shall terminate automatically on the earliest of (i) the first day of the month next following the 36-month anniversary of the effective date of the Purchase Agreement or (ii) the date on which the YA shall have made payment of Advances (as defined in the Purchase Agreement) pursuant to the Purchase Agreement for the Common Shares equal to the Commitment Amount (as defined in the Purchase Agreement), i.e., 150,000,000 shares of our Common Stock if our stockholders approve the sale of more than 20% of our issued and outstanding shares of Common Stock under the Purchase Agreement.

The net proceeds under the Purchase Agreement to us will depend on the frequency and prices at which we sell shares of our stock to Common Stock, our ability to meet the conditions set forth in the Purchase Agreement and any impacts of the Exchange Cap or Beneficial Ownership Cap, each as discussed below in the section titled “The YA Transaction.” We expect that any proceeds received by us from such sales to Common Stock will be used for working capital and general corporate purposes.

Risk Factors

An investment in our common stock involves substantial risk. The occurrence of one or more of the events or circumstances described in the section entitled “Risk Factors,” alone or in combination with other events or circumstances, may have a material adverse effect on our business, cash flows, financial condition and results of operations.

7

THE OFFERING

Issuer

    

Ideanomics, Inc.

Shares of Common Stock Offered by Selling Stockholder

(i)
1,500,000 Commitment Shares issued to YA upon execution of the Purchase Agreement. We have not and will not receive any cash proceeds from the issuance of these Commitment Shares; and
(ii)
Up to 150,000,000 shares (the “Purchase Shares”) we may sell to YA under the Purchase Agreement from time to time.

Shares of Common Stock Outstanding Prior to this Offering

497,868,547 shares of Common Stock (as of September 20, 2022)

Shares of Common Stock Outstanding after this Offering

649,368,547 shares of Common Stock, assuming

(i)
the approval by our stockholders of sale of more than 20% of our issued and outstanding shares of Common Stock;
(ii)
the sale of a total of 151,500,000 shares of Common Stock to YA, including the 1,500,000 Commitment Shares issued to YA.

The actual number of shares will vary depending upon the number of shares we sell under the Purchase Agreement and depending on the approval of item (i) by our stockholders.

Use of Proceeds

We will not receive any proceeds from the sale of shares of Common Stock included in this prospectus by the Selling Stockholder. We may receive up to $88,500,000 (assuming $0.59 reference price under the Nasdaq Rules and the sale of the Purchase Shares) aggregate gross proceeds under the Purchase Agreement from sales of Common Stock that we elect to make to YA pursuant to the Purchase Agreement, if any, from time to time in our sole discretion, although the actual amount of proceeds that we may receive cannot be determined at this time and will depend on the number of shares we sell under the Purchase Agreement and market prices at the times of such sales. Any proceeds that we receive from sales of our Common Stock to YA under the Purchase Agreement will be used for working capital and general corporate purposes. See “Use of Proceeds.”

Market for Common Stock

Our Common Stock is currently traded on the Nasdaq Capital Market under the symbol “IDEX.”

Risk Factors

See “Risk Factors” and other information included in this prospectus for a discussion of factors you should consider before investing in our securities.

8

RISK FACTORS

An investment in our securities involves a high degree of risk. This prospectus contains a discussion of the risks applicable to an investment in our securities. You should carefully consider the specific factors discussed under this “Risk Factors” heading in this prospectus, together with all of the other information contained or incorporated by reference in this prospectus. You should also consider the risks, uncertainties and assumptions discussed under Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and any updates described in our subsequent Quarterly Reports on Form 10-Q, all of which are incorporated herein by reference, and may be amended, supplemented or superseded from time to time by other reports we file with the SEC. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our operations.

It is not possible to predict the actual number of shares we will sell under the Purchase Agreement to the Selling Stockholder, or the actual gross proceeds resulting from those sales.

On September 1, 2022, we entered into the Purchase Agreement with YA, as subsequently amended and restated on September 15, 2022, pursuant to which YA has committed to purchase up to 151,500,000 shares of our Common Stock, subject to certain limitations and conditions set forth in the Purchase Agreement. The shares of our Common Stock that may be issued under the Purchase Agreement may be sold by us to YA at our discretion from time to time over an approximately 36-month period commencing on the date of the Purchase Agreement.

We generally have the right to control the timing and amount of any sales of our shares of Common Stock to YA under the Purchase Agreement. Sales of our Common Stock, if any, to YA under the Purchase Agreement will depend upon market conditions and other factors. We may ultimately decide to sell to YA all, some or none of the shares of our Common Stock that may be available for us to sell to YA pursuant to the Purchase Agreement.

Because the purchase price per share to be paid by YA for the shares of Common Stock that we may elect to sell to YA under the Purchase Agreement, if any, will fluctuate based on the market prices of our Common Stock during the applicable Pricing Period, as such term described in the Purchase Agreement, for each Purchase made pursuant to the Purchase Agreement, if any, it is not possible for us to predict, as of the date of this prospectus and prior to any such sales, the number of shares of Common Stock that we will sell to YA under the Purchase Agreement, the purchase price per share that YA will pay for shares purchased from us under the Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases by YA under the Purchase Agreement, if any.

In addition, unless we satisfy the exception set forth in the Purchase Agreement based on the average price of our sales thereunder or we obtain stockholder approval, we will not be able to issue shares of Common Stock in excess of the Exchange Cap under the Purchase Agreement in accordance with applicable Nasdaq Listing Rules. Depending on the market prices of our Common Stock in the future, this could be a significant limitation on the amount of funds we are able to raise pursuant to the Purchase Agreement. Other limitations in the Purchase Agreement, including the Beneficial Ownership Cap and our ability to meet the conditions necessary to deliver an Advance Notice, could also prevents us from being able to raise funds up to the Total Commitment.

Any issuance and sale by us under the Purchase Agreement of a substantial amount of shares of Common Stock in addition to the shares of Common Stock being registered for resale by YA under this prospectus could cause additional substantial dilution to our stockholders. The number of shares of our Common Stock ultimately offered for sale by YA is dependent upon the number of shares of Common Stock, if any, we ultimately sell to YA under the Purchase Agreement.

Further, the resale by YA of a significant amount of shares registered for resale in this offering at any given time, or the perception that these sales may occur, could cause the market price of our Common Stock to decline and to be highly volatile.

Investors who buy shares at different times will likely pay different prices.

Pursuant to the Purchase Agreement, we will have discretion, to vary the timing, prices, and numbers of shares sold to YA. If and when we do elect to sell shares of our Common Stock to YA pursuant to the Purchase Agreement, YA may resell all, some or none of such shares at any time or from time to time in its discretion and at different prices. As a result, investors who purchase shares from YA in this offering at different times will likely pay different prices for those shares, and so may experience different levels of dilution and in some cases substantial dilution and different outcomes in their investment results. Investors may experience a decline in the value of the shares they purchase from YA in this offering as a result of future sales made by us to YA at prices lower than the prices such investors paid for their shares in this offering.

9

We may require additional financing to sustain our operations and without it we will not be able to continue operations.

The extent to which we rely on YA as a source of funding will depend on a number of factors, including the prevailing market price of our Common Stock, our ability to meet the conditions necessary to deliver Advance Notices under the Purchase Agreement, the impacts of the Exchange Cap and the Beneficial Ownership Cap and the extent to which we are able to secure funding from other sources. Regardless of the amount of funds we ultimately raise under the Purchase Agreement, if any, we expect to continue to seek other sources of funding. Even if we were to sell to YA the Total Commitment under the Purchase Agreement, we will still need additional capital to fully implement our business plan.

Future sales and issuances of our Common Stock or other securities might result in significant dilution and could cause the price of our Common Stock to decline.

To raise capital, we may sell Common Stock, convertible securities or other equity securities in one or more transactions other than those contemplated by the Purchase Agreement, at prices and in a manner we determine from time to time. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional shares of our Common Stock, or securities convertible or exchangeable into Common Stock, in future transactions may be higher or lower than the price per share paid by investors in this offering. Any sales of additional shares will dilute our stockholders.

Sales of a substantial number of shares of our Common Stock in the public market or the perception that these sales might occur could depress the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our Common Stock. In addition, the sale of substantial amounts of our Common Stock could adversely impact its price.

Management will have broad discretion as to the use of the proceeds from the Purchase Agreement, and uses may not improve our financial condition or market value.

Because we have not designated the amount of net proceeds from the Purchase Agreement to be used for any particular purpose, our management will have broad discretion as to the application of such proceeds. Our management may use the proceeds for working capital and general corporate purposes that may not improve our financial condition or advance our business objectives.

10

THE YA TRANSACTION

On September 1, 2022, we entered into the Purchase Agreement, as subsequently amended and restated on September 15, 2022, pursuant to which YA has committed to purchase the shares of our Common Stock, at our direction from time to time after the date of this prospectus, subject to the satisfaction of the conditions in the Purchase Agreement.

Under the terms and subject to the conditions of the Purchase Agreement, we have the right, but not the obligation, to sell to YA, and YA is obligated to purchase up to 151,500,000 shares of our Common Stock. Such sales of Common Stock, if any, will be subject to certain limitations, and may occur from time to time at our sole discretion, over the approximately 36-month period commencing on the date of the Purchase Agreement, provided, that the registration statement that includes this prospectus covering the resale by YA of shares of Common Stock that have been and may be issued under the Purchase Agreement is declared effective by the SEC and the other conditions set forth in the Purchase Agreement are satisfied.

YA has no right to require us to sell any shares of Common Stock to YA, but YA is obligated to make purchases at our direction subject to certain conditions. There is no upper limit on the price per share that YA could be obligated to pay for the Common Stock under the Purchase Agreement. Actual sales of shares of Common Stock to YA from time to time will depend on a variety of factors, including, among others, market conditions, the trading price of our Common Stock and determinations by us as to the appropriate sources of funding for us and our operations.

We do not know what the purchase price for our Common Stock will be and therefore cannot be certain as to the number of shares we might issue to YA under the Purchase Agreement. As of September 20, 2022, there were 497,868,547 shares of our Common Stock outstanding. 150,000,000 shares of our Common Stock are being registered for resale by the Selling Stockholder under this prospectus, which represent the (i) 1,500,000 Commitment Shares that we issued to YA as consideration of its irrevocable commitment to purchase shares of Common Stock under the Purchase Agreement and (ii) up to 150,000,000 shares of Common Stock that may be issued to YA, if and when we elect to sell shares under the Purchase Agreement. If all of the 151,500,000 shares offered by YA under this prospectus were issued and outstanding as of the date hereof, such shares would represent approximately 23.3% of the total number of shares of our Common Stock outstanding.

Under applicable rules of the Nasdaq Capital Market and the Purchase Agreement, in no event may we issue or sell to YA shares of our Common Stock in excess of 97,997,528 shares (the “Exchange Cap”), which is 19.9% of the shares of Common Stock outstanding immediately prior to the execution of the Purchase Agreement, unless (i) we obtain stockholder approval to issue shares of Common Stock in excess of the Exchange Cap or (ii) the average price of all applicable sales of Common Shares hereunder (including the Commitment Fee Shares in the number of shares sold for these purposes) equals or exceeds $0.59 (reference price under Nasdaq Rules) per share (which represents the lower of (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the Purchase Agreement; or (ii) the average Nasdaq Official Closing Price of the Common Shares (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Purchase Agreement). In any event, we may not issue or sell any shares of our Common Stock under the Purchase Agreement if such issuance or sale would breach any applicable Nasdaq Listing Rules.

The Purchase Agreement also prohibits us from directing YA to purchase any shares of Common Stock if those shares, when aggregated with all other shares of our Common Stock then beneficially owned by YA and its affiliates as a result of purchases under the Purchase Agreement, would result in YA and its affiliates having beneficial ownership of more than the 4.99% of our then outstanding Common Stock (the “Beneficial Ownership Cap”).

The net proceeds under the Purchase Agreement to us will depend on the frequency and prices at which we sell shares of our stock to YA. We expect that any proceeds received by us from such sales to YA will be used for working capital and general corporate purposes.

As consideration for YA’s irrevocable commitment to purchase shares of our Common Stock upon the terms of and subject to satisfaction of the conditions set forth in the Purchase Agreement, upon execution of the Purchase Agreement, we issued 1,500,000 Commitment Shares to YA.

Purchase of Shares Under the Purchase Agreement

We have the right, but not the obligation, from time to time at our sole discretion over the approximately 36-month period from the date of the Purchase Agreement, to direct YA to purchase amounts of our Common Stock under the Purchase Agreement that we

11

specify in a written notice (an “Advance Notice”) delivered to YA on any trading day. Subject to the satisfaction of the conditions under the Purchase Agreement, we may deliver Advance Notices from time to time, provided that we have delivered all shares relating to all prior Purchases.

The purchase price of the shares of Common Stock that we may direct YA to purchase pursuant to a Purchase will be equal to 95% of the lowest of the three daily VWAPs during the Pricing Period as set forth in the Purchase Agreement.

The payment for, against simultaneous delivery of, shares in respect of each Purchase under the Purchase Agreement will be settled as soon as practicable on or after the first trading day following the applicable Pricing Period for such Purchase, as set forth in the Purchase Agreement.

Conditions to Delivery of Advance Notices

Our ability to deliver Advance Notices to YA under the Purchase Agreement is subject to the satisfaction of certain conditions, all of which are entirely outside of YA’s control, including, among other things, the following:

the accuracy in all material respects of our representations and warranties included in the Purchase Agreement;
the effectiveness of this registration statement that includes this prospectus (and any one or more additional registration statements filed with the SEC that include shares of Common Stock that may be issued and sold by us to YA under the Purchase Agreement);
no Material Outside Event (as defined in the Purchase Agreement) shall have occurred or be continuing;
us having performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Purchase Agreement to be performed, satisfied or complied with by us;
the absence of any statute, regulation, order, decree, writ, ruling or injunction by any court or governmental authority of competent jurisdiction which prohibits or directly, materially and adversely affects any of the transactions contemplated by the Purchase Agreement;
trading in our Common Stock shall not have been suspended by the SEC or the Nasdaq, we shall not have received any final and non-appealable notice that the listing or quotation of the Common Stock on the Nasdaq shall be terminated;
there shall be a sufficient number of authorized but unissued and otherwise unreserved Common Stock for the issuance of all the Common Stock issuable pursuant to such Advance Notice;
the representations contained in the appliable Advance Notice shall be true and correct in all material respects; and the Pricing Period for all prior Advance Notices shall have been completed.

No Short-Selling or Hedging by YA

YA has agreed that, during the term of the Purchase Agreement, neither YA or its affiliates will engage in any short sales or hedging transactions with respect to our Common Stock, provided that upon receipt of an Advance Notice, YA may sell shares that it is obligated to purchase under such Advance Notice prior to taking possession of such shares.

Termination of the Purchase Agreement

Unless earlier terminated as provided in the Purchase Agreement, the Purchase Agreement will terminate automatically on the earliest to occur of:

the first day of the month next following the 36-month anniversary of the date of the Purchase Agreement; and

12

the date on which YA shall have made payment of advances pursuant to this Purchase Agreement for shares of Common Stock equal to the Commitment Amount (as defined in the Purchase Agreement).

We have the right to terminate the Purchase Agreement at any time, at no cost or penalty, upon five trading days’ prior written notice to YA provided that there are no outstanding Advance Notices that have not been completed. We and YA may also terminate the Purchase Agreement at any time by mutual written consent.

Effect of Performance of the Purchase Agreement on our Stockholders

All shares of Common Stock that have been or may be issued or sold by us to YA under the Purchase Agreement that are being registered under the Securities Act for resale by YA under this prospectus are expected to be freely tradable. The shares of Common Stock being registered for resale in this offering (excluding the 1,500,000 Commitment Shares) may be issued and sold by us to YA from time to time at our discretion over a period of up to 36 months commencing on the date of execution of the Purchase Agreement. The resale by YA of a significant amount of shares registered for resale in this offering at any given time, or the perception that these sales may occur, could cause the market price of our Common Stock to decline and to be highly volatile. Sales of our Common Stock, if any, to YA under the Purchase Agreement will depend upon market conditions and other factors. We may ultimately decide to sell to YA all, some or none of the shares of our Common Stock that may be available for us to sell to YA pursuant to the Purchase Agreement.

13

USE OF PROCEEDS

This prospectus relates to shares of our Common Stock that may be offered and sold from time to time by YA. All of the Common Stock offered by the Selling Stockholder pursuant to this prospectus will be sold by the Selling Stockholder for its own account. We will not receive any of the proceeds from these sales.

We may receive $88,500,000 or more in aggregate gross proceeds under the Purchase Agreement from any sales we make to YA pursuant to the Purchase Agreement. However, we are unable to estimate the actual amount of proceeds that we may receive, as it will depend on the number of shares that we choose to sell, our ability to meet the conditions to Purchases set forth in the Purchase Agreement, market conditions and the price of shares of our Common Stock, among other factors.

We expect to use any proceeds that we receive under the Purchase Agreement for working capital and general corporate purposes. As of the date of this prospectus, we cannot specify with certainty all of the particular uses, and the respective amounts we may allocate to those uses, for any net proceeds we receive. Accordingly, we will retain broad discretion over the use of these proceeds.

DETERMINATION OF OFFERING PRICE

We cannot currently determine the price or prices at which shares of our Common Stock may be sold by the Selling Stockholder under this prospectus.

14

MARKET INFORMATION FOR COMMON STOCK AND DIVIDEND POLICY

Market Information

Our Common Stock currently trades on the Nasdaq Capital Market under the symbol “IDEX.”

Holders

As of August 31, 2022, there were approximately 385 holders of record of the Common Stock. This number excludes the shares Common Stock beneficially owned by shareholders holding stock in securities trading accounts through DTC, or under nominee security position listings.

Dividend Policy

We have not paid any cash dividends on the Common Stock to date. We may retain future earnings, if any, for future operations and expansion and have no current plans to pay cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of the board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that the board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any future outstanding indebtedness we or our subsidiaries incur.

15

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following management’s discussion and analysis is presented in five sections as below and should be read in conjunction with our consolidated financial statements and the notes thereto and the other financial information appearing elsewhere in this registration statement. 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.

OVERVIEW

Ideanomics, Inc. (Nasdaq: IDEX) was incorporated in the State of Nevada on October 19, 2004. Through June 30, 2022, the Company operates in one segment with two business units, Ideanomics Mobility and Ideanomics Capital. Ideanomics Mobility is driving EV adoption by assembling a synergistic ecosystem of subsidiaries and investments across the three key pillars of EV: Vehicles, Charging, and Energy. These three pillars provide the foundation for Ideanomics Mobility’s planned offering of unique business solutions such as CaaS and VaaS.

Ideanomics Capital is the Company’s business focused on the financial services and title and agency services in the real estate market. Ideanomics Capital has begun providing a range of financing programs in support of the sale of EVs and associated charging and energy systems by Ideanomics Mobility. Over time, it is Ideanomics intention to focus Ideanomics Capital solely as the financial services arm of Ideanomics Mobility and to divest its other fintech assets accordingly.

Restatement of Previously Issued Consolidated Financial Statements

The accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to the restatement adjustments made to the previously reported Condensed Consolidated Financial Statements as of and for the period ended June 30, 2021. For additional information and a detailed discussion of the Restatement, see Note 2, “Restatement of Previously Issued Condensed Consolidated Financial Statements.”

Significant Transactions in the Six Months Ended June 30, 2022

Energica Loan Agreement

On January 7, 2022, the Company entered into a loan agreement with Energica. Pursuant to this loan agreement, the Company may advance up to €5.0 million ($5.7 million), in installments of €250,000 ($284,075), at an annual interest rate of Euribor plus 2.0%. The purpose of the loan is to provide working capital during the motorcycle manufacturing and purchasing season. The loan is unsecured, with interest payable semi-annually, on June 30 and December 31 of each year. The outstanding principal is due and payable in two installments, on June 30, 2024 and December 31, 2024.

Energica Tender Offer

On September 15, 2021, the Company announced it had entered into an agreement to launch a voluntary conditional tender offer in concert with the founders of Energica for shares of Energica, pursuant to which Ideanomics plans to increase its investment from 20.0% in Energica to approximately 70.0%. The Energica founders shall continue to own 29.0% of Energica.

The transaction is proceeding with the Italian regulatory authorities. On February 9, 2022, the Company wired €52.5 million (approximately $60.3 million) to an escrow account in order to facilitate and fund the conditional tender offer. On March, 7, 2022 the Company announced that it had achieved the 90.0% threshold for the conditional tender offer. The transaction received final approval from Italian regulatory authorities and closed on March 14, 2022.

Disposition of Seven Stars Energy Pte. Ltd.

On February 9, 2022, the Company transferred its 51.0% interest in Seven Starts Energy Pte. Ltd. for a nominal amount. The Company expects to record a loss resulting from the disposition of $0.5 million.

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Principal Factors Affecting the Company’s Financial Performance

The business is expected to be impacted by both macroeconomic and Ideanomics-specific factors. The following factors have been part of the transformation of the Company which affected the results of its operations in 2022 and 2021:

The Company’s ability to access the equity and debt markets to obtain the working capital and investment capital required to fund its EV operations. The Company’s EV businesses are in the development stage, are not profitable, and are not expected to be profitable and cash generative in the short to medium term. Consequently, the EV businesses are highly dependent on the Company’s ability to access the equity & debt capital markets to provide sufficient cash for these businesses to continue to develop their products, build large scale manufacturing capacity and invest in sales and marketing infrastructure.
The Company’s ability to remain competitive. The Company will continue to face intense competition: these new technologies are constantly evolving, and the Company’s competitors may introduce new platforms and solutions that are superior. In addition, the Company’s competitors may be able to adapt more quickly to new technologies or may be able to devote greater resources to the development, marketing and sale of their products than the Company can. The Company may never establish and maintain a competitive position in the hybrid financing and logistics management businesses.
The fluctuation in earnings from the deployment of the Company’s services through acquisitions, strategic equity investments, the formation of joint ventures, and through licenses of technology. The Company’s results of operations may fluctuate from period to period based on the entry into new transactions to expand the business. In addition, while management intends to contribute cash and other assets to the Company’s various investments, the Company does not intend to conduct significant research and development activities. The Company intends research and development activities to be conducted by its technology partners and licensors. These fluctuations in growth or costs and in the Company’s various investments may contribute to significant fluctuations in the results of the Company’s operations.

Effects of COVID 19

COVID-19 is an infectious disease cause by severe acute respiratory syndrome coronavirus. The disease was first identified in December 2019 in Wuhan, the capital of China’s Hubei province, and has since spread globally, resulting in the ongoing COVID-19 pandemic. As of August 31, 2022, over 607.6 million cases had been reported across the globe, resulting in 6.5 million deaths.

The spread of COVID-19 has caused significant disruption to society as a whole, including the workplace. The resulting impact on the global supply chain has disrupted most aspects of national and international commerce, with government-mandated social distancing measures imposing stay-at-home and work-from-home orders in almost every country. The effects of social distancing have shut down significant parts of the local, regional, national, and international economies, for limited or extended periods of time, with the exception of government designated essential services.

In many parts of the world, stay-at-home and work-from-home orders were relaxed during the summer of 2020 as the effects of the Coronavirus appeared to lessen, and economic activity began to recover. However, commencing in the autumn and fall of 2020, the U.S. as well as countries in Europe, South America and Asia began to experience an increase in new COVID-19 cases, and in some cases local, state, and national governments began to reinstate restrictive measures to stem the spread of the virus. The U.S. and other countries also experienced an increase in new COVID-19 cases after the fall and winter holiday season, with new, more infectious variants of COVID-19 identified. Various vaccines have been developed, with vaccination programs in effect worldwide, though reaching acceptable levels for worldwide immunization against COVID-19 remains challenging at the local, regional and global level.

The future effects of the virus are difficult to predict, due to uncertainty about the course of the virus, different variants that may evolve, and the supply of the vaccine on a local, regional, and global basis, as well as the ability to implement vaccination programs in a short time frame.

The Company does not anticipate significant adverse effects on its operations’ revenue as compared to its business plan in the near- or mid-term, although the future effects of COVID-19 may result in regional restrictive measures which may constrain the Company’s operations, and supply chain shortages of various materials may have a negative effect on our EV sales or production capacity in the longer-term. The Company’s Tree Technologies business, which focuses on the sale of motorbikes in the ASEAN region, is experiencing disruption in its operations as a result the continued lockdowns in the region, which have adversely impacted its ability to fulfill committed orders.

17

The Company continues to monitor the overall situation with COVID-19 and its effects on local, regional and global economies.

Information about Segment Presentation

The Company’s chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. The Company operates in one segment with two business units: Ideanomics Mobility and Ideanomics Capital. For the three months ended March 31, 2022, the Company completed one acquisition. We are in the in the process of obtaining required shareholder approval to acquire 100% of VIA. The total aggregate consideration payable in connection with this transaction is equal to $630.0 million, consisting of an upfront payment at the closing of the transaction of $450.0 million in shares of Ideanomics at a fixed share ratio equal to $2.36 per Ideanomics share and an earnout payment of up to $180.0 million which will be according to the prevailing Ideanomics share price at the time the earnout is achieved. The Company anticipates that its internal management structure and the information reviewed by the chief operating decision maker will change such that it may have multiple reportable segments in the future.

Ideanomics Mobility will drive EV adoption by assembling a synergistic ecosystem of subsidiaries and investments across the three key pillars of EV: Vehicles, Charging, and Energy. These three pillars provide the foundation for Ideanomics Mobility’s planned offering of unique business solutions such as CaaS and VaaS.

Ideanomics Capital will be the Company’s fintech business unit, which focuses on providing a range of financing programs in support of the sale of EVs and associated charging and energy systems by Ideanomics Mobility. Over time, it is Ideanomics intention to focus Ideanomics Capital as the financial services arm of Ideanomics Mobility and to divest its other fintech assets accordingly.

Our Unconsolidated Equity Investments

The investments where the Company exercises significant influence, but not control, are classified as long-term equity investments and accounted for using the equity method. Under the equity method, the investment is initially recorded at cost and adjusted for its share of undistributed earnings or losses of the investee. Investment losses are recognized until the investment is written down to nil, provided that the Company does not guarantee the investee’s obligations or is committed to provide additional funding. Refer to Note 10 of the notes to unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

Immaterial Corrections of Prior Period Financial Statements

The Company has determined that there were immaterial errors in the consolidated financial statements as of and for the year ended December 31, 2020 related to its accounting of the acquisition of 51% of the ownership interests of Tree Technologies, a Malaysian company engaged in the EV market, in December 2019. The Company determined that it did not recognize a deferred tax liability and consequently, additional goodwill, in the initial purchase price allocation of Tree Technologies as of December 31, 2019, which also resulted in certain income tax benefits not being recognized during the year ended December 31, 2020. In addition, the Company determined that it did not recognize certain measurement period adjustments for the Tree Technologies acquisition as of December 31, 2020 and income tax benefits associated with the impairment of the marketing and distribution agreement acquired in the acquisition during the year ended December 31, 2020.

The Company also determined that a legal agreement the Company entered into whereby the Company took possession of a property in Qingdao, China for no consideration was incorrectly accounted for as a lease in accordance with ASC 842.

Additionally, the Company changed the accounting model for one investment from that of a cost method investment to an equity method investment.

The Company assessed the materiality of these errors in accordance with Staff Accounting Bulletin No. 99, Materiality, and the Company determined that, qualitatively, the amounts, individually and in the aggregate, would have no bearing on the decision-making process of a reasonable investor. Accordingly, the Company is correcting the relevant consolidated financial statements and related footnotes as of and for the year ended December 31, 2020 within these consolidated financial statements.

18

The following table reflects the impact of the immaterial corrections discussed above on the Company’s previously reported consolidated balance sheet as of December 31, 2020 (in thousands):

Previously

    

Reported

    

Adjustments

    

As Revised

Assets

 

  

 

  

 

  

Goodwill

$

1,165

$

(460)

$

705

Operating lease right of use assets

 

7,117

 

(6,962)

 

155

Long-term investments

 

8,570

 

(83)

 

8,487

Other non-current assets

 

517

 

6,961

 

7,478

Total assets

 

234,412

 

(543)

 

233,869

Liabilities

 

  

 

  

 

  

Other current liabilities

 

1,920

 

315

 

2,235

Current portion of operating lease liabilities

 

430

 

(315)

 

115

Operating lease liability – long term

 

6,759

 

(6,740)

 

19

Deferred tax liabilities

 

 

5,045

 

5,045

Other long-term liabilities

 

535

 

6,740

 

7,275

Total liabilities

 

32,643

 

5,045

 

37,688

Stockholders’ Equity

 

  

 

  

 

  

Accumulated deficit

 

(346,883)

 

(2,864)

 

(349,747)

Accumulated other comprehensive income

 

1,256

 

(25)

 

1,231

Total Ideanomics, Inc. shareholders’ equity

 

186,584

 

(2,889)

 

183,695

Non-controlling interest

 

6,438

 

(2,699)

 

3,739

Total equity

 

193,022

 

(5,588)

 

187,434

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

$

234,412

$

(543)

$

233,869

The following table reflects the impact of the immaterial corrections discussed above on the Company’s previously reported consolidated statement of operations for the year ended December 31, 2020 (in thousands:)

    

Previously

    

    

    

    

Reported

Adjustment

As Revised

Goodwill impairment

$

9,323

$

8,766

$

18,089

Loss from operations

 

(86,879)

 

(8,765)

 

(95,644)

Income tax benefit

 

 

3,308

 

3,308

Impairment of and equity in loss of equity method investees

 

(16,698)

 

(82)

 

(16,780)

Net loss

 

(106,043)

 

(5,538)

 

(111,581)

Net loss attributable to Ideanomics, Inc. common shareholders

$

(98,400)

$

(2,864)

$

(101,264)

Basic and diluted loss per share

$

(0.46)

 

(0.01)

$

(0.47)

The following table reflects the impact of the immaterial corrections discussed above on the Company’s previously reported consolidated statement of cash flows for the year ended December 31, 2020 (in thousands):

Previously

    

Reported

    

Adjustment

    

As Revised

Cash flows from operating activities

 

  

 

  

 

  

Net loss

$

(106,043)

$

(5,538)

$

(111,581)

Income tax benefit

 

 

(3,308)

 

(3,308)

Impairment of and equity in loss of equity method investees

 

16,698

 

82

 

16,780

Impairment losses

 

42,554

 

8,765

 

51,319

Net cash used in operating activities

$

41,468

$

$

41,468

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Liquidity and Going Concern

The accompanying consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with generally accepted accounting principles in the United States of America. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Pursuant to the requirements of the ASC 205, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued.

