LAS VEGAS, April 1, 2019 /PRNewswire/ -- Remark
Holdings, Inc. (NASDAQ: MARK), a diversified global technology
company with leading artificial intelligence (AI) solutions and
digital media properties, reported its financial results for the
fourth quarter and full year ended December
31, 2018.
Management Commentary
"We closed the year on a strong note, generating solid top-line
growth at both of our business segments," said Kai-Shing Tao, Chairman and Chief Executive
Officer of Remark Holdings. "Our success in turning around
Vegas.com under our ownership during the past three years has
allowed us to move forward in monetizing this asset and
transitioning into a pure-play AI enterprise. Our sale of
Vegas.com will allow us to substantially reduce our debt,
restructure our balance sheet and streamline our cost structure, as
we shift all of our attention on expanding our AI business.
"KanKan contributed $2.4 million
to our fourth quarter revenues; which excludes an additional
$4.6 million that will be recognized
in future periods, beginning in the second quarter of 2019.
KanKan's fourth quarter delivery was its highest since we
launched our AI operations. Our operating momentum has
continued in the first quarter of 2019, as we demonstrate the
effectiveness of our solutions at retail, including elevating
engagement, increasing sales and driving deeper connections with
shoppers.
"Looking ahead, we're focused on building on the success of our
retail launch, while continuing to work with our partners in the
safety and security space to develop tailored AI solutions for
construction sites, campuses, restaurants, and traffic monitoring
and enforcement. As a pure-play AI company, we will be
optimally positioned to maximize our resources, including our
proprietary technology, to expand our business in multiple sectors,
with the goal of building a stream of recurring revenues, supported
by modest recurring capital costs."
Recent Strategic and Operational Highlights
- Continued to work closely with a diverse group of clients in
executing on various stages of deployment regarding KanKan AI
solutions in retail, construction sites, traffic control,
restaurants and entertainment.
- Entered into an agreement to sell Vegas.com, LLC to VDC-MGG
Holdings LLC, an affiliate of Remark's senior lenders, for an
anticipated enterprise value of approximately $45 million. The cash proceeds of the transaction
will be used to pay amounts due to Remark's senior lenders, leaving
only approximately $10 million of
remaining debt owed to the senior lenders.
- The sale of Vegas.com will transform Remark into a pure play AI
company and allow the company to significantly reduce debt,
restructure its balance sheet and its cost structures. The sale of
Vegas.com remains subject to certain closing conditions, including
approval of the transaction by our stockholders. We will hold a
special meeting of stockholders to obtain stockholder approval for
the transaction. The closing of the transaction is expected to take
place during the second quarter of 2019.
Three Months Ended December 31,
2018 compared to 2017
- Revenue for the fourth quarter of 2018 was approximately
$22.3 million, compared to
$18.6 million in the fourth quarter
of 2017. Results reflect a $4.0
million increase in revenue resulting from transaction
growth in the Travel & Entertainment segment, offset by a
$.3 million decrease in revenue from
the Company's other business units. Our Technology & Data
Intelligence segment contributed $2.4
million in revenue from the deployment of our AI-based
retail and safety solutions. A further $4.6
million was delivered for our AI- based public safety and
risk management solutions, but revenue recognition will be deferred
until such time as we collect the amounts due from the customer. We
anticipate collections to begin in the second quarter of 2019.
- Total cost and expense for the fourth quarter of 2018 was
$32.4 million, compared to
$40.0 million in 2017, driven in part
by a reduction in impairment charges to $2.2
million, from $14.6 million in
2017, which included recognized losses of $5.8 million and $8.8
million, on impairments of long-lived intangible assets and
goodwill respectively, which were acquired through the CBG
acquisition. During the fourth quarter of 2018 we also recorded a
$.6 million impairment of the
remaining long-lived intangible asset acquired in the CBG
acquisition, and a $1.6 million
impairment of goodwill related to the sale of substantially all the
remaining assets of Banks.com.
- The Company's cost and expense for the fourth quarter of 2018
also included a $4.7 million increase
in cost of revenue in the Technology and Data Intelligence segment
to deliver projects, and a $1.5
million increase in paid-search costs in the Travel &
Entertainment segment resulting from the competitive nature of the
paid-search marketplace. Also, during the same period, Remark
recorded $2.0 million less in
employee stock compensation.
- Operating loss was $10.1 million,
compared to $21.4 million due to the
decrease in total cost and expense.
- Adjusted EBITDA was negative $4.6
million, compared to negative $2.2
million.
