Ideanomics, Inc (IDEX) CEO Alf Poor on Q2 2019 Results - Earnings Call Transcript

About: Ideanomics, Inc. (IDEX)
by: SA Transcripts
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Earning Call Audio

Ideanomics, Inc. (NASDAQ:IDEX) Q2 2019 Results Earnings Conference Call August 14, 2019 8:30 AM ET

Company Participants

Tony Sklar - Vice President-Communications and Head-Investor Relations

Bruno Wu - Chairman

Alf Poor - Chief Executive Officer

Cecilia Xu - Corporate Controller

Conference Call Participants


Greetings. And welcome to the Ideanomics Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Tony Sklar, Vice President of Communications and Head of Investor Relations. Thank you, you may begin.

Tony Sklar

Thank you, operator. And welcome to the Ideanomics second quarter 2019 earnings conference call. Joining me today, I am pleased to have prerecorded session by Dr. Bruno Wu, Chairman of Ideanomics, due to some travel disruptions that he is currently experiencing. He is planned to be on the call, but we were able to get prerecorded message for our investment community. I have Alf Poor, our Chief Executive Officer; and Miss Cecilia Xu will be reading our financial statements -- presentation.

A webcast of today’s call will be archived and available on the Events and Presentation section of our corporate website for a minimum of 30 days. As a reminder, this conference is being recorded.

During the call, we will make forward-looking statements such as dialogue regarding our revenue expectations or forecast for the quarters and full fiscal year 2019 and 2020 related to our business. These statements are based on our current expectations and information available as of today and are subject to a variety of risks, uncertainties and assumptions. Actual results may differ materially and as a result, various risk factors that have been described in our periodic filings with the SEC.

As a result, we caution you against placing undue reliance on these forward-looking statements. We assume no obligation to update the forward-looking statements as a result of new information or future events except as required by law.

In addition other risks and more fully described in the Ideanomics public filings with the U.S. Securities and Exchange Commission, which can be reviewed at Today, August 14, 2019, the company filed its 10-Q with the SEC and afterwards issued a press release announcing the financial results. So participants on this call, who may not have already done so, may wish to look at those documents, and as we provide more of a summary of these results on the call.

The format of today’s call will be as follows. We will play the message from Dr. Bruno Wu, our Chairman of Ideanomics who will address the investment community with his vision and strategy, Mr. Alfred Poor, our CEO will speak to the company’s overview, business strategy and as well as the activities and developments for the second quarter 2019, and Miss Cecilia Xu will speak to the company’s operating and financial results for the second quarter 2019; and then everybody’s favorite our Q&A session.

I’ll now hand the conversation over to our prerecorded Dr. Wu’ message.

Bruno Wu

Dear shareholders, it is my great pleasure to address our shareholders and investment community. Over the past quarter, we have made some very significant milestones and gained momentum on many of our newly signed joint ventures and deals. We continue to develop ourselves in order to be the one-stop solution for every aspect of the new energy based transportation services markets.

As of today, our new energy transportation service, NETS division is officially rebranding itself to mobile energy group, MEG. The group expands itself from the original sales financing operations to also include a new SVUs such as the energy supply unit with clean energy exchange, and electricity storage car sales as well as conversion of gas stations.

The new SVUs will also include the battery operation unit which may include the financing, leasing financing on the battery to all related battery services and sales and marketing. It will also include a division of Internet over Vehicle, which will lead us to the next generation of smart clean energy management hub, which we're in discussion with some of the world's top partners of beauty. So we are perfectly positioned to become the next generation CleanTech Energy Internet world leader with a very strong focus in commercial vehicles.

Our long-term value creation framework is built upon the strong foundation we have in place. Our industry leading and robust product innovation pipeline supported and executed by exceptional employees throughout the world. We measure these value equation components by focusing on a few key measures, deliver any [ph] net sales growth across all our global footprint, and grow earnings per share annually, expand our market share by leveraging our strong brands and partnerships, innovative new products, and through our partners strong cost productivity programs, and generate also dividends for shareholders.

Not only in every niche and every SBU of our company, we're looking at partnering with the world's best, Asia's best, Europe's best, America's best, China's best. We're also looking at expanding our operations beyond China into ASEAN market, Asia Pacific market, including ASEAN as well as the Middle East Gulf states, India, Australia, New Zealand and finally America and Europe.

We're making good progress and having conversations, significant conversations on all those fronts, which we can duplicate our model. And we hope to report to you and keep you updated. As we move along, we're expanding rapidly and we'll continue to do so. We continue to add new partners to our business and we continue to improve our division and services. I am committed to continue to fund operations on all fronts until such a time that our revenues are sufficient, and we remain confident in our ability to effectively manage our business regardless of the operational environment and expect to continue delivering long term values to all of our shareholders.

