LAS VEGAS, Aug. 8, 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 second quarter
ended June 30, 2019.
Management Commentary
"During the second quarter, we continued to broaden our
base of contracts and are currently installing our AI solutions in
the real estate, pharmacy, and transportation sectors, while
working with additional partners to expand upon our retail
deployments," said Kai-Shing
Tao, Chairman and Chief Executive Officer of Remark
Holdings. "Our focus on our customer's return on investment is
resonating with them, leading to additional organic revenue
opportunities, expanding upon their existing large footprints," Mr.
Tao added. "At the same time we're continuing to align
our cost structure, as we pursue business in a disciplined manner
and lay the path to profitable growth."
Recent Highlights
- Completed the sale of Vegas.com and used proceeds to
significantly reduce debt.
- Entered into a "smart-building" partnership agreement with
Hanvon Technology Co. Ltd, one of China's top software companies, to utilize
KanKan's facial-recognition technology to provide entry/exit
management at access points in the portfolio buildings of the
software company. The partnership has already resulted in
deployment at more than 1,000 access points, with plans to continue
deployment to more than 10,000 building units by the end of
2019.
- The company's installation of 5,000 units of its
pharmacy-patient terminal system in 2018 led to an additional
contract to install 15,000 terminals in pharmacies in additional
Chinese cities in 2019.
- Completed the installation of KanKan's taxi-safety-monitoring
system in more than 2,000 taxis in the Chinese city of
Xi'an. Remark is pursuing
additional business opportunities for the taxi-safety-monitoring
system in Guiyang and Chongqing, cities representing a total
addressable market of approximately 25,000 vehicles and a revenue
opportunity of more than $10
million.
- Sharecare received a strategic investment led by Quest
Diagnostics, further highlighting the value Sharecare is creating.
Remark owns approximately five percent of Sharecare's issued stock
and continues to explore avenues to optimize the monetization of
this asset to best create long-term value for its shareholders. To
date, Sharecare has raised in excess of $400
million.
Three Months Ended June 30,
2019 compared to Three Months Ended June 30, 2018
- On May 15, 2019, the company
completed the sale of Vegas.com for an aggregate purchase price of
$30.0 million and used the proceeds
to significantly reduce its obligations to its lenders. A gain of
$6.5 million was recorded in
discontinued operations on the sale of the Vegas.com business that
formerly comprised Remark's Travel and Entertainment segment. The
results of the formerly-reported Travel and Entertainment segment
are now reported as discontinued operations.
- Revenue for the second quarter of 2019 was $2.9 million, down from $3.9 million during the comparable period of last
year. Regulatory changes in China's financial services market caused the
company to discontinue its FinTech business in 2018, but the
absence of FinTech revenue was partially offset by an increase in
revenue from AI projects. Additionally, AI revenue in the second
quarter of 2019 was more than double the $1.2 million reported during the second quarter
of 2018, and significantly higher than the $0.4 million reported in the first quarter of
2019, representing the completion and passing of several
proof-of-concept tests on projects and the beginning of deployment
and implementation phases.
- Total cost and expense for the second quarter of 2019 was
$5.8 million, a decrease from the
$10.6 million reported in the second
quarter of 2018. The decrease is primarily attributable to
decreases in cost of sales as a result of the discontinuance of
FinTech services, in consulting fees due to declining use of
external consultants, in payroll and related costs as a result of
headcount reductions, and in bad debt expense.
- Operating loss declined to $2.9
million in the second quarter of 2019 from $6.7 million in the second quarter of 2018
commensurate with the cost and expense declines.
- Adjusted EBITDA was ($2.7)
million from continuing operations, as compared to
($5.3) million.
- Net loss totaled $2.8 million or
($0.06) per diluted share in the
second quarter ended June 30, 2019,
compared to net income of $3.4
million, or $0.10 per diluted
share in the comparable period of the prior year. The income in the
prior year was driven by a $10.1
million gain in the change of the fair value of the warranty
liability.
- At June 30, 2019, the cash and
cash equivalents balance was $2.1
million, compared to a cash position of $1.4 million at December
31, 2018. Cash increased primarily due to timing of payments
related to elements of working capital and the issuance of common
stock.
Conference Call Information
Mr. Tao will hold a conference call today August 8, 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: 866-548-4713
International Number: 323-794-2093
Conference ID: 7402737
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
August 13, 2019.
Toll-Free Replay Number: 844-512-2921
International Replay Number: 412-317-6671
Replay ID: 7402737
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 http://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:
E. Brian
Harvey
Remark Holdings, Inc.
ebharvey@remarkholdings.com
702-701-9514
Media Relations Contact:
Brad
Edwards
The Plunkett Group, Inc.