- Net loss was $(7.1) million, or
$(0.19) per diluted share, compared
to a net loss of $(89.2) million or
$(3.47) per diluted share. Net loss
for the fourth quarter of 2018 included a non-cash gain of
$5.7 million related to a change in
the fair value of Remark's warrant liability, which occurred due to
the decrease in the Company's stock price during the period. The
same period of 2017 included a non-cash loss of $66.5 million related to a change in the fair
value of Remark's warrant liability, which occurred due to the
increase in the Company's stock price during that period.
- At December 31, 2018, the cash
and cash equivalents balance was $14.4
million, and total restricted cash was $11.1 million, bringing the total combined cash
position to $25.5 million, compared
to a total combined cash position of $34.3
million at December 31, 2017.
Cash decreased primarily due to an increase in total expense as the
Company grew its operations in China and engaged in multiple proof-of-concept
projects, the timing of payments related to elements of working
capital, and paying security deposits related to the Travel &
Entertainment business.
Conference Call Information
Mr. Tao will hold a conference call today April 1, 2019 at 4:30 p.m.
Eastern Time (1:30 p.m. Pacific
Time) to discuss these financial results. A question and
answer session will follow management's presentation.
Toll-Free Number: 800-289-0438
International Number: 323-794-2423
Conference ID: 8109233
Please call the conference telephone number 10 minutes prior to
the start time. An operator will register your name and
organization.
The conference call will be broadcast simultaneously and
available for replay via the investor section of the Company's
website here.
A replay of the call will be available after 7:30 pm Eastern time on the same day through
April 5, 2019.
Toll-Free Replay Number: 844-512-2921
International Replay Number: 412-317-6671
Replay ID: 8109233
About Remark Holdings, Inc.
Remark Holdings, Inc.
(NASDAQ: MARK) delivers an integrated suite of AI solutions that
enable businesses and organizations to solve problems, reduce risk
and deliver positive outcomes. The company's easy-to-install AI
products are being rolled out in a wide range of applications
within the retail, financial, public safety and workplace arenas.
The company also owns and operates digital media properties that
deliver relevant, dynamic content and ecommerce solutions. The
company is headquartered in Las Vegas,
Nevada, with additional operations in Los Angeles, California and in Beijing, Shanghai, Chengdu and Hangzhou, China. For more information, please
visit the company's website at www.remarkholdings.com.
Forward-Looking Statements
This press release may
contain forward-looking statements, including information relating
to future events, future financial performance, strategies,
expectations, competitive environment and regulation. Words such as
"may," "should," "could," "would," "predicts," "potential,"
"continue," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates," and similar expressions, as well as
statements in future tense, identify forward-looking statements.
These statements involve known and unknown risks, uncertainties and
other factors, including those discussed in Part I, Item 1A. Risk
Factors in Remark Holdings' Annual Report on Form 10-K and Remark
Holdings' other filings with the SEC. Any forward-looking
statements reflect Remark Holdings' current views with respect to
future events, are based on assumptions and are subject to risks
and uncertainties. Given such uncertainties, you should not place
undue reliance on any forward-looking statements, which represent
Remark Holdings' estimates and assumptions only as of the date
hereof. Except as required by law, Remark Holdings undertakes no
obligation to update or revise publicly any forward-looking
statements after the date hereof, whether as a result of new
information, future events or otherwise.
Company Contact:
Alison
Davidson
Remark Holdings, Inc.
adavidson@remarkholdings.com
702-701-9514
Investor Relations Contact:
Brad Edwards
The Plunkett Group, Inc.