Thank you for all your continued support of our brands and products, and their investments in our company. We look forward to furthering our legacy of long term value creation for shareholders, while improving the ecosystem the world needs, every day and every moment.

I will now hand the call back to Tony. Thank you, Tony. Thank you everyone.

Tony Sklar

That was a pre-recorded message from Dr. Wu. Again, he apologizes profusely as some travel disruption in the Asian region has caused him unable to get him on the call this morning. However, I am now very excited to hand the call over to our CEO, Alf Poor.

Alf Poor

Thank you, Tony and thank you to everyone on the call today. As Tony said, he and Bruno had a little bit of fun a couple of hours ago, due to some flight disruptions. So Bruno had to do a recorded message with Tony over cell phone. He apologizes for not being here, but obviously the rest of the team is here to answer any questions in the Q&A session.

I've got quite a significant update for you guys today. I would like you to read the cue carefully. There's a lot of good information in that. I'm also going to walk you through each aspects of our operations this morning, so that I can give us a detailed and update as possible.

Cecilia will take you through the numbers next. But I wanted to start by looking at the results at a high level. Investors should not focus on the year-on-year revenue numbers. As 2018 numbers contained high top line revenues from the electronics and oil trading businesses, which we are exiting from due to the high amount, due to the thin margins

For evidence of the value of the 2019 revenues versus 2018, I would refer you to the year-on-year EPS results, which is the most important fundamental to consider. This is our second successive profitable quarter. We have significant Bitcoin and Ethereum holdings from the GTB trading into those crypto currencies. We continue to convert daily and as of today, hold around $35 million equivalent between BTC and ETH.

Indeed, the resurgence in price in both BTC and ETH since the spring of this year has been pleasing. As the Q2 results show, we have not yet converted any of the BTC and ETH into fear. So they remain as intangible assets on the balance sheet that we plan to make that a focus in the remainder of the year.

At a high level, Q2 was primarily about getting the final pieces of the puzzle in place, and execution in preparation for the second half of the year. Chen Wu came through with several notable deals in Asia that have put us in a very strong position in the new energy vehicles space, such that we are considering the patent ability of the models that he and the team have come up with to provide future upside protection of the IP we have been rapidly developing in the space.

Our costs are well controlled and significantly down year-over-year considering our business transformation and the activities at Fintech Village Put simply, we are achieving a lot with the resources we have. Our teams in New York, Beijing and our other locations are talented and focused, and productivity is high, because of this. I've said this before, but I will reemphasize, we've achieved a tremendous amount at a fraction of the cost in comparison to other players in the Fintech and Clean Energy vehicle space.

Operationally, we added additional staff to the finance team in the U.S. to include filling out SEC reporting and general accounting management roles, and we have begun the rollout of net suite in the U.S. and we'll continue the rollout internationally after the U.S. is fully online.

This is an important investment and time commitment we have made, which will help streamline our finance operations in the future, and was put in place at this time to support the business transformation and growth. We have also reduced the number of entities in the group, and continue to work on the entity consolidation process. We have opened two entities in Singapore to help us with contract management, Taxation and Revenue repatriation, so that we are able to efficiently collect their revenues.

Now that we have the other pieces in place, we are going to begin our search for a new CFO. We are looking for someone in the U.S. with significant experience in addressing institutional investors and talking to the markets in general to help us navigate the next phase of the company. We're looking to dispose of the space, we originally planned to occupy, on the 18th floor of 55 Broadway. We already have an active office for some portions of the space, to coincide with the end of the rent free period. We originally took the option for this back in the summer of 2018, and our plans have shifted since that decision was taken.

I took this decision as we simply don't need the staffing numbers to run our New York corporate HQ efficiently, and we still have space to expand the team on the 19th floor we currently occupy. We will instead redirect some of our planned hiring into our Singapore operations as they come online, and Fintech Village will accommodate some of our additional U.S. staffing requirements that are not the core U.S. management team. I want to say a special thanks to several individuals in the company. Jessica, Tony, Stephanie, Liam in particular who helped us get the new website up and running. I think it's a significant improvement on the previous website that the company had.

We were very pleased to be advised by the team at NASDAQ that we had been included in the Russell 2000, 3000, Microcap funds after that annual reconstitution. Special thanks to Tony Sklar who worked on this. We are happy to have the acknowledgement of Ideanomics from the FTSE Russell team and we look forward to graduating to other indices in the future.

Furthermore, we will be initiating an analyst coverage in the coming days and weeks, and we will also be posting an IR deck to our website to give our investors transparency into those discussions.