This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

The Company operates in one segment with two business units, Ideanomics Mobility and Ideanomics Capital. Ideanomics Mobility has as its mission the acceleration of commercial adoption of electric vehicles. Ideanomics Capital is the Company’s business focused on the financial services and title and agency services in the real estate market. Over time, it is Ideanomics intention to focus Ideanomics Capital solely as the financial services arm of Ideanomics Mobility and to divest its other fintech assets accordingly. The Company has one pending acquisition to add to its Mobility business unit: VIA, a U.S. manufacturer of electric commercial vehicles including Class 2 through Class 5 cargo vans, trucks, and buses.

On September 15, 2021, the Company announced it had entered into an agreement to launch a voluntary conditional tender offer in concert with the founders of Energica for shares of Energica, pursuant to which Ideanomics plans to increase its investment from 20.0% in Energica to approximately 70.0%. The Energica founders shall continue to own 29.0% of Energica.

On February 9, 2022, the Company wired €52.5 million ($60.3 million) to an escrow account in order to facilitate and fund the conditional tender offer. On March 4, 2022, the Company received sufficient tendered shares to reach the 90.0% threshold for the tender to become irrevocable. The transaction received final approval from Italian regulatory authorities and closed on March 14, 2022.

The Company is in the in the process of obtaining required shareholder approval to acquire 100% of VIA. The total aggregate consideration payable in connection with this transaction is equal to $630.0 million, consisting of an upfront payment at the closing of the transaction of $450.0 million, more than $62.9 million of which has been paid to date (prior to closing) in cash as documented in the form of convertible notes, as well as an earnout payment of up to $180.0 million. The remaining consideration for the acquisition of VIA is to be consummated with Ideanomics common stock, rather than cash. However, transaction fees are material and estimated to be $45.0 million, and it is anticipated that VIA will require operational and capital funding of $260.0 million. The Company has filed a registration statement on Form S-4 regarding shareholder approval for the transaction. As of the date of these financial statements, the registration statement had not been declared effective, and the financial statements contained therein must be updated to December 31, 2021. An amended S-4 statement with the required updated financial statements is anticipated to be filed with the SEC in the fourth quarter of 2022. The terms of the agreement stated that either party may terminate the agreement under specified conditions as of August 31, 2022, however, the Company has exercised its option to extend that date to September 30, 2022.

As of December 31, 2021, the Company had cash and cash equivalents of approximately $269.9 million, of which $11.8 million is held in China and is subject to local foreign exchange regulations in that country, $0.4 million is held at a consolidated entity which requires the minority interest’s permission to withdraw, and additionally two subsidiaries have required capital or liquidity requirements of $2.2 million. The Company also had accounts payable and accrued expenses of $15.6 million, other current liabilities of $7.1 million, current contingent consideration of $0.6 million, lease payments due within the next twelve months of $3.1 million, and payments of short-term and long-term debt due within the next twelve months of $58.1 million. Additionally, the Company has committed to invest in the MDI Fund a total of $25.0 million, of which $20.4 million remains and may be called at any time. The Company had a net loss of $256.7 million for the year ended December 31, 2021, and an accumulated deficit of $605.8 million.

20

As of June 30, 2022, the Company’s principal source of liquidity is its unrestricted cash balance in the amount of $85.5 million of which $12.2 million is held by the Company’s subsidiaries located and China and is subject to foreign exchange control regulations and $2.2 million is minimum regulatory capital required to be held by US operating companies – we do not consider cash balances held in China or required minimum regulatory capital to be part of the Company’s liquid cash balances. The Company had negative cash flow from operating activities of $81.8 million for the six months ended June 30, 2022. The Company has experienced greater net losses and negative cash flows from operating and investing activities in the third quarter consistent with its business plan for ongoing activities and planned acquisitions. As of the date of the filing of this Form 10-K, securing additional financing is in progress, and as such management has limited the extent to which it is taking actions to delay, scale back, or abandon future expenditures. As such, management’s actions to preserve an adequate level of liquidity for a period extending twelve months from the date of the filing of this Form 10-K are no longer sufficient on their own without additional financing, to mitigate the conditions raising substantial doubt about the Company’s ability to continue as a going concern. We currently do not have adequate cash to meet our short or long-term needs. In the event additional capital is raised, it may have a dilutive effect on our existing stockholders.

The Company’s ability to raise capital is critical. On September 1, 2022, the company entered into a SEPA with YA II PN. The Company will be able to sell up to sixty million of the Company’s shares of common stock, par value $0.001 per share (the at the Company’s request any time during the 36 months following the date of the SEPA’s entrance into force. The shares would be purchased at 95.0% of the Market Price (as defined below) and would be subject to certain limitations, including that YA could not purchase any shares that would result in it owning more than 5.0% of the Company’s common stock. Market Price is the lowest daily VWAP of the Common Shares during the three consecutive trading days commencing on the advance notice date, other than the daily VWAP on any excluded days. VWAP means, for any trading day, the daily volume weighted average price of the Common Shares for such trading day on the principal market during regular trading hours as reported by Bloomberg L.P. Pursuant to the SEPA, the Company is required to register all shares which YA may acquire. The Company agreed to file with the SEC a Registration Statement (as defined in the SEPA) registering all of the shares of common stock that are to be offered and sold to YA pursuant to the SEPA. The Company is required to have a Registration Statement declared effective by the SEC before it can raise any funds using the SEPA. Unless earlier terminated as provided under the SEPA, the SEPA shall terminate automatically on the earliest of (i) the first day of the month next following the 36-month anniversary of the Effective Date or (ii) the date on which the YA shall have made payment of Advances (as defined in the SEPA) pursuant to the SEPA for the Common Shares equal to the Commitment Amount (as defined in the SEPA). On September 15, 2022, we amended the SEPA increasing the commitment amount from sixty million shares to one hundred fifty million shares. In addition, the shares to be provided as a commitment fee increased from six hundred thousand to one million five hundred thousand.

The Company believes that its current level of cash and cash equivalents are not sufficient to fund continuing operations and the addition of the one planned acquisition in various stages of completion. The Company will need to bring in new capital to support its growth and, as evidenced from its successful capital raising activities in 2020 and 2021, believes it has the ability to continue to do so. However, there can be no assurance that this will occur. As described in Note 15(a), on October 25, 2021 the Company executed a security purchase agreement with YA II PN, whereby the Company issued a convertible note of $75.0 million, and received aggregate gross proceeds of $75.0 million. The note is scheduled to mature on October 24, 2022 and bears interest at an annual rate of 4.0%, which would increase to 18.0% in the event of default. The note has a fixed conversion price of $1.88. The conversion price is not subject to adjustment except for subdivisions or combinations of common stock. Commencing April 1, 2022, the Company has the obligation to redeem $8.3 million per month, against the unpaid principal. This amount may be reduced by any conversions by YA II or optional redemptions made by the Company. As of December 31, 2021, after the conversion of principal in the amount of $17.5 million, $57.5 million remained outstanding. On August 30, 2022, the Company and YA II PN agreed to amend the terms of the outstanding convertible note and entered into an amendment agreement dated August 29, 2022. As of August 29, 2022, the outstanding principal balance of the convertible note was $16.7 million. The amendments to the convertible note amended the principal amount to reflect the outstanding balance as of August 29, 2022, change the maturity date to January 29, 2023 and adjust the conversion price to the lower of $1.50 or 85.0% of the lowest daily VWAP during the 7 consecutive Trading Days immediately preceding the Conversion Date or other date of determination, but not lower than $0.20 per share of common stock. The Company shall not have the right to prepay any amounts due under the Amended Debenture prior to the Maturity Date without the Investor’s prior written consent.

The Company has various vehicles through which it could raise a limited amount of equity funding, however, these are subject to market conditions which are not within management’s control. As our Quarterly Report on Form 10-Q was not filed timely, we will not be Form S-3 eligible until August 9, 2023, which could make fund raising more difficult or more expensive. Management continues to seek to raise additional funds through the issuance of equity, mezzanine or debt securities. As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our business and industry. These factors individually and collectively raise doubt about the Company’s ability to continue as a going concern. We currently do not have adequate cash to meet our short or long-term needs. In the event additional capital is raised, it may have a dilutive effect on our existing stockholders.

21

Principal Factors Affecting Our Financial Performance

Our business is expected to be impacted by both macroeconomic and Ideanomics-specific factors. The following factors have been part of the transformation of the Company which affected the results of our operations in the years ended December 31, 2021, 2020, and 2019:

Our ability to transform our business and to meet internal or external expectations of future performance. 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, 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.
Our ability to remain competitive. 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. We may never establish and maintain a competitive position in the hybrid financing and logistics management businesses.
The fluctuation in earnings resulting from acquisitions, strategic equity investments, the formation of joint ventures, and in-licenses of technology. Our results of operations may fluctuate from period to period based on our entry into new transactions to expand our business. In addition, while we intend to contribute cash and other assets to our investments, we do not intend for our holding company to conduct significant research and development activities. In general, we intend research and development activities to be conducted by our technology partners and licensors. These fluctuations in growth or costs and in our investments and partnerships may contribute to significant fluctuations in the results of our operations.

Effects of COVID-19

COVID-19 is an infectious disease cause by severe acute respiratory syndrome coronavirus. The disease was first identified in December 2019 in Wuhan, the capital of China’s Hubei province, and has since spread globally, resulting in the ongoing COVID-19 pandemic. As of August 31, 2022, over 607.6 million cases had been reported across the globe, resulting in 6.5 million deaths.

The spread of COVID-19 has caused significant disruption to society as a whole, including the workplace. The resulting impact on the global supply chain has disrupted most aspects of national and international commerce, with government-mandated social distancing measures imposing stay-at-home and work-from-home orders in almost every country. The effects of social distancing have shut down significant parts of the local, regional, national, and international economies, for limited or extended periods of time, with the exception of government designated essential services.

In many parts of the world, stay-at-home and work-from-home orders were relaxed during the summer of 2020 as the effects of the Coronavirus appeared to lessen, and economic activity began to recover. However, commencing in the autumn and fall of 2020, the U.S. as well as countries in Europe, South America and Asia began to experience an increase in new COVID-19 cases, and in some cases local, state, and national governments began to reinstate restrictive measures to stem the spread of the virus. The U.S. and other countries also experienced an increase in new COVID-19 cases after the fall and winter holiday season, with new, more infectious variants of COVID-19 identified. Various vaccines have been developed, with vaccination programs in effect worldwide, though reaching acceptable levels for worldwide immunization against COVID-19 remains challenging at the local, regional and global level.

The future effects of the virus are difficult to predict, due to uncertainty about the course of the virus, different variants that may evolve, and the supply of the vaccine on a local, regional, and global basis, as well as the ability to implement vaccination programs in a short time frame.

The Company does not anticipate significant adverse effects on its operations’ revenue as compared to its business plan in the near- or mid-term, although the future effects of COVID-19 may result in regional restrictive measures which may constrain the

22

Company’s operations, and supply chain shortages of various materials may have a negative effect on our EV sales or production capacity in the longer-term. The Company’s Tree Technologies business, which focuses on the sale of motorbikes in the ASEAN region, is experiencing disruption in its operations as a result the continued lockdowns in the region, which have adversely impacted its ability to fulfill committed orders.

The Company continues to monitor the overall situation with COVID-19 and its effects on local, regional and global economies.

Information about segments

The Company’s chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Therefore, the Company operates in one segment with two business units: Ideanomics Mobility and Ideanomics Capital.

Our Unconsolidated Equity Investments

The investments where the Company exercises significant influence, but not control, are classified as long-term equity investments and accounted for using the equity method. Under the equity method, the investment is initially recorded at cost and adjusted for 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 not committed to provide additional funding. Refer to Note 12 of the Notes to Consolidated Financial Statements included in Part IV, Item 8 of this Annual Report on Form 10-K for further information.

Taxation

United States

Ideanomics, Inc. and its US subsidiaries are subject to the provisions of the Internal Revenue Code. Prior to 2021, no provision for income taxes has been provided as none of the companies then part of the company had taxable profit since inception. At the acquisition of Grapevine in 2018, deferred tax liabilities were recorded relating to intangible assets recorded for financial reporting purposes but not recognized for income tax purposes. The intangible assets consequently could not provide deductible amortization expense for income tax purposes. The deferred tax liabilities were recorded on the acquisition date to the extent that they could not be offset by usable NOL carryforwards acquired in the acquisition. These deferred tax liabilities were reduced, providing an income tax benefit, to the extent that the intangible assets were reduced by amortization expense and additional NOL carryforwards were created to offset the liabilities. These benefits include $0.1 million in 2019. The 2019 amount related to activities in the first two quarters of 2019. Ideanomics increased its ownership in Grapevine such that beginning with the third quarter of 2019, the result of which was that Grapevine activities would be included in the consolidated tax return of Ideanomics, Inc. As a result, the valuation allowance provided against Ideanomics’ deferred tax assets were reduced by $0.4million, the amount of Grapevine’s remaining deferred tax liabilities as that portion of Ideanomics’ NOL carryovers could then be utilized to offset these liabilities.

At the acquisition of each of Timios, WAVE, US Hybrid and Solectrac in 2021, the companies immediately became includable in the consolidated federal tax return of Ideanomics. WAVE will be included in the state tax returns of Ideanomics. In the case of each acquisition, intangible assets were recognized for financial reporting purposes that were not recognized for income tax purposes. This, in combination with some smaller temporary differences of the four acquired businesses, resulted in the recognition of $12.2 million deferred tax liabilities. The federal deferred tax liabilities, and the WAVE state deferred tax liabilities created, resulted in the valuation allowance on Ideanomics’ deferred tax assets being reduced by a similar amount. Ideanomics’ net deferred tax assets had previously been judged to be more likely than not to be unable to reduce the Company’s income tax liability and consequently were completely offset by a valuation allowance. Once the acquisitions of four acquired businesses occurred, a portion of Ideanomics’ deferred tax assets could be utilized in offsetting most of the newly acquired deferred tax liabilities, this resulted in a one-time income tax benefit of $10.1 million.

During the year ended December 31, 2021, there was an income tax benefit of $11.8 million, of which $11.4 million was from operations in the US. This consisted principally of the $10.1 million one-time benefit. In addition, Timios, US Hybrid and Solectrac have taxable income or loss reported on certain separate state tax returns and consequently have related state income tax expense or benefit. For the year ended December 31, 2021 the three companies have losses, which results in state income tax benefits consisting of those losses being used to reduce the state deferred tax liabilities recognized in the acquisitions. The net state income tax (benefit) for Timios, US Hybrid and Solectrac was $1.2 million for the year ended December 31, 2021.There was an additional $0.1 million federal

23

income tax benefit, principally consisting of the reduction, through amortization or impairment of intangible assets, of federal deferred tax liabilities recognized in acquisitions that had not allowed for the release of Ideanomics’ valuation allowances.

TCJA includes provision for 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 BEAT under which taxes are imposed on certain base eroding payments to related foreign companies, subject to certain requirements.

Based on 2021, 2020 and 2019 financial results, the company has determined that there is no GILTI or BEAT tax liability.

In addition, the TCJA now entitles U.S. companies that owns 10.0% or more of a foreign corporation a 100% dividends-received deduction for the foreign-source portion of dividends paid by such foreign corporation. Also, NOLs arising after December 31, 2017 are deductible only to the extent of 80.0% of the taxpayer’s taxable income, and may be carried forward indefinitely but generally not allowed to be carried back.

European Union

In March 2022 approximately $4.7 million of deferred tax liabilities were recognized on the acquisition of Energica. The foreign income tax benefit for the second quarter consists primarily of the reversal of some of this liability as a result of Energica losses.

Cayman Islands and the British Virgin Islands

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

Hong Kong

The Company’s subsidiaries incorporated in Hong Kong are subject to Profits Tax of 16.5%. Tax expense of $0.1 million was recorded in the year ended December 31, 2019 relating to the income on one Hong Kong subsidiary, subsequently disposed of, relating to a gain recorded on the sale of VIE related assets. All other Hong Kong subsidiaries’ activities relate to support and ownership of businesses outside of Hong Kong, and consequently their expenses do not create operating loss carryovers.

The PRC

Under the PRC’s EIT Law, the company’s Chinese subsidiaries are subject to an EIT of 25.0%.

The Company’s future effective income tax rate depends on various factors, such as tax legislation, geographic composition of its pre-tax income and non-tax deductible expenses incurred. The Company’s management regularly monitors these legislative developments to determine if there are changes in the statutory income tax rate.

During the year ended December 31, 2019, one of the Company’s PRC subsidiaries incurred a tax obligation of $0.6 million relating to its EV sales. The entity did not have operating loss carryovers and is not able to utilize the loss carryovers of other subsidiaries. The transactions under which the VIE agreements were terminated resulted in gains to one VIE entity, prior to deconsolidation, which triggered a tax expense of $0.2 million. Other PRC entities either had losses that created additional operating loss carryovers, where the related deferred tax assets were offset by a valuation allowance, or had income that would have resulted in a current tax liability, except that they were able to offset those liabilities with operating loss carryovers from prior years. The use of prior year carryovers, in all cases for which the related deferred tax assets all had previously been offset by a valuation allowance, avoided $0.2 million of income tax expense.

During the years ended December 31, 2021 and 2020, all of the Company’s PRC subsidiaries incurred losses that created operating loss carryovers. Certain of the subsidiaries had previously established operating loss carryovers expired as PRC loss carryovers are generally allowed to be carried over five years. The deferred tax assets related to the operating loss carryovers have been fully offset by valuation allowances meaning that there was no income tax expense or benefit for the Company’s PRC subsidiaries these years.

24

Malaysia

At the acquisition of Tree Technologies at the end of 2019, the Company recognized approximately $8.2 million of deferred tax liabilities related to land-use rights and a distribution and marketing agreement with carrying values well in excess of their tax basis. During the year ended December 31, 2020, Tree Technologies recorded a $3.3 million income tax benefit. This resulted principally from a $3.1 million benefit from amortization and eventual impairment, of the distribution and marketing agreement which resulted in the reversal of the deferred tax liabilities related to the agreement. The remaining $0.2 million benefit resulted from the operating losses creating carryovers that could offset part of the remaining deferred tax liabilities.

During the year ended December 31, 2021 Tree Technologies recorded a $0.4 million deferred tax benefit. This benefit resulted from operating loss carryovers part of which were able to offset previously recorded deferred tax liabilities and part of which were offset by a valuation allowance.

Future wind down of PRC Operations

On September 12, 2022, the Board authorized management to pursue a plan to wind down operations in China. We expect the plan to be finalized and initiated in the fourth quarter of 2022. The wind down is anticipated to be complete no later than the fourth quarter of 2023. In the year ended December 31, 2021, the company generated $29.7 million in revenues in the PRC, primarily from the sale of electric vehicle products. For the six months ended June 30, 2022, the company generated $28.9 million in revenues in the PRC. The carrying value of long lived assets in the PRC as June 30, 2022, was not material and cash held in the PRC was approximately $12.4 million as of June 30, 2022.

25

RESULTS OF OPERATIONS: YEARS ENDED DECEMBER 31, 2021 AND 2020

Comparison of Years Ended December 31, 2021 and 2020 (USD in thousands, except per share amounts)

For the years ended December 31,

    

2021

    

2020

    

Amount Change

    

% Change

 

Revenue

$

114,080

$

26,759

$

87,321

 

n/m

Cost of revenue

 

90,852

 

24,702

 

66,150

 

n/m

Gross profit

 

23,228

 

2,057

 

21,171

 

n/m

Operating expenses:

 

  

 

  

 

  

 

  

Selling, general and administrative expenses

 

72,825

 

32,399

 

40,426

 

n/m

Research and development expense

 

760

 

1,635

 

(875)

 

(53.5)

%

Professional fees

 

34,710

 

12,541

 

22,169

 

n/m

Asset impairments

 

71,070

 

33,230

 

37,840

 

113.9

%

Goodwill impairments

 

101,470

 

18,089

 

83,381

 

n/m

Change in fair value of contingent consideration, net

 

(9,600)

 

(5,503)

 

(4,097)

 

74.5

%

Litigation settlements

 

5,432

 

 

5,432

 

n/m

Depreciation and amortization

 

6,118

 

5,310

 

808

 

15.2

%

Total operating expenses

 

282,785

 

97,701

 

185,084

 

n/m

Loss from operations

 

(259,557)

 

(95,644)

 

(163,913)

 

n/m

Interest and other income (expense):

 

  

 

  

 

  

 

  

Interest income

 

1,502

 

108

 

1,394

 

n/m

Interest expense

 

(2,139)

 

(16,078)

 

13,939

 

(86.7)

%

Expense due to conversion of notes

 

 

(2,266)

 

2,266

 

n/m

Gain (loss) on extinguishment of debt

 

300

 

8,891

 

(8,591)

 

(96.6)

%

(Loss) gain on disposal of subsidiaries, net

 

(1,264)

 

276

 

(1,540)

 

n/m

Gain (loss) on remeasurement of investment

 

2,915

 

 

2,915

 

n/m

Other income (expense), net

 

1,261

 

6,604

 

(5,343)

 

(80.9)

%

Loss before income taxes and non-controlling interest

 

(256,982)

 

(98,109)

 

(158,873)

 

n/m

Income tax benefit

 

11,786

 

3,308

 

8,478

 

n/m

Impairment of and equity in loss of equity method investees

 

(11,529)

 

(16,780)

 

5,251

 

(31.3)

%

Net loss

 

(256,725)

 

(111,581)

 

(145,144)

 

130.1

%

Deemed dividend related to warrant repricing

 

 

(184)

 

184

 

n/m

Net loss attributable to common shareholders

 

(256,725)

 

(111,765)

 

(144,960)

 

129.7

%

Net (income) loss attributable to non-controlling interest

 

714

 

10,501

 

(9,787)

 

(93.2)

%

Net loss attributable to Ideanomics, Inc. common shareholders

$

(256,011)

$

(101,264)

$

(154,747)

 

n/m

n/m = Not Meaningful - represents percentage changes, in terms of absolute value over 100%.

26

Comparison of Years Ended December 31, 2020 and 2019 (USD in thousands, except per share amounts)

For the years ended December 31,

    

2020

    

2019

    

Amount Change

    

% Change

 

Revenue

$

26,759

$

44,566

$

(17,807)

 

(40.0)

%

Cost of revenue

 

24,702

 

1,458

 

23,244

 

n/m

Gross profit

 

2,057

 

43,108

 

(41,051)

 

(95.2)

%

Operating expenses:

 

  

 

  

 

  

 

  

Selling, general and administrative expenses

 

32,399

 

24,862

 

7,537

 

30.3

%

Research and development expense

 

1,635

 

 

1,635

 

n/m

Professional fees

 

12,541

 

5,828

 

6,713

 

n/m

Asset impairment

 

33,230

 

73,669

 

(40,439)

 

(54.9)

%

Goodwill impairment

 

18,089

 

 

18,089

 

n/m

Change in fair value of contingent consideration, net

 

(5,503)

 

5,094

 

(10,597)

 

n/m

Depreciation and amortization

 

5,310

 

2,229

 

3,081

 

n/m

Total operating expenses

 

97,701

 

111,682

 

(13,981)

 

(12.5)

%

Loss from operations

 

(95,644)

 

(68,574)

 

(27,070)

 

39.5

%

Interest and other income (expense):

 

  

 

  

 

  

 

  

Interest income

 

108

 

68

 

40

 

58.8

%

Interest expense

 

(16,078)

 

(5,684)

 

(10,394)

 

n/m

Expense due to conversion of notes

 

(2,266)

 

 

(2,266)

 

n/m

Gain (loss) on extinguishment of debt

 

8,891

 

(3,940)

 

12,831

 

n/m

Gain (loss) on disposal of subsidiaries, net

 

276

 

(952)

 

1,228

 

n/m

(Loss) gain on remeasurement of investment

 

 

(3,179)

 

3,179

 

n/m

Other income (expense), net

 

6,604

 

(433)

 

7,037

 

n/m

Loss before income taxes and non-controlling interest

 

(98,109)

 

(82,694)

 

(15,415)

 

18.6

%

Income tax expense

 

3,308

 

(417)

 

3,725

 

n/m

Impairment of and equity in loss of equity method investees

 

(16,780)

 

(13,718)

 

(3,062)

 

22.3

%

Net loss

 

(111,581)

 

(96,829)

 

(14,752)

 

15.2

%

Deemed dividend related to warrant repricing

 

(184)

 

(827)

 

643

 

(77.8)

%

Net loss attributable to common shareholders

 

(111,765)

 

(97,656)

 

(14,109)

 

14.4

%

Net (income) loss attributable to non-controlling interest

 

10,501

 

(852)

 

11,353

 

n/m

Net loss attributable to Ideanomics, Inc. common shareholders

$

(101,264)

$

(98,508)

$

(2,756)

 

2.8

%

n/m = Not Meaningful - represents percentage changes, in terms of absolute value over 100%.

27

Revenues (USD in thousands)

For the years ended December 31,

    

2021

    

2020

    

Amount Change

    

% Change

 

Title and escrow services

$

72,686

$

$

72,686

 

n/m

Electric vehicles products

 

31,123

 

19,462

 

11,661

 

59.9

%

Electric vehicles services

 

204

 

 

204

 

n/m

Combustion engine vehicles

 

 

5,160

 

(5,160)

 

n/m

Charging, battery and powertrain products

 

5,886

 

506

 

5,380

 

n/m

Charging, battery and powertrain services

 

2,645

 

 

2,645

 

n/m

Digital advertising services

 

231

 

1,631

 

(1,400)

 

(85.8)

%

Other revenue

 

1,305

 

 

1,305

 

n/m

Total

$

114,080

$

26,759

$

87,321

 

n/m

n/m = Not Meaningful - represents percentage changes, in terms of absolute value over 100%.

Revenue for the year ended December 31, 2021 was $114.1 million as compared to $26.8 million for the year ended December 31, 2020, an increase of $87.3 million. The increase was mainly due to the Company’s acquisition of Timios, which generated revenue of $72.7 million from the acquisition closing date through December 31, 2021. No revenue was generated related to title and escrow services for the year ended December 31, 2020. During the year ended December 31, 2021 the Company earned revenues of $31.1 million from sales of EV products as compared to $19.5 million for the year ended December 31, 2020, an increase of $11.7 million. The increase was primarily due to an increase in EV product sales in China and incremental revenue from acquisitions made in the year ended December 31, 2021. Revenues from the Charging, battery and powertrain products and services product lines were generated almost exclusively from revenues generated by the acquisitions made in the year ended December 31, 2021. No revenue was generated from the sale of Combustion engine vehicles for the year ended December 31, 2021.

For the years ended December 31,

    

2020

    

2019

    

Amount Change

    

% Change

 

Digital asset management services

$

$

40,700

$

(40,700)

 

n/m

Electric vehicles products

 

19,462

 

 

19,462

 

n/m

Electric vehicles services

 

 

2,693

 

(2,693)

 

n/m

Combustion engine vehicles

 

5,160

 

 

5,160

 

n/m

Charging, battery and powertrain products

 

506

 

 

506

 

n/m

Digital advertising services

 

1,631

 

1,173

 

458

 

39.0

%

Total

$

26,759

$

44,566

$

(17,807)

 

(40.0)

%

n/m = Not Meaningful - represents percentage changes, in terms of absolute value over 100%.

