UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 1, 2019
IDEANOMICS, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 20-1778374 |
| (State or other jurisdiction | (IRS Employer |
| of incorporation) | Identification No.) |
001-35561
(Commission File Number)
55 Broadway, 19 th Floor, New York, NY 10006
(Address of principal executive offices) (Zip Code)
212-206-1216
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition . |
On April 1, 2019, Ideanomics, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal year ended December 31, 2018. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information contained in this Item 2.02, including Exhibit 99.1, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any other filings under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit No. | Description |
| 99.1 | Press Release dated April 1, 2019. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Ideanomics, Inc. | |||
| Date: April 5, 2019 | By: | /s/ Alfred Poor | |
| Alfred Poor | |||
| Chief Executive Officer | |||
Exhibit 99.1
Ideanomics Reports Full Year 2018 Financial Results
| - | Revenue for the year ended December 31, 2018 was $377.7 million |
| - | Earnings Release Conference Call to be held Monday April 1, 2019 at 8:00 a.m. ET |
NEW YORK, April 1, 2019 /PRNewswire/ -- Ideanomics (NASDAQ: IDEX) ("Ideanomics" or the "Company"), a global AI-driven management and financial services company acting as a catalyst for transformative industries, announced today its Full Year 2018 operating results for the period ended December 31, 2018 (a full copy of the Company's annual report on Form 10-K is available at www.sec.gov ) .
Conference Call: Ideanomics’ management, including Dr. Bruno Wu (Chairman),Alf Poor (Chief Executive Officer), Federico Tovar (Chief Financial Officer) and Tony Sklar (VP of Communications and Head of Investor Relations), will host live an earnings release conference call at 8:30 am ET, Monday, April 1, 2019 (8:30 pm Monday April 1, 2019 Beijing/Hong Kong Time).
To join the webcast, please visit the 'Events & Presentations' section of the Ideanomics corporate website ( http://www.ideanomics.com/ ) , or Dial-in Number: (Toll-Free US & Canada): 877-407-3107 or 201-493-6796; for China: +86-400-120 - 2840 . Time permitting, Ideanomics management will answer questions during the live Q&A session.
A replay of the earning call will be available soon after the conclusion of the event.
Ideanomics Full Year 2018 Operating Results
Revenue for the year ended December 31, 2018 was $377.7 million as compared to $144.4 million for the same period in 2017, an increase of approximately $233.3 million, or 162%. The increase was mainly due to our logistics management business of crude oil trading initiated in October 2017 and partially offset in the amount of $0.8 million by a decrease of our legacy YOD business.
Our 2018 business strategy and the primary goal for entering crude oil and consumer electronic is to learn about the needs of buyers and sellers in industries to deploy blockchain and AI solutions. Our activities in the crude oil trading and consumer electronic business have been successful in various aspects. We generated revenue of $359.8 million for the first 3 quarters and have gained experience in the traditional logistics management and financing business, such that we have identified initial use cases for the applications of the technologies in our Fintech ecosystem. While we have gained this experience, the Company does not intend to be a logistics management company. Therefore, we decided to gradually start contracting our crude oil trading business and consumer electronics business starting in the third quarter of 2018 so that we can work towards enabling the application of our Fintech ecosystem for other useful and more lucrative cases that we have identified.
In parallel, for strategic reasons, during the course of the third and fourth quarter, we also chose to focus our resources and efforts on other non-crude oil trading and non-logistics management revenue generating opportunities that we have identified in the market. These other market opportunities also involve the use of our technologies across our Fintech ecosystem and their applications across industry ventures.
Cost of revenues was $ 374.6 million for the year ended December 31, 2018, as compared to $137.2 million for the year ended December 31, 2017. Our cost of revenues increased by $237.4 million which is in line with our increase in revenues. Our cost of revenues is primarily comprised of cost to purchase electronics products and crude oil from suppliers in our logistics management business and the cost of sales in Legacy YOD business is primarily comprised of content licensing fees. Our content license agreements with production companies incorporate minimum guaranteed payment levels.
Our gross profit for the year ended December 31, 2018 was approximately $3.2 million, as compared to $7.2 million during the same period in 2017.
Our current crude oil and consumer electronics trading business operates in highly competitive global markets characterized by aggressive price competition, resulting in downward pressure on already low gross margins.
Our selling, general and administrative expense for the year ended December 31, 2018 was $ 22.5 million as compared to $13.1 million for the same period in 2017, an increase of approximately $9.3 million or 71%. The majority of the increase was due to:
| ¨ | an increase in headcounts and relevant traveling expense in the amount of $2.5 million; |
| ¨ | an increase of approximately of $2.1 million in share-based compensation that were paid to our employees; |
| ¨ | an increase of approximately of $3.0 million in consulting, legal, and professional service fees that were paid to our external consultants who provided various consulting services with respect to our Fintech and Platform-as-a-Service business; and |
| ¨ | an increase in our sales and marketing expense in the amount of $0.9 million relating to the introduction and promotion of our business models to various potential investors and business partners, as well as the marketing of Wecast Services business. |
| ¨ | an increase in rent expense by $1 million mainly for our office in New York City. |
Most of the costs are one time, associated with the departure of certain executives and are significantly reduced for 2019.
Professional fees are generally related to public company reporting and governance expenses as well as legal fees related to business transition and expansion. Our professional fees increased approximately by $1.5 million, or 48%, for the year ended December 31, 2018, compared with the same period in 2017. The increase was related to an increase in legal, valuation, audit and tax as well as fees associated with continuing to build out our technology ecosystem and establishing strategic partnerships and M&A activity as part of this technology ecosystem.