In terms of Fintech Village, we're pleased to announce that we released that plan to the media recently, and we have received tremendous feedback on the exciting plans we have there. We reached an agreement with the State of Connecticut regarding the remediation at the West Hartford site in Q2, which saw the return of our 3.6 million cash collaterals that we have posted that was returned to us in early July as part of commencing the [Indiscernible] abatement.

That effort is already underway, and we contracted with the state's largest environmental contractor to take care of this. As part of that, we are currently navigating the permitting process for building demolition as it is proven both expedient and economical to remove the three larger buildings rather than renovate them due to the levels of PCB contamination.

No significant delays are anticipated in the permitting process going forward. Suffice to say that the typical red tape is that such as historical opinions required at town county and state level, the buildings before they can be taken down. There is no known historical value for the buildings, but this has been undertaken as part of a procedure that we cannot avoid. We were successful in reducing the tax assessment on the property, from seven figures down to a low six figures for 2019, 2020 and we have the right to a further assessment when the buildings are demolished.

That said, in the state of Connecticut, you are assessed as improvements are made. So as soon as we start construction, which is likely spring 2020, we will be subject to rising assessments throughout the construction phase, which will be multi-year.

We are planning the construction phase carefully so that buildings can come online as others are under construction, or awaiting construction. So I want to be clear that we do not have to wait until the campus is cleared completely finished to start making use of buildings that are completed through the different phases.

There is significant inbound inquiries to suggest interest in Fintech Village over and about the partners we will bring in. Other activities for tenants in Fintech Village are in the planning, with some very exciting renderings of space shoes usage being shared with us at this time.

The state has approved $4 million of additional Brownfield funds, which are available to us through the town of West Hartford if the remediation cost comes in over the agreed estimates. We hope to have the first partners in the remaining IT building in the fall. But this is subject to amendments at the town level.

Finally, for Fintech Village, doctor will send 7000 -- innovation pops will play an active role in the development of the project, along with other development partners so that we are not financing development costs off of Ideanomics balance sheet. This was the original plan for the site. I just wanted to reiterate that, as it came in, a number of questions submitted recently by investors.

In terms of our EKAR ETF since the ECAR ETF was rebranded to IDEX at the end of Q1 beginning of Q2, we have seen an increase in 60% of assets under custody. While performance though negative has been slowly improving. The overall EDF to ETF industry performance has been largely affected by the heavy upfront investment required for electric car manufacturers, provide us a value added services such as battery and parts and slower than expected adoption in the West.

The more seasoned EDFs in the market saw consistent outflow and negative performance since inception However, we strongly believe that in the long run, the electric vehicle industry will pick up momentum with Asia leading the way, and we will begin introducing our top picks for the industry as we see the sector develop.

For our great grade prime [ph] unit, Q2 saw Kristen Standish, Formula SVP of Sales, take over as CEO of our grapevine business unit. Kristen has been very proactive since taking the reins and has secured several large advertising deals which will produce revenues in the second half of the year.

Additionally, Kristen is exploring partnerships opportunities in Europe and Asia to expand into the large influence of markets in those regions. We got some exciting news for grapevine. We are pursuing adding in a consumer purchasing element to the influence of campaigns, which we believe will help to grow revenues significantly.

The intention is to have that consumer experience live in time for November 11th, which is the equivalent of Black Friday and Cyber Monday in Asia to capture some of the spike in online purchasing at that time of the year as well of course in North America for our own Black Friday later that month.

Since the acquisition in Q1, the CommentsRadar team has been very productive. In Q2, the team completed the migration of the CommentsRadar platform onto Ideanomics server infrastructure, added Instagram's and additional sole source of data for the platform significantly improve the way the platform categorizes data and made a number of other optimizations and fixes to the CommentsRadar platform.

Additionally over the course of this quarter, the CommentsRadar team integrated more deeply with the Grapevine organization. The CommentsRadar engineering team has been fully trained on the Grapevine platform and began building new features and making optimizations for the Grapevine platform in May.

CommentsRadar business lead has been tried on the Grapevine sales process and is currently assisting Grapevine in cross-selling their product augmented with CommentsRadar capabilities.

Q2 saw us finalize majority ownership in the Delaware Board of Trade, which also saw John Wallace join the Ideanomics’ board. Kate Lam is heading up working with John and the DBOT team to develop the ITS to profitability quickly and efficiently.

To that end, we are working with Council on additional FINRA applications and also speaking to market makers to boost their trading volumes. Our plans for DEBOT include using the ATS as a destination for fixed income, including recent debt products.

Many of you may have seen the Blockstack announcement about their receiving the first Reg A + approval for their token offering. While this is encouraging Blockstack operates a closed system for trading on its own platform, and is using the opportunity to raise money for its future token.

I've had a lot of investor outrage on this subject, so I want to say that DEBOT we are pursuing asset backed token offerings, to generate appeal to mainstream investors and not just speculators. We believe that this is a better foundation for the adoption of digital securities.