Revenue for the year ended December 31, 2020 was $26.8 million as compared to $44.6 million for the year ended December 31, 2019, a decrease of $17.8 million, or 40%. The decrease was due to there being no revenue generated from Digital asset management services in the year ended December 31, 2020 as compared to $40.7 million in the prior year. The Company generated $19.5 million from the sale of EV products as compared to $2.7 million from the sale of EV services in the prior year, a shift of category and an increase of $16.8 million. For the year ended December 31, 2020, the Company earned revenues of $5.2 million from the sale of combustion engine vehicles; the sale of combustion engine vehicles is not the Company’s primary focus, however, from time to time, the Company will sell combustion engine vehicles if a client places an order. During 2020, the Company made its first sales of charging and battery equipment. Revenues from the digital advertising services provided by Grapevine were $1.6 million as compared to $1.2 million in the prior year, an increase of $0.5 million or 39%. Grapevine was considered a non-core asset for Ideanomics.

28

Cost of revenue (USD in thousands)

For the years ended December 31,

    

2021

    

2020

    

Amount Change

    

% Change

 

Title and escrow services

$

48,684

$

$

48,684

 

n/m

Electric vehicles products

 

29,884

 

18,035

 

11,849

 

65.7

%

Electric vehicles services

 

183

 

 

183

 

n/m

Combustion engine vehicles

 

 

5,121

 

(5,121)

 

n/m

Charging, battery and powertrain products

 

7,961

 

488

 

7,473

 

n/m

Charging, battery and powertrain services

 

2,503

 

 

2,503

 

n/m

Digital advertising services

 

192

 

1,058

 

(866)

 

(81.9)

%

Other revenue

 

1,445

 

 

1,445

 

n/m

Total

$

90,852

$

24,702

$

66,150

 

n/m

n/m = Not Meaningful - represents percentage changes, in terms of absolute value over 100%.

Cost of revenues was $90.9 million for the year ended December 31, 2021, as compared to $24.7 million for the year ended December 31, 2020. The cost of revenues increased by $66.2 million. The increase was mainly due to the Company’s acquisition of Timios, which had recorded cost of revenues of $48.7 million related to title and escrow service from the acquisition closing date through December 31, 2021. No cost related to title and escrow services were incurred for the year ended December 31, 2020. The increase was due to an increase in EV product sales in China and incremental revenue from acquisitions made in the year ended December 31, 2021. Revenues from the Charging, battery and powertrain products and services product lines were generated almost exclusively from revenues generated by the acquisitions made in the year ended December 31, 2021. No revenue and associated cost was generated related Combustion engine vehicles for the year ended December 31, 2021.

For the years ended December 31,

    

2020

    

2019

    

Amount Change

    

% Change

 

Digital asset management services

$

$

467

$

(467)

 

n/m

Electric vehicles products

 

18,035

 

 

18,035

 

n/m

Combustion engine vehicles

 

5,121

 

 

5,121

 

n/m

Charging, battery and powertrain products

 

488

 

 

488

 

n/m

Digital advertising services

 

1,058

 

991

 

67

 

6.8

%

Total

$

24,702

$

1,458

$

23,244

 

n/m

n/m = Not Meaningful - represents percentage changes, in terms of absolute value over 100%.

Cost of revenues was $24.7 million for the year ended December 31, 2020, as compared to $1.5 million for the year ended December 31, 2019. The cost of revenues increased by $23.2 million. From a comparability perspective, the cost of revenue during 2019 is not indicative of the business in 2020. The cost of revenue during 2019 was primarily associated with the digital asset management services and creator payments from the Grapevine business. The cost of revenue from the sale of EVs was $18.0 million; there was no cost of revenue recorded for the sale of EV services during 2019 as the company acted as agent in the sale of EVs in 2019 and consequently revenues were recorded on “net” basis without any corresponding cost of revenues. Cost of revenues from the sale of combustion engine vehicles was $5.1 million; there were no sales of combustion engine vehicles in the prior year. Cost of revenues for charging and batteries was $0.5 million; there were no sales of charging and batteries in the prior year. The cost of revenues for the digital advertising services provided by Grapevine were $1.1 million as compared to $1.0 million in the prior year, an increase of $0.1 million or 6.8%.

29

Gross profit (USD in thousands)

For the years ended December 31,

    

2021

    

2020

    

Amount Change

    

% Change

 

Title and escrow services

$

24,002

$

$

24,002

 

n/m

Electric vehicles products

 

1,239

 

1,427

 

(188)

 

(13.2)

%

Electric vehicles services

 

21

 

 

21

 

n/m

Combustion engine vehicles

 

 

39

 

(39)

 

n/m

Charging, battery and powertrain products

 

(2,075)

 

18

 

(2,093)

 

n/m

Charging, battery and powertrain services

 

142

 

 

142

 

n/m

Digital advertising services

 

39

 

573

 

(534)

 

(93.2)

%

Other revenue

 

(140)

 

 

(140)

 

n/m

Total

$

23,228

$

2,057

$

21,171

 

n/m

n/m = Not Meaningful - represents percentage changes, in terms of absolute value over 100%.

For the years ended December 31,

    

2020

    

2019

    

Amount Change

    

% Change

 

Digital asset management services

$

$

40,233

$

(40,233)

n/m

 

Electric vehicles products

 

1,427

 

 

1,427

 

n/m

Electric vehicles services

 

 

2,693

 

(2,693)

 

n/m

Combustion engine vehicles

 

39

 

 

39

 

n/m

Charging, battery and powertrain products

 

18

 

 

18

 

n/m

Digital advertising services

 

573

 

182

 

391

 

n/m

Total

$

2,057

$

43,108

$

(41,051)

 

(95.2)

%

Gross profit ratio

For the years ended December 31,

    

2021

    

2020

 

Title and escrow services

33.0

%  

%

Electric vehicles products

 

4.0

 

7.0

Electric vehicles services

 

10.3

 

Combustion engine vehicles

 

 

1.0

Charging, battery and powertrain products

 

(35.3)

 

4.0

Charging, battery and powertrain services

 

5.4

 

Digital advertising services

 

16.9

 

35.0

Other revenue

 

(10.7)

 

Total

 

20.4

%  

8.0

%

Gross profit for the year ended December 31, 2021 was $23.2 million, as compared to gross profit of $2.1 million for the year ended December 31, 2020. The gross profit ratio for the year ended December 31, 2021 was 20.4%, while in 2020, it was 8.0%. The increase was mainly due to the high gross margin from sales of title and escrow services for the year ended December 31, 2021.

For the years ended December 31,

    

2020

    

2019

 

Digital asset management services

%  

99.0

%

Electric vehicles products

 

7.0

 

Electric vehicles services

 

 

100.0

Combustion engine vehicles

 

1.0

 

Charging and batteries

 

4.0

 

Digital advertising services

 

35.0

 

16.0

Total

 

8.0

%  

97.0

%

The gross profit for the year ended December 31, 2020 was $2.1 million, as compared to $43.1 million during the same period in 2019, a decrease of $41.1 million. The decrease was primarily due to revenue from digital asset management services in 2019 which was not repeated in 2020 and had a low cost of revenue. The gross profit earned from the sale of EV products was $1.4 million as compared to $2.7 million from the sale of EV Services in the prior year, a decrease of $1.3 million. The Company acted in an agent capacity in the sale of EVs in 2019 and consequentially the revenue was recorded as a service on a "net" basis without any cost of revenue which resulted in a higher gross profit and gross margin.

30

Selling, general and administrative expenses

Our selling, general and administrative expense for the year ended December 31, 2021 was $72.8 million as compared to $32.4 million for the year ended December 31, 2020, an increase of $40.4 million. The increase was principally due to costs related to the operations of the Timios, WAVE, Solectrac and US Hybrid acquisitions completed in the current year, stock based compensation expense related to RSU grants, increased compensation, payroll tax and benefit expense arising from the hiring undertaken to expand the business and built out the corporate infrastructure and associated recruitment expense, partially offset by lower operating expenses in China and lower rent expense due to the termination of the company’s lease on its headquarters property in New York City due to Covid 19.

Our selling, general and administrative expense for the year ended December 31, 2020 was $32.4 million as compared to $24.9 million for the year ended December 31, 2019, an increase of $7.5 million. The majority of the increase was due to increased stock based compensation expense, bonuses and sales commissions and salaries resulting from the increase in employee numbers and sales activity, and bad debt expense which was partially offset by lower spending on travel and entertainment due to the restrictions on travel and entertaining arising from COVID-19 and lower severance expense.

Research and development expense

Research and development expense for the year ended December 31, 2021 was $0.8 million as compared to $1.6 million for the year ended December 31, 2020 a decrease of $0.9 million. The expense for the prior year included costs related to technical development and design into EV trucks, there was no expense research related to EV trucks in the current year. Expense in the current period was primarily incurred in connection with EV motorbikes in Malaysia, and research and development activities in WAVE , Solectrac and US Hybrid. No research and development expense was incurred in 2019.

Professional fees

Professional fees for the year ended December 31, 2021 were $34.7 million as compared to $12.5 million for the year ended December 31, 2020, an increase of $22.2 million. The increase in professional fees was principally related to the merger and acquisition activity undertaken during 2021 including fees related to due diligence, post-merger integration activities, regulatory filings and fund raising activity, expenses incurred by affiliates acquired during 2021 which did not exist in the prior year, increased fees incurred in the general operation of the business reflecting the heightened level of business activity, costs incurred for audit and other regulatory filings and advice on patent and intellectual property matters.

Professional fees for the year ended December 31, 2020 were $12.5 million as compared to $5.8 million for the year ended December 31, 2019, an increase of $6.7 million. The majority of this increase was due to increased expense for investor relations programs, legal fee expense related to regulatory inquires, fund raising and merger and acquisition activities, and class action lawsuits. Expenses for consultants and contractors increased as a result of the Company’s continued expansion.

31

Asset Impairments and Goodwill Impairments

The following table summarizes the impairment losses recorded in the years ended December 31, 2021, 2020 and 2019, (in thousands):

Asset Impaired

    

Note

    

Caption

Amount

    

2021

    

2020

   

2019

GTB – digital currency

 

Note 11 – Goodwill and Intangible Assets

 

Asset impairment

$

$

$

61,124

Equity method investments

 

Note 12 - Long-term Investments

 

Impairment of and equity in loss of equity method investees

 

7,864

 

16,650

 

13,062

Intangible assets

 

Note 11 – Goodwill and Intangible Assets

 

Asset Impairment

 

50,619

 

20,331

 

5,715

Goodwill

 

Note 11 – Goodwill and Intangible Assets

 

Goodwill impairment

 

101,470

 

18,089

 

Right of use assets

 

Note 13 - Leases

 

Asset impairment

 

99

 

6,424

 

Fintech buildings, land and capitalized fees

 

Note 10 - Property and Equipment, net

 

Asset impairment

 

 

3,315

 

2,299

Fintech buildings asset retirement cost

 

Note 10 - Property and Equipment, net

 

Asset Impairment

 

 

1,996

 

1,504

Available for sale securities

 

Note 5 - Available for sale securities

 

Asset Impairment

 

15,833

 

 

Fixed assets and other

 

 

Asset impairment

 

923

 

Cost method investments

 

Note 12 - Long-term Investments

 

Asset Impairment

 

4,519

 

241

 

3,026

Total

$

180,404

$

67,969

$

86,730

Additional information related to the impairment losses recorded in the years ended December 31, 2021, 2020 and 2019 is as follows:

Year Ended December 31, 2021

The Company recorded impairment loss of $13.7 million related to Timios lender relationship and trade name and $5.8      million related to Timios goodwill.
The Company recorded impairment loss of $23.9 million related to WAVE patents and trademarks and $35.7million related to WAVE goodwill.
The Company recorded impairment loss of $7.0 million related to US Hybrid patents and trademarks and $42.2 million related to US Hybrid goodwill.
The Company recorded impairment loss of $6.0 million related to Solectrac patents and trademarks and $17.7million related to Solectrac goodwill.
The Company recorded impairment loss of $4.5 million as the Company fully impaired the cost method investments in two entities.
The Company recorded an impairment loss of $0.1 million related to ROU assets due to the closure of one Timios office and one China office.
The Company recorded an impairment loss of $15.8 million related to an available for sale securities.

32

The Company recorded an impairment loss of $7.9 million related to an equity investment.

Year Ended December 31, 2020

The Company recorded impairment losses of $16.7 million related to its equity method investments, Glory and Intelligenta. In the fourth quarter of 2020, Tree Technologies obtained its own domestic manufacturing license, and determined that it would not purchase vehicles from Tree Manufacturing, Glory’s subsidiary, and that the investment in Glory was therefore impaired. The Company evaluated the business prospects of Intelligenta in light of the continued political tensions between China and the U.S., and determined that its business prospects had diminished.
The Company recorded impairment losses of $20.3 million related to intangible assets:
oAn impairment loss of $12.5 million related to Tree Technologies marketing and distribution agreement with Tree Manufacturing after Tree manufacturing obtained its own domestic manufacturing license, and determined that it would not purchase vehicles from Tree Manufacturing.
oImpairment losses of $7.1 million related to DBOT’s intangible assets, its continuing membership agreement and customer list.
oAn impairment loss of $0.8 million related to Grapevine’s influencer network, after determining that the attrition rate of the influencer network was higher than expected.
The Company recorded an impairment loss of $9.3 million related to the goodwill of its consolidated subsidiary, DBOT, and recorded an impairment loss of $8.8 million for Tree Technologies, after evaluating its business prospects.
The Company recorded impairment losses of $6.4 million related to right of use assets after ceasing to use the related real estate premises.
The Company recorded impairment losses of $3.3 million related to its investment in Fintech Village, and recorded an impairment loss of $2.0 million for the related asset retirement cost.
The Company recorded an impairment loss of $0.2 million related to a cost method investment after its price per share declined in the fourth quarter of 2020.

Year Ended December 31, 2019

The Company recorded an impairment loss of $61.1 million in the fourth quarter of 2019 related to GTB which the Company had received in connections with a services agreement and an asset purchase agreement with GT Dollar Pte, a minority shareholder at the time of the transaction. On October 29, 2019, GTB had an unexpected significant decline in quoted price, from $17.00 to $1.84. This decline continued through the fourth quarter of 2019, and on December 31, 2019 the quoted price was $0.23. As a result of this decline in quoted price, and its inability to convert GTB into other digital currencies which were more liquid, or fiat currency, the Company performed an impairment analysis and recorded an impairment loss.
The Company recorded a $13.1 million impairment loss in Glory, an equity method investment, in the fourth quarter of 2019, when it became apparent that Glory’s subsidiary, Tree Manufacturing, would not receive the land use rights to 250 acres of vacant land and other assets.
The Company recorded a $5.7 million impairment loss related to a secure mobile financial information, social, and messaging platform that has been designed for streamlining financial-based communication for professional and retail users. Management determined these assets had no future use and recorded an impairment loss.
The Company recorded impairment losses of $3.0 million in two non-marketable equity investments after management evaluated their performance.

33

The Company recorded an impairment loss of $2.3 million in the third quarter of 2019 in connection with four buildings in Fintech Village, which were later demolished, and recorded an impairment loss of $1.5 million for the related asset retirement cost.

Change in fair value of contingent consideration, net

For the year ended December 31, 2021, change in fair value of contingent consideration, net of $(9.6) million represents the remeasurement gain of $1.6 million of the contingent consideration payable to the former Solectrac shareholder and remeasurement gain of $8.0 million of the contingent consideration payable to the Tree Technology shareholders.

For the year ended December 31, 2020, change in fair value of contingent consideration, net of $(5.5) million represents the remeasurement loss of $1.5 million of the contingent consideration payable to the former DBOT shareholder and remeasurement gain of $7.0 million of the contingent consideration payable to the Tree Technology shareholders.

For the year ended December 31, 2019, change in fair value of contingent consideration, net of $5.1 million represents the remeasurement of the contingent consideration payable to the former DBOT shareholders due to the decline in Ideanomics’ stock price.

Litigation settlements

For the year ended December 31, 2021, the Company recorded an expense of $5.4 million related to settlement of litigation. The Rudani shareholder class action lawsuit was settled for $5.0 million. There were no such litigation settlements in the years ended December 31, 2020 and 2019.

Depreciation and amortization

Depreciation and amortization for the year ended December 31, 2021 was $6.1 million as compared to $5.3 million for the year ended December 31, 2020, an increase of $0.8 million. The increase was mainly due to the increase in amortization expense recorded by Timios, WAVE, Solectrac and US Hybrid, which were acquired in 2021.

Depreciation and amortization for the year ended December 31, 2020 was $5.3 million as compared to $2.2 million for 2019, an increase of $3.1 million. The increase was mainly due to the increase in amortization expense arising from the shortening of the useful life on an IP intangible asset.

Loss from operations

Loss from operations for the year ended December 31, 2021 was $259.6 million as compared to loss of $95.6 million for the year ended December 31, 2020 an increase of $163.9 million. The increased loss from operations included the operating loss from Timios, WAVE, Solectrac and US Hybrid, which were acquired in 2021 partially offset by the gain resulting from a change in the fair value of contingent consideration.

Loss from operations for the year ended December 31, 2020 was $95.6 million as compared to loss of $68.6 million for the year ended December 31, 2019 an increase of $27.1 million. The increased Loss from Operations is due to number of factors, the gross profit for 2019 included revenues from digital asset services which had a gross profit margin of almost 100% which was not repeated in 2020, increased expenses for selling, general and administrative, research and development, professional fees, and depreciation and amortization expense partially offset by lower impairment charges and a gain resulting from a change in the fair value of contingent consideration.

Interest income

Interest income for the year ended December 31, 2021 was $1.5 million as compared to $0.1 million for the year ended December 31, 2020, an increase of $1.4 million. The increase was mainly due to the income recognized from the investment in notes receivables, while earlier years interest income was generated primarily on deposits held in banks.

Interest income for the year ended December 31, 2020 was $0.1 million as compared to $0.1 million for the year ended December 31, 2019. The interest income for the year ended December 31, 2020 and December 31, 2019 mainly represents the income generated from deposit in banks.

34

Interest expense

Interest expense for the year ended December 31, 2021 was $2.1 million as compared to $16.1 million for the year ended December 31, 2020, a decrease of $13.9 million. The decrease was mainly due to the amortization of BCFs of $14.5 million associated with the convertible notes in the year ended December 31, 2020 which did not arise in the year ended December 31, 2021.

Interest expense for the year ended December 31, 2020 was $16.1 million as compared to $5.7 million for the year ended December 31, 2019, an increase of $10.4 million. The increase was primarily due to increased expense related to amortization of BCFs arising from the modification of convertible notes. The following table summarizes the breakdown of the interest expense (in thousands):

    

Year ended

    

Year ended

    

Year ended

December 31,

December 31,

December 31,

2021

2020

2019

Interest

$

2,139

$

1,593

$

1,449

Amortization of discount

 

 

14,485

 

4,235

Total

$

2,139

$

16,078

$

5,684

Expense due to conversion of notes

There were no such conversions for the year ended December 31, 2021.

Conversion expense of $2.3 million for the year ended December 31, 2020 represents the expense recognized as a result of the reduction of conversion price to induce the conversion of the convertible notes from related parties.

There were no such conversions for the year ended December 31, 2019.

Gain (loss) on extinguishment of debt

In the year ended December 31, 2021, the Company recorded a gain of $0.3 million on WAVE Paycheck Protection Program loan forgiveness.

In the year ended December 31, 2020, the Company recorded a gain on the extinguishment of debt of $8.9 million, as it paid a promissory note prior to its scheduled maturity. The Company also settled several outstanding balances with vendors and recorded a gain of $0.5 million.

In the year ended December 31, 2019, the Company recorded a loss on extinguishment of debt of $3.9 million which resulted from modifications made to various convertible notes.

35

(Loss) gain on disposal of subsidiaries, net

The following table summarizes gains and (losses) recorded in “(Loss) gain on disposal of subsidiaries, net” in the years ended December 31, 2021, 2020 and 2019 (in thousands):

    

Year ended

    

Year ended

    

Year ended

December 31,

December 31,

December 31,

Subsidiary

2021

2020

2019

Guang Min

$

$

276

$

Red Rock

 

 

 

552

Amer Global Technology Limited

 

 

 

505

Deconsolidation of VIEs

 

 

 

(2,009)

Grapevine

 

(1,234)

 

 

Other

 

(30)

 

 

Total

$

(1,264)

$

276

$

(952)

Gain (loss) on disposal of subsidiaries was a loss of $1.3 million for year ended December 31, 2021 as compared to a gain of $0.3 million in the year ended December 31, 2020. Gain (loss) on disposal of subsidiaries was a gain of $0.3 million for year ended December 31, 2020 as compared to a loss of $1.0 million in the year ended December 31, 2019.

Gain on remeasurement of investment

Gain on remeasurement of investment was $2.9 million for the year ended December 31, 2021 which resulted from the remeasurement of the Company’s investment in Solectrac to its fair value as of the date the Company obtained the remainder of the Solectrac shares outstanding and commenced consolidating Solectrac.

There were no such remeasurements for the year ended December 31, 2020.

In the year ended December 31, 2019, the Company increased its ownership in DBOT and consolidated DBOT in July 2019. Immediately prior to the consummation of the acquisition, the Company’s investment in DBOT had a fair value of $3.1 million, and the Company recorded a loss of $3.2 million to record the investment in DBOT to its fair value.

Other income (expense), net

Other income (expense), net was $1.3 million for the year ended December 31, 2021 as compared to $6.6 million for year ended December 31, 2020, a decrease of $5.3 million. The decrease was mainly due to 2020 income being unusually high from lease early termination settlements, which includes a gain of $4.9 million recognized from the settlement agreements to terminate leases early for the New York City headquarters at 55 Broadway and a gain of $0.8 million from the DBOT lease settlement with the landlord

Other income (expense), net was an income of $6.6 million for the year ended December 31, 2020 as compared to a loss of $0.4 million for the year ended, an increase of $7.0 million. The increase was mainly due to a gain of $4.9 million recognized from the settlement agreements to terminate leases early for the New York City headquarters at 55 Broadway a gain of $0.8 million from the DBOT lease settlement with the landlord in addition to sublease income $0.1 million in year ended December 31, 2020.

Income tax (expense) benefit

In the year ended December 31, 2021, the income tax benefit of $11.8 million is mainly due to $10.1 million of one-time benefits relating to acquisitions, net state income benefit of $1.2 million for recently acquired entities, and a $0.1 million of other U.S. federal income tax benefit and a $0.4 million deferred tax benefit from our Tree Technologies, our Malaysian subsidiary.

In the year ended December 31, 2020, the income tax benefit of $3.3 million income tax benefit is from Tree Technologies. It consists of $3.1 million benefit from amortization and eventual impairment, of a distribution and marketing agreement which resulted in the reversal of the deferred tax liabilities related to the agreement, and $0.2 million benefit resulted from the operating losses creating carryovers that could offset part of Tree Technologies’ remaining deferred tax liabilities. For the year ended December 31, 2020, other than the $3.3 million Tree Technologies benefit, income tax expense is nil because of NOL and deferred tax assets related to the NOLs had been offset by a valuation allowance. The Company had established a 100.0% valuation allowance against its net deferred tax assets due to its history of pre-tax losses and the likelihood that the deferred tax assets will not be realized.

36

In the year ended December 31, 2019, one PRC subsidiary, generated income related to EV sales that resulted in $0.6 million income tax expense, two Ideanomics China entities, that have since been disposed of, generated a one-time gain the required triggering a tax expense of $0.3 million while the company had a one-time deferred tax benefit of $0.5 million related to the acquisition of Grapevine. Other than these matters, resulting in a net income tax expense of $0.4 million, there were no other income tax expense because of NOL and deferred tax assets related to the NOL had been offset by a valuation allowance. The Company had established a 100.0% valuation allowance against its net deferred tax assets due to its history of pre-tax losses and the likelihood that the deferred tax assets will not be realized.

Impairment of and equity in loss of equity method investees

Impairment of and equity in loss of equity method investees was $11.5 million for the year ended December 31, 2021 as compared to $16.8 million in the year ended December 31, 2020, a decrease of $5.3 million. The decrease was mainly due to impairments losses of $16.7 million recorded in the year ended December 31, 2020, as compared to an impairment loss of $7.9 million recorded in the year ended December 31, 2021.

Impairment of and equity in loss of equity method investments for the year ended December 31, 2020 was $16.8 million as compared to $13.7 million for the year ended December 31, 2019, an increase of $3.1 million. The increase was mainly due to impairments losses of $16.7 million recorded in the year ended December 31, 2020, as compared to an impairment loss of $13.1 million recorded in the year ended December 31, 2019.

Net (income)/loss attributable to non-controlling interest

Net (income)/loss attributable to non-controlling interests was a $0.7 million loss in the year ended December 31, 2021 as compared to a $10.5 million loss for the year ended December 31, 2020. The decrease is mainly due to there is significant loss in the year ended December 31, 2020 from Tree Technology.

Net (income)/loss attributable to non-controlling interests was a $10.5 million loss in the year ended December 31, 2020 as compared to a net income of $0.9 million in the year ended December 31, 2019. The loss in 2020 is primarily due to net loss from Tree Technology. The gain in 2019 is primarily due to the taxis commission revenue recognized in an entity in which we have a 50.1% ownership.

37

RESULTS OF OPERATIONS: THREE AND SIX MONTHS ENDED JUNE 30, 2022

Comparison of Three Months Ended June 30, 2022 and 2021 (USD in thousands):

    

Three Months Ended

    

  

    

  

   

   

   

Amount

   

%

June 30, 2022

June 30, 2021

Change

Change

Revenue

$

34,202

$

30,128

$

4,074

13.5

Cost of revenue

 

32,713

 

21,096

 

11,617

55.1

Gross profit

 

1,489

 

9,032

 

(7,543)

(83.5)

Operating expenses:

 

  

 

  

 

  

  

Selling, general and administrative expenses

 

38,750

 

19,780

 

18,970

95.9

Research and development expense

 

680

 

235

 

445

n/m

Asset impairments

 

572

 

 

572

n/m

Change in fair value of contingent consideration, net

 

 

(2,401)

 

2,401

n/m

Litigation settlement

 

42

 

 

42

n/m

Depreciation and amortization

 

2,282

 

1,441

 

841

n/m

Total operating expenses

 

42,326

 

19,055

 

23,271

n/m

Loss from operations

 

(40,837)

 

(10,023)

 

(30,814)

n/m

Interest and other income (expense):

 

  

 

  

 

  

  

Interest income

 

840

 

238

 

602

n/m

Interest expense

 

(488)

 

(801)

 

313

(39.1)

Loss on disposal of subsidiaries, net

 

(42)

 

(1,234)

 

1,192

(96.6)

Gain on remeasurement of investment

 

 

2,915

 

(2,915)

n/m

Other income, net

 

1,696

 

837

 

859

58.4

Loss before income taxes and non-controlling interest

 

(38,831)

 

(8,068)

 

(30,763)

n/m

Income tax benefit

 

147

 

1,682

 

(1,535)

(91.3)

Equity in gain (loss) of equity method investees

 

(589)

 

(461)

 

(128)

27.8

Net loss

 

(39,273)

 

(6,847)

 

(32,426)

n/m

Net loss attributable to common shareholders

 

(39,273)

 

(6,847)

 

(32,426)

n/m

Net loss attributable to non-controlling interest

 

1,506

 

152

 

1,354

n/m

Net loss attributable to Ideanomics, Inc. common shareholders

$

(37,767)

$

(6,695)

$

(31,072)

n/m

n/m = Not Meaningful - represents percentage changes, in terms of absolute value over 100%.

38

Comparison of Six Months Ended June 30, 2022 and 2021 (USD in thousands):

    

Six Months Ended

    

  

    

  

 

Amount

%

 

June 30, 2022

June 30, 2021

Change

Change

 

Revenue

 

59,593

$

60,066

$

(473)

 

(0.8)

%

Cost of revenue

 

58,084

 

40,322

 

17,762

 

44.1

Gross profit

 

1,509

 

19,744

 

(18,235)

 

(92.4)

Operating expenses:

 

  

 

  

 

  

 

  

Selling, general and administrative expenses

 

75,845

 

36,669

 

39,176

 

n/m

Research and development expense

 

1,694

 

245

 

1,449

 

n/m

Asset impairment

 

653

 

 

653

 

n/m

Change in fair value of contingent consideration, net

 

(131)

 

(1,907)

 

1,776

 

(93.1)

Litigation settlement

 

42

 

5,000

 

(4,958)

 

(99.2)

Depreciation and amortization

 

3,567

 

2,769

 

798

 

28.8

Total operating expenses

 

81,670

 

42,776

 

38,894

 

90.9

Loss from operations

 

(80,161)

 

(23,032)

 

(57,129)

 

n/m

Interest and other income (expense):

 

  

 

  

 

  

 

  

Interest income

 

1,603

 

395

 

1,208

 

n/m

Interest expense

 

(1,067)

 

(1,375)

 

308

 

(22.4)

Loss on disposal of subsidiaries, net

 

(188)

 

(1,264)

 

1,076

 

(85.1)

Gain on remeasurement of investment

 

10,965

 

2,915

 

8,050

 

n/m

Other income, net

 

1,887

 

499

 

1,388

 

n/m

Loss before income taxes and non-controlling interest

 

(66,961)

 

(21,862)

 

(45,099)

 

n/m

Income tax benefit

 

525

 

9,027

 

(8,502)

 

(94.2)

Equity in loss of equity method investees

 

(1,928)

 

(615)

 

(1,313)

 

n/m

Net loss

 

(68,364)

 

(13,450)

 

(54,914)

 

n/m

Net loss attributable to common shareholders

 

(68,364)

 

(13,450)

 

(54,914)

 

n/m

Net loss attributable to non-controlling interest

 

2,086

 

272

 

1,814

 

n/m

Net loss attributable to Ideanomics, Inc. common shareholders

$

(66,278)

$

(13,178)

$

(53,100)

 

n/m

39

Revenues (USD in thousands)

    

Three Months Ended

    

  

    

  

Amount

%

June 30, 2022

June 30, 2021

Change

Change

Electric vehicles products

$

23,577

$

5,274

$

18,303

 

n/m

Electric vehicles services

 

74

 

75

 

(1)

 

45.4

Charging, batteries and powertrains products

 

956

 

1,683

 

(727)

 

(61.8)

Charging, batteries and powertrain services

 

338

 

617

 

(279)

 

4.5

Title and escrow services

 

9,171

 

22,069

 

(12,898)

 

(59.3)

Digital advertising services and other

 

 

34

 

(34)

 

n/m

Fund raising services

 

7

 

 

7

 

n/m

Other revenue

 

79

 

376

 

(297)

 

n/m

Total

$

34,202

$

30,128

$

4,074

 

(0.8)

n/m = Not Meaningful - represents percentage changes, in terms of absolute value over 100%.

