Immaterial Corrections of Prior Period Condensed Consolidated Financial Statements

9 Months Ended

Sep. 30, 2022

Accounting Changes and Error Corrections [Abstract]

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