I want to make it clear that we have no intention to enable startup funding through digital securities offerings via DEBOT. We are only interested in asset backed and regulatory compliant digital offerings at this time.

Speaking of digital securities, we recently announced a stake in Liquefy, a Hong Kong based tokenization platform. Adrian Lai and his team are a young, dynamic and resourceful group that align very well with our objectives in the region. We are pleased to announce we have already begun activities with Liquefy, the first of which will be a fixed income offering through tokenization of a medical facility building in Asia.

This deal is in the underwriting stage, and we hope to see that offering live in the near-term. The monetization for these offerings is seamless with additional offerings such as IPOs in Liquefy and Ideanomics whose share fees based on a percentage of the amount raised. We are focused on providing medical and leisure based real estate assets to Liquefy this time, as we believe these are two strong growth areas in Asia, and we have plans to develop REITs [ph] and other such products around the Liquefy portfolio as it grows to sufficient size for that type of activity.

In terms of Intelligenta, we are currently marketing several Intelligenta offerings to the financial services community in the areas of custom big data solutions, RegTech, risk management and loan portfolio underwriting. There is good interest from the banks we have spoken to so far, and we have active engagements which are very promising.

We anticipate securing some business in 2019 for this unit, business unit although such projects are slated to commence in January 2020. So no revenues are anticipated until Q1 of next year outside of the possibility of perhaps some setup and customization fees. So investors should not anticipate revenues from the Intelligenta Business Unit in 2019.

In terms of Fortify [ph] we are working with Dan Lavi and several other interesting parties to commercialize several opportunities in the security and Cybersecurity space. We have a strong interest in this arena, as we live in an online world, and Ideanomics [ph] in particular security for our advisory or management services go hand-in-hand.

We do not anticipate meaningful revenues from before 2019. We are still developing the business at this time. That said, there is opportunity for us to derive consulting revenues before -- in 2019 leveraging Dr. Lavi's expertise in Cybersecurity. But we have yet to decide if that is interesting for us, as our core interest is in providing higher margin software and hardware services as opposed to the more expensive human services and consulting.

Where such opportunities provide for future soft brand or hardware sales, we will consider the consulting engagements on a case-by-case basis. But investors should not anticipate revenues from this business unit in 2019.

In terms of NETS, which Bruno advised you based on the GCL announcement this morning, we’re changing that group name to MEG. I know we've changed the name of the group twice in recent times. GCL had a hard opinion on the naming of the group. So that's why the recent adjustment was made.

Our Clean Energy EV division continues to develop very rapidly, and the announcement a couple of hours ago required some additional context on this call. GCL is one of the largest Clean Energy companies in Asia with several of its subsidiaries listed on the Hong Kong Stock Exchange. Our partnership with GCL will see them take a stake in which is now called MEG Group in exchange for guaranteed EV fleet sales is significant.

China recently ended its EV subsidy program and in response GCL was innovative enough to develop a program to incentivize fleet customers to procure their vehicles through MEG by being rewarded with an electricity rebate program, which will reduce the cost of charging for fleet owners.

This is a direct comparison to the type of rebate they would have been receiving from the government for the CleanTech vehicles. Ideanomics will provide vehicle procurement through its manufacturing partners with associated lease financing and ABS financing fees from financing activities, as well as the fees from the group buying activities which will be based on volumes per manufacturer in the 5% to 15% range.

Bruno spoke more about that in his earlier remarks. For Treeletrik, as you may have seen from a share issuance, we restructured the deal for the acquisition of Tree to make it more favorable for Ideanomics and its shareholders.

We have also hired a new CEO in Malaysia, who joins us from the commercial vehicle industry where he has successfully brought Chinese and European manufacturers into Malaysia and the ASEAN region. The new CEO will prove very valuable in helping us expand the assembly business, sales and service operations and will help us finalize selection of product lines for the larger commercial trucks and buses we are planning to sell in the region, as well as help us navigate the vehicle licensing process for each type of vehicle, we'll be offering.

Vehicle approvals in Malaysia are done to EU standards. So this provides us with tremendous flexibility when it comes to exporting to other countries when we start our expansion programs for the Treeletrik Group.

In terms of the GTB, as I mentioned previously at the start of the call, we'd be receiving those GTB fees for the initial phase. And we've also been working with the GT dollar team on the development of that fund and we've delivered a detailed white paper on how we'd like to see the fund develop strategically.

We have been actively converting to Bitcoin and Ethereum as I said since shortly after receiving the funds. Details of the conversion are in the 10-Q report. We have not yet started the billing for the monthly service fees. We would like to point out that we have the right to bill monthly when services are delivered and can backfill services if applicable.