    

Six Months Ended

    

  

    

  

Amount

%

June 30, 2022

June 30, 2021

Change

Change

Electric vehicles products

$

38,200

$

8,304

$

29,896

 

n/m

Electric vehicles services

 

157

 

108

 

49

 

45.4

Charging, batteries and powertrains products

 

1,210

 

3,168

 

(1,958)

 

(61.8)

Charging, batteries and powertrain services

 

790

 

756

 

34

 

4.5

Title and escrow services

 

19,096

 

46,909

 

(27,813)

 

(59.3)

Digital advertising services and other

 

 

231

 

(231)

 

n/m

Fund raising services

 

7

 

 

7

 

n/m

Other revenue

 

133

 

590

 

(457)

 

n/m

Total

$

59,593

$

60,066

$

(473)

 

(0.8)

n/m = Not Meaningful - represents percentage changes, in terms of absolute value over 100%.

*

The revenues were recorded on either a Principal or Agent basis, depending on the terms of the underlying transaction, including the ability to control the product and the level of inventory risk taken.

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Revenue for the three months ended June 30, 2022 was $34.2 million as compared to $30.1 million for the same period in 2021, an increase of $4.1 million. The increase was mainly due increased revenue from EV Products which increased from $5.3 million in the three months ended June 30, 2021 to $23.6 million in the three months ended June 30, 2022, an increase of $18.3 million. This increase is the result of acquiring Solectrac in June 2021, acquiring Energica in March 2022, and significantly increased revenue from EV products in China during the second quarter of 2022. This increase is partially offset by a large decrease in revenue from Title and escrow services. Revenue from Title and escrow services decreased from $22.1 million in the three months ended June 30, 2021 to $9.2 million in the three months ended June 30, 2022, a decrease of $12.9 million. This decrease is the result of decreased revenue at Timios following a cybersecurity breach in July 2021.

In the three months ended June 30, 2021, the Company recognized $0.4 million revenue from the sales of vehicles, which included revenue of $5.3 million from the sale of traditional combustion vehicles. In the three months ended June 30, 2021, the Company acted in both a Principal and Agent capacity in relation to vehicle sales. For those contracts in which it acted in a Principal capacity, revenues were recorded on a Gross basis and for those contracts where it acted in an Agent capacity the revenues were recorded on a Net basis.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Revenue for the six months ended June 30, 2022 was $59.6 million as compared to $60.1 million for the same period in 2021, a decrease of $0.5 million. The decrease was mainly but not entirely due to a large decrease in revenue from Title and escrow services. Revenue from Title and escrow services decreased from $46.9 million in the six months ended June 30, 2021 to $19.1 million in the

40

six months ended June 30, 2022, a decrease of $27.8 million. This decrease is the result of decreased revenue at Timios following a cybersecurity breach in July 2021. This decrease is offset by increased sales of EV Products which increased from $8.3 million in the six months ended June 30, 2021 to $38.2 million in the six months ended June 30, 2022, an increase of $29.9 million. This increase is the result of acquiring Solectrac in June 2021, acquiring Energica in March 2022, and significantly increased revenue from EV products in China during the second quarter of 2022. Other small decreases in other revenue categories resulted in the overall result of decreased total revenue.

Cost of revenues (USD in thousands)

    

Three Months Ended

    

  

    

  

    

Six Months Ended

    

  

    

  

June 30,
2022

June 30,
2021

Amount
Change

%
Change

June 30, 2022

June 30, 2021

Amount
Change

%
Change

Electric vehicles products

$

22,508

$

4,872

$

17,636

 

n/m

$

37,240

$

7,899

$

29,341

 

n/m

Electric vehicles services

 

47

 

53

 

(6)

 

(11.3)

 

103

 

86

 

17

 

19.8

Charging, batteries and powertrains products

 

2,519

 

1,188

 

1,331

 

n/m

 

3,525

 

2,479

 

1,046

 

42.2

Charging, batteries and powertrain services

 

299

 

573

 

(274)

 

(47.8)

 

719

 

618

 

101

 

16.3

Title and escrow services

 

7,248

 

14,021

 

(6,773)

 

(48.3)

 

16,355

 

28,515

 

(12,160)

 

(42.6)

Digital advertising services and other

 

 

16

 

(16)

 

n/m

 

 

192

 

(192)

 

n/m

Fund raising services

 

11

 

 

11

 

n/m

 

11

 

 

11

 

n/m

Other revenue

 

81

 

373

 

(292)

 

(78.3)

 

131

 

533

 

(402)

 

(75.4)

Total

$

32,713

$

21,096

$

11,617

 

55.1

$

58,084

$

40,322

$

17,762

 

44.1

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Cost of revenues was $32.7 million for the three months ended June 30, 2022, as compared to $21.1 million for the three months ended June 30, 2021. The increase was mainly due to increased cost of revenue from EV Products which increased from $4.8 million in the three months ended June 30, 2021 to $22.5 million in the three months ended June 30, 2022, an increase of $17.7 million. This increase is the result of acquiring Solectrac in June 2021, acquiring Energica in March 2022, and significantly increased cost of revenue from EV products in China during the second quarter of 2022. This increase is partially offset by a large decrease in cost of revenue from Title and escrow services. Cost of revenue from Title and escrow services decreased from $13.9 million in the three months ended June 30, 2021 to $7.2 million in the three months ended June 30, 2022, a decrease of $6.6 million. This decrease is the result of decreased cost of revenue at Timios following a cybersecurity breach in July 2021.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Cost of revenues was $58.1 million for the six months ended June 30, 2022, as compared to $40.3 million for the six months ended June 30, 2021. The increase was mainly due to the increased cost of revenue from EV Products which increased from $7.8 million in the six months ended June 30, 2021 to $37.2 million in the six months ended June 30, 2022, an increase of $29.4 million. This increase is the result of acquiring Solectrac in June 2021, acquiring Energica in March 2022, and significantly increased cost of revenue from EV products in China during the second quarter of 2022. This increase is partially offset by a large decrease in cost of revenue from Title and escrow services. Cost of revenue from Title and escrow services decreased from $28.5 million in the six months ended June 30, 2021 to $16.4 million in the six months ended June 30, 2022, a decrease of $12.2 million. This decrease is the result of decreased cost of revenue at Timios following a cybersecurity breach in July 2021.

41

Gross profit (USD in thousands)

    

Three Months Ended

    

  

    

  

    

Six Months Ended

    

  

    

  

Amount

%

Amount

%

June 30, 2022

June 30, 2021

Change

Change

June 30, 2022

June 30, 2021

Change

Change

Electric vehicles products

$

1,069

$

402

$

667

 

n/m

$

960

$

405

$

555

 

n/m

Electric vehicles services

 

27

 

22

 

5

 

22.7

%  

 

54

 

22

 

32

 

n/m

Charging, batteries and powertrains

 

(1,563)

 

495

 

(2,058)

 

n/m

 

(2,315)

 

689

 

(3,004)

 

n/m

Charging, batteries and powertrain services

 

39

 

44

 

(5)

 

(11.4)

%  

 

71

 

138

 

(67)

 

(48.6)

Title and escrow services

 

1,923

 

8,048

 

(6,125)

 

(76.1)

%  

 

2,741

 

18,394

 

(15,653)

 

(85.1)

Digital advertising services and others

 

 

18

 

(18)

 

n/m

 

 

39

 

(39)

 

n/m

Fund raising services

 

(4)

 

 

(4)

 

n/m

 

(4)

$

 

(4)

 

n/m

Other revenue

 

(2)

 

3

 

(5)

 

n/m

 

2

$

57

 

(55)

 

(96.5)

Total

$

1,489

$

9,032

$

(7,543)

 

(83.5)

%  

$

1,509

$

19,744

 

(18,235)

 

(92.4)

Gross profit ratio

    

Three Months Ended

    

Six Months Ended

 

June 30,

June 30,

June 30,

June 30,

 

2022

2021

2022

2021

 

Electric vehicles products

 

4.5

%  

7.6

%  

2.5

%  

4.9

%

Electric vehicles services

 

36.5

%  

29.3

%  

34.4

%  

20.4

%

Charging, batteries and powertrains products

 

(163.5)

%  

29.4

%  

(191.3)

%  

21.7

%

Charging, batteries and powertrain services

 

11.5

%  

7.1

%  

9.0

%  

18.3

%

Title and escrow services

 

21.0

%  

36.5

%  

14.4

%  

39.2

%

Digital advertising services and other

 

%  

52.9

%  

%  

16.9

%

Fund raising services

 

(57.1)

%  

%  

(57.1)

%  

%

Other revenue

 

(2.5)

%  

0.8

%  

1.5

%  

9.7

%

Total

 

4.4

%  

30.0

%  

2.5

%  

32.9

%

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Gross profit for the three months ended June 30, 2022 was $1.5 million, as compared to gross profit in the amount of $9.0 million during the same period in 2021, a decrease of $7.5 million. The decrease was mainly due to decreased Title and escrow services profit at Timios following the cybersecurity breach in July 2021, since that incident both revenue and cost of revenue have decreased, thereby reducing profit as well. Additionally the gross margin on Charging, batteries and powertrain products has decreased dramatically and is in fact negative in the three months ended June 30, 2022. This is the result of US Hybrid and WAVE operating with negative gross margins on their sales in 2022.

The gross profit ratio for the three months ended June 30, 2022 was 4.4%, while in 2021, it was 30.8%. The decrease was mainly due to decreased gross margin on Title and escrow services at Timios as some of their costs of revenue such as rent and wages are fixed and did not fall in line with the fall in revenue. Additionally the gross margin on Charging, batteries and powertrain products has decreased dramatically and is in fact negative in the three months ended June 30, 2022. This is the result of US Hybrid and WAVE operating with negative gross margins on their sales in 2022.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Gross profit for the six months ended June 30, 2022 was $1.5 million, as compared to gross profit in the amount of $19.7 million during the same period in 2021. The decrease was mainly due to the decreased gross margin on Title and escrow services at Timios as some of their costs of revenue such as rent and wages are fixed and did not fall in line with the fall in revenue. Additionally the gross margin on Charging, batteries and powertrain products has decreased dramatically and is in fact negative in the six months ended June 30, 2022. This is the result of US Hybrid and WAVE operating with negative gross margins on their sales in 2022.

The gross profit ratio for the six months ended June 30, 2022 was 2.5%, while in 2021, it was 32.9%. The decrease was mainly due to the decreased gross margin on Title and escrow services at Timios as some of their costs of revenue such as rent and wages are

42

fixed and did not fall in line with the fall in revenue. Additionally the gross margin on Charging, batteries and powertrain products has decreased dramatically and is in fact negative in the six months ended June 30, 2022. This is the result of US Hybrid and WAVE operating with negative gross margins on their sales in 2022

Selling, general and administrative expenses

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Selling, general and administrative expenses for the three months ended June 30, 2022 were $38.8 million as compared to $19.8 million for the same period in 2021, an increase of $19.0 million. Selling, general and administrative expenses includes compensation & benefits costs, professional fees and marketing and other costs. Compensation & benefits expense increased due to hiring of additional staff in the corporate and head office functions to support the continuing growth of the business, incremental costs associated with businesses purchased after June 30, 2021, partially offset by lower performance based compensation in the Company’s Title & Escrow Agency business. The increase in professional fees was principally due to increased costs related to regulatory filings and consulting expense incurred by the Company’s operating entities as they continue build out their sales and operations infrastructure. Marketing and other expense in selling, general and administrative expenses increased as a result of higher rent expense for the Company’s new lease in New Jersey and increased rent expense incurred by the Company’s operating entities, increased advertising & marketing expense and an increase in general operating expense.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Selling, general and administrative expenses for the six months ended June 30, 2022 were $75.8 million as compared to $36.7 million for the same period in 2021, an increase of $39.2 million. Selling, general and administrative expenses includes compensation & benefits costs, professional fees and marketing and other costs. Compensation & benefits expense increased due to hiring of additional staff in the corporate and head office and those operating companies acquired in the six months ending June 30, 2021, to support the continuing growth of the business, incremental costs associated with businesses purchased after June 30, 2021, partially offset by lower performance based compensation in the Company’s Title & Escrow Agency business. The increase in professional fees was due to an increase in audit and consulting fees related to regulatory filing fees, transaction fees related to the purchase of Energica and consulting expense incurred by the Company’s operating entities as they continue to build out their sales and operating structure. Marketing and other expense in selling, general and administrative expenses increased due to unrealized loss on foreign exchange, increased expense for marketing, conference and events, higher rent expense due to Company’s new lease in New Jersey and increased rent expense incurred by the Company’s operating entities, and an increase in general operating expense.

Research and development expense

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Research and development expense was $0.7 million in the three months ended June 30, 2022 as compared to $0.2 million for the three months ended June 30, 2021 an increase of $0.4 million. The increase is mainly due to higher R&D expense incurred in the entities acquired in 2021 and Energica acquired in 2022.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Research and development expense was $1.7 million in the six months ended June 30, 2022 as compared to $0.2 million for the six months ended June 30, 2021 an increase of $1.4 million is mainly due to higher R&D expense incurred in the entities acquired in 2021 and Energica acquired in 2022.

Impairment losses

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

In the three months ended June 30, 2022, the Company recorded impairment losses of $0.6 million, related to the right down of the Timios and Energica right of use asset, there was no impairment loss in the three months ended June 30, 2021.

43

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

In the six months ended June 30, 2022, the Company recorded impairment losses of $0.7 million, related to the right down of the Timios and Energica right of use asset, there was no impairment loss in the three months ended June 30, 2021.

Change in fair value of contingent consideration, net

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

There was no change in fair value of contingent consideration, net for the three months ended June 30, 2022.

The change in fair value of contingent consideration, net was $(2.4) million for the three months ended June 30, 2021 represents the remeasurement of the contingent consideration payable to Tree Technology shareholders.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

The change in fair value of contingent consideration, net There was $(0.1) million for the six months ended June 30, 2022 represents the remeasurement of the contingent consideration payable to Tree Technology shareholders.

The change in fair value of contingent consideration, net was $(1.9) million for the six months ended June 30, 2021 represents the remeasurement of the contingent consideration payable to the Tree Technology shareholders.

Litigation settlement

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

There were no litigation settlement expenses recorded for the three months ended June 30, 2022 and 2021.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

The Company recorded a $5.0 million litigation settlement as a result of the agreement reached by both parties on the mediation in April, 2021.

Depreciation and amortization

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Depreciation and amortization for the three months ended June 30, 2022 was $2.3 million as compared to $1.4 million for the same period in 2021, an increase of $0.9 million. The increase was mainly due to the increase in amortization and depreciation expense recorded by Energica, which were acquired at the end of the first quarter of 2022.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Depreciation and amortization for the six months ended June 30, 2022 was $3.6 million as compared to $2.8 million for the same period in 2021, an increase of $0.8 million. The increase was mainly due to the acquisition of Energica at the end of the first quarter of 2022.

Interest Income

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Interest income for the three months ended June 30, 2022 was $0.8 million as compared to $0.2 million for the same period in 2021, an increase of $0.6 million. The increase was mainly due to the increase in interest income from Silk EV during 2021 and interest income from Inobat, EV riderz, Silk EV, Via motors and Energica during 2022

44

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Interest income for the six months ended June 30, 2022 was $1.6 million as compared to $0.4 million for the same period in 2021, an increase of $1.2 million. The increase was mainly due to the increase in interest income from Silk EV during 2021 and interest income from Inobat, EV riderz, Silk EV, Via motors and Energica during 2022

Interest Expense

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Interest expense decreased $0.3 million to $0.5 million for the three months ended June 30, 2022, from $0.8 million during the same period of 2021. The decreases is related to less debt outstanding during the three months ended June 30, 2022.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Interest expense decreased $0.3 million to $1.1 million for the six months ended June 30, 2022, from $1.4 million during the same period of 2021. The decreases is related to less debt outstanding during the six months ended June 30, 2022.

Loss on disposal of subsidiaries, net

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Change in loss on disposal of subsidiaries, net, $42,000 is related to the disposal losses for FNL for the three months ended June 30, 2022. Change in loss on disposal of subsidiaries, net of $1.2 million is mainly related to the dilution loss on Solectrac and loss on the disposal of grapevine for the three months ended June 30, 2021.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Change in loss on disposal of subsidiaries, net, $0.2 million is related to the dissolution and disposal losses for SSE and FNL and a gain on Energica for the six months ended June 30, 2022. Change in loss on disposal of subsidiaries, net of $1.3 million is mainly related to the dilution loss on Solectrac and loss on the disposal of grapevine for the six months ended June 30, 2021.

Gain on remeasurement of investment

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

There was no gain on remeasurement of investment for the three months ended June 30, 2022. Gain on remeasurement of investment of $2.9 million in the three months ended June 30, 2021 resulted from remeasuring of the Company’s investment in Solectrac to its fair value of the date the Company obtained the remainder of the Solectrac shares outstanding and commenced consolidating Solectrac.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Gain on remeasurement of investment of $11.0 million in the six months ended June 30, 2022 resulted from the remeasuring of the Company’s investment in Energica.

Gain on remeasurement of investment of $2.9 million in the six months ended June 30, 2021 resulted from remeasuring the Company’s investment in Solectrac to its fair value of the date the Company obtained the remainder of the Solectrac shares outstanding and commenced consolidating Solectrac.

Other income, net

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Other income (expense), net has increased $0.9 million to $1.7 million for the three months ended June 30, 2022 from $0.8 million during the same period of 2021 mainly due to an insurance claim received for Timios offset by various expenses during 2022.

45

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Other income (expense), net has increased $1.4 million to $1.9 million for the six months ended June 30, 2022 from $0.5 million during the same period of 2021, mainly due to an insurance claim received for Timios and gain on a fair value adjustment on Inobat during 2022.

Income tax (expense) benefit

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

During the three months ended June 30, 2022, the income tax expense of $0.1 million, consisted principally foreign income tax benefits.

During the three months ended June 30, 2021, the income tax benefit of $1.7 million of one time benefits related to acquisitions and net state income tax expense of $0.1 million for recently acquired entities in 2021.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

During the six months ended June 30, 2022, the income tax benefit of $0.5 million consisted principally of $0.3 million state income tax benefits for US subsidiaries and $0.2 million of foreign income tax benefits.

During the six months ended June 30, 2021, the income tax benefit of $9.0 million, this consisted principally of $0.3 million state income tax benefits for US subsidiaries and $0.4 million of foreign income tax benefits.

Equity in loss of equity method investees

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Equity in loss of equity method investees increased $0.1 million to $0.6 million for the three months ended June 30, 2022 from $0.5 million during the same period of 2021. The change mainly represents the equity pickup from FNL, MDI and Prettl during the three months ended June 30, 2022. For the three months ended June 2021 the change represents the equity pickup from TM1 and Solectrac.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Equity in loss of equity method investees increased $1.3 million to $1.9 million for the six months ended June 30, 2022 from $0.6 million during the same period of 2021. The increased for the six months ended June 2022 is mainly related to the increase of the Energica pickup of $0.8 million.

Net loss attributable to non-controlling interest

Three months ended June 30, 2022 as compared to the three months ended June 30, 2021

Net loss attributable to non-controlling interests was $1.5 million for the three months ended June 30, 2022 compared to a net loss of $0.2 million in the same period in 2021. The increase is due to the NCI from Energica acquired in March 2022 and the Company increased its ownership in new energy to 100%, therefore no NCI pickup in 2022.

Six months ended June 30, 2022 as compared to the six months ended June 30, 2021

Net loss attributable to non-controlling interests was $2.1 million for the six months ended June 30, 2022 compared to a net loss of $0.3 million in the same period in 2021. The increase is due to the NCI from Energica acquired in March 2022 and the Company increased its ownership in new energy to 100%, therefore no NCI pickup in 2022.

46

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Capital Resources

As of June 30, 2022, the Company had cash of $85.5 million. Approximately $14.1 million was held in accounts outside of the United States, primarily in Hong Kong and the PRC.

Due to the strict regulations governing the transfer of funds held in the PRC to other jurisdictions, the Company does not consider funds held in its PRC entities to be available to fund operations and investment outside of the PRC and consequently does not include them when evaluating the liquidity needs of its businesses operating outside of the PRC.

Timios holds various regulatory licenses related to its business as a title insurance agency and is required to hold a minimum cash balance of $2.0 million. As a broker-dealer, JUSTLY has minimum capital requirements. JUSTLY had cash of $0.8 million as of June 30, 2022, which was necessary for JUSTLY to meet its minimum capital requirements. This entity had cash of $0.2 million as of June 30, 2022. The agreement of the Company’s partner in this entity is required prior to disbursement of this entity’s funds for certain defined expenditures.

The following table provides a summary of net cash flows from operating, investing and financing activities (in thousands):

    

Six Months Ended

June 30, 2022

June 30, 2021

Net cash used in operating activities

$

(82,369)

$

(10,370)

Net cash used in investing activities

 

(76,317)

 

(142,837)

Net cash provided by (used) financing activities

 

(24,420)

 

383,046

Effect of exchange rate changes on cash

 

(1,249)

 

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Net increase in cash and cash equivalents

 

(184,355)

 

229,878

Cash and cash equivalents at beginning of period

 

269,863

 

165,764

Cash and cash equivalents at end of period

$

85,508

$

395,642

Operating Activities

Cash used in operating activities was $82.4 million for the six months ended June 30, 2022 as compared to cash used in operating activities of $10.4 million in the same period in 2021. This was primarily due to: (1) an increase in net loss to $68.4 million in the current period as compared to a net loss of $13.5 million in the same period of 2021, and (2) total non-cash adjustments increase (decrease) to net loss was $1.6 million and $(3.0) million for the six months ended June 30, 2021 and 2020, respectively;(3) total changes in operating assets and liabilities resulted in $15.0 million and $6.0 million in cash used in operating activities for the six months ended June 30, 2022 and 2021, respectively.

Investing Activities

Cash used in investing activities was $76.3 million for the six months ended June 30, 2022, which was primarily due to expenditures incurred for the acquisition of Energica and debt securities, Cash used in investing activities was $142.8 million for the six months ended June 30, 2021, which was primarily due to expenditures incurred for the acquisition of Timios, WAVE, Solectrac and US Hybrid, WAVE, the investment in Energica and FNL and the acquisition of the convertible note with Silk EV.

Financing Activities

In the six months ended June 30, 2022, the Company repaid $24.4 million from financing activities versus $383.0 million received in the same period in the prior year. The company did not issue any convertible notes in the current period as compared to $220.0 million generated in the same period of 2021. There were no exercises of warrants and stock options and issuance of common stock generated during the six months ended June 30, 2022, compared to $163.0 million in the same period of 2021. In the period ended June 30, 2022, the Company made a repayment of $24.7 million to settle a convertible note.

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

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Off-Balance Sheet Arrangements

Off-balance sheet arrangements are obligations the Company has with nonconsolidated entities related to transactions, agreements or other contractual arrangements. The Company holds interests in investments accounted for under the equity method of accounting. The Company does not control these investments and therefore does not consolidate them.

The Company does not have other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in its securities.

Seasonality

The Company expects that orders and sales in its Ideanomics Mobility business unit will be influenced by the amount and timing of budgeted expenditure by its customers. Typically, the Company would expect to see higher sales at the start of the year when companies start executing on their capital programs and at the end of the year when companies are spending any surplus or uncommitted budget before the new budget cycle commences. The Company’s operating businesses are in the early stage of their development and consequently do not have sufficient trading histories to project seasonal buying patterns with any degree of confidence.

Orders and sales in our Ideanomics Capital business unit will principally be influenced by changes in interest rates and the resulting impact on in the U.S. housing market particularly as it relates to purchases of homes and the refinancing of existing mortgages which are central to our Timios business.

OUTLOOK

The Company has two distinct business units, Ideanomics Mobility and Ideanomics Capital. Each is focused on the growth opportunity, fueled by technological and legislative disruption, taking place in the automotive, energy, and financial services industries. Ideanomics Mobility has as its mission the acceleration of commercial adoption of electric vehicles. Ideanomics Capital focuses on providing a range of financing programs in support of the sale of EVs and associated charging and energy storage systems by Ideanomics Mobility. The Company believes these two business units provide an opportunity for the Company to benefit from the value creation that can be achieved in the short, medium, and long-term through establishing competitive products and services which can enable the capture of market share sufficient to sustain profitable operations.

IDEANOMICS MOBILITY

The Ideanomics Mobility business unit seeks to accelerate the commercial adoption of electric vehicles. The Company’s EV and technology acquisitions during 2021completed the foundation for the development of four product-focused verticals comprised of off-highway, two-wheeler, on-highway, and energy and charging services. This integrated offering helps support business progress toward its mission of offering fleet operators a range of vehicles and associated charging systems through a single procurement partner.

By combining leading EV technologies, products, knowledge, and capabilities across the Company’s four product verticals, Ideanomics anticipates that it will be able to rapidly develop unique zero emission mobility solutions in both the off-highway and on-highway commercial vehicle markets. These are anticipated to include the provision of commercial electric vans, trucks, and buses, electric tractors, and two-wheeled transportation, supported by the provision of energy services and infrastructure for the EV market consisting of charging systems, energy storage, energy generation, including hydrogen and solar, and associated data and management applications. These will be supported by financing programs which have been developed to enable commercial fleet operators to migrate away from gasoline and diesel-powered vehicles with minimal disruption to their business models and balance sheet. Together, these products and services will provide the Company with the capability to assist commercial fleet operators to transition with confidence to BEV and FCEV and meet their zero-emission objectives.

By choosing the integrated platform approach from Ideanomics Mobility, the commercial fleet operator will benefit from a single source solution that supports all aspects of the transition to EV, from early-stage requirements analysis, charging infrastructure specification and installation, vehicle procurement and deployment, training, vehicle- and charging-derived data management, operationalization management services, and financing.

To support the cost of transition from fossil fuels to BEV and FCEV, Ideanomics will offer fleet operators the complete financial and management support to confidently migrate from traditional CapEx models to an OpEx model, releasing capital to support traditional

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business growth and have the simplicity, predictability, and certainty of a monthly subscription which covers all aspects of EV fleet operations. These programs will also have the added advantage of providing Ideanomics with predictable recurring revenues. These Mobility-as-a-Service solutions are comprised of financing programs we refer to as VaaS and CaaS.

The Company anticipates that the shift from combustion engine vehicles to zero-emission vehicles is a complex process that most fleet operators do not have the expertise to manage. The Company anticipates that vendors selling a single product will be at a disadvantage compared to the Company’s integrated offering. The Company believes this will create a unique opportunity for the Company to become a trusted partner, providing services to analyze and define a customer’s needs, specifying and installing charging infrastructure, procuring and deploying vehicles, administering training, and operationalizing management services. In addition, the Company anticipates that its as-a-Service financing models will make it possible for more customers to transition to zero-emission vehicles as an operating expense rather than a large upfront capital expenditure.

At the operating business level, further investment is planned to support continuous technology and product development and the associated manufacturing and assembly expansion to support increasing demand and revenue achievement.

Global supply chain slowdowns and shipping constraints continue to present challenges at each of the operating companies within the Ideanomics Mobility business unit.

Environmental Matters

The Company is subject to various federal, state and local laws and regulations governing, among other things, hazardous materials, environmental contamination and the protection of the environment. We have made, and expect 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.

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BUSINESS

Overview

Ideanomics is an  operating  company incorporated in 2004 under the laws of the State of Nevada. Our evolution has been driven by technological innovation and numerous strategic acquisitions of businesses to act as our operating subsidiaries that expanded our product offerings and complemented our existing solutions. Currently, Ideanomics conducts its operations globally in one segment with two business units – Ideanomics Mobility and Ideanomics Capital. Ideanomics Mobility has as its mission the acceleration of commercial adoption of electric vehicles. Ideanomics Capital is the Company’s fintech business unit, which focuses on leveraging technology and innovation to improve efficiency, transparency, and profitability for the financial services industry.