Brad@ThePlunkettGroup.com
914-582-4187
[Tables to follow]
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
|
Consolidated Balance
Sheets
|
|
(dollars in
thousands, except par values)
|
|
|
December
31,
|
|
2018
|
|
2017
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
14,410
|
|
|
$
|
22,632
|
|
|
Restricted
cash
|
11,138
|
|
|
11,670
|
|
|
Trade accounts
receivable, net
|
6,369
|
|
|
3,673
|
|
|
Prepaid expense and
other current assets
|
12,128
|
|
|
5,518
|
|
|
Notes receivable,
current
|
100
|
|
|
290
|
|
|
Total current
assets
|
44,145
|
|
|
43,783
|
|
|
Notes
receivable
|
—
|
|
|
100
|
|
|
Property and
equipment, net
|
10,570
|
|
|
13,387
|
|
|
Investments in
unconsolidated affiliates
|
2,005
|
|
|
1,030
|
|
|
Intangibles,
net
|
17,930
|
|
|
23,946
|
|
|
Goodwill
|
18,514
|
|
|
20,099
|
|
|
Other long-term
assets
|
644
|
|
|
1,192
|
|
|
Total
assets
|
$
|
93,808
|
|
|
$
|
103,537
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Accounts
payable
|
$
|
30,876
|
|
|
$
|
17,857
|
|
|
Accrued expense and
other current liabilities
|
24,664
|
|
|
18,795
|
|
|
Deferred merchant
booking
|
4,664
|
|
|
9,027
|
|
|
Contract
Liability
|
4,063
|
|
|
3,691
|
|
|
Note
payable
|
3,000
|
|
|
3,000
|
|
|
Current maturities of
long-term debt, net of unamortized discount and debt issuance
cost
|
35,314
|
|
|
38,085
|
|
|
Total current
liabilities
|
102,581
|
|
|
90,455
|
|
|
Warrant
liability
|
1,383
|
|
|
89,169
|
|
|
Other
liabilities
|
2,968
|
|
|
3,501
|
|
|
Total
liabilities
|
106,932
|
|
|
183,125
|
|
|
|
|
|
|
Commitments and
contingencies (Note 13)
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.001 par value; 1,000,000 shares authorized; none
issued
|
—
|
|
|
—
|
|
|
Common stock, $0.001
par value; 100,000,000 shares authorized; 39,053,312 and 28,406,026
shares issued and outstanding; each at December 31, 2018 and
2017, respectively
|
39
|
|
|
28
|
|
|
Additional
paid-in-capital
|
308,018
|
|
|
220,117
|
|
|
Accumulated other
comprehensive loss
|
32
|
|
|
115
|
|
|
Accumulated
deficit
|
(321,213)
|
|
|
(299,848)
|
|
|
Total stockholders'
equity (deficit)
|
(13,124)
|
|
|
(79,588)
|
|
|
Total liabilities and
stockholders' equity
|
$
|
93,808
|
|
|
$
|
103,537
|
|
|
|
See Notes to
Consolidated Financial Statements
|
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
|
Consolidated
Statements of Operations and Comprehensive Loss
|
|
(dollars in
thousands, except per share amounts)
|
|
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
|
Revenue,
net
|
$
|
79,110
|
|
|
$
|
70,601
|
|
|
Cost and
expense
|
|
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
24,628
|
|
|
16,909
|
|
|
Sales and marketing
1
|
38,391
|
|
|
33,252
|
|
|
Technology and
development 1
|
13,332
|
|
|
11,642
|
|
|
General and
administrative 1
|
33,344
|
|
|
19,391
|
|
|
Depreciation and
amortization
|
10,875
|
|
|
11,070
|
|
|
Impairments
|
2,209
|
|
|
14,646
|
|
|
Other operating
expense 1
|
1,084
|
|
|
1,070
|
|
|
Total cost and
expense
|
123,863
|
|
|
107,980
|
|
|
Operating
loss
|
(44,753)
|
|
|
(37,379)
|
|
|
Other income
(expense)
|
|
|
|
|
Interest
expense
|
(6,491)
|
|
|
(4,645)
|
|
|
Other income,
net
|
282
|
|
|
23
|
|
|
Change in fair value
of warrant liability
|
27,879
|
|
|
(64,139)
|
|
|
Other gain
(loss)
|
858
|
|
|
(317)
|
|
|
Total other income
(expense), net
|
22,528
|
|
|
(69,078)
|
|
|
Loss before income
taxes
|
(22,225)
|
|
|
(106,457)
|
|
|
Benefit from (provision
for) income taxes
|
667
|
|
|
(278)
|
|
|
Net loss
|
$
|
(21,558)
|
|
|
$
|
(106,735)
|
|
|
Other comprehensive
income (loss)
|
|
|
|
|
Foreign currency
translation adjustments
|
(83)
|
|
|
131
|
|
|
Comprehensive
loss
|
$
|
(21,641)
|
|
|
$
|
(106,604)
|
|
|
|
|
|
|
Weighted-average
shares outstanding, basic and diluted
|
34,545
|
|
|
23,763
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
$
|
(0.62)
|
|
|
$
|
(4.49)
|
|
|
|
|
|
|
1 Includes
share-based compensation as follows:
|
|
|
|
|
Sales and
marketing
|
$
|
129
|
|
|
$
|
—
|
|
|
Technology and development
|
(280)
|
|
|
716
|
|
|
General
and administrative
|
13,098
|
|
|
3,504
|
|
|
Other
operating expense
|
$
|
1
|
|
|
$
|
—
|
|
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SOURCE Remark Holdings, Inc.