The tax advice from the GTB Holdings took longer and was more complex than initially considered primarily due to the fact that there was no precedent for receiving a large sum of service fees and a cryptocurrency for our advisors to use as a benchmark.

I was in Singapore recently with the GT team as were our auditors, so I can confirm that we have delivered the requirements for the fees already received, and we will continue to work on the next stages of development for the funds.

Getting to the point that I think a lot of you on the call want to hear. Our ABS related bus activities are underway, but we do not yet have sufficient buses delivered to an individual city or province to form an asset package for underwriting.

In discussions with the manufacturers, they are expanding production to meet demand by the cities and provinces, and we will notify the market when the first asset package is clear underwriting and are ready for go-to-market.

As you've seen with the iUnicorn Shenma announcement yesterday and the GCL announcement today, our MEG group is going to be responsible for sourcing very high volumes of electric vehicles both commercial and passenger for the taxi business in Chengdu and additionally in the coming days, we expect to make an announcement from our discussions with the Ministry of Culture and Tourism, regarding the tour buses.

Going to take a moment or two to explain how this works. In the S2F2C model that we have, the first S, first part of the model S is for sales. There are two opportunities for revenues here, and these activities are underway at this time. The first one is the procurement of the vehicles. Okay. When you’re procuring vehicles and as you saw with the iUnicorn announcements, there'll be 11,000 taxis procured in tranches between now and December 31st 2020. Based on volume overrides, we will be earning fees from the group buying that we're enabling with the manufacturers.

Secondly, we will be putting lease financing in place to help the city of Chengdu finance those vehicles as well. They are both near-term revenues we can capture. Once a sufficient number of vehicles is deployed, we can then go to the ABS teams at our partners such as CICC and we can package up a large block of vehicles and refinance that original lease financing as asset backed securities.

We will then -- that will be our third range of fees from S2F side of the business. I do want to take a couple of moments to explain that, because we're entering a phase now of heavy negotiations for commercial vehicles, for passenger vehicles, for taxis and for buses for the cities and provinces and 800,000 tour buses which need to be fulfilled in the next three years.

So we do anticipate in the second half of the year, revenues from the sales and the lease financing fees as part of that effort. For Ningbo and our other port deals, we are encountering some interesting challenges in terms of integration as the underlying port systems are old school in comparison to a modern block chain NII systems.

Rather than just wait for the port systems to do major upgrades, which can take some time we are discussing with them ways to get AI involved with their vast datasets to begin commercial engagement now, so we are well positioned when the systems are ready for integration with our other technologies.

Finally there have been a number of questions regarding our cash position and analyst coverage. We have not been actively seeking investment as we are able to draw on commitments from my largest shareholder for additional capitalization if required, although I do want to let this group know today on the call, that there are some interesting developments on the make side of the business, which has suggested that there are interested external parties about planning adjust to enter a phase that is capital intensive.

Once we have a couple of quarters of training revenues from the e-business and our value is better reflected in the share price, we will be reaching out to the investor community to enlarge our institutional investor base and help expand our analyst coverage.

One last thing before I hand back to Tony, a few investors had mailed in questions regarding my employment agreement providing for an increase in base pay upon two successive quarters of profitability.

I can advise today that I have differed accepting that increase until we publish results containing revenues from our clean energy business unit to help demonstrate our commitment in focus on revenue development in this significant area of our activities.

I understand there was a lot of information I'll provide you today but we thought it was important to provide a comprehensive updates for the market. Thank you again to everyone on the call.

I'll hand you back to you Tony.

Tony Sklar

Thank you so much. Really appreciate that. And before I just hand the conversation over to Cecilia, I want to remind our listeners, if they would like to ask a question to operator, I believe it is press star. All right.


[Operator Instructions]

Tony Sklar

Here we go. Thank you very much operator. I appreciate that. I'm now going t hand the conversation over to Ms. Cecilia Xu.

Cecilia Xu

Thank you, Tony. I am Cecilia. I will read financial information. Our revenue for the second quarter ended June 30, 2019 was $14.5 million, that's compared to $133 million for the same period in 2018, a decrease of approximately $118.5 million or approximately 89%. The decrease was mainly due to a change to our business focus from logistic management to digital business consulting services.

Our business strategy and the primary goal for entering the crude oil and electronic trading businesses was to learn about the needs of buyers and sellers in these industries that rely heavily on the shipment of goods.

Our activities in the crude oil trading and electronic trading business have been successful in various aspects in 2018. For strategic reasons we have now phased out of our crude oil trading business and electronics trading business so that we can work towards enabling the application of our Fintech Ecosystem for other useful cases that we have identified.

In March 2019, the Company entered into an agreement with GTD, one of our minority shareholders and strategic investors, whereby the Company agreed to provide digital asset management services.