Principal Products or Services and Their Markets

Ideanomics Mobility

Description

The Ideanomics Mobility business unit is seeking to accelerate the commercial adoption of electric vehicles. The Company’s EV and technology acquisitions during 2021 completed the foundation for the development of four product-focused verticals comprised of off-highway, two-wheeler, on-highway, and associated energy and charging services. This integrated offering helps support business progress toward its mission of offering fleet operators the convenience of a range of vehicles and associated charging systems through a single procurement partner.

By combining leading EV technologies, products, knowledge, and capabilities across the Company’s four product verticals, Ideanomics anticipates that it will be able to rapidly develop unique zero emission mobility solutions in both the off-highway and on-highway commercial vehicle markets. These include the provision of commercial electric vans, trucks, and buses, electric tractors, and two-wheeled transportation, supported by the provision of energy services and infrastructure for the EV market consisting of charging systems, energy storage, energy generation, including hydrogen and solar, and associated data and management applications. These will be supported by financing programs that have been developed to enable commercial fleet operators to migrate away from gasoline and diesel-powered vehicles with minimal disruption to their business models and balance sheet. Together, these products and services will provide the Company with the capability to assist commercial fleet operators to transition with confidence to BEV and FCEV and meet their zero-emission objectives.

By choosing the integrated platform approach from Ideanomics Mobility, the commercial fleet operator will benefit from a single source solution that supports all aspects of the transition to EV, from early-stage requirements analysis, charging infrastructure specification and installation, vehicle procurement and deployment, training, vehicle- and charging-derived data management, operationalization management services, and financing.

To support the cost of transition from fossil fuels to BEV and FCEV, Ideanomics will offer fleet operators the complete financial and management support to confidently migrate from traditional CapEx models to an OpEx model, releasing capital to support traditional business growth and have the simplicity, predictability, and certainty of a monthly subscription which covers all aspects of EV fleet operations. These programs will also have the added advantage of providing Ideanomics with predictable recurring revenues. These MaaS solutions are comprised of financing programs we refer to as VaaS and CaaS.

To support the Company’s operations, in late 2021 Ideanomics entered a lease agreement for a 48,500 square foot facility in New Jersey, which will serve as a center of excellence for Ideanomics Mobility and for promoting education and advocacy of electric and hydrogen powered vehicles to commercial fleet operators. Anticipated to come online in late 2022, the facility will showcase the Ideanomics Mobility products and services and serve as a regional support center on the East Coast of the United States for Ideanomics Mobility’s operating businesses’ activities in North America.

Operating Companies

There are six operating companies within the Ideanomics Mobility business unit” (i) WAVE, (ii) Solectrac, (iii) US Hybrid, (iv) Tree Technologies, (v) Ideanomics China (formerly known as Mobile Energy Global and (vi) Energica.

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1.WAVE

In 2021, the Company acquired 100% of privately held WAVE.

Founded in 2011, and headquartered in Salt Lake City, Utah, WAVE is a leading provider of high-power inductive (wireless) charging solutions for medium and heavy-duty EVs. Embedded in roadways and depot facilities, the WAVE system automatically charges vehicles during scheduled stops. The hands-free WAVE system mitigates battery range limitations and enables fleets to achieve duty cycles which are comparable to that of ICEs.

Deployed since 2012, WAVE has demonstrated the capability to develop and integrate high-power charging systems into heavy-duty EVs from leading commercial EV manufacturers. WAVE provides custom fleet solutions for mass transit, logistics, airport and campus shuttles, drayage fleets, and off-road vehicles at ports and industrial sites.

Since the acquisition of WAVE in January 2021, the Company has continued investment in engineering, facilities and production resources, including continuous development programs improving technology, reducing cost and scaling manufacturing. These investments and programs are necessary to meet current and anticipated demand for WAVE’s high power inductive wireless charging products. WAVE has continued to develop its high-powered induction capabilities beyond 250kW, successfully delivering systems at 125kW and 500kW, and is working on a 1-Megawatt system for heavy trucking applications. To support widespread adoption, WAVE is developing relationships with additional OEM partners to facilitate the integration of its vehicle-side hardware.

To support its expansion plans, WAVE is adapting its products to meet the varying power requirements and standards for Europe and Asia.

2.Solectrac

In 2021, the Company completed the acquisition of Solectrac, a California-based manufacturer and distributor of electric powered tractors. Since the acquisition the Company has invested in developing the business and has made investments in engineering, supply chain management, and operational leadership to scale the business.

The next stage of product development has been initiated, focused on ergonomic and application improvements, system upgrades, the introduction of a range of Solectrac-compatible farming implements, and a re-styling exercise to strengthen Solectrac’s physical branding. To that end, Solectrac recently launched its E70N tractor, which is focused on vineyards and hobby farms.

A lease on a new facility, in proximity to the current facility, has been recently executed to facilitate expanding its manufacturing and assembly capacity to meet anticipated market demand. While currently being utilized for assembly and testing, Solectrac has engaged the services of a leading, global, automotive consultancy to design and implement a scalable and compliant manufacturing operation at this new facility which is expected to come online during the second half of 2022.

To support its growth objectives, Solectrac has commenced the development of a North American dealer and distribution network, which will help it in the marketing, distribution, sales, and servicing of its products and services.

3.US Hybrid

In 2021, the Company completed the acquisition of US Hybrid, a California-based low- and zero-emission engineering and vehicle integration business which also manufactures hydrogen fuel cells and power electronics for electric, hydrogen, and hybrid powered vehicles. Since the acquisition, the Company has invested in developing the business and has made investments in people and operations to help scale the business, which includes a lease on a new facility in Torrance, California to expand its engineering and assembly capacity to meet the anticipated market demand for specialist vehicle applications.

Additionally, the Company is working with US Hybrid to further develop the resources required to expand its hydrogen fuel cell manufacturing operations to meet the anticipated demand for hydrogen powered vehicles.

US Hybrid will continue to provide engineering services, fuel cells, power electronics, systems, and components, and associated vehicle integration services to both external customers and to internal companies within Ideanomics Mobility. US Hybrid will serve as a research and development resource across Ideanomics Mobility for BEV and FCEV.

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4.Tree Technologies

Tree Technologies is headquartered in Kuala Lumpur, Malaysia and through its Treeletrik brand sells EV bikes, scooters, and batteries throughout the ASEAN region. Tree Technologies is collaborating with Energica on the potential development of a new range of low power commercially focused electric motorcycles which are anticipated for introduction to market in 2022 and 2023. The development of the next generation of Treeletrik-branded motorbikes will enable Tree Technologies to remain competitive and leverages Energica’s technology and know-how; translated to the lower power commuter and delivery bike market segment to which Tree Technologies markets its products. This technical collaboration demonstrates the synergistic nature of the companies within Ideanomics Mobility, and the ability to leverage and apply IP, technology, and expertise to improve the Company’s products.

The contract with PSE for the purchase of 200,000 motorcycles is not progressing on the originally anticipated time scale because of the pandemic restrictions and the progress and performance of PSE in areas including local homologation. The Company is evaluating alternatives to fulfilling the order, including but not limited to establishing dealerships in Indonesia, Philippines, and Thailand starting in 2022 to directly enter these markets and take advantage of the opportunity surrounding the dependence on two and three-wheeled low-cost transportation in the region.

Tree Technologies was subjected to continuous rolling lockdowns in 2021 due to the COVID-19 pandemic. This has restricted the supply chain and ability to export products within the ASEAN region. The Company anticipates this situation to continue until such time as vaccination rates increase in Malaysia and surrounding countries.

5.Ideanomics China (formerly known as Mobile Energy Global)

The Company’s operations in China continue to develop the business, selling ride hailing vehicles, electric vans, trucks, and buses, and EV batteries. A market has developed for used commercial EVs in China, and the Company has established operations to take advantage of this market. Additionally, Ideanomics China supports supply chain operations for the rest of the companies within Ideanomics Mobility.

6.Energica

Energica is the world’s leading manufacturer of high performance electric motorcycles and the sole manufacturer of the FIM Enel MotoEWorld Cup. Energica motorcycles are currently on sale through the official network of dealers and importers.

Status of Previously Announced Acquisitions

VIA

VIA Motors is a leading electric commercial vehicle company with proven advanced electric drive technology, delivering sustainable mobility solutions for a more livable world. VIA designs, manufactures, and markets electric commercial vehicles, with superior life-cycle economics, for use across a broad cross-section of the global fleet customer base.

We executed a definitive agreement to acquire VIA on August 30, 2021. We are currently in the process of obtaining the required stockholder approval to acquire 100% of VIA and registering the issuance of our common stock as consideration for the transaction. The total aggregate consideration payable in connection with this transaction is up to $630.0 million, consisting of an upfront payment comprised of both stock and cash consideration at the closing of the transaction of $450.0 million and an earnout payment of up to $180.0 million in our common stock. The majority of the $450.0 million is payable in Ideanomics common stock and the $450.0 million value is based on a calculation for a fixed number of shares priced at $2.3668. The cash component of the $450.0 million is documented in two forms, both of which shall be credited to closing consideration: (1) a SAFE issued to VIA on June 7, 2021, for $7.5 million and (2) secured convertible promissory notes issued to VIA periodically in advance of the closing of the transaction, the current outstanding aggregate principal balance of which is $55.4 million. Further details can be found in the Form S-4/A filed with the SEC on February 1, 2022 as well as the Form 8Ks likewise filed by the Company on May 23, 2022, June 16, 2022, July 18, 2022, and August 19, 2022. The Company currently anticipates that its agreement to purchase VIA will close in the fourth quarter of 2022.

With the acquisition of VIA Motors, Ideanomics will acquire a business which has developed a unique commercial battery electric skateboard architecture in the high-growth Class 2 to 5 local and last mile delivery market segment. The skateboard architecture provides an opportunity to customize the vehicle configuration in a van or cab/chassis to meet specific customer needs. VIA is well advanced in the development and validation of the product and with the support of Ideanomics will transition to volume manufacturing

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by 2023. The details of the transaction with VIA Motors are delineated in a Registration Statement on Form S-4 filed by Ideanomics, Inc. with the Securities and Exchange Commission on November 5, 2021, as amended (File No. 333-260843).

Energica

On January 7, 2022, the Company entered into a loan agreement with Energica. Pursuant to this loan agreement, the Company may advance up to Euro 5.0 million, in installments of Euro 250,000, at an annual interest rate of Eurobar plus 2.0%. The purpose of the loan is to provide working capital during the motorcycle manufacturing and purchasing season. The loan is unsecured, with interest payable semi-annually, on June 30 and December 31 of each year. The outstanding principal is due and payable in two installments, on June 30, 2024 and December 31, 2024. On February 9, 2022, the Company wired €52.5 million ($60.3 million) to an escrow account in order to facilitate and fund the conditional tender offer. On March 7, 2022 the Company announced that it had achieved the 90% threshold for the conditional tender offer and the transaction closed on March 14, 2022 .

Ideanomics Capital

Ideanomics Capital is the Company’s fintech business unit, which focuses on leveraging technology and innovation to improve efficiency, transparency, and profitability for the financial services industry which could generate high rates of return through the deployment of technology and solutions to disrupt existing business models.

The Company’s Ideanomics Capital business unit provides capital market expertise to enable the sale of its subsidiaries’ products and services. It aligns financing resources and develops funding structures that enable growth and revenue generation for the Ideanomics Mobility business unit. Financing structures would include service and products for payment such as CaaS and VaaS. These options are part of the Ideanomics Mobility offering to commercial fleet operators. Additionally, in 2021 Ideanomics Capital began supporting Energica in the creation of a financing program to increase dealership and expand the eBike business. Over time, it is Ideanomics intention to focus Ideanomics Capital as the financial services arm of Ideanomics Mobility and to divest its other fintech assets accordingly.

Operating Companies

There are two operating companies within the Ideanomics Capital business unit: (i) Timios and (ii) Justly.

1.Timios

Founded in 2008 by real estate industry veteran Trevor Stoffer, Timios’ vision is to bring transparency to real estate transactions. The company offers title and settlement, and REO title and closing services in 45 states and currently serves 285 national and regional clients.

In 2021, the Company acquired 100% of privately-held Timios. Timios, a nationwide title and escrow services provider, which has been expanding in recent years through offering innovative and freedom-of-choice-friendly solutions for real estate transactions. The products include residential and commercial title insurance, closing and settlement services, as well as specialized offerings for the mortgage process industry. Timios combines difficult to obtain local and state licenses, a knowledgeable and experienced team, and a scalable platform to deliver best-in-class services through both centralized processing and localized branch networks. Ideanomics will assist Timios in scaling its business in various ways, including referring client acquisitions and product innovation.

Timios experienced a cybersecurity incident on July 27, 2021, and, as a consequence of the incident, there was a material reduction in the number of daily orders and revenue. The number of daily orders was recovering, however the impact of rising interest rates during first half of 2022 has made the near-term market conditions more challenging as the mortgage origination and refinance markets are sensitive to rising interest rates. The company has seen an increase in the default sector, which utilizes title and closing services, and this is anticipated to provide some offset to the drop in mortgage origination and refinance revenues. Timios has entered into a strategic partnership with OrangeGrid making Timios the preferred provider of title, escrow, valuation and asset management services within OrangeGrid’s GridReady default management ecosystem. Additionally, Timios and Orangegrid will collaborate on a number of co-marketing initiatives to accelerate market adoption of the solution. Mortgage servicers who are GridReady customers will be able to seamlessly order title, escrow and valuation products and track fulfillment by Timios through the GridSource vendor management component of the ecosystem.

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2.JUSTLY (formerly known as Delaware Board of Trade (DBOT))

In the latter half of 2021, the Company restructured and relaunched its DBOT business as JUSTLY, a FINRA-registered broker dealer destination for ESG and thematic investments. The Company has hired an entirely new management team of experienced capital markets and regulatory professionals, implementing new systems for JUSTLY to leverage its new business model as a destination for crowdfunding as well as other associated offerings.

JUSTLY, in its new form, is a broker dealer that operates a funding platform focused on Reg. CF, A+ and D private equity and debt. Recent regulatory easing and the increase in the maximum size of Reg. CF (now $5.0 million) and Reg. A+ (now $75.0 million) have increased investor interest and access to the private equity market. JUSTLY is also registered with FINRA to manage an ATS, which is currently not active, but is expected to be relaunched when market conditions are more favorable, offering a secondary market in private equities. The Company believes that growing demand for private placements and the need for a secondary market provide a favorable environment for JUSTLY’s future growth.

Portfolio Optimization

The Company had previously identified two business units that it considered non-core. The non-core assets are Grapevine, a marketing and ecommerce platform focused on influencer marketing, and Fintech Village a 58-acre development site in West Hartford, Connecticut.

The Company completed the divestitures of Grapevine in April, 2021 and of Fintech Village in December, 2021.

In addition, we may also reorganize our business structure in 2022 to align our portfolio of products and solutions more closely with the markets we serve and bring better performance clarity with our competitive peer set. We are continuing to review our portfolio and will look for other ways to better manage and optimize our product offerings.

Competitive Business Conditions, Competitive Position in the Industry and Methods of Competition

The markets in which we participate are dynamic and highly competitive, requiring companies to react quickly to capitalize on opportunity. We retain skilled and experienced personnel and deploy substantial resources to meet the changing demands of the industry and to capitalize on change. The market for our products is highly competitive and subject to rapid technological change. We encounter significant domestic and international competition across all units of our business.

Ideanomics Mobility

The company’s EV business operates in the market for fleet commercial vehicles, which is still in the development stage. The company could face competition from other companies that develop and operate a similar integrated platform for the procurement, purchase, financing, charging, and energy management needs of fleet EV operators. The company could also face competition from companies that only operate in one part of the vehicle purchase and operation cycle, for example, an EV vehicle or battery manufacturer may sell directly to EV fleet operators while also participating in the platform operated by the Company’s Ideanomics China business.

Purchasers of commercial vehicles have the choice between traditional ICE vehicles and EVs and this is likely to continue for at least the next five years, and possibly longer. The most important drivers for the development of the commercial fleet EV market are federal and provincial regulations relating to clean air and electric vehicles including subsidies and incentives to help owners of fleets of commercial vehicles convert from combustion engines to EV. The speed at which fleet operators convert to EV is highly correlated with government regulations, targets and related subsidies and incentives. If the governments, or municipalities, change the regulations, targets, incentives or subsidies then the rate at which fleet operators convert their vehicles to EV could slow down which in turn may lead to lower revenues for the Company. Additionally, the rate and form in which the commercial fleet EV market develops is dependent upon technological developments in battery and charging systems; deployment of the charging infrastructure to support widespread commercial EV use and the development of new financing and lending structures that address the different collateral and resale values of the battery and vehicle versus ICE vehicles.

In addition to its directly owned operations, the Company operates through a network of investment arrangements, partnerships and formal and informal alliances; consequently, its competitive position could be adversely impacted if one of the members of the alliance was not able to meet the demand for its products, decides not to continue to cooperate with the Company, or goes out of business.

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Ideanomics Capital

The Company’s Ideanomics Capital business unit operates in sectors that are undergoing rapid change. The Company’s fintech business operates in several markets, with Timios providing title and escrow services throughout the U.S, and JUSTLY is a FINRA registered broker-dealer, which intends to operate a financing funding platform focused on private equity and debt. Timios has many competitors, some of whom may have a broader geographic reach within this market, and may be more well-capitalized and therefore more able to weather a downturn in business volume resulting from an increase in interest rates.

JUSTLY, among other business endeavors, operates a curated crowdfunding equity platform of private impact investments to advisors, registered investment advisors, family offices, angels, and accredited and non-accredited investors from all income levels. JUSTLY is engaged in business in a highly competitive, constantly evolving marketplace, requiring continual advancing pricing sophistication and technological capabilities of the competitors and necessitating to differentiate their product offerings.

Sources and Availability of Raw Materials

The Company’s businesses depend on a ready supply of components and parts that are sourced domestically and internationally and any interruption to the supply of these could have an adverse impact on the Company’s results. The Company’s suppliers that manufacture components and parts, which includes EV motors and batteries, depend on a ready supply of raw materials and components, consequently a shortage of raw materials or components could adversely impact their manufacturing process and, potentially, impact the Company’s revenues as it may not be able to complete orders that it has received. The Company may also be adversely impacted if global logistics and supply chains are interrupted.

Our products are manufactured or assembled from both standard components and parts that are unique to our specifications. Our internal manufacturing operations are largely process oriented and we use significant quantities of various raw materials, including aluminum, copper, steel, bimetals, optical fiber and plastics and other polymers, among others. We use significant volumes of aluminum, copper, steel and polymers in manufacturing coaxial and twisted pair cables and antennas. Other parts are produced using processes such as stamping, machining, molding and pressing from metals or plastics. Portions of the requirements for these materials are purchased under supply arrangements where some portion of the unit pricing may be indexed to commodity market prices for these metals. We may occasionally enter forward purchase commitments or otherwise secure availability for specific commodities to mitigate our exposure to price changes for a portion of our anticipated purchases. Certain of the raw materials utilized in our products may only be available from a few suppliers, and we may enter into longer term agreements to secure access to certain key inputs. We may, therefore, encounter significant price increases and/or availability issues for the materials we obtain from these suppliers, such as those that we have seen in 2021. These supply chain constraints have limited our ability to manufacture and deliver products to our customers in 2021 and we expect this to continue into 2022.

Our profitability has been and may continue to be materially affected by changes in the market price of our raw materials and components, most of which are linked to the commodity markets. Prices for aluminum, copper, plastics, silicon and certain other polymers derived from oil and natural gas have fluctuated substantially during the past several years. We have adjusted our prices for certain products and may have to adjust prices again. Delays in implementing price increases, failure to achieve market acceptance of price increases, or price reductions in response to a rapid decline in raw material costs, could have a material adverse impact on the results of our operations.

In addition, some of our products are assembled from specialized components and subassemblies manufactured by third-party suppliers. We depend upon sole suppliers for certain of these components, including capacitors, memory devices and silicon chips. Our results of operations have been and may continue to be materially affected if these suppliers cannot provide these components in sufficient quantity and quality on a timely and cost-efficient basis. We believe that our supply contracts and our supplier contingency plans mitigate some of this risk. Our supply agreements include technology licensing and component purchase contracts, and several of our competitors have similar supply agreements for these components. There can be no guarantee that the Company will be able to extend or renew these supply agreements on similar terms, or at all. In addition, we license software for operating network and security systems or sub-systems and a variety of routing protocols from different suppliers.

Seasonality

The Company expects that orders and sales will be influenced by the amount and timing of budgeted expenditure by its customers. Typically, the Company would expect to see higher sales at the start of the year when companies start executing on their capital programs and at the end of the year when companies are spending any surplus or uncommitted budget before the new budget

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cycle commences. The Company’s EV operating businesses are in the early stage of their development and consequently do not have sufficient trading histories to project seasonal buying patterns with any degree of confidence.

Working Capital Requirements

As the Company expands its business the need for working capital will continue to grow. The Company acquired several companies in 2021 and, along with its existing operations, are all considered growth companies at various stages of maturity. For these reasons, and the tight supply chain within automotive in general, will require working capital for both organic growth of those business plus for the purchase of components for the manufacture and assembly of the Company’s respective EV and wired and wireless charging systems. The Company will continue to raise both debt and equity capital to support the working capital needs of these businesses and its U.S. headquarters functions.

Trademarks, Patents and Licenses

We hold various patents and trade names and rely on a combination of patent, copyright, trademark, service mark and trade secret laws to establish and protect our intellectual property rights. We have a number of pending patent applications relating to new products and technology. We will continue to file additional patent applications on new inventions, as appropriate, demonstrating our commitment to technology and innovation. For technology that is not owned by us, we have a program for obtaining appropriate licenses to help ensure that we have the necessary license coverage for our products. In addition, we have formed strategic relationships with leading technology companies to provide us with early access to technology that we believe will help keep us at the forefront of our industry. Although we believe our intellectual property rights play a role in maintaining our competitive position in a number of the markets that we serve, we do not believe we would be materially adversely affected by the expiration or termination of our trademarks or trade names or the loss of any of our other intellectual property rights.

Business and Customer Concentration

The Company is in the process of building out its Ideanomics Mobility unit and has not yet reached a stage of development where the loss of any single customer would have a material adverse effect on the Company.

Timios’ title and escrow service depends upon a network of referring financial institutions. The loss of referrals from the larger referring financial institutions would have a material adverse effect on the Company.

Reliance on Government Contracts

In its international operations the Company does not typically contract directly with national governments, however it may contract with provincial, state and local municipalities.

The Company does not contract directly with the government of the PRC. Additionally, the rate at which commercial fleets convert to EV is heavily influenced by federal and provincial policies in the PRC as they relate to clean air and adoption of EV technology. Consequently, the Company’s results may be adversely impacted by changes in regulations in the PRC.

Corporate Structure

Ideanomics is a Nevada corporation existing as an operating company that conducts a substantial majority of its operations through twenty-five (25) of its operating subsidiaries established in various jurisdictions including the United States, People’s Republic of China, Hong Kong, Malaysia, and England and Wales, and nine (9) subsidiaries with no operations acting solely as holding companies. Currently, there are fifteen (15) operating subsidiaries of Ideanomics in the United States and five (5) PRC subsidiaries. In addition, twenty (20) of the subsidiaries of the Company are referred to as dormant subsidiaries that ceased their operations, remain not liquidated solely for the purpose of compliance with administrative formalities, and are expected to be liquidated within 6 months of the consummation of the merger.

The organizational structure of the Company is comprised of a total of fifty-four (54) subsidiaries.

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Our Unconsolidated Equity Investments

Our investments in Energica, PEA, the MDI Fund, TM2, and FNL, where we may exercise significant influence, but not control, are classified as a 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.

Energica

On March 3, 2021, the Company entered into an investment agreement with Energica. The Company invested €10.1 million ($13.6 million) for 6.1 million ordinary shares of Energica at a subscription price of €1.78 ($2.21) for each ordinary share. Pursuant to the purchase of the shares the Company will hold 20.0% of Energica’s share capital.

Energica is the world’s leading manufacturer of high performance electric motorcycles and was the sole manufacturer of the FIM Enel MotoE™ World Cup.

Certain shareholders of Energica have rights such that they may convert their ordinary shares into ordinary shares with supervoting rights under certain conditions. If some or all of these ordinary shares were converted into ordinary shares with supervoting rights, the Company’s ownership in Energica would be diluted, perhaps significantly.

On September 15, 2021, the Company announced it had entered into an agreement to launch a voluntary conditional tender offer in concert with the founders of Energica for shares of Energica, pursuant to which Ideanomics plans to increase its investment from 20.0% in Energica to approximately 70.0%. The Energica founders shall continue to own 29.0% of Energica.

On February 9, 2022, the Company wired €52.5 million ($60.3 million) to an escrow account in order to facilitate and fund the conditional tender offer. On March 4, 2022, the Company received sufficient tendered shares to reach the 90.0% threshold for the tender to become irrevocable. The transaction received final approval from Italian regulatory authorities and closed on March 14, 2022

PEA

On August 2, 2021, the Company announced a strategic investment in PEA, a business unit within the Prettl Group, a large German industrial company that manufactures and distributes components and systems for the automotive, energy, and electronics industries. The terms include a strategic investment of €7.5 million ($9.1 million) for 11,175 preferred shares. Ideanomics received exclusive sales and distribution rights for PEA charging infrastructure products and solutions in North America and CEO Alf Poor will join PEA’s Board of Directors. The Company received legal ownership as of October 19, 2021, after payment of €7.5 million ($9.1 million).

MDI Fund

On July 26, 2021, the Company entered into a subscription agreement to invest $25.0 million in the MDI Fund. The MDI Fund sponsored by the National Bankers’ Association, is an organization of minority-owned banks that aims to increase inclusivity in the financial services industry. The MDI Fund will provide capital resources primarily in low and moderate income areas to grow a more skilled workforce, increase employment opportunities, and support businesses’ growth among minority and underserved communities.

The initial investment of $0.6 million was made on July 26, 2021.

TM2

On January 28, 2021, the Company entered into a SAFE with TM2. As of August 13, 2021, the SAFE was amended to which Ideanomics invested €5.0 million ($5.9 million), an increase in the investment of €3.5 million ($4.1 million), from the original contracted investment of €1.5 million ($1.8 million.)

TM2 is a London based digital commodities issuance and trading platform for technology metals. It connects institutional investors, proprietary traders and retail investors with metals suppliers – miners, refiners, recyclers and mints. The platform focuses specifically on new metals that currently don’t have an active trading marketplace, such as rhodium, lithium, cobalt, rhenium, etc. The

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Company’s ownership interest in TM2 provides valuable data and insight into the global technology metals market, which is critical to the future of the cleantech and EV industries. TM2 connects both pillars of cleantech and fintech. The types of metals and materials traded on the TM2 platform are critical to cleantech (for EV battery production, energy storage systems, solar cells, etc.,) while the fintech platform is innovative in representing these commodities which do not exist on traditional exchanges.

In the fourth quarter ending December 31, 2021, as the management and controlling shareholders of TM2 updated business plans and related capital requirements for the emerging trading platform in 2023, it was determined that incremental funding would be required to achieve critical objectives. TM2 has been unsuccessful to date in obtaining incremental funding and consequently has reduced headcount and curtailed other critical spending. The current outlook and management approach without any indication of likely incremental capital funding indicates a probable impairment. The Company recorded an impairment charge for the full value of the investment in the fourth quarter ended December 31, 2021.

FNL

On April 20, 2021, Ideanomics entered into a stock purchase agreement with FNL (developer of Hoo.be), pursuant to which Ideanomics made an investment into FNL, which included the investment of $2.9 million cash into FNL, the issuance of 0.1 million shares of Ideanomics common stock, and 100.0% of the common stock outstanding of Grapevine. Ideanomics received 0.6 million shares of common stock of FNL at a subscription price of $8.09 per share of common stock, and Ideanomics also converted a $250,000 SAFE into 30,902 shares of common stock. The Company determined that the basis in the FNL investment is the aggregate of the cash invested, including the SAFE, the fair value of the Ideanomics common stock issued, and the fair value of Grapevine. As a result of this transaction, Ideanomics owns 29.0% of the common stock outstanding of FNL, and FNL appointed Alfred Poor, Ideanomics’ Chief Executive Officer, to be a member of its board of directors.

Government Regulations

Rules and Regulations Material to our Business

Vehicle Safety and Testing

In the U.S., some of our vehicles are subject to regulation by the NHTSA, including all applicable FMVSS and the NHTSA bumper standard. While our current vehicles fully comply with applicable regulations and we expect that our vehicles in the future will fully comply with all applicable FMVSS with limited or no exemptions, FMVSS are subject to change from time to time and while we anticipate being in compliance with the proposed changes, there is no assurance until final regulation changes are enacted. As a manufacturer, we must self-certify that our vehicles meet all applicable FMVSS and the NHTSA bumper standard, or otherwise are exempt, before the vehicles may be imported or sold in the U.S.

We are also required to comply with other federal laws administered by NHTSA including labeling requirements and other information provided to customers in writing, Early Warning Reporting requirements regarding warranty claims, field reports, death and injury reports and foreign recalls and additional requirements for cooperating with compliance and safety investigations and recall reporting. In addition, federal law requires inclusion of fuel economy ratings, as determined by the U.S. Department of Transportation and the EPA, and New Car Assessment Program ratings as determined by NHTSA, if available.

