XML 161 R133.htm IDEA: XBRL DOCUMENT v3.22.2.2
Immaterial Corrections of Prior Period Condensed Consolidated Financial Statements
9 Months Ended 12 Months Ended
Sep. 30, 2022
Dec. 31, 2021
Accounting Changes and Error Corrections [Abstract]    
Immaterial Corrections of Prior Period Condensed Consolidated Financial Statements

Note 2.   Immaterial Corrections of Prior Period Condensed Consolidated Financial Statements

In the fourth quarter of 2021, the Company became aware of immaterial errors primarily related to amortization expense on certain intangible assets acquired in various acquisitions, the classification of gains and losses from equity method investments, the classification of certain costs, and the accounting for non-controlling interest and income taxes related to the Company’s acquisition of 51% of the ownership interests of Tree Technologies, a Malaysian company engaged in the EV market in December 2019. An assessment concluded that the errors were not material, individually or in the aggregate, to any prior period consolidated financial statements. As such, in accordance with ASC 250, “Accounting Changes and Error Corrections” and Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the prior period consolidated financial statements have been revised in the applicable consolidated financial statements. The Company concluded a revision of prior period consolidated financial statements was appropriate the next time they were reported, since the correction of errors would have been material if recorded in the year ended December 31, 2021. Periods not presented herein will be revised, as applicable, in future filings. Although management has determined that the errors, individually and in the aggregate, were not material to prior periods, the condensed consolidated financial statements for the three and nine months ended September 30, 2021, included herein, have been revised to correct for the impact of these items. Unless otherwise indicated, the condensed consolidated financial information as of and for the three and nine months ended September 30, 2021 presented in this Quarterly Report on Form 10-Q reflects these revisions.

The following table reflects the impact of the immaterial corrections discussed above on the Company’s previously reported condensed consolidated statements of operations and comprehensive loss for the three months ended September 30, 2021 (in thousands, except per share amounts):

    

Previously

    

    

Reported

Adjustment

As Revised

Revenue – sales of products

$

9,977

$

(301)

$

9,676

Total revenue

 

27,047

 

(466)

 

26,581

Cost of revenue – sales of products

 

9,893

 

41

 

9,934

Cost of revenue – sales of services

 

12,626

 

(461)

 

12,165

Total cost of revenue

 

22,519

 

111

 

22,630

Gross profit

 

4,528

 

(577)

 

3,951

Selling, general and administrative

 

28,876

 

8,874

 

37,750

Depreciation and amortization

 

1,682

 

97

 

1,779

Total operating expenses

 

56,063

 

(200)

 

55,863

Loss from operations

 

(51,535)

 

(377)

 

(51,912)

Loss before income taxes and non-controlling interest

 

(51,118)

 

(377)

 

(51,495)

Income tax benefit

 

842

 

102

 

944

Net loss

 

(51,095)

 

(903)

 

(51,998)

Net loss attributable to common shareholders

 

(51,095)

 

(903)

 

(51,998)

Net loss attributable to non-controlling interest

 

244

 

(57)

 

187

Net loss attributable to Ideanomics common shareholders

 

(50,851)

 

(960)

 

(51,811)

Foreign currency translation adjustments

 

(295)

 

(656)

 

(951)

Comprehensive loss

(51,386)

(1,559)

(52,945)

Comprehensive loss attributable to non-controlling interest

350

(77)

273

Comprehensive loss attributable to Ideanomics, Inc. shareholders

$

(51,036)

$

(1,636)

$

(52,672)

There was no change in earnings per share – basic and diluted from the immaterial error corrections.

The following table reflects the impact of the immaterial corrections discussed above on the Company’s previously reported condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2021 (in thousands, except per share amounts):

    

Previously

    

    

Reported

Adjustment

As Revised

Revenue – sales of products

$

21,934

$

(785)

$

21,149

Total revenue

 

87,832

 

(1,185)

 

86,647

Cost of revenue – sales of products

 

20,838

 

(393)

 

20,445

Cost of revenue – sales of services

 

42,323

 

(882)

 

41,441

Total cost of revenue

 

63,161

 

(212)

 

62,949

Gross profit

 

24,671

 

(973)

 

23,698

Selling, general and administrative

 

53,650

 

20,769

 

74,419

Depreciation and amortization

 

4,445

 

103

 

4,548

Total operating expenses

 

99,545

 

(906)

 

98,639

Loss from operations

 

(74,874)

 

(67)

 

(74,941)

Loss on disposal of subsidiaries

 

(1,446)

 

182

 

(1,264)

Other income, net

 

689

 

(182)

 

507

Loss before income taxes and non-controlling interest

 

(73,287)

 

(67)

 

(73,354)

Income tax benefit

 

9,667

 

304

 

9,971

Equity in loss of equity method investees

 

(1,517)

 

(545)

 

(2,062)

Net loss

 

(65,137)

 

(308)

 

(65,445)

Net loss attributable to common shareholders

 

(65,137)

 

(308)

 

(65,445)

Net loss attributable to non-controlling interest

 

611

 

(152)

 

459

Net loss attributable to Ideanomics common shareholders

 

(64,526)

 

(460)

 

(64,986)

Foreign currency translation adjustments

 

(1,196)

 

(487)

 

(1,683)

Comprehensive loss

 

(66,349)

 

(795)

 

(67,144)

Comprehensive loss attributable to non-controlling interest

 

1,113

 

(249)

 

864

Comprehensive loss attributable to Ideanomics, Inc. shareholders

$

(65,236)

$

(1,044)

$

(66,280)

There was no change in earnings per share – basic and diluted from the immaterial error corrections.

The following table reflects the impact of the immaterial corrections discussed above on the Company’s previously reported condensed consolidated statement of cash flows for the nine months ended September 30, 2021 (in thousands):

    

Previously

    

    

Reported

Adjustment

As Revised

Cash flows from operating activities

 

  

 

  

 

  

Net loss

$

(65,137)

$

(308)

$

(65,445)

Depreciation and amortization

 

4,445

 

103

 

4,548

Income tax benefit

 

(10,160)

 

(305)

 

(10,465)

Equity in losses of equity method investees

 

1,517

 

545

 

2,062

Accounts receivable

 

5,042

 

253

 

5,295

Inventory

 

(410)

 

610

 

200

Prepaid expenses and other assets

 

(16,358)

 

(2,183)

 

(18,541)

Accrued expenses, salary and other current liabilities

$

6,971

$

922

$

7,893

Note 2.   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.

The Company intends to revise its condensed consolidated financial statements for the periods ended March 31, 2021, June 30, 2021, and September 30, 2021 through subsequent periodic filings.

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, except per share amounts):

    

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 comprehensive loss for the year ended December 31, 2020 (in thousands, except per share amounts):

    

Previously 

    

    

Reported

Adjustment

As Revised

Net loss

$

(106,043)

$

(5,538)

$

(111,581)

Foreign currency translation adjustments

 

3,208

 

(50)

 

3,158

Comprehensive loss

 

(102,835)

 

(5,588)

 

(108,423)

Comprehensive loss attributable to non-controlling interest

 

6,539

 

2,699

 

9,238

Comprehensive loss attributable to Ideanomics, Inc. shareholders

$

(96,480)

$

(2,889)

$

(99,369)

In addition, certain additional temporary differences between financial statement amounts and tax amounts at December 31, 2020, relating to the PRC companies were identified after issuance of the financial statements. These resulted in the recognition of $0.3 million additional deferred tax assets, offset by $5,000 additional deferred tax liabilities and $0.3 million additional valuation allowance with no effect on the balance sheet or income statement.

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