The Company recognized $26.6 million in the first quarter of 2019, and the remaining revenue of $14.1 million in the second quarter of 2019, as all performance obligations associated with the development of the master plan from the agreement have been satisfied.

Cost of revenues was $0.7 million for the quarter ended June 30, 2019, as compared to $131.4 million for the quarter ended June 30, 2018, a decrease of approximately $130.7 million, or 99%. From a comparability perspective, the cost of revenue during 2018 is not necessarily indicative of the new Fintech business in 2019.

The cost of revenue during 2018 was mainly associated with the logistics management business, oil trading and electronics trading, which traditionally has a very high cost of revenue and low gross margin, while the cost of revenue during the second quarter of 2019 is mainly associated with our digital asset management services as part of our new Fintech services business.

Majority of the costs associated with the development of the master plan services have already been incurred in 2018. In 2018, due to the uncertainty associated with the future economic benefits when such costs were incurred, the Company expensed these costs during 2018.

Our gross profit for the quarter ended June 30, 2019 was approximately $13.7 million, as compared to $1.5 million during the same period in 2018, representing an increase of 796%. The gross profit ratio for the quarter ended June 30, 2019 was 95%, while it was 1% during the same period in 2018.

The increase was mainly due to the first; the Company recorded service revenue from digital asset management services in 2019. The second; the low cost of revenue associated with our digital asset management services, which resulted in higher gross profit margin of second quarter in 2019 compared to the low gross profit margin from the logistics management business in 2018.

The reasons for high gross margin in the digital asset management services provided to GTD are as follows. The first; we have invested in our technical development knowledge in digital asset management since early 2018.

The second; our uncapitalized assets, such as knowhow and expertise in our management team to develop the appropriate strategy to provide the digital asset management service which has delivered a lot of values to our client, GTD. The third; there are no significant incremental costs, other than labor expenses associated with delivering on the master plan.

Selling, general and administrative expenses for the quarter ended June 30, 2019 was $6.5 million as compared to $8.8 million for the same period in 2018, a decrease of approximately $2.3 million or 26%. Majority of the decrease is due to a decrease in salary and employee benefits expenses, and lower sales and marketing expense for Wecast services.

Professional fees for the quarter ended June 30, 2019 was $1.2 million as compared to $0.6 million for the same period in 2018, an increase of approximately $0.6 million. 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.

Net earnings per share for the quarter ended June 30, 2019 was $0.05 per share, as compared to a loss per share for the same period in 2018 of $0.12 per share. As of June 30, 2019, the company had a cash of $1.1 million, total assets of $149.4 million, total liabilities of $61.2 million and total equity of $87.0 million.

Over the past year Ideanomics has been able to transform 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 have positioned the Company towards a path of unlocking Fintech services related revenue during 2019. We have several signed customer revenue deals in our pipeline, and our product and tech teams are diligently building out these new digital products to continue to unlock this revenue and position the company towards a strong 2019.

Thank you. So, I would hand back to Tony.

Tony Sklar

Thank you very much Cecilia. That concludes management's prepared remarks and of course now we're going to turn to the Q&A session.

Question-and-Answer Session

[Operator Instructions]

A - Tony Sklar

Excellent. That's fantastic. All right. We're going to start off with our first one here and I think its Mr. Jim Mitchell. Hi, Jim.

Unidentified Analyst

Hey good morning everyone. My question regards GT. It appears from the 10-Q that you've got about $29 million in Bitcoin and Ethereum or $35 million as of today as you mentioned earlier, which was all converted from GTB. Can you describe from end-to-end the next phase of the GT Dollar deal. Specifically, what services will be providing going forward? And when you plan on building the monthlies? How you're paid in crypto? And most importantly, how this will become actual revenue on the financials?

Alf Poor

Absolutely. Thanks Jim. Good to talk to you again. So, in turn -- I'll take you the first part of your question first in terms of what we're delivering to GT Dollar with help and develop the fund. We want to take the notion of a coin as a currency. Put that to one side for a second. What we believe there's a significant opportunity with having a ASEAN region based coin such as GTB, is to and I can't give away too much because a lot of this is confidential development. But essentially we're looking at areas where GTB can be used as a significant cross-border settlement.

So, we've produced a comprehensive white paper through myself; Dr. Wu, some other members of the team that we presented to the GT Group. They're very excited about it. There is some complexity because we are talking about cross-border settlement. But we believe this is an exceptional way to develop the GTB fund and to put GT in a class of its own in the long term. In the short term, we're giving them some assistance in helping them with the complexities of listing their coin on other markets. We have opened up a corporate account with Coinbase. But there is a lot of complexity around cryptocurrency.