Our vehicles sold outside of the U.S. are subject to similar foreign compliance, safety, environmental and other regulations. Many of those regulations are different from those applicable in the U.S. and may require redesign and/or retesting. Some of those regulations impact or prevent the rollout of new vehicle features. Additionally, the European Union established new rules regarding additional compliance oversight that commenced in 2020. There is also regulatory uncertainty regarding how these rules will impact sales in the United Kingdom given its withdrawal from the E.U.

Automobile Manufacturer and Dealer Regulation

In the U.S., state laws regulate the manufacture, distribution, sale and service of motor vehicles, and generally require motor vehicle manufacturers and dealers to be licensed in order to sell vehicles directly to residents. Certain states have asserted that the laws in such states do not permit manufacturers to be licensed as dealers or to act in the capacity of a dealer, or that they otherwise restrict a manufacturer’s ability to deliver or service vehicles.

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Battery Safety and Testing

Our battery packs are subject to various U.S. and international regulations that govern transport of “dangerous goods,” defined to include lithium-ion batteries, which may present a risk in transportation. The governing regulations, which are issued by the Pipeline and Hazardous Materials Safety Administration, are based on the UN Recommendations on the Safe Transport of Dangerous Goods Model Regulations and related UN Manual Tests and Criteria. The regulations vary by mode of shipping transportation, such as by ocean vessel, rail, truck or air. We conduct testing to demonstrate our compliance with such regulations.

As indicated above, we use lithium-ion cells in the high voltage battery packs in some of our vehicles and energy storage products. The use, storage and disposal of our battery packs are regulated under existing laws and are the subject of ongoing regulatory changes that may add additional requirements in the future.

Solar Energy—General

We are subject to certain state and federal regulations applicable to solar and battery storage providers and sellers of electricity. To operate our systems, we enter into standard interconnection agreements with applicable utilities. Sales of electricity and non-sale equipment leases by third parties, such as our leases and PPAs, are likely to face regulatory challenges in some states and jurisdictions.

Environmental Regulations

We operate in an industry that is subject to extensive environmental regulation, which has become more stringent over time. The laws and regulations to which we are subject govern, among others, vehicle emissions and the storage, handling, treatment, transportation and disposal of hazardous materials and the remediation of environmental contamination. Compliance with such laws and regulations at an international, regional, national, and local level is an important aspect of our ability to continue our operations.

Environmental standards applicable to us are established by the laws and regulations of the countries in which we operate, standards adopted by regulatory agencies and the permits and licenses issued to us. Each of these sources is subject to periodic modifications and what we anticipate will be increasingly stringent requirements. Violations of these laws, regulations or permits and licenses may result in substantial administrative, civil or even criminal fines, penalties and possibly orders to cease any violating operations or to conduct or pay for corrective works. In some instances, violations may also result in the suspension or revocation of permits or licenses.

EPA Emissions and Certificate of Conformity

The U.S. Clean Air Act requires that we obtain a Certificate of Conformity issued by the EPA and a California Executive Order issued by CARB certifying that certain of our vehicles comply with all applicable emissions and related certification requirements. A Certificate of Conformity is required for vehicles sold in states covered by the Clean Air Act’s standards and a CARB Executive Order is required for vehicles sold in California and states that have adopted California’s stricter standards for emissions controls related to new vehicles and engines sold in such states. States that have adopted the California standards as approved by EPA also recognize the CARB Executive Order for sales of vehicles.

In addition to California, there are 13 other states that have either adopted or are in the process of adopting the stricter California standards, including New York, Massachusetts, Vermont, Maine, Pennsylvania, Connecticut, Rhode Island, Washington, Oregon, New Jersey, Maryland, Delaware and Colorado.

We are required to seek an EPA Certificate of Conformity for certain of our vehicles sold in states covered by the Clean Air Act’s standards and a CARB Executive Order for vehicles sold in California or any of the other 13 states identified above that have adopted the stricter California standards.

Regulations Pertaining to Our Title Business

Our title companies and related subsidiaries are subject to extensive regulation under applicable state laws. The laws of most states in which we transact business establish supervisory agencies with broad administrative powers relating to issuing and revoking licenses to transact business, regulating trade practices, licensing agents, accounting practices, and financial practices.

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In addition to state-level regulation, our title business is subject to regulation by federal agencies, including the CFPB. The CFPB was established under the Dodd-Frank which also included regulation over financial services and other lending related businesses. The CFPB has broad authority to regulate, among other areas, the mortgage and real estate markets in matters pertaining to consumers. This authority includes the enforcement of the TILA, the RESPA and the rules related to the TRID formerly placed with the Department of Housing and Urban Development. Our underwritten title companies, primarily those domiciled in California, are also subject to certain regulation by insurance regulatory or other governing authorities relating to their net worth and working capital.

From time to time, we receive inquiries and requests for information from attorneys general, insurance commissioners and other regulatory agencies about various matters relating to our business. Sometimes these take the form of civil investigative demands or subpoenas. We cooperate with all such inquiries. From time to time, we are assessed fines for violations of regulations or other matters or enter into settlements with such authorities which may require us to pay fines or claims or take other actions.

Regulations Regarding our Fintech Businesses

Securities and Commodities Laws

In order for a securities exchange to operate, it must register as a broker-dealer with the SEC and become a member of FINRA. Depending on a securities exchange’s activities, it may be required to also register as a broker dealer on the state level. JUSTLY is a registered broker dealer with an ATS. Depending upon the jurisdiction, we may also be required to comply with laws applicable to securities exchanges.

Financial Crimes and Sanctions Compliance

The jurisdictions in which we operate and intend to operate generally have adopted laws to prevent money laundering, terrorist financing, fraud and other financial crime, as well as to ensure compliance with applicable sanctions regimes. Various aspects of our business require us to develop and implement policies and procedures that confirm the identity of customers, detect suspicious activities and ensure we do not do business with blocked persons.

Rules and Regulations of PRC Material to our Business

General Regulation of Businesses in the PRC

We are required to obtain government approval from or filing with the MOFCOM and/or other government agencies in the PRC for transactions, such as our acquisition or disposition of business entities in the PRC. Additionally, foreign ownership of certain business and assets in the PRC is not permitted without specific government approval.

Regulations Relating to Foreign Investment

Investment activities in the PRC by foreign investors are principally governed by the Negative List and the Encouraged Foreign Investment Catalogue, which was promulgated and is amended from time to time by the MOFCOM and the National Development and Reform Commission. The Catalogue sets forth the industries in which foreign investments are encouraged, restricted, or prohibited. Industries that are not listed in the restricted or prohibited categories are permitted areas for foreign investments and are generally open to foreign investment unless specifically restricted by other PRC regulations. Establishment of wholly foreign owned enterprises is generally allowed in encouraged and permitted industries. Foreign investors are not allowed to invest in industries in the prohibited category.

Under PRC law, the establishment of a wholly foreign owned enterprise is subject to the approval of or filing with the MOFCOM or its local counterparts and the wholly foreign owned enterprise must register with the competent administration for market regulation. Our significant PRC subsidiaries have duly obtained all material approvals required for their business operations.

In addition, the transportation sector is subject to regulation at the central and provincial level. The PRC government may issue from time to time new laws or new interpretations on existing laws, some of which are not published on a timely basis or may have retroactive effect. Administrative and court proceedings in the PRC may also be protracted, resulting in substantial costs and diversion of resources and management attention. Regulatory risk also encompasses the interpretation by the tax authorities of current tax laws, and our legal structure and scope of operations in the PRC, which could be subject to further restrictions resulting in limitations on our ability to conduct business in the PRC.

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PRC Regulations on Automobile Sales

On April 5, 2017, the MOFCOM promulgated the Administrative Measures on Automobile Sales, which became effective on July 1, 2017, pursuant to which automobile suppliers and dealers are required to file with relevant authorities (via an information system for national automobile circulation operated by competent commerce departments) within 90 days after receiving a business license. Where there is any change to a party’s underlying information, automobile suppliers and dealers must update such information within 30 days after such change. Failure to satisfy such filing requirement will be subject to a warning or a fine up to RMB 30,000.

PRC Regulations on the Recall of Defective Automobiles

On October 22, 2012, the State Council promulgated the Administrative Provisions on Defective Automotive Product Recalls, which became effective on January 1, 2013, and which were amended on March 3, 2019. According to this legislation, the product quality supervision department of the State Council is responsible for the supervision and administration of recalls of defective automotive products in China. Manufacturers of automobile products are required to take measures to eliminate defects in products they sell. A manufacturer must recall all defective automobile products. If any operator conducting sales, leasing, or repair of vehicles discovers any defect in automobile products, it must cease to sell, lease or use the defective products and must assist manufacturers in the recall of those products.

PRC Regulation Relating to Compulsory Product Certification

According to the Administrative Regulations on Compulsory Product Certification promulgated by the QSIQ (which was subsequently merged into the SAMR) on July 3, 2009 and which became effective on September 1, 2009, and the List of the First Batch of Products Subject to Compulsory Product Certification promulgated by the QSIQ in association with the CAA on December 3, 2001, which became effective on the same day, the QSIQ is responsible for the quality certification of automobiles. Automobiles and relevant accessories must not be sold, exported or used in operating activities until they are certified by relevant certification authorities designated by the CAA as qualified products and granted certification marks.

PRC Regulations on Consumer Rights Protection

The Consumer Rights and Interests Protection Law, as promulgated on October 31, 1993 and most recently amended in 2013 by the SCNPC, imposes stringent requirements and obligations on business operators in China. Failure to comply with consumer protection requirements under this legislation could subject business operators to administrative penalties including warnings, confiscation of unlawful income, imposition of fines, an order to cease business operations, revocation of business licenses, as well as potential civil or criminal liabilities.

PRC Regulation on Employment

The Labor Contract Law of the PRC, which was promulgated by the SCNPC on June 29, 2007 and most recently amended as of July 1, 2013, is primarily aimed at regulating rights and obligations of employer and employee relationships, including the establishment, performance and termination of labor contracts. Pursuant to the Labor Contract Law, labor contracts must be concluded in writing if labor relationships are to be or have been established between employers and their employees. Employee wages shall be no lower than local standards on minimum wages and must be paid to employees in a timely manner. Employers are prohibited from forcing employees to work above certain time limits and employers shall pay employees for overtime work in accordance with national regulations. The Labor Contract Law in effect prohibits employers from terminating employees without severance except in a few enumerated circumstances (e.g., serious violation of company rules and regulations). In some permitted circumstances of termination (such as where an employee is incompetent and remains incompetent after training or assignment to another post), a 30 days’ prior notice (or pay in lieu) and severance payments are required.

The Social Insurance Law of the PRC, promulgated by the SCNPC on October 28, 2010 and most recently amended on December 29, 2018, provides that each employer within the PRC must register with the State’s social insurance system upon its establishment and make contributions to the social insurance system for the benefit of each of its employees, including foreign nationals who are employed in the PRC. Specifically, an employer must make monthly deposits to a designated fund for its contribution to each of its employees’ pension insurance, medical insurance, work injury insurance, unemployment insurance, and maternity insurance. Failure to make such deposits according to the amounts and times provided by law can lead to a court order for seizure, freezing, or an auction of the employer’s property equivalent to the value of any unpaid social insurance payables.

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In accordance with the Regulations on the Management of Housing Fund which was promulgated by the State Council on April 3, 1999 and revised on March 24, 2019, employers must register at designated administrative centers and open bank accounts in order to deposit mandatory employee housing fund contributions. Employers are required to pay and deposit housing fund contributions (in an amount no less than 5% of the monthly average salary of the employee in the preceding year) in full and on time.

PRC Regulation on Government Subsidies

On April 22, 2015, the MOF, the MOST, the MIIT and the NDRC jointly promulgated the Financial Support Circular, which took effect on the same day. The Financial Support Circular provides that those who purchase new energy vehicles specified in the Catalogue of Recommended New Energy Vehicle Models for Promotion and Application issued by the MIIT may enjoy government subsidies. A purchaser may purchase a new energy vehicle from a manufacturer by paying the price deducted by the subsidy amount, and the manufacturer may obtain the subsidy amount from the PRC central government after such new energy vehicle is sold to the purchaser.

On April 23, 2020, the MOF, the MOST, the MIIT and the NDRC jointly issued the 2020 Financial Subsidies Circular, which took effect on the same day, and which extended the implementation period of financial subsidies for new energy vehicles to the end of 2022. The 2020 Financial Subsidies Circular further specifies that the subsidy criteria for new energy vehicles during the period from year 2020 to 2022 will generally be reduced by 10%, 20% and 30% compared to the subsidy standard of the previous year respectively, and the number of vehicles eligible for the subsidies will not exceed approximately two million each year.

On December 31, 2020, the above mentioned authorities further promulgated the 2021 Financial Subsidies Circular, a Circular on Further Improving the Financial Subsidy Policy for the Wider Application of New-energy Vehicles, which became effective on January 1, 2021, and was another similar circular to reiterate the principles including among others, the subsidy criteria reduction rate as stipulated in the 2020 Financial Subsidies Circular. This 2021 Financial Subsidies Circular emphasizes that the effective period for financial subsidy policies applicable to new energy vehicles will be extended to the end of 2022, given levels of technical progress, scale effect and other factors. The reduction of these subsidy standards will be gradual. The 2021 subsidy standard reduces the base subsidy amount by 20% for each new energy vehicle on the basis of that for the previous year.

On December 31, 2021, the above mentioned authorities promulgated the 2022 Financial Subsidies Circular, a Circular on Financial Subsidy Policy for Application and Promotion of New-energy Vehicles in the year of 2022, which became effective on January 1, 2022. The 2022 Financial Subsidies Circular specifies that the subsidy standard of 2022 will be reduced by 30% compared to the subsidy standard of the previous year, and the financial subsidy policies applicable to new energy vehicles will expire on December 31, 2022.

Taxation

On March 16, 2007, the National People’s Congress of the PRC originally passed the EIT Law, which was most recently amended on December 29, 2018, and on November 28, 2007, the State Council of China originally passed implementing rules to the EIT Law, which were most recently amended on April 23, 2019. The EIT Law and its implementing rules impose a unified EIT rate of 25.0% on all domestic-invested enterprises and FIE unless they qualify under certain limited exceptions. In addition, under the EIT Law, an enterprise established outside of the PRC with “de facto management bodies” within the PRC is considered a resident enterprise and will be subject to an EIT of 25% on its global income. The implementing rules define the term “de facto management bodies” as “an establishment that exercises, in substance, overall management and control over the production, business, personnel, accounting, etc., of a Chinese enterprise.” If the PRC tax authorities subsequently determine that we should be classified as a resident enterprise, then our organization’s global income will be subject to PRC income tax of 25%.

In April 2009, the State Administration of Taxation originally issued a circular, commonly known as “Circular 82,” which was most recently amended on December 29, 2017. Circular 82 provides specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is actually located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups (not those controlled by PRC individuals or foreigners,) the criteria set forth in the circular may reflect the State Administration of Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an enterprise incorporated offshore but controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records,

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company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

For detailed discussion of PRC tax issues related to resident enterprise status, see Risk Factors—Risks Related to Doing Business in the PRC- Under the EIT Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in dividends payable to our foreign investor and gains on sale of our common stock by our foreign investors may become subject to PRC taxation.”

Foreign Currency Exchange

Under the PRC foreign currency exchange regulations applicable to us, RMB is convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions. Currently, our PRC operating entities may purchase foreign currencies for settlement of current account transactions, including payments of dividends to us, without the approval of the PRC State Administration of Foreign Exchange, by complying with certain procedural requirements. Conversion of RMB for capital account items, such as direct investment, loan, security investment and repatriation of investment, however, is still subject to the approval of the State Administration of Foreign Exchange. In particular, if our PRC operating entities borrow foreign currency through loans from us or other foreign lenders, these loans must be registered with the State Administration of Foreign Exchange, and if we finance the subsidiaries by means of additional capital contributions, these capital contributions must be registered or filed with by certain government authorities. These limitations could affect our PRC operating entities’ ability to obtain foreign exchange through debt or equity financing.

Dividend Distributions

PRC regulations restrict the ability of our PRC entities to make dividends and other payments to their offshore parent company. PRC legal restrictions permit payments of dividends by our PRC entities only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Each of our PRC subsidiaries is also required under PRC laws and regulations to allocate at least 10% of our annual after-tax profits determined in accordance with generally accepted accounting principles in the PRC to a statutory general reserve fund until the amounts in such fund reaches 50% of its registered capital. These reserves are not distributable as cash dividends. Our PRC subsidiaries have the discretion to allocate a portion of their after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

In addition, under the EIT Law, the Notice 112 which was originally issued on January 29, 2008 and most recently amended on February 29, 2008, any dividends from our PRC operating subsidiaries paid to us through our entities are (since January 1, 2008) subject to a withholding tax at a rate of 10%. Furthermore, the ultimate tax rate will be determined by treaty between the PRC and the tax residence nation of the holder of the PRC subsidiary. Dividends historically declared and paid before January 1, 2008 on distributable profits were grandfathered in under the EIT Law and were not subject to withholding tax.

We intend to reinvest profits, if any, and do not intend on making cash distributions of dividends in the near future.

The Company is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding data protection.

We are subject to federal, state and international laws relating to the collection, use, retention, security and transfer of various types of personal information. In many cases, these laws apply not only to third-party transactions, but also restrict transfers of personal information among the Company and its international subsidiaries and vice versa. Many jurisdictions have passed laws regarding data privacy and personal data, and additional jurisdictions are considering imposing additional restrictions or have laws that are pending. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing requirements causes the Company to incur substantial costs and has required and may in the future require the Company to change its business practices. Noncompliance could result in significant penalties or legal liability.

The Company makes statements about its use and disclosure of personal and business information through its privacy policy, information provided on its website, press statements and other privacy notices. Any failure by the Company to comply with these public statements or with other federal, state or international privacy or data protection laws and regulations could result in inquiries or proceedings against the Company by governmental entities or others. In addition to reputational impacts, penalties could include ongoing audit requirements and significant legal liability. In addition to the risks generally relating to the collection, use, retention, security and transfer of personal information, the Company is also subject to specific obligations relating to information considered sensitive under

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applicable laws, such as vehicle telematics data and financial data.  Vehicle telematics are subject to specific regulation by the PRC, and if the Company fails to adequately comply with these rules and requirements, the Company can be subject to litigation or government investigations in the PRC or elsewhere, and can be liable for associated investigatory expenses, and can also incur significant fees or fines.

Human Capital Management

Human Capital Resources

Our experienced employees and management team are our most valuable resources. Attracting, training, and retaining key personnel has been and will remain critical to our success. We are committed to attracting, motivating, and retaining top professionals. To achieve our human capital goals, we intend to stay focused on providing our personnel with entrepreneurial opportunities to expand our business within their areas of expertise. We will also continue to provide our personnel with personal and professional growth opportunities, including additional training, performance-based incentives such as opportunities for stock ownership, and other competitive benefits.

We work to ensure that the Company provides a safe, inclusive, and positive employee environment for all its employees. As of December 31, 2021, we had a total of 559 employees, of which 476 were located in the United States, 40 located in Malaysia, 37 located in China and 6 located in the United Kingdom. None of our employees are represented by a union or covered by a collective bargaining agreement. We have not experienced any work stoppages, and we consider our relationship with our employees to be good.

Our success is directly related to the satisfaction, growth, and development of our employees. We strive to offer a work environment where employee opinions are valued and allow our employees to use and augment their professional skills. To achieve our human capital goals, we intend to remain focused on providing our personnel with entrepreneurial opportunities to expand our business within their areas of expertise and continue to provide our personnel with personal and professional growth. Ideanomics emphasizes several measures and objectives in managing our human capital assets, including, among others, employee safety and wellness, talent acquisition and retention, employee engagement, development and training, diversity and inclusion, and compensation and pay equity.

COVID-19 and Employee Safety and Wellness

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees as well as the communities in which we operate. These measures include allowing most employees to work from home. We believe in supporting our employees’ health and well-being. Our goal is to help employees make informed decisions about their health by providing the tools and resources necessary to achieve a healthier lifestyle. We offer our employees a wide array of benefits such as life and health (medical, dental, and vision) insurance, paid time off and retirement benefits, as well as emotional well-being services through our health insurance program.

Diversity and Inclusion and Ethical Business Practices

We believe that a company culture focused on diversity and inclusion is a crucial driver of creativity and innovation. We also believe that diverse and inclusive teams make better business decisions, ultimately driving better business outcomes. We are committed to recruiting, retaining, and developing high-performing, innovative and engaged employees with diverse backgrounds and experiences. This commitment includes providing equal access to, and participation in, equal employment opportunities, programs, and services without regard to race, religion, color, national origin, disability, sex, sexual orientation, gender identity, stereotypes, or assumptions based thereon. We welcome and celebrate our teams’ differences, experiences, and beliefs, and we are investing in a more engaged, diverse, and inclusive workforce.

Ideanomics also fosters a strong corporate culture that promotes high standards of ethics and compliance for our business, including policies that set forth principles to guide employee, officer, director, and vendor conduct, such as our Code of Business Conduct and Ethics. We also maintain a whistleblower policy and anonymous hotline for the confidential reporting of any suspected policy violations or unethical business conduct on the part of our businesses, employees, officers, directors, or vendors.

To learn more about policies and practices and our continuing efforts related to human capital matters, please refer to our website at www.ideanomics.com for further information. You may also find our Code of Business Conduct and Ethics, and the charters of the committees of our Board of Directors on our website. The information contained on, or that may be accessed through, our website, is not part of, and not incorporated into, our Annual Report.

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Environmental, Social and Corporate Governance

Ideanomics published its first ESG Report in January 2021. The report serves as a step in fulfilling our commitment to our employees, our shareholders, our subsidiaries, and our partners. Our dynamic process of incorporating social and environmental challenges into our operations as well as creating actionable plans to improve areas of weakness will enable us to grow a stronger, cleaner, and more resilient business. Some ESG highlights this year include:

Added ESG oversight at the Board level by expanding the Nominating and Corporate Governance Committee’s responsibilities and created an ESG Task Force to oversee ESG programs and initiatives.
Fortified our Code of Conduct by stating our position against discrimination and corruption, commitment to safe work ecosystems, and fair labor standards.
Downsized our corporate offices, significantly reducing our carbon footprint and to making appropriate adjustments for our flexible remote workforce.
The 3 “R’s” have never been more important, and we strive to implement Reduce, Reuse, and Recycle wherever possible, including water filters and reusable cups and company supplied water bottles to all employees to encourage minimizing of our footprint.
We maintained our optional remote work policy initiated in March 2020. We’ve also expanded our human resource function to expand programs and benefits to ensure our team’s continued well-being, diversity, and professional growth.
Began partnership with One Tree Planted, a non-profit organization that works with reforestation partners across 43 countries to get trees in the ground. These projects restore forests after fires and floods, create jobs, build communities, and protect habitat for wildlife. As part of our commitment to One Tree Planted, Ideanomics donated more than 2,000 trees in 2021.

As Ideanomics grows and we implement our ESG platform across our subsidiaries, we will apply best practices to ensure that our partners and suppliers meet both environmental and human rights standards.

To learn more about policies and practices and our continuing efforts related to ESG, refer to our website at www.ideanomics.com for further information. You may also find our 2021 ESG Report on our website. The information contained on, or that may be accessed through, our website, is not part of, and not incorporated into, our Annual Report on Form 10-K for the year ended December 31, 2021.

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MANAGEMENT

Executive Officers and Directors

Our directors and executive officers, and their respective ages, are as follows as of September 16, 2022:

Name

    

Age

    

Position

Shane McMahon

52

Executive Chairman

Alfred P. Poor

52

Chief Executive Officer and Director

Stephen Johnston

52

Chief Financial Officer

James S. Cassano

76

Director

Jerry Fan

56

Director

Harry Edelson

89

Director

Mr. Shane McMahon. Mr. McMahon was appointed Executive Chairman as of July 23, 2021, previously he was Vice Chairman from January 12, 2016 to the date of his appointment as Executive Chairman and was previously our Chairman from July 2010 to January 2016. Prior to joining us, from 2000 to December 31, 2009, Mr. McMahon served in various executive level positions with World Wrestling Entertainment, Inc. (NYSE: WWE). Mr. McMahon also sits on the Boards of Directors of International Sports Management (USA) Inc., a Delaware corporation, and Global Power of Literacy, a New York not-for-profit corporation.

Mr. Alfred P. Poor. Our Chief Executive Officer is a former Chief Operating Officer at Global Data Sentinel, a cybersecurity company that specializes in identity management, file access control, protected sharing, reporting and tracking, AI and thread response, and backup and recovery. He is the former President and Chief Operating Officer of Agendize Services Inc., a company with an integrated suite of applications that help businesses generate higher quality leads, improve business efficiency and customer engagement. Mr. Poor is a client-focused and profitability-driven management executive with a track record of success at both rapidly-growing technology companies and large, multi-national, organizations.

Mr. Stephen Johnston. Mr. Johnston joined the Company bringing almost 30 years of diverse, global experience as a Chief Financial Officer, Corporate Controller and Chief Accounting Officer as well as Big 4 Partner. Prior to joining the Company, Mr. Johnston served as the Chief Financial Officer of Dura Automotive Systems (“Dura”), a global automotive supplier for highly integrated mechatronic systems, and lightweight structural solutions, with oversight of the financial performance of the company’s 22 plants in 11 countries. Prior to the successful sale of Tower Automotive in 2019, Mr. Johnston was the Tower Automotive North American Chief Financial Officer, a manufacturer of engineered metal structures and complex welded assemblies for body and chassis. As a member of the North American leadership team, Mr. Johnston was responsible for the financial performance of program launches for key customers, including Ford, FCA and BMW. Mr. Johnston is a certified public accountant (CPA) and a member of the Michigan Association of CPAs and the American Institute of CPAs.

Mr. James S. Cassano. Mr. Cassano was appointed Vice Chairman of the Company effective as of July 23, 2021 and has been a director since January 11, 2008. Mr. Cassano is currently a Partner and Chief Financial Officer of CoActive Health Solutions, LLC, a worldwide contract research organization, supporting the pharmaceutical and biotechnology industries. Mr. Cassano has served as executive vice president, chief financial officer, secretary and director of Jaguar Acquisition Corporation a Delaware corporation (OTCBB: JGAC), a blank check company, since its formation in June 2005. Mr. Cassano has served as a managing director of Katalyst LLC, a company which provides certain administrative services to Jaguar Acquisition Corporation, since January 2005. In June 1998, Mr. Cassano founded New Forum Publishers, an electronic publisher of educational material for secondary schools, and served as its chairman of the Board and chief executive officer until it was sold to Apex Learning, Inc., a company controlled by Warburg Pincus, in August 2003. He remained with Apex until November 2003 in transition as vice president business development and served as a consultant to the company through February 2004. In June 1995, Mr. Cassano co-founded Advantix, Inc., a high volume electronic ticketing software and transaction services company which handled event related client and customer payments, that was renamed Tickets.com and went public through an IPO in 1999. From March 1987 to June 1995, Mr. Cassano served as senior vice president and chief financial officer of the Hill Group, Inc., a privately-held engineering and consulting organization, and from February 1986 to March 1987, Mr. Cassano served as vice president of investments and acquisitions for Safeguard Scientifics, Inc., a public venture development company. From May 1973 to February 1986, Mr. Cassano served as partner and director of strategic management services (Europe) for the strategic management group of Hay Associates. Mr. Cassano received a B.S. in Aeronautics and Astronautics from Purdue University and an M.B.A. from Wharton Graduate School at the University of Pennsylvania.

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Mr. Jerry Fan. Mr. Fan was appointed as director of the Company on January 12, 2016. Mr. Fan is the Corporate Vice President responsible for managing Analog Devices, Inc. (NASDAQ: ADI) Asia Pacific business and was previously Managing Director and Country Manager for the Greater China region at Analog Devices, Inc. (NASDAQ: ADI), a global semiconductor company since November, 2012. Prior to ADI, Mr. Fan worked for Cisco Systems, Inc. (NASDAQ: CSCO) for 15 years between 1997 and 2012 in a number of senior management roles, including Sales Managing Director for Cisco China, Sale Director for Cisco Australia and Senior Manager for Operations and Strategy for the Cisco Service Provider business based in Hong Kong. Mr. Fan started his career in 1998 working at Fudan University as a faculty member in both teaching and research roles. He graduated from Fudan University with a Computer Science Bachelor degree and an Executive MBA degree from CEIBS (China European International Business School) in 1999.