Our loss from operations was increased by $16.1 million to $26.2 million for the year ended December 31, 2018, from $10.1 million during 2017. This was mostly due to the decrease in gross profit from our Wecast Services segment and the increase of operating expenses for the development of Wecast Service business.
Loss per share for 2018 was $0.35 as compared to $0.17 in 2017.
As of December 31, 2018 the company had cash of $3.1 million, total assets of $94.2 million, total equity of $43.2 million.
From 2019 onwards, the Company has officially transformed into a strong AI enhanced financial advisory and asset management model, that is now positioned to deliver significant value to its shareholders and strong economics.
Over the past year Ideanomics has been able to continue its transformation from its legacy business, to be a prominent player for fintech services and asset digitization through establishing a global compliant network of financial technology, user community, and digital asset production. Our team of seasoned digital strategists and technology leaders has positioned the Company towards a path of unlocking unlocking FinTech services related revenue for 2019. We have several signed customer revenue deals in the areas of CleanTech, EV bus sales and asset backed securitization, and others in our pipeline, and our product and tech teams are diligently building out these new digital products to unlock this revenue in the near term and position the company towards a strong 2019.
The Company is committed to our successful product launches. These deals have the potential to derive significant revenues and sustain the long-term viability of our business model.
“The investments we have made over the past 18 months have been essential for building a strong foundation and future for both Ideanomics and our shareholders. They are part of the vision we are bringing to reality,” said Dr. Bruno Wu, Chairman of Ideanomics. “I want to say a very big thank to all our partners, vendors, board members, and the management team who have worked tirelessly with Alf and I to build a platform for Ideanomics success. I also want to thank our clients, for allowing us to serve your needs, to our shareowners for your support, and to the Ideanomics team everywhere for your ingenuity, your passion, and your work ethic.”
About Ideanomics
Ideanomics is a global Fintech and AI catalyst for transformative industries combines deal origination and enablement with technology and applications as part of the next-generation of financial services. We drive shareholder value through 3 primary divisions: Artificial Intelligence (AI) Division, Digital Banking and Advisory, and Digital Asset Management Services.
The company is headquartered in New York, NY, and has offices in Beijing, China, with plans for global centers for Technology and Innovation such as our primary fintech village campus in West Hartford, CT.
Safe Harbor Statement
This press release contains certain statements that may include "forward looking statements". All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties, and include statements regarding our intention to transition our business model to become a next-generation financial technology company, our business strategy and planned product offerings, our intention to phase out our oil trading and consumer electronics businesses, and potential future financial results. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties, such as risks related to: our ability to continue as a going concern; our ability to raise additional financing to meet our business requirements; the transformation of our business model; fluctuations in our operating results; strain to our personnel management, financial systems and other resources as we grow our business; our ability to attract and retain key employees and senior management; competitive pressure; our international operations; and other risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission, and similar disclosures in subsequent reports filed with the SEC, which are available on the SEC website at www.sec.gov.. All forward- looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
Investor Relations and Media Contact
Tony Sklar, VP of Communications at Ideanomics
55 Broadway, 19 th Floor New York, New York 10006 Email: ir@ideanomics.com
www.ideanomics.com
Tel: +1.212.206.1216
IDEANOMICS, INC.
CONSOLIDATED BALANCE SHEETS
IDEANOMICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the years ended December 31, | 2018 | 2017 | ||||||
| Revenue from third parties | $ | 377,742,872 | $ | 125,379,786 | ||||
| Revenue from related party | - | 18,973,054 | ||||||
| Total revenue | 377,742,872 | 144,352,840 | ||||||
| Cost of revenue from third parties | 130,464,906 | 137,188,393 | ||||||
| Cost of revenue from related parties | 244,110,132 | - | ||||||
| Gross profit | 3,167,834 | 7,164,447 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative expenses | 22,471,976 | 13,129,313 | ||||||
| Research and development expense | 1,654,491 | 406,845 | ||||||
| Professional fees | 4,749,799 | 3,200,885 | ||||||
| Depreciation and amortization | 352,332 | 308,102 | ||||||
| Impairment of other intangible assets | 134,290 | 216,468 | ||||||
| Total operating expenses | 29,362,888 | 17,261,613 | ||||||
| Loss from operations | (26,195,054 | ) | (10,097,166 | ) | ||||
| Interest and other income (expense): | ||||||||
| Interest expense, net | (804,595 | ) | (94,618 | ) | ||||
| Change in fair value of warrant liabilities | - | (112,642 | ) | |||||
| Equity in loss of equity method investees | (180,625 | ) | (129,193 | ) | ||||
| Loss on disposal of a subsidiary | (1,183,289 | ) | - | |||||
| Others | (99,765 | ) | (426,698 | ) | ||||
| Loss before income taxes and non-controlling interest | (28,463,328 | ) | (10,860,317 | ) | ||||
| Income tax benefit | 40,244 | - | ||||||
| Net loss | (28,423,084 | ) | (10,860,317 | ) | ||||
| Net loss attributable to non-controlling interest | 996,728 | 357,268 | ||||||
| Net loss attributable to IDEX common shareholders | $ | (27,426,356 | ) | $ | (10,503,049 | ) | ||
| Basic and diluted loss per share | $ | (0.35 | ) | $ | (0.17 | ) | ||
| Weighted average shares outstanding: | ||||||||
| Basic and diluted | 78,386,116 | 61,182,209 | ||||||