You can't snap your fingers and expect things to happen. Getting liability insurance and custodian services is not simple for any crypto exchange and not simple for the underlying funds that it lists. So there's a bit of complexity there. But some very exciting times. The majority of the reason for not billing at this point was due to our attention being diverted to how best manage the receipt of those fees. Part of the reason of establishing the entities within Singapore was with GTB consideration, as well as the fact that we'll use that to repatriate revenues out of China. We've rewritten some of our contracts to be Singapore based, so that we're not impacted by any future currency restrictions caused by the ongoing trade discussions.

In terms of how we monetize, we plan to start converting into Fiat in the second half of the year. It's been pleasing watching the growth. I mean we started converting our GTB into BTC when it was around the $5500 level. So although there's been a bit of movement up and down in BTC in recent weeks, typically we've enjoyed the upright there. So -- but we do want to make those conversions. Currently, they sit as an intangible asset on the balance sheet. As soon as we begin to liquidate those they will have that discount as an intangible asset removed only for the portion that we cash in and that will then be considered typical earnings in subject to taxation. Does that answer your question, Jim?

Unidentified Analyst

I guess just a quick follow up. Do you foresee any problems making them tangible assets?

Alf Poor

No. It's a question of converting them into fiat. As soon as we do that, the guidance were given by our auditors and by regulators was that crypto should be, because it doesn't have any underlying value like a typical currency would have. It should be shown as an intangible asset on the balance sheet. But once we do convert that into hard cash fiat currency then that discounts removed and then it's treated as ordinary earnings.

Unidentified Analyst

Okay. Thank you.

Tony Sklar

Thanks Jim every much. I really appreciate that. And we have another question. Next up is Mr. Dan Potter.

Unidentified Analyst

I have a follow up on the GT as well. My question is, can you just provide some clarity. Do we have a signed contract in place with GT Dollar which allows us to collect the monthly fees or are we still awaiting their final approval of the master plan for that to go into effect?

Alf Poor

The master plan has been submitted and received. Our auditors have verified that as part of our Q2 activities. We do have the right to do the billing and the bank billing. Originally when the contract was signed there were the upfront fees and then there was a second set of fees to be paid by December 31st. We went back in and negotiated the right to bill monthly but we had the right to-- so we have the right to do it, but obviously only when certain service deliverables have met. We can do that whenever we're ready.

Currently, we're more focused on the next stage of what we want to do to develop the funds. And then as soon as we hit certain milestones there in then the billing -- monthly billing will begin. And it maybe the first billing covers a bank period as well.

Tony Sklar

Great. Okay. Thanks very much, Mr. Potter. I'm going to remind listeners one more time Star One to be able to answer questions. We do have a little bit of a lineup, but there is an order here. So the next question goes to Miles Gray [ph], Investments.

Unidentified Analyst

Hey guys. Thanks for the time. So, given that we are halfway through Q3, can you speak to forward looking revenue guidance? And then, in addition to that, you mentioned the investor slide deck. When can we expect that to be on the new website?

Alf Poor

Jessica and Tony are working on the investor slide deck, that's being produced in line with some feedback that we're getting from the analysts that we currently have engaged. I expect we'll have that up in the coming weeks.

Tony Sklar

Yes. Absolutely.

Alf Poor

In terms of giving revenue guidance, our council has asked us not to. The best we can do is let you know that the sales and financing activities are underway in Q3. Obviously, we have some class action lawsuits hanging out that from guidance previously given. So until those are settled and we're confident they'll full favorably for Ideanomics. We've been asked not to give any formal guidance.

Unidentified Analyst

Got it. Thanks.

Tony Sklar

Thanks very much. And then, we have our next question from a member for [Indiscernible].

Unidentified Analyst

Hey, thank you for taking the time to answer my question here. Just a follow up to the bus revenues, you mentioned regarding the ABS perhaps happening in 2020. Can you just provide little bit more color on how that's looking here? So when you say underway are we delivering buses now perhaps you can just clarify that for us a little bit?

Alf Poor

Yes, absolutely. Buses are being delivered as you know if you take an ABS package to market it needs to be considerable in size to be interesting to the institutional investors. Currently, I'll give you an example. Obviously they're trying to convert a million buses by 2022. JAC one of our partners is one of the biggest bus manufacturers. Their output in Q2 was less than 3000 bus units. So there needs to be a ramp up in the manufacturing those 3000 bus units, it did not go exclusively to us of course. We only have a portion of the pie. There are many major cities out there. They're all vying for each bus as it comes off the line because they want to ensure they meet their carbon emissions quotas by 2022.