Mr. Harry Edelson. Mr. Edelson was appointed as director of the Company effective as of September 15, 2019, CFA, CCP, CDP, is the Founder of Edelson Technology Partners, and President since 1980 of Edelson Technology, Inc., a company involved in consulting, fundraising, Mergers and Acquisitions, and investments. From 1984 until 2005 Mr. Edelson was an advisor and consultant for 10 multinational corporations (AT&T, Viacom, 3M, Ford Motor, Cincinnati Bell, Colgate-Palmolive, Reed Elsevier, Imation, Asea Brown Boveri and UPS). During this time he managed four technology-oriented strategic venture capital funds for the aforementioned 10 companies using corporate rather than pension money. He has served on over 150 boards of directors, 12 as chairman. At some time in the past five years, Harry Edelson served as a director of four private companies, Airwire, PogoTec, eChinaCash, Pathway Genomics, and one public company, China Gerui. Executive positions in industry include Senior Systems Computer Engineer for Unisys, Transmission Engineer for AT&T (1962-1967), CTO for Cities Service (1967-1970) and Director of Marketing for a terminal manufacturer serving the nascent internet industry (1971-1973). His experience in technology led him to a 12 year career as a securities analyst on Wall Street covering telecommunications, computers, and office equipment for three leading investment banking firms in the 1970s and 1980s. Harry obtained a BS in Physics from Brooklyn College in 1962, MBA from New York University Graduate School of Business in 1965, and completed a Graduate Program in Telecommunications Engineering at the Cornell Graduate School of Electrical Engineering in 1966. In 2007, Harry served as Chairman and Chief Executive Officer for China Opportunity Acquisition Corp., a SPAC that raised $40 million and merged with China Gerui in 2009. Mr. Edelson was a Council member of The Julliard School of Music, Dance and Drama, and is the founder and still Chairman of the China Investment Group; and the founder and current member of the Chinese Cultural Foundation. Harry’s qualifications to serve as a director include decades of experience on Wall Street and various venture capital ventures. He has SPAC experience, vast board experience, and participated in numerous Mergers and Acquisitions transactions.

There are no agreements or understandings between any of our executive officers or directors and any other persons to resign at the request of another such other person and to act on behalf of or at the direction of any such other person.

Directors are elected for one-year term and until their successors are duly elected and qualified.

Corporate Governance

Our current corporate governance practices and policies are designed to promote shareholder value and we are committed to the highest standards of corporate ethics and diligent compliance with financial accounting and reporting rules. Our Board provides independent leadership in the exercise of its responsibilities. Our management oversees a system of internal controls and compliance with corporate policies and applicable laws and regulations, and our employees operate in a climate of responsibility, candor and integrity.

Corporate Governance Guidelines

We and our Board are committed to high standards of corporate governance as an important component in building and maintaining shareholder value. To this end, we regularly review our corporate governance policies and practices to ensure that they are consistent with the high standards of other companies. We also closely monitor guidance issued or proposed by the SEC and the provisions of the Sarbanes-Oxley Act, as well as the emerging best practices of other companies. The current corporate governance guidelines are available on the Company’s website www.ideanomics.com. Printed copies of our corporate governance guidelines may be obtained, without charge, by contacting our Corporate Secretary at 1441 Broadway, Suite 5116, New York, NY 10018.

The Board and Committees of the Board

The Company is governed by the Board that currently consists of five members: Shane McMahon, Alfred Poor, James S. Cassano, Jerry Fan, and Harry Edelson. The Board has established three Committees: the Audit Committee, the Compensation

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Committee and the Nominating and Governance Committee. Each of the Audit Committee, Compensation Committee and Nominating and Governance Committee are comprised entirely of independent directors. From time to time, the Board may establish other committees. The Board has adopted a written charter for each of the Committees which are available on the Company’s website www.ideanomics.com. Printed copies of these charters may be obtained, without charge, by contacting our Corporate Secretary at 1441 Broadway, Suite 5116, New York, NY 10018.

Governance Structure

Our Board of Directors is responsible for corporate governance in compliance with reporting laws and for representing the interests of our shareholders. As of the date of our Annual Report, the Board was composed of five members, four of whom are considered independent, non-executive directors. Details on Board membership, oversight and activity are reported below.

We encourage our shareholders to learn more about our Company’s governance practices at our website, www.ideanomics.com.

The Board’s Role in Risk Oversight

The Board oversees that the assets of the Company are properly safeguarded, that the appropriate financial and other controls are maintained, and that the Company’s business is conducted wisely and in compliance with applicable laws and regulations and proper governance. Included in these responsibilities is the Board of Directors’ oversight of the various risks facing the Company. In this regard, the Board seeks to understand and oversee critical business risks. The Board does not view risk in isolation. Risks are considered in virtually every business decision and as part of the Company’s business strategy. The Board recognizes that it is neither possible nor prudent to eliminate all risk. Indeed, purposeful and appropriate risk-taking is essential for the Company to be competitive on a global basis and to achieve its objectives.

While the Board oversees risk management, Company management is charged with managing risk. The Company has robust internal processes and a strong internal control environment to identify and manage risks and to communicate with the Board. The Board and the Audit Committee monitor and evaluate the effectiveness of the internal controls and the risk management program at least annually. Management communicates routinely with the Board, Board committees and individual directors on the significant risks identified and how they are being managed. Directors are free to, and indeed often do, communicate directly with senior management.

The Board implements its risk oversight function both as a whole and through Committees. Much of the work is delegated to various Committees, which meet regularly and report back to the full Board. All Committees play significant roles in carrying out the risk oversight function. In particular:

The Audit Committee oversees risks related to the Company’s financial statements, the financial reporting process, accounting and legal matters. The Audit Committee members meet separately with representatives of the independent auditing firm.
The Compensation Committee evaluates the risks and rewards associated with the Company’s compensation philosophy and programs. The Compensation Committee reviews and approves compensation programs with features that mitigate risk without diminishing the incentive nature of the compensation. Management discusses with the Compensation Committee the procedures that have been put in place to identify and mitigate potential risks in compensation.

Independent Directors

In considering and making decisions as to the independence of each of the directors of the Company, the Board considered transactions and relationships between the Company (and its subsidiaries) and each director (and each member of such director’s immediate family and any entity with which the director or family member has an affiliation such that the director or family member may have a material direct or indirect interest in a transaction or relationship with such entity). The Board has determined that James S. Cassano, Shane McMahon, Jerry Fan, and Harry Edelson are independent as defined in applicable SEC and Nasdaq Listing Rules and regulations, and that each constitutes an “Independent Director” as defined in NASDAQ Listing Rule 5605.

Audit Committee

Our Audit Committee consists of James S. Cassano, Harry Edelson and Jerry Fan with Mr. Cassano acting as Chair. The Audit Committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.

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Mr. Cassano serves as our Audit Committee financial experts as that term is defined by the applicable SEC rules. The Audit Committee is responsible for, among other things:

selecting our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors;
reviewing with our independent auditors any audit problems or difficulties and management’s response;
reviewing and approving all proposed related-party transactions, as defined in Item 404 of Regulation S-K under the Securities Act of 1933, as amended;
discussing the annual audited financial statements with management and our independent auditors;
reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of significant internal control deficiencies;
annually reviewing and reassessing the adequacy of our Audit Committee charter;
overseeing the work of our independent auditor, including resolution of disagreements between management and the independent auditor regarding financial reporting;
reporting regularly to and reviewing with the full Board any issues that arise with respect to the quality or integrity of the Company’s financial statements, the performance and independence of the independent auditors and any other matters that the Audit Committee deems appropriate or is requested to review for the benefit of the Board.

The Audit Committee may engage independent counsel and such other advisors it deems necessary to carry out its responsibilities and powers, and, if such counsel or other advisors are engaged, shall determine the compensation or fees payable to such counsel or other advisors. The Audit Committee may form and delegate authority to subcommittees consisting of one or more of its members as the Audit Committee deems appropriate to carry out its responsibilities and exercise its powers.

Compensation Committee

Our Compensation Committee consists of James S. Cassano, Harry Edelson and Jerry Fan with Mr. Cassano acting as Chair. Our Compensation Committee assists the Board in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our directors and executive officers. The Compensation Committee is responsible for, among other things:

reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating the performance of our chief executive officer in light of those goals and objectives, and setting the compensation level of our chief executive officer based on this evaluation;
reviewing and making recommendations to the Board with regard to the compensation of other executive officers;
reviewing and making recommendations to the Board with respect to the compensation of our directors; and
reviewing and making recommendations to the Board regarding all incentive-based compensation plans and equity-based plans.

The Compensation Committee has sole authority to retain and terminate any consulting firm or other outside advisor to assist the committee in the evaluation of director, chief executive officer or senior executive compensation and other compensation-related matters, including sole authority to approve the firms’ fees and other retention terms. The Compensation Committee may also form and delegate authority to subcommittees consisting of one or more members of the Compensation Committee.

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Governance and Nominating Committee

Our Governance and Nominating Committee consists of Harry Edelson, James S. Cassano and Jerry Fan with Harry Edelson acting as Chair. The Governance and Nominating Committee assists the Board of Directors in identifying individuals qualified to become our directors and in determining the composition of the Board and its committees. The Governance and Nominating Committee is responsible for, among other things:

identifying and recommending to the Board nominees for election or re-election to the Board, or for appointment to fill any vacancy;
selecting directors for appointment to committees of the Board; and
overseeing annual evaluation of the Board and its committees for the prior fiscal year.

The Governance and Nominating Committee has sole authority to retain and terminate any search firm that is to be used by the Company to assist in identifying director candidates, including sole authority to approve the firms’ fees and other retention terms. The Governance and Nominating Committee may also form and delegate authority to subcommittees consisting of one or more members of the Governance and Nominating Committee.

Director Qualifications

Directors are responsible for overseeing the Company’s business consistent with their fiduciary duty to shareholders. This significant responsibility requires highly-skilled individuals with various qualities, attributes and professional experience. The Board believes that there are general requirements for service on the Company’s Board of Directors that are applicable to all directors and that there are other skills and experience that should be represented on the Board as a whole but not necessarily by each director. The Board and the Governance and Nominating Committee of the Board consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition and the Company’s current and future needs.

Qualifications for All Directors

In its assessment of each potential director candidate, including those recommended by shareholders, the Governance and Nominating Committee considers the nominee’s judgment, integrity, experience, independence, understanding of the Company’s business or other related industries and such other factors the Governance and Nominating Committee determines are pertinent in light of the current needs of the Board. The Governance and Nominating Committee also takes into account the ability of a director to devote the time and effort necessary to fulfill his or her responsibilities to the Company.

The Board and the Governance and Nominating Committee require that each director be a recognized person of high integrity with a proven record of success in his or her field. Each director must demonstrate innovative thinking, familiarity with and respect for corporate governance requirements and practices, an appreciation of multiple cultures and a commitment to sustainability and to dealing responsibly with social issues. In addition to the qualifications required of all directors, the Board assesses intangible qualities including the individual’s ability to ask difficult questions and, simultaneously, to work collegially. The Board does not have a specific diversity policy, but considers diversity of race, ethnicity, gender, age, cultural background and professional experiences in evaluating candidates for Board membership. Diversity is important because a variety of points of view contribute to a more effective decision-making process.

Qualifications, Attributes, Skills and Experience to be represented on the Board as a Whole

The Board has identified particular qualifications, attributes, skills and experience that are important to be represented on the Board as a whole, in light of the Company’s current needs and business priorities. The Company’s services are performed in areas of future growth located outside of the United States. Accordingly, the Board believes that international experience or specific knowledge of key geographic growth areas and diversity of professional experiences should be represented on the Board. In addition, the Company’s business is multifaceted and involves complex financial transactions. Therefore, the Board believes that the Board should include some directors with a high level of financial literacy and some directors who possess relevant business experience as a Chief Executive Officer or President. Our business involves complex technologies in a highly specialized industry. Therefore, the Board believes that extensive knowledge of the Company’s business and industry should be represented on the Board.

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Summary of Qualifications of Current Directors

Set forth below is a narrative disclosure that summarizes some of the specific qualifications, attributes, skills and experiences of our directors. For more detailed information, please refer to the biographical information for each director set forth above.

Mr. Shane McMahon. Mr. McMahon has significant marketing and promotion experience and has been instrumental in exploiting pay-per-view programming on a global basis. In light of our business and structure, Mr. McMahon’s extensive executive and industry experience led us to the conclusion that he should serve as a director of our Company.

Mr. Alfred P. Poor. Mr. Poor is a client-focused and profitability-driven management executive with a track record of success at both rapidly-growing technology companies and large, multi-national, organizations. In light of our business and structure, Mr. Poor’s extensive executive experience and his educational background led us to the conclusion that he should serve as a director of our Company.

Mr. James S. Cassano. Mr. Cassano has substantial experience as a senior executive in management consulting, corporate development, mergers and acquisitions and start up enterprises across a numerous different industries. In light of our business and structure, Mr. Cassano’s extensive executive experience and his educational background led us to the conclusion that he should serve as a director of our Company.

Mr. Harry Edelson. Mr. Edelson is the Founder of Edelson Technology Partners, and President since 1980 of Edelson Technology, Inc., a company involved in consulting, fundraising, Mergers and Acquisitions, and investments. In light of our business and structure, Mr. Edelson’s extensive executive experience and his educational background led us to the conclusion that he should serve as a director of our Company.

Mr. Jerry Fan. Mr. Fan has more than 20 years of experience in top management positions in China and the Asia Pacific region, working for several multinational technology companies. He also has served in senior management positions of several U.S. public companies. In light of our business and structure, Mr. Fan’s extensive industry and business experience and his educational background led us to the conclusion that he should serve as a director of our Company.

Family Relationships

There are no family relationships among our directors and officers.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants),

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relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Except as set forth elsewhere in this registration statement, none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Promoters and Certain Control Persons

We did not have any promoters at any time during the past five fiscal years.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires that our executive officers and directors and other persons who beneficially own more than 10% of a registered class of our equity securities file with the SEC reports of ownership and reports of changes in ownership of shares and other equity securities. Such executive officers and directors and other persons who beneficially own more than 10% of a registered class of our equity securities are required by the SEC to furnish us with copies of all Section 16(a) filed by such reporting persons.

Based solely on our review of such forms furnished to us or written representations provided to us by the reporting persons, we believe that all filing requirements applicable to our executive officers, directors and other persons who beneficially own more than 10% of a registered class of our equity securities were complied with in the year ended December 31, 2021, except that one Form 4, covering one delinquent transaction, was filed late by Shane McMahon.

Code of Ethics

Our board of directors adopted a code of business conduct and ethics that applies to our directors, officers, employees, subsidiaries, agents, contractors and consultants, which became effective in January 2016 and was updated in December 2021. We have posted a copy of our code of business conduct and ethics on our website at https://investors.ideanomics.com/corporate-governance.

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EXECUTIVE COMPENSATION

Summary Compensation Table (2021 and 2020)

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons (our “named executive officers”) for services rendered in all capacities during the noted periods.

    

    

    

    

    

    

    

Nonqualified

    

    

Nonequity

deferred

incentive plan

compensation

All other

Salary

Bonus

Stock awards

Option awards

compensation

earnings

compensation

Total

Name and Principal Positon

Year

($)

($)

($) (3)

(#)

($)

($)

($)

($)

Shane McMahon (Executive Chairman) (1)

 

2021

 

133,334

 

 

823,333

 

 

 

 

 

956,667

Alfred P. Poor (Chief Executive Officer )

 

2020

 

383,333

 

500,000

 

 

 

 

 

 

883,333

2021

 

645,833

 

500,000

 

5,535,000

 

2,000,000

 

 

 

 

6,680,833

Conor McCarthy (Chief Financial Officer)

 

2020

 

291,666

 

350,000

 

 

1,500,000

 

 

 

 

641,666

2021

 

422,915

 

350,000

 

1,537,500

 

750,000

 

 

 

 

2,310,415

Anthony Sklar (SVP, Investor Relations)

 

2021

 

364,755

 

350,000

 

3,075,000

 

500,000

 

 

 

 

3,789,755

Carla Oiong Zhou (Chief Revenue Officer)

 

2020

 

250,000

 

 

 

 

 

 

 

250,000

Bruno Wu (2)

 

2020

 

250,000

 

 

 

 

 

 

 

250,000

(1)Mr. McMahon was appointed Executive Chairman of the Company on July 23, 2021, and prior to this date Mr. McMahon was Vice-Chairman of the Company. Included in Mr. McMahon’s salary is $29,167 for directors’ fees paid to him in his capacity as Vice-Chairman of the Company. The stock awards of $823,833 includes a RSU grant with immediate vesting with a value of $615,000 and stock compensation paid to him for the period August 1, 2021 to December 31, 2021 with a value of $208,333.
(2)On December 31, 2020 Bruno Wu resigned from his position as Executive Chairman.
(3)Reflects the aggregate grant date fair value of option or restricted stock units determined in accordance with FASB ASC Topic 718.

Employment Agreements

Alfred P. Poor

Effective on July 31, 2020, we entered into employment agreement with Mr. Poor for a term of 2 years pursuant to which Mr. Poor will receive an annual base salary of $500,000, a bonus of $300,000 earned on July 21, 2020, the date the employment contract became effective, and will be entitled to participate in all employment benefit plan and policies of the Company generally available. Mr. Poor will be entitled to stock options of up to 2,000,000 shares in 2021. Effective July 23, 2021, Mr. Poor’s salary was increased to $800,000.

Conor McCarthy

Effective on July 31, 2020, we entered into an employment agreement with Mr. McCarthy for a term of 2 years pursuant to which Mr. McCarthy will receive an annual salary of $350,000 and will be entitled to participate in all employment benefit plan and policies of the Company. Mr. McCarthy will be entitled to stock options of up to 750,000 shares in 2021. Effective July 23, 2021, Mr. McCarthy’s salary was increased to $525,000.

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We have not provided retirement benefits (other than a state pension scheme in which all of our employees in China participate) or change of control benefits to our named executive officers.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth the equity awards of our named executive officers outstanding at December 31, 2021.

   

Option awards

Equity

incentive

plan awards: Number

of

Number of

Number of

securities

securities

securities

underlying

underlying

underlying

unexercised

Option

unexercised

unexercised

unearned

exercise

Option

options

options

options

price

expiration

Name

    

(#) exercisable

    

(#) unexercisable

    

(#)

    

($)

    

date

Shane McMahon

75,800

 

 

 

5.57

November 17,2027

500,000

 

 

 

0.53

February 22,2029

266,664

 

266,669

 

 

1.84

December 10,2030

Alfred P. Poor

2,000,000

 

 

 

1.98

February 20,2029

541,671

 

208,329

 

 

0.53

May 8,2030

416,669

 

1,583,331

 

 

2.37

July 31,2031

Conor McCarthy

1,500,000

 

 

 

0.53

September 20,2029

156,250

 

593,750

 

 

2.37

July 31,2031

Anthony Sklar

250,000

 

 

 

February 22,2029

650,000

 

 

 

May 8,2030

104,165

 

395,835

 

 

July 31,2031

Compensation of Directors

The following table sets forth certain information concerning the compensation paid to our directors for services rendered to us during the fiscal year ended December 31, 2021.

    

    

    

    

    

Nonqualified

    

    

Fees earned

Non-equity

deferred

or

Stock

Option

incentive plan

compensation

All other

paid in cash

awards(1)

awards(2)

compensation

earnings

compensation

Total

Name

($)

($)

(#)

($)

($)

($)

($)

James S. Cassano

 

131,250

 

1,107,000

 

 

 

 

 

1,238,250

Jerry Fan

 

77,084

 

246,000

 

 

 

 

 

323,084

Harry Edelson

 

110,416

 

246,000

 

 

 

 

 

356,416

(1)Reflects the aggregate grant date fair value of restricted stock determined in accordance with FASB ASC Topic 718.
(2)Reflects the number of stock options granted in 2021.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Review and Approval of Related Party Transactions

We have adopted a written policy with respect to the review, approval and ratification of related person transactions. The Audit Committee has primary responsibility for reviewing all related party transactions involving the Company’s directors, officers and directors’ and officers’ immediate family members. The Board may determine to permit or prohibit the Related Party Transaction. For any ongoing relationships, the Board shall annually review and assess the relationships with the Related Party and whether the Related Party Transaction should continue.

Under the policy, a “related party transaction” means any transaction directly or indirectly involving any Related Party that would need to be disclosed under Item 404 of Regulation S-K. Under Item 404, the Company is required to disclose any transaction occurring since the beginning of the Company’s last fiscal year, or any currently proposed transaction, in which the Company was or is a participant and the amount involved exceeds $120,000, and in which any related party had or will have a direct or indirect material interest. “Related Party Transaction” also includes any material amendment or modification to an existing Related Party Transaction. For the purposes of this policy, a “Related Party” means (A) a director, including any director nominee, (B) an executive officer; (C) a person known by the Company to be the beneficial owner of more than 5% of the Company’s common stock; or (D) a person known by the Company to be an immediate family member of any of the foregoing. “Immediate family member” means a child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of such director, executive officer, nominee for director, or beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee for director, or beneficial owner.

The following is a summary of transactions since the beginning of the 2018 fiscal year, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

Related Party Transactions with Dr. Wu, former Executive Chairman

In June 2020, the Company entered a service agreement with SSSIG for the period from July 1, 2020 through June 30, 2021 for $1.4 million in exchange for consulting services from SSSIG, the services include but are not limited to human resources, finance and legal advice. The Company recorded the service charges of $0.7 million in “professional fess” for the year ended December 31 2020, and $0.2 million in “Amount due to related parties” as of December 31 2020. The Company is currently in process of negotiating the agreement with SSSIG.

Except as set forth in our discussion above, none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

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PRINCIPAL SECURITYHOLDERS

The following table sets forth information known by us regarding the beneficial ownership of the Common Stock as of August 29, 2022, by:

each person who is known by us to be the beneficial owner of more than 5% of the outstanding shares of Common Stock;
each of our current Named Executive Officers and directors; and
all of our current executive officers and directors as a group.

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.

The beneficial ownership percentages set forth in the table below are based on 491,849,892 shares of Common Stock issued and outstanding as of August 29, 2022. Unless otherwise noted, the address for each beneficial owner listed below is c/o Ideanomics, Inc., at 1441 Broadway, Suite 5116, New York, NY 10018.

    

Common Stock

    

 

Beneficially Owned

 

Number of

 

Shares of

Percent of

 

Common Stock

Common Stock

 

Name and Address of Beneficial Owner

Beneficially Owned

Outstanding

 

Directors and Named Executive Officers

 

  

 

  

Shane McMahon (1)

 

6,532,764

 

1.3

%

Alfred P. Poor (2)

 

5,323,041

 

1.1

%

James S. Cassano (3)

 

1,355,758

 

*

Harry Edelson (4)

 

600,000

 

*

Jerry Fan (5)

 

775,800

 

*

Conor McCarthy (6)

 

2,227,562

 

*

All Current Directors and Executive Officers, as a group (6 individuals)

 

16,814,925

 

3.4

%

Five Percent Holders

 

  

 

  

Bruno Wu (7)

 

21,932,749

 

6.1

%

*

Represents beneficial ownership of less than 1%.

(1)Includes (i) 5,468,080 shares of Common Stock, (ii) 488,884 shares of Common Stock underlying options exercisable within 60 days at $1.84 per share, (iii) 500,000 shares of Common Stock underlying options exercisable within 60 days at $1.98 per share; (v) 75,800 shares of Common Stock underlying options exercisable within 60 days at $5.57 per share.
(2)Includes (i) 1,406,375 shares of Common Stock, (ii) 750,000 shares underlying options exercisable within 60 days at $0.53 per share, (iii) 2,000,000 shares underlying options exercisable within 60 days at $1.98 per share, and 1,166,666 shares underlying options exercisable within 60 days at $2.37 per share.
(3)Includes (i) 509,308 shares of Common Stock, (ii) 11,676 shares underlying options exercisable within 60 days at $1.84 per share, (iii) 8,974 shares underlying options exercisable within 60 days at $2.91 per share, (iv)75,800 shares underlying options exercisable within 60 days at $5.57, (v) 500,000 shares underlying options exercisable within 60 days at $1.98 per shares, and(vi) 250,000 shares underlying options exercisable with 60 days at $0.53 per share.

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(4)Includes (i) 100,000 shares of common stock and (ii) 500,000 shares underlying options exercisable within 60 days at $0.53.
(5)Includes (i) 200,000 shares of Common Stock, (ii) 250,000 shares underlying options exercisable within 60 days at $1.98(iii) 75,800 shares underlying options exercisable withing 60 days at $5.57 per share, and (iv) 250,000 shares underlying options exercisable withing 60 days at $0.53 per share.
(6)Includes (i) 290,062 shares of Common Stock, (ii) 1,500,000 shares underlying options exercisable within 60 days at $0.53, and (iii) 437,500 shares underlying options exercisable within 60 days at $2.37 per share.
(7)Includes (i) 20,999,416 shares of Common Stock and (ii) 933,333 shares of Common Stock that is issuable upon conversion of a share of 7,000,000 shares of Series A Preferred Stock issued and outstanding as of August 29, 2022.

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SELLING STOCKHOLDER

This prospectus relates to the possible resale from time to time by YA of up to 151,500,000 shares of Common Stock that have been or may be issued by us to YA under the Purchase Agreement. For additional information regarding the issuance of Common Stock covered by this prospectus, see the section titled “The YA Transaction” above. Except for the transactions contemplated by the Purchase Agreement and other transactions disclosed in our public filings with the SEC, YA does not, and has not had, any material relationship with us.

The table below presents information regarding the Selling Stockholder and the shares of Common Stock that it may offer from time to time under this prospectus. This table is prepared based on information supplied to us by the Selling Stockholder as of September 20, 2022. The number of shares in the column “Maximum Number of Shares of Common Stock to be Offered Pursuant to this Prospectus” represents all of the shares of Common Stock that the Selling Stockholder may offer under this prospectus. The Selling Stockholder may sell some, all, or none of its shares in this offering. We do not know how long the Selling Stockholder will hold the shares before selling them, and we currently have no agreements, arrangements, or understandings with the Selling Stockholder regarding the sale of any of the shares.

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act, and includes shares of Common Stock with respect to which the Selling Stockholder has voting and investment power. The percentage of shares of Common Stock beneficially owned by the Selling Stockholder prior to the offering shown in the table below is based on an aggregate of 497,868,547 shares of our Common Stock outstanding on September 20, 2022. The number of shares that may actually be sold by us under the Purchase Agreement may be fewer than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the Selling Stockholder pursuant to this prospectus.

    

    

Maximum Number of

    

Shares of

  

Number of Shares of

Common Stock to be

Number of Shares of

Common Stock

Offered Pursuant to

Common Stock Owned

Name of Selling Stockholder

Owned Prior to Offering

this Prospectus

After Offering

    

Number(1)

    

Percent

    

    

Number(2)

    

Percent

YA II PN, LTD. (3)

 

26,069,667

 

4.99%

 

151,500,000

 

 

(1)YA directly holds 1,500,000 shares of Common Stock we issued as Commitment Shares in consideration for entering into the Purchase Agreement with us, plus YA has the right to acquire additional shares of Common Stock upon conversion of the Amended and Restated Convertible Debenture issued on August 29, 2022 in the principal amount of $16,717,808.55. Under the terms of the debenture, YA may not convert the debenture to the extent it or any of its affiliates would beneficially own a number of shares of Common Stock which would exceed 4.99% of the total shares of Common Stock issued and outstanding as of the date of such conversion. In accordance with Rule 13d-3(d) under the Exchange Act, we have excluded from the number of shares beneficially owned prior to the offering all of the shares that YA may be required to purchase under the Purchase Agreement, because the issuance of such shares is solely at our discretion and is subject to conditions contained in the Purchase Agreement, the satisfaction of which are entirely outside of YA’s control, including the registration statement that includes this prospectus becoming and remaining effective.
(2)Assumes the sale of all shares being offered pursuant to this prospectus. Depending on the price per share at which we sell our Common Stock to YA pursuant to the Purchase Agreement. The number of shares ultimately offered for resale by YA is dependent upon the number of shares we sell to YA under the Purchase Agreement.
(3)YA is a fund managed by Yorkville Advisors Global, LP (“Yorkville LP”). Yorkville Advisors Global II, LLC (“Yorkville LLC”) is the General Partner of Yorkville LP. All investment decisions for YA are made by Yorkville LLC’s President and Managing Member, Mr. Mark Angelo. The business address of YA is 1012 Springfield Avenue, Mountainside, NJ 07092.

78

DESCRIPTION OF SECURITIES

The following description is a summary of the terms of our common stock, which is registered under Section 12(b) of the Securities Exchange Act of 1934, as amended.

The following description of our common stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our Articles of Incorporation, as amended (“Articles of Incorporation”), and Bylaws, as amended (“Bylaws”), each of which is incorporated herein by reference as an exhibit to the Annual Report on Form 10-K filed with the Securities and Exchange Commission of which this exhibit is a part, and certain applicable provisions of the Nevada Revised Statutes.

General

Our authorized capital stock consists of 1,500,000,000 shares of common stock, par value $0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per share, of which:

(i)7,000,000 shares are designated as Series A Preferred Stock;
(ii)11,000,000 shares are designated as Series B Preferred Stock;
(iii)250,000 shares are designated as Series C Preferred Stock;
(iv)2,500,000 shares are designated as Series D 4% Convertible Preferred Stock; and
(v)16,500,000 shares are designated as Series E Convertible Preferred Stock.

Common Stock

Dividend Rights. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our common stock may, pursuant to our Bylaws, receive dividends out of funds legally available if our board, in its discretion, determines to issue dividends and then only at the times and in the amounts that our board may determine. We have not paid any dividends on our common stock and do not contemplate doing so in the foreseeable future.