Brad@ThePlunkettGroup.com
212-739-6740
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
(dollars in
thousands, except share and per share amounts)
|
|
|
June 30,
2019
|
|
December 31,
2018
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,071
|
|
|
$
|
1,410
|
|
|
Trade accounts
receivable, net
|
4,700
|
|
|
5,762
|
|
|
Prepaid expense and
other current assets
|
7,213
|
|
|
7,907
|
|
|
Notes receivable,
current
|
—
|
|
|
100
|
|
|
Assets of disposal
group, current
|
—
|
|
|
28,966
|
|
|
Total current
assets
|
13,984
|
|
|
44,145
|
|
|
Property and
equipment, net
|
1,795
|
|
|
2,075
|
|
|
Operating lease
assets
|
5,582
|
|
|
—
|
|
|
Investment in
unconsolidated affiliates
|
1,944
|
|
|
2,005
|
|
|
Intangibles,
net
|
838
|
|
|
1,010
|
|
|
Other long-term
assets
|
1,308
|
|
|
450
|
|
|
Assets of disposal
group, long-term
|
—
|
|
|
44,123
|
|
|
Total
assets
|
$
|
25,451
|
|
|
$
|
93,808
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Accounts
payable
|
$
|
7,696
|
|
|
$
|
5,675
|
|
|
Accrued expense and
other current liabilities
|
13,625
|
|
|
16,812
|
|
|
Contract
liability
|
222
|
|
|
132
|
|
|
Note
payable
|
3,000
|
|
|
3,000
|
|
|
Loans payable,
current, net of unamortized discount and debt issuance
cost
|
11,248
|
|
|
35,314
|
|
|
Liabilities of
disposal group, current
|
—
|
|
|
41,648
|
|
|
Total current
liabilities
|
35,791
|
|
|
102,581
|
|
|
Operating lease
liabilities, long-term
|
5,838
|
|
|
—
|
|
|
Warrant
liability
|
721
|
|
|
1,383
|
|
|
Other
liabilities
|
—
|
|
|
2,934
|
|
|
Liabilities of
disposal group, long-term
|
—
|
|
|
34
|
|
|
Total
liabilities
|
42,350
|
|
|
106,932
|
|
|
|
|
|
|
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; 46,130,159 and
39,053,312 shares issued and outstanding; each at June 30, 2019 and
December 31,
2018, respectively
|
46
|
|
|
39
|
|
|
Additional
paid-in-capital
|
315,829
|
|
|
308,018
|
|
|
Accumulated other
comprehensive income
|
65
|
|
|
32
|
|
|
Accumulated
deficit
|
(332,839)
|
|
|
(321,213)
|
|
|
Total stockholders'
deficit
|
(16,899)
|
|
|
(13,124)
|
|
|
Total liabilities and
stockholders' deficit
|
$
|
25,451
|
|
|
$
|
93,808
|
|
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
|
Unaudited Condensed
Consolidated Statements of Operations and Comprehensive
Loss
|
|
(dollars in
thousands, except per share amounts)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Revenue
|
$
|
2,865
|
|
|
$
|
3,887
|
|
|
$
|
4,074
|
|
|
$
|
5,713
|
|
|
Cost and
expense
|
|
|
|
|
|
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
1,541
|
|
|
3,280
|
|
|
3,134
|
|
|
4,547
|
|
|
Sales and
marketing
|
687
|
|
|
1,074
|
|
|
1,546
|
|
|
2,057
|
|
|
Technology and
development
|
854
|
|
|
1,288
|
|
|
2,158
|
|
|
2,091
|
|
|
General and
administrative
|
2,454
|
|
|
4,385
|
|
|
5,431
|
|
|
21,650
|
|
|
Depreciation and
amortization
|
260
|
|
|
546
|
|
|
585
|
|
|
1,137
|
|
|
Other operating
expense
|
—
|
|
|
24
|
|
|
6
|
|
|
46
|
|
|
Total cost and
expense
|
5,796
|
|
|
10,597
|
|
|
12,860
|
|
|
31,528
|
|
|
Operating
loss
|
(2,931)
|
|
|
(6,710)
|
|
|
(8,786)
|
|
|
(25,815)
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
Interest
expense
|
(553)
|
|
|
(330)
|
|
|
(940)
|
|
|
(672)
|
|
|
Other income,
net
|
92
|
|
|
43
|
|
|
47
|
|
|
44
|
|
|
Change in fair value
of warrant liability
|
2,078
|
|
|
10,055
|
|
|
662
|
|
|
18,665
|
|
|
Other gain
(loss)
|
27
|
|
|
554
|
|
|
1
|
|
|
523
|
|
|
Total other income
(expense), net
|
1,644
|
|
|
10,322
|
|
|
(230)
|
|
|
18,560
|
|
|
Income (loss) from
continuing operations before income taxes
|
(1,287)
|
|
|
3,612
|
|
|
(9,016)
|
|
|
(7,255)
|
|
|
Benefit from income
taxes
|
—
|
|
|
1,026
|
|
|
—
|
|
|
995
|
|
|
Income (loss) from
continuing operations
|
$
|
(1,287)
|
|
|
$
|
4,638
|
|
|
$
|
(9,016)
|
|
|
$
|
(6,260)
|
|
|
Income (loss) from
discontinued operations (Note 16)
|
(1,487)
|
|
|
(1,259)
|
|
|
(2,610)
|
|
|
(4,414)
|
|
|
Net income
(loss)
|
$
|
(2,774)
|
|
|
$
|
3,379
|
|
|
$
|
(11,626)
|
|
|
$
|
(10,674)
|
|
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
127
|
|
|
(183)
|
|
|
33
|
|
|
15
|
|
|
Comprehensive income
(loss)
|
$
|
(2,647)
|
|
|
$
|
3,196
|
|
|
$
|
(11,593)
|
|
|
$
|
(10,659)
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding, basic and diluted
|
43,335
|
|
|
32,933
|
|
|
39,994
|
|
|
32,666
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share, basic and diluted
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.03)
|
|
|
$
|
0.14
|
|
|
$
|
(0.23)
|
|
|
$
|
(0.19)
|
|
|
Discontinued
operations
|
(0.03)
|
|
|
(0.04)
|
|
|
(0.07)
|
|
|
(0.14)
|
|
|
Consolidated
|
$
|
(0.06)
|
|
|
$
|
0.10
|
|
|
$
|
(0.30)
|
|
|
$
|
(0.33)
|
|
|
|
|
|
|
|
|
|
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SOURCE Remark Holdings, Inc.