So a little bit of ease is on the manufacturing side which we can't control. That's one of the reasons that Bruno has rounded up so many of the manufacturers not only to give us that group buying activities but of course to give us some influence to make sure that we at least get our fair quota of buses. So as soon as we have sufficient buses delivered. And remember these have already been financed by their local authority and government, the initial purchasing. So what we're effectively doing is asset backed refinancing.

So whereas if you look at the tour buses, the deal with GSL for the fleet customers and the deal with them our Unicom for the city of Chengdu in Sichuan Province. We're going to be doing the upfront lease finance for those as well. For the city buses is different. They've already been paid for in financing through the government and we'll be refinancing those under the ABS. So going a little slower than we had hoped but activity is well underway. I'm going to be in the region much more to make sure that we can push those things along because it seems quite often that a western face in the room makes people want to move quicker which is which is great.

So you know what we do see from the manufacturers and the cities is a tremendous amount of cognizance around wanting to get as many buses delivered as quickly as possible. So as soon as we have them, because ABS packages are taken to market we'll be able to declare them to you.

Tony Sklar

Did you want to have a follow-up to that?

Unidentified Analyst

Sure. I thought you want the next question. Okay. That's great. No. Thank you very much. So as far as Q3 looks can we -- I know you can't provide guidance right now. You choose not to. Can we at least expect to see a sequential rise quarter over quarter in revenues?

Alf Poor


Unidentified Analyst

Great. Thank you, guys.

Tony Sklar

All right. We will have our next question from [Indiscernible]

Unidentified Analyst

Hi guys. Thanks for taking my call. I got a question that I would like a solid answer on, Alfred. When are you expecting to sell our crypto holdings? I'm sure you said it but I'm not getting a clear answer as far as all are cryptos?

Alf Poor

Yes. We haven't chosen to sell any of the GTB – sorry, the BTC and the ETH that we're holding from conversion in GTB. We'll be actively doing that now. Part of that required us to move it to another exchange which we're under way of doing. As I mentioned we've got a corporate account with Coinbase at this point. We've put in place the protocols which are complicated but need to be very detailed and done correctly in terms of the cold storage that we're going to be doing to facilitate the transfer. But we'll be focusing on that in Q3 and Q4.

Unidentified Analyst

Okay. So we'll see revenues and is there like a timeframe you have to selling all of this or the Bitcoin, Ethereum and whatnot?

Alf Poor

We're in process. We're doing it. We obviously hold a significant amount. There's some questions internally around security and making sure that we're not subject to any kind of compromise while this transfer happens. That's what's being put in place at this time. But as I mentioned earlier on the call, as soon as we do the conversion it'll show up as earnings and the discount will be removed from those coins based on the value that we derive from the fiat conversion.

Unidentified Analyst

Okay. My last question is regards to my email on this. Is there like a confirmation that could get as far as people that I found. I really didn't get a response. I was hoping for your answer?

Alf Poor

Yes. I think what you – sort of to speak out there. I think what you what you provided to us was just a direct comparison between the two previous S-1 filings. We've handed that off internally to understand those holdings. None of that closely held or sold anything whatsoever. Bruno Wu if anything -- if you guys take a look in the Q, you will see that he has actually done an internal purchase off of one of our investors who indicated they were looking to liquidate. And Bruno purchased those shares at $3 per share.

Unidentified Analyst


Alf Poor

1.7 million shares.

Unidentified Analyst


Alf Poor

That's why I said on the start of the call. Take a look in the Q guys, lot of valuable information in there.

Unidentified Analyst

Okay. I'm assuming it's going to be highly accurate.

Alf Poor

I'm sorry, I didn't catch that.

Unidentified Analyst

The Venture, ID Venturas. I believe it's true that they are in the purchase.

Alf Poor

No. ID Venturas 7 LLC is not related to Bruno.

Unidentified Analyst


Alf Poor

Bruno we do in the purchase through is some Seven Stars Group likely Red Rock Capital. Again I think the details are in the Q, correct Cecilia.

Cecilia Xu


Unidentified Analyst

Okay. Although I'm looking for others than that. Okay. That's it.

Tony Sklar

Great. Thank you very much. I appreciate that everybody. That is all the time that we have today and it concludes the Ideanomics 2019 Q2 Investor Earnings Call. We encourage our community to reach out to us so we can answer any further questions that you have individually.

You can also send your questions into IR at I know many of you do. We'd like to thank all of our listeners, shareholders, analysts and others would take the time to listen to our earnings call. We urge to refer to our latest SEC filings for any information that you need. This call will be available from our new website. Thanks very much. Out in the Investors section and you will find the link there. To be alerted to news, events, and other information in a timely manner we recommend you follow us on social media channels to sign-up for our newsletter and explore our new website at Thank you everybody for participating on the call today. And I'll hand it back over to you operator.


Ladies and gentlemen, thank you for your participation. You may disconnect your lines and have a wonderful day.