Voting Rights. In accordance with Nevada Revised Statutes Section 78.350, holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. We have not provided for cumulative voting for the election of directors in our Articles of Incorporation.

No Preemptive or Similar Rights. In accordance with Nevada Revised Statutes Section 78.267, our common stock is not entitled to preemptive rights and is not subject to conversion, redemption, or sinking fund provisions.

Right to Receive Liquidation Distribution. In accordance with Nevada Revised Statutes Sections 78.565 to 78.620, if we become subject to a liquidation, dissolution, or winding-up, the assets legally available for distribution to our stockholders would be distributable among the holders of our common stock and our participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights and payment of liquidation preferences on any outstanding shares of preferred stock.

Fully Paid and Non-Assessable. In accordance with NRS Sections 78.195 and 78.211 and the assessment of our board, all of the outstanding shares of our common stock are fully paid and nonassessable.

Nasdaq Capital Market. Our shares of common stock trade on The Nasdaq Capital Market under the symbol “IDEX.”

Transfer Agent and Registrar. The transfer agent and registrar for our common stock is TransferOnline.

79

Blank Check Preferred Stock

We are authorized to issue 50,000,000 shares of preferred stock, par value $0.001 per share. Pursuant to our Articles of Incorporation, our board is authorized to authorize and issue preferred stock and to fix the designations, preferences and rights of the preferred stock pursuant to a board resolution. Our board may designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, redemption rights, liquidation preference, sinking fund terms and the number of shares constituting any series or the designation of any series.

Anti-Takeover Effects of Nevada Law and Our Articles of Incorporation and Bylaws

Provisions of the Nevada Revised Statutes and our Articles of Incorporation and Bylaws could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions, summarized below, would be expected to discourage certain types of takeover practices and takeover bids our board may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us will outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.

Blank Check Preferred. Our Articles of Incorporation permit our board to issue preferred stock with voting, conversion and exchange rights that could negatively affect the voting power or other rights of our common stockholders. The issuance of our preferred stock could delay or prevent a change of control of our company.

Board Vacancies to be filled by Remaining Directors. Our Bylaws provide that casual vacancies on the board may be filled by the remaining directors then in office.

Removal of Directors by Stockholders. Our Bylaws and the Nevada Revised Statutes provide that directors may be removed with or without cause at any time by a vote of two-thirds of the stockholders entitled to vote thereon, at a special meeting of the stockholders called for that purpose.

Stockholder Action. Our Bylaws provide that special meetings of the stockholders may be called by the board or such person or persons authorized by the board.

Amendments to our Articles of Incorporation and Bylaws. Under the Nevada Revised Statutes, our Articles of Incorporation may not be amended by stockholder action alone. Amendments to our Articles of Incorporation require a board resolution approved by the majority of the outstanding capital stock entitled to vote. Our Bylaws may only be amended by a majority vote of the stockholders at any annual meeting or special meeting called for that purpose. Subject to the right of stockholders as described in the immediately preceding sentence, the board has the power to make, adopt, alter, amend and repeal, from time to time, our Bylaws.

Nevada Anti-Takeover Statute. We may be subject to Nevada’s Combination with Interested Stockholders Statute (Nevada Revised Statutes Sections 78.411 to 78.444) which prohibits an “interested stockholder” from entering into a “combination” with the corporation, unless certain conditions are met. An “interested stockholder” is a person who, together with affiliates and associates, beneficially owns (or within the prior two years, did beneficially own) 10% or more of the corporation’s capital stock entitled to vote.

Limitations on Liability and Indemnification of Officers and Directors. The Nevada Revised Statutes limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors. Our Bylaws include provisions that require the company to indemnify our directors or officers against monetary damages for actions taken as a director or officer of our company. We are also expressly authorized to carry directors’ and officers’ insurance to protect our directors, officers, employees, and agents from certain liabilities. Our Articles of Incorporation do not contain any limiting language regarding director immunity from liability.

80

The limitation of liability and indemnification provisions under Nevada Revised Statutes and in our Articles of Incorporation and Bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. However, these provisions do not limit or eliminate our rights, or those of any stockholder, to seek non-monetary relief such as injunction or rescission in the event of a breach of a director’s fiduciary duties. Moreover, the provisions do not alter the liability of directors under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

Authorized but Unissued Shares. Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without stockholder approval, except as may be required under the listing rules of any stock exchange on which our common stock is then listed. We may use additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

81

PLAN OF DISTRIBUTION

On September 1, 2022, we entered into the Purchase Agreement with YA, as subsequently amended and restated on September 15, 2022. The Purchase Agreement provides that, upon the terms and subject to the conditions set forth therein, YA is committed to purchase up to 150,000,000 shares of our Common Stock over an approximately 36-month commitment period. From time to time, and at our sole discretion, we may present YA with Advance Notices to purchase shares of our Common Stock. The shares would be purchased pursuant to the Purchase Agreement at 95% of the lowest daily VWAPs during the Pricing Period as set forth in the Purchase Agreement. We may receive up to $88,500,000 (assuming $0.59 reference price under the Nasdaq Rules and the sale of the Purchase Shares) aggregate gross proceeds under the Purchase Agreement from sales of Common Stock that we elect to make to YA pursuant to the Purchase Agreement, if any, from time to time in our sole discretion, although the actual amount of proceeds that we may receive cannot be determined at this time and will depend on the number of shares we sell under the Purchase Agreement and market prices at the times of such sales.

The shares of Common Stock offered by this prospectus are being offered by the Selling Stockholder, YA. The Selling Stockholder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act. We have agreed in the Purchase Agreement to provide customary indemnification to YA.

The sale of the shares of our Common Stock offered by this prospectus could be effected in one or more of the following methods:

ordinary brokerage transactions;
transactions involving cross or block trades;
through brokers, dealers, or underwriters who may act solely as agents;
“at the market” into an existing market for our Common Stock;
in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents;
in privately negotiated transactions; or
a combination of any such methods of sale.

In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption from the state’s registration or qualification requirement is available and complied with.

YA is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.

82

YA has informed us that it intends to use one or more registered broker-dealers to effectuate all sales, if any, of our Common Stock that it may acquire from us pursuant to the Purchase Agreement. Such sales will be made at prices and at terms then prevailing or at prices related to the then-current market price. Such registered broker-dealer may, in some circumstances (for instance if such registered broker-dealer’s involvement is not limited to receiving commission not in excess of the usual and customary distributors’ or sellers’ commissions), be considered to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. YA has informed us that each such broker-dealer may receive commissions from the Selling Holder for executing such sales for the Selling Holder and, if so, such commissions will not exceed customary brokerage commissions.

Brokers, dealers, underwriters, or agents participating in the distribution of the shares of our Common Stock offered by this prospectus may receive compensation in the form of commissions, discounts, or concessions from the purchasers, for whom the broker-dealers may act as agent, of the shares sold by YA through this prospectus. The compensation paid to any such particular broker-dealer by any such purchasers of shares of our Common Stock sold by YA may be less than or in excess of customary commissions. Neither we nor YA can presently estimate the amount of compensation that any agent will receive from any purchasers of shares of our Common Stock sold by YA.

83

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a general discussion of the material U.S. federal income tax consequences relating to the ownership and disposition of our Common Stock. The discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations, judicial decisions, published positions of the Internal Revenue Service (the “IRS”) and other applicable authorities, all as in effect as of the date hereof and all of which are subject to change or differing interpretations (possibly with retroactive effect). We have not requested, and will not request, a ruling from the IRS with respect to any of the U.S. federal income tax considerations described below, and as a result there can be no assurance that the IRS will not disagree with or successfully challenge any of the conclusions we have reached and that are described herein.

This discussion deals only with beneficial owners that hold the Common Stock as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). Moreover, this discussion is for general information only and does not address all of the U.S. federal income tax consequences that may be relevant to particular investors in light of their personal circumstances or to certain types of investors subject to special tax rules (such as U.S. holders (as defined below) having a functional currency other than the U.S. dollar, former citizens and residents of the United States, individual retirement accounts or other tax deferred accounts, banks or other financial institutions, persons subject to the alternative minimum tax, grantor trusts, real estate investment trusts, insurance companies, tax-exempt entities or organizations, partnerships or other pass-through entities or arrangements for U.S. federal income tax purposes and investors therein, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, persons holding Common Stock in connection with a hedging transaction, straddle, conversion transaction or other integrated transaction, taxpayers required to recognize income with respect to the Common Stock for U.S. federal income tax purposes no later than when such income is taken into account in applicable financial statements, corporations treated as personal holding companies, U.S. holders who hold Common Stock through a non-U.S. broker or other intermediary, controlled foreign corporations, passive foreign investment companies or non-U.S. holders (as defined below) that are owned or controlled by U.S. holders).

This discussion does not address any U.S. federal tax consequences other than income tax consequences, such as U.S. federal estate and gift tax consequences, or any tax consequences under any state, local or foreign laws. Holders are urged to consult their own tax advisors as to the particular tax consequences to them of their ownership and disposition of Common Stock, including the applicability of any other U.S. federal tax laws or any state, local or foreign tax laws or any treaty, and any changes (or proposed changes) in applicable tax laws or interpretations thereof.

U.S. Holders

For purposes of this discussion, a “U.S. holder” means a beneficial owner (as determined for U.S. federal income tax purposes) of Common Stock that is, or is treated as, one of the following:

a citizen or individual resident of the United States as determined for U.S. federal income tax purposes;
a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia;
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

A “non-U.S. holder” means any beneficial owner of Common Stock (other than a partnership or any entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is not a U.S. holder. If an entity or arrangement that is classified as a partnership for U.S. federal income tax purposes is a beneficial owner of Common Stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and upon the activities of the partnership.

Partnerships holding Common Stock, and partners in such partnerships, should consult their tax advisors as to the particular U.S. federal income tax consequences of acquiring, holding and disposing of Common Stock.

84

Tax Consequences to U.S. Holders

Dividends

Distributions, if any, made on our Common Stock, other than certain pro rata distributions of common shares, generally will be included in income as ordinary dividend income to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. A distribution in excess of our current and accumulated earnings and profits will be treated as a tax-free return of capital, which reduces the U.S. holder’s tax basis in the Common Stock. Any distribution in excess of the U.S. holder’s tax basis in the Common Stock will be treated as capital gain and as long-term capital gain if the U.S. holder’s holding period in the Common Stock exceeds one year. Certain non-corporate U.S. holders may be entitled to a preferential rate of tax on such dividends if certain holding periods and other requirements are met. Dividends received by a corporate U.S. holder may be eligible for the dividends-received deduction, subject to applicable limitations.

Gain on Sale, Exchange or Other Taxable Disposition of Common Stock

Upon the sale, taxable exchange, or other taxable disposition of our Common Stock, a U.S. holder generally will recognize capital gain or loss equal to the difference between (i) the amount of cash and the fair market value of any property received upon such taxable disposition and (ii) its tax basis in the Common Stock. Such capital gain or loss will generally be long-term capital gain or loss if such U.S. holder’s holding period in the Common Stock is more than one year at the time of the taxable disposition. Long-term capital gains recognized by certain non-corporate U.S. holders generally are subject to a reduced rate of U.S. federal income tax. The deductibility of capital losses is subject to limitations.

Additional Tax on Passive Income

U.S. holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally will be subject to a 3.8% Medicare contribution tax on unearned income, including, among other things, dividend income and capital gains from the sale, exchange or other taxable disposition of, Common Stock, subject to certain limitations and exceptions.

Tax Consequences to Non-U.S. Holders

Dividends and Constructive Distributions

In general, any distributions (including constructive distributions) we make to a non-U.S. holder of shares of our Common Stock, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless such non-U.S. holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable). In the case of any constructive dividend, it is possible that this tax would be withheld from any amount owed to a non-U.S. holder by the applicable withholding agent, including cash distributions on other property or sale proceeds or other property subsequently paid or credited to such holder. Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the non-U.S. holder’s adjusted tax basis in its shares of our Common Stock and, to the extent such distribution exceeds the non-U.S. holder’s adjusted tax basis, as gain realized from the sale or other disposition of the Common Stock, which will be treated as described under “Tax Consequences to Non-U.S. Holders — Gain on Sale, Exchange or Other Taxable Disposition of Common Stock” below.

Dividends we pay to a non-U.S. holder that are effectively connected with such non-U.S. holder’s conduct of a trade or business within the United States (or, if a tax treaty applies, are attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. holder) will generally not be subject to U.S. withholding tax, provided such non-U.S. holder complies with certain certification and disclosure requirements (usually by providing an IRS Form W-8ECI). Instead, such dividends will generally be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. holders. If the non-U.S. holder is a corporation, dividends that are effectively connected income may also be subject to a “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).

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Gain on Sale, Exchange or Other Taxable Disposition of Common Stock

A non-U.S. holder will generally not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our Common Stock, unless:

the gain is effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, if an applicable tax treaty so requires, is attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. holder);
the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or
we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. holder held our Common Stock, and, in the case where shares of our Common Stock are regularly traded on an established securities market, the non-U.S. holder has owned, directly or constructively, more than 5% of our Common Stock at any time within the shorter of the five-year period preceding the disposition or such non-U.S. holder’s holding period for the shares of our Common Stock. There can be no assurance that our Common Stock will be treated as regularly traded on an established securities market for this purpose.

Gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates. Any gains described in the first bullet point above of a non-U.S. holder that is a foreign corporation may also be subject to an additional “branch profits tax” at a 30% rate (or lower applicable treaty rate). Gain described in the second bullet point above will generally be subject to a flat 30% U.S. federal income tax. Non-U.S. holders are urged to consult their tax advisors regarding possible eligibility for benefits under income tax treaties.

If the third bullet point above applies to a non-U.S. holder, gain recognized by such holder on the sale, exchange or other disposition of our Common Stock will be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our Common Stock from such holder may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such disposition. We will be classified as a United States real property holding corporation if the fair market value of our “United States real property interests” equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests plus our other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. We do not believe we currently are or will become a United States real property holding corporation, however there can be no assurance in this regard. Non-U.S. holders are urged to consult their tax advisors regarding the application of these rules.

Information Reporting and Backup Withholding

Dividends (including constructive dividends) and other payments on our Common Stock, and the amounts withheld, if any, with respect to the payments, will generally be required to be reported to the IRS.

U.S. Holders

U.S. holders may be subject to backup withholding (currently at a rate of 24%) with respect to dividends (including constructive dividends) and gross proceeds from the sale, exchange or disposition of our Common Stock unless (1) the U.S. holder is a corporation or comes within certain other exempt categories or (2) prior to payment, the U.S. holder provides an accurate taxpayer identification number and certifies as required on a duly completed and executed IRS Form W-9 (or permitted substitute form), and otherwise complies with the requirements of the backup withholding rules.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a holder will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle the holder to a refund, provided the required information is timely furnished to the IRS and all other requirements are satisfied.

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Non-U.S. Holders

Non-U.S. holders who have provided the applicable forms and certifications mentioned above under “Tax Consequences to Non-U.S. Holders” or who have otherwise established an exemption will generally not be subject to backup withholding.

Payments of the proceeds from the sale, exchange or disposition of Common Stock to or through a foreign office of a broker will generally not be subject to information reporting or backup withholding. However, information reporting, but not backup withholding, may apply to those payments if the broker has certain specified U.S. connections. Information reporting and backup withholding may apply to payments of the proceeds from a sale, exchange or disposition of Common Stock held by a non-U.S. holder to or through the U.S. office of a broker unless the non-U.S. holder establishes an exemption from one or both. Copies of the information returns reporting interest, deemed dividends, dividends and withholding may be made available to the tax authorities in a country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a holder will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle the holder to a refund, provided the required information is timely furnished to the IRS and all other requirements are satisfied.

Additional Withholding Requirements

Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as “FATCA”), a 30% United States federal withholding tax may apply to any dividends paid on our Common Stock paid to (i) a “foreign financial institution” (as specifically defined in the Code) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA, or (y) its compliance (or deemed compliance) with FATCA (which may alternatively be in the form of compliance with an intergovernmental agreement with the United States) in a manner which avoids withholding, or (ii) a “non-financial foreign entity” (as specifically defined in the Code) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA, or (y) adequate information regarding certain substantial United States beneficial owners of such entity (if any). If a dividend payment is both subject to withholding under FATCA and subject to the withholding tax discussed above under “Tax Consequences to Non-U.S. Holders — Dividends and Constructive Distributions,” the withholding under FATCA may be credited against, and therefore reduce, such other withholding tax. You should consult your own tax advisors regarding these requirements and whether they may be relevant to your ownership and disposition of Common Stock.

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LEGAL MATTERS

The validity of any securities offered by this prospectus will be passed upon for us by Sherman & Howard, Las Vegas, Nevada.

EXPERTS

The consolidated financial statements of Ideanomics, Inc. as of and for the year ended December 31, 2021, have been included herein in reliance upon the report of Grassi & Co, CPAs, P.C. (“Grassi”), independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements of Ideanomics, Inc. as of and for the year ended December 31, 2020 and 2019, have been included herein in reliance upon the report of BF Borgers CPA PC (“BFB”), independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

CHANGE IN ACCOUNTANTS

BFB was our independent registered public accounting firm for the year ended December 31, 2020. On September 24, 2021, that firm was dismissed. The dismissal of BFB was approved by our Audit Committee. BDO USA, LLP (“BDO”) was appointed our independent registered public accounting firm on September 24, 2021.

During the fiscal years ended December 31, 2020 and 2019, and in the subsequent interim period through September 24, 2021, there were no “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) with BFB on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction of BFB would have caused BFB to make reference thereto in its reports on the consolidated financial statements for such years. During the fiscal years ended December 31, 2020 and 2019 and through September 24, 2021, there have been no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K).

The reports by BFB on the Company’s consolidated financial statements for the fiscal years ended December 31, 2020 and 2019 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. For the year ended December 31, 2019, BFB’s report included a report on the effectiveness of the Company’s internal control over financial reporting.

On September 24, 2021, the Company engaged BDO as the Company’s new independent registered public accounting firm, effective immediately, to perform independent audit services for the fiscal year ending December 31, 2021. The decision to appoint BDO was approved by the Audit Committee. During the fiscal years ended December 31, 2020 and 2019 and through September 24, 2021, neither the Company, nor anyone on its behalf, consulted BDO regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the consolidated financial statements of the Company, and no written report or oral advice was provided to the Company by BDO that was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

On July 21, 2022, the Company dismissed BDO. The dismissal of BDO was approved by the Audit Committee of the Board. BDO did not issue an audit report on the Company’s financial statements for the fiscal year ended December 31, 2021. The Company was advised by BDO of certain events reportable in accordance with Item 304(a)(1)(v) of Regulation S-K in BDO’s letter dated August 4, 2022 (“BDO’s Letter”). A copy of BDO’s Letter is filed as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 8, 2022. Our Board has appointed Grassi as our independent registered public accounting firm for the fiscal year ending December 31, 2022 and recommends that shareholders vote for ratification of this appointment.

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On July 27, 2022, the Company engaged Grassi as the Company’s new independent registered public accounting firm, effective immediately, to perform independent audit services for the fiscal year ended December 31, 2021. The decision to appoint Grassi was approved by the Audit Committee. During the fiscal years ended December 31, 2021 and 2020 and through July 27, 2022, neither the Company, nor anyone on its behalf, consulted Grassi regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the consolidated financial statements of the Company, and no written report or oral advice was provided to the Company by Grassi that was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

WHERE YOU CAN FIND MORE INFORMATION

We are required to file annual, quarterly, and current reports, proxy statements, and other information with the SEC as required by the Exchange Act. You can read our SEC filings, including this prospectus, over the Internet at the SEC’s website at http://www.sec.gov.

Our website address is www.ideanomics.com. Through our website, we make available, free of charge, the following documents as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC, including our Annual Reports on Form 10-K; our proxy statements for our annual and special stockholder meetings; our Quarterly Reports on Form 10-Q; our Current Reports on Form 8-K; Forms 3, 4 and 5 and Schedules 13D with respect to our securities filed on behalf of our directors and our executive officers; and amendments to those documents. The information contained on, or that may be accessed through, our website is not a part of, and is not incorporated into, this prospectus.

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Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of Ideanomics, Inc.

Opinions on the Financial Statements

We have audited the accompanying consolidated balance sheet of Ideanomics, Inc. and Subsidiaries (the “Company”), as of December 31, 2021, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2021, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated September 2, 2022, expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of material weaknesses.

Substantial Doubt Regarding the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, has an accumulated deficit and does not believe that its current level of cash and cash equivalents is sufficient to fund continuing operations or the addition of the two planned acquisitions in various stages of completion. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-2

Business Combinations

Critical Audit Matter Description

As described in Note 8 to the consolidated financial statements, the Company acquired Timios, WAVE, US Hybrid and Solectrac during 2021. Each of these acquisitions was accounted for as a business combination. We identified the evaluation of the acquisition date fair value of intangible assets acquired and goodwill as a critical audit matter.

The principal consideration for our determination that the evaluation of the acquisition date fair values of the intangible assets acquired and goodwill was a critical audit matter is the high degree of subjective auditor judgment associated with evaluating management’s determination of the fair values of the acquired intangible assets and goodwill, which is primarily due to the complexity of the valuation models used and the sensitivity of the underlying significant assumptions. The key assumptions used within the valuation models included prospective financial information, including future revenue growth and an applied discount rate. The calculated fair values are sensitive to changes in these key assumptions.

How the Critical Audit Matter was addressed in the Audit

Our audit procedures related to the evaluation of acquisition date fair values of the intangible assets acquired and goodwill included the following, among others:

a.

We evaluated the design and operating effectiveness of certain controls over the acquisition-date valuation process, including controls over the development of the key assumptions such as the revenue growth and the applied discount rate.

b.

We read and reviewed the executed stock purchase or merger agreements to assess the reasonableness and completeness of assets identified in the purchase price allocation.

c.

We vouched cash amounts paid and stock tendered to source documentation to validate purchase price. We also evaluated valuation of contingent consideration in evaluating purchase price.

d.

We obtained the purchase price allocation analyses from management and the third-party specialists engaged by management.

e.

We assessed the qualifications and competence of management and the qualifications, competence and objectivity of third-party specialist.

f.

We evaluated the methodologies used to determine the fair values of the intangible assets and goodwill.

g.

We tested the assumptions used within the discounted cash flow models to estimate the fair values of the intangible assets, which included key assumptions such as the future revenue growth and the applied discount rate.

h.

We assessed the reasonableness of management’s forecast by inquiring with management to understand how the forecasts were developed and comparing the projections to historical results and economic conditions.

i.

We involved an internal valuation specialist who assisted in the evaluation and testing performed of the reasonableness of significant methods and assumptions to the models, including the applied discount rate.

j.

We assessed the sufficiency of Company’s disclosure of its accounting for these acquisitions included in Note 8.

Impairment assessment of intangible assets and goodwill

Critical Audit Matter Description

As described in Notes 3 and 11 to the consolidated financial statements, the Company performs an annual impairment assessment of its indefinite-lived intangible assets and goodwill, or more frequently if events or circumstances indicate that the carrying values exceeds its fair value. The Company reviews other intangible assets with estimable lives for impairment whenever indicators are present that the carrying value may not be recoverable. During 2021, the Company recorded impairments of $101.5 million and $50.6 million of

F-3

goodwill and intangible assets, respectively. The carrying value, after impairment, of goodwill and intangibles was $16.2 million and $42.5 million, respectively, as of December 31, 2021.

Auditing the valuation of intangible assets and goodwill involved complex judgment due to subjective evaluation of indicators and significant estimation required in determining the recoverability or fair value of the intangible assets and goodwill. Specifically, the cash flow forecasts were sensitive to significant assumptions about future market and economic conditions. Significant assumptions used in the Company’s estimates included sales volume, growth rates, gross profits, operating expenditures, tax rates, and discount rate, as applicable.

How the Critical Audit Matter was addressed in the Audit

Our audit procedures related to the evaluation of the intangible assets and goodwill for impairment included the following, among others:

a.

We evaluated the design and operating effectiveness of certain controls over the Company’s annual impairment assessments of intangible assets and goodwill.

b.

We evaluated management’s assessment in qualitive factors relating to the intangible assets and goodwill valuation, by searching online for information including economic growth forecast, industry outlook, and business environment, as well as accumulating our understanding of the Company’s reporting units’ performance.

c.

With respect to the Company’s valuation of intangible assets and goodwill as a result of impairment indicators identified:

i.

We tested the estimated future cash flows, including but not limited to, comparing significant inputs to observable third party and industrial sources, comparing to the historical performance of the Company, and evaluating the reasonableness of management’s projected financial information by comparing to observable economic conditions and other internal and external data.

ii.

We performed sensitivity analyses of significant assumptions to evaluate the reasonableness of the Company’s cash flow forecasts.

iii.

We assessed the qualifications and competence of management and the qualifications, competence and objectivity of third-party specialist whom prepared the valuation analyses.

iv.

We evaluated the methodologies used to determine the fair values of the impaired intangible assets and goodwill.

v.

We assessed the reasonableness of management’s forecast by inquiring with management to understand how the forecasts were developed and comparing the projections to historical results and external sources including industry trends and peer companies’ historical data.

vi.

We involved an internal valuation specialist who assisted in the evaluation and testing performed of the reasonableness of significant methods and assumptions to the models, including the applied discount rate.

d.

We assessed the Company’s disclosure of its impairment assessments included in Note 3 as well as the sufficiency of footnote disclosure of impairment assessment of intangible assets and goodwill in Note 11.

Grassi & Co., CPAs, P.C.

We have served as the Company’s auditor since 2022.

Jericho, NY

September 2, 2022, except for Note 26, as to which the date is September 21, 2022.

F-4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Shareholders and Board of Directors of Ideanomics, Inc.

Adverse Opinion on Internal Control over Financial Reporting

We have audited Ideanomics, Inc. and Subsidiaries (the “Company”) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses described in the following paragraph on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in “Management’s Annual Report on Internal Control Over Financial Reporting”:

a.

The design and implementation of internal controls over the review of management’s inputs into valuation models and associated valuation outputs from third party valuation specialists.

b.

The design and implementation of internal controls over the revenue recognition process, specifically the failure to properly evaluate whether the Company was to be considered the principal or the agent in contracts with customers.

c.

There is a lack of sufficient personnel in accounting and financial reporting functions with sufficient experience and expertise with respect to the application of U.S. GAAP and SEC disclosure requirements.

d.

Operating effectiveness of internal controls to identify and evaluate the accounting implications of non-routine transactions.

e.

There is a lack of controls designed to address risk of material misstatement for various financial statement areas and related assertions.

f.

There is a lack of validation of completeness and accuracy of internally prepared data, including key reports generated from systems, utilized in the operations of controls.

g.

There is a lack of evidence to support the effective review in the operations of controls.

h.

There is a lack of controls at the entity level, particularly over the review of subsidiary financial information, including analysis of balance sheet data, operating results, non-routine transactions, litigation accruals and income tax matters.

i.

Controls are not designed with a sufficient level of precision to prevent or detect a material misstatement.

j.

An inventory of service organizations utilized to process transactions was not maintained throughout the reporting period. There is a lack of review over service organization reports. In instances in which service organization reports are not available, the Company does not have adequate complementary controls.

k.

There is a lack of segregation of duties that exists in the information technology environments and payroll and procure to pay cycles at the Company.

l.

There is a lack of documented compliance related to controls to evaluate potential risk of dealing with inappropriate vendors and/or customers.

m.

The Company’s information technology general controls over certain information technology systems were not designed properly and therefore did not operate effectively.

n.

There is lack of document compliance -related controls to evaluate transactions in accordance with the Foreign Corrupt Practices Act (“FCPA”)

o.

There is ineffective oversight from the Company’s Audit Committee.

These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and this report does not affect our report dated September 2, 2022 on those financial statements.

F-5

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet as of December 31, 2021 and the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity, and cash flows for the year then ended of the Company and our report dated September 2, 2022 expressed an unqualified opinion on those financial statements.

Explanatory Paragraph – Excluded Subsidiaries

As described in “Management Annual Report on Internal Control Over Financial Reporting,” management has excluded its wholly-owned subsidiaries, Timios, Wave, US Hybrid and Solectrac, from its assessment of internal control over financial reporting as of December 31, 2021 because these entities were acquired by the Company in a purchase business combinations during 2021. We have also excluded Timios, WAVE, US Hybrid and Solectrac from our audit of internal control over financial reporting. As of and for the year ended December 31, 2021, Timios represented 8.6% of total assets and 63.7% of revenue, WAVE represented 2.1% of total assets and 6.1% of revenue, US Hybrid represented 2.2% of total assets and 2.3% of revenue, and Solectrac represented 2.3% of total assets and 1.5% of revenue.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management Annual Report on Internal Control Over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.

Grassi & Co., CPAs, P.C.

Jericho, NY

September 2, 2022

F-6

Report of Independent Registered Public Accounting Firm

That To the shareholders and the board of directors of Ideanomics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ideanomics Inc. (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, comprehensive loss, equity, and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We also have audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting as of December 31, 2020. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion as of December 31, 2020.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures i