LAS VEGAS, Nov. 12, 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 third quarter
ended September 30, 2019.
Management Commentary
"Our third quarter represented
our largest win to date with China Mobile selecting our AI
technology to transform all their 17,800 corporate stores into
'smart' retail outlets," said Kai-Shing Tao, Chairman and Chief Executive
Officer of Remark Holdings. "This win validates our technology
as it proved we can beat larger and entrenched competitors. The
China Mobile project also adds to our momentum implementing our
leading AI technology not only throughout China, but in other parts of Asia and the United
States," Mr. Tao added. "Additionally, we are close to
finalizing the monetization of our investment in Sharecare, which
will immediately eliminate our debt and provide us with the growth
working capital necessary to propel our AI business forward."
Recent Highlights
- Partnered with Hanvon Technology, a publicly-listed Chinese
systems integrator that won the master retail contract to transform
China Mobile's 17,800 corporate stores into smart retail stores.
The first phase of this partnership with Hanvon is expected to
bring $50.0 million of revenue to the
Company over the three-year life of the project.
- Announced the initial deployment of KanKan AI's Smart Campus
solution in the Hangzhou Primary School System in Hangzhou, China. The Smart Campus Solution
uses facial recognition technology and object recognition
technology to: automate student check-in and check-out at the
school's entrance and exit points; control access to dormitories,
laboratories and libraries; alert school administrators of
unauthorized persons who have trespassed on the school campus;
ensure students are released only to parents or other pre-approved
persons; and monitor for unauthorized objects, such as weapons,
brought into school buildings.
- Announced a new partnership with Tongyue Technologies to bring
its KanKan's AI leading AI technology to Tongyue's recent launch of
its Kindergarten Medical Robot, which identifies a student's health
condition, weight, height, and body temperature within ten seconds
to determine whether the student is suspected of contracting hand,
foot, and mouth disease or other potentially infectious diseases.
Initially launching in Hangzhou
with 30 kindergartens representing 12,000 students, the partnership
is expected to deploy to over 500 kindergartens in the Hangzhou province, representing 200,000
students.
- Sharecare received a strategic investment from Aflac Corporate
Ventures, as a follow on to the investment by Quest Diagnostics, to
accelerate digital health innovation, further highlighting the
value Sharecare is creating. To date, Sharecare has raised in
excess of $425 million. Additionally,
Sharecare and Walmart announced a strategic partnership aimed at
improving the health and wellbeing of the retailer's associates,
families and friends, as well as the people living in the
communities in which their stores operate. Remark continues to
explore avenues to optimize the monetization of its investment in
Sharecare to best create long-term value for its shareholders.
Three Months Ended September 30,
2019 compared to Three Months Ended September 30, 2018
- Revenue for the third quarter of 2019 was $0.7 million, down from $1.8 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. At the same
time, other business segments showed declining revenue associated
with the expiration of contracts that were not renewed, and a
decrease in e-commerce sales.
- AI-based product and service revenue fell by $0.1 million during the third quarter and was
negatively impacted by celebrations related to the 70th
anniversary of the founding of the
People's Republic of China, the ongoing US-China trade war
which caused disruption in supply chain management, extended
project testing and customization work on our larger projects and,
finally, by working capital constraints.
- Total cost and expense for the third quarter of 2019 was
$5.0 million, a decrease from the
$8.1 million reported in the third
quarter of 2018. The decrease is primarily attributable to
decreases in cost of sales as a result of the discontinuation of
FinTech services and declines in payroll and related cost as a
result of headcount reductions, all of which was partially offset
by an increase of approximately $0.8
million in the bad debt allowance resulting from an
increased risk that certain trade receivables may not be fully
collected.
- Operating loss declined to $4.3
million in the third quarter of 2019 from $6.4 million in the third quarter of 2018
commensurate with the cost and expense declines.
- Adjusted EBITDA was ($4.0)
million from continuing operations, as compared to
($5.1) million.
- Net loss from continuing operations totaled $4.9 million or ($0.11) per diluted share in the third quarter
ended September 30, 2019, compared to
a net loss of $3.8 million, or
($0.08) per diluted share in the
comparable period of the prior year.
- At September 30, 2019, the cash
and cash equivalents balance was $0.7
million, compared to a cash position of $1.4 million at December
31, 2018. Cash declined primarily due to timing of payments
related to elements of working capital, offsetting proceeds from
common stock issuances.
Conference Call Information
Mr. Tao will hold a conference call today, November 12, 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: 800.263.0877
International Number: 646.828.8143
Conference ID: 6600270
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
November 17, 2019.
Toll-Free Replay Number: 844.512.2921
International Replay Number: 412.317.6671
Replay ID: 6600270
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:
E. Brian
Harvey
Remark Holdings, Inc.
ebharvey@remarkholdings.com
702-701-9514
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
|
Condensed
Consolidated Balance Sheets
|
|
(dollars in
thousands, except share and per share amounts)
|
|
|
September 30,
2019
|
|
December 31,
2018
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
656
|
|
$
|
1,410
|
|
Trade accounts
receivable, net
|
3,792
|
|
5,762
|
|
Prepaid expense and
other current assets
|
6,233
|
|
7,907
|
|
Notes receivable,
current
|
—
|
|
100
|
|
Assets of disposal
group, current
|
—
|
|
28,966
|
|
Total current
assets
|
10,681
|
|
44,145
|
|
Property and
equipment, net
|
1,591
|
|
2,075
|
|
Operating lease
assets
|
5,294
|
|
—
|
|
Investment in
unconsolidated affiliates
|
1,920
|
|
2,005
|
|
Intangibles,
net
|
752
|
|
1,010
|
|
Other long-term
assets
|
1,245
|
|
450
|
|
Assets of disposal
group, long-term
|
—
|
|
44,123
|
|
Total
assets
|
$
|
21,483
|
|
$
|
93,808
|
|
Liabilities and
Stockholders' Deficit
|
|
|
|
|
Accounts
payable
|
$
|
7,585
|
|
$
|
5,675
|
|
Accrued expense and
other current liabilities
|
12,861
|
|
16,812
|
|
Contract
liability
|
312
|
|
132
|
|
Note
payable
|
3,000
|
|
3,000
|
|
Loans payable,
current, net of unamortized discount and debt issuance
cost
|
11,632
|
|
35,314
|
|
Liabilities of
disposal group, current
|
—
|
|
41,648
|
|
Total current
liabilities
|
35,390
|
|
102,581
|
|
Operating lease
liabilities, long-term
|
5,436
|
|
—
|
|
Warrant
liability
|
881
|
|
1,383
|
|
Other
liabilities
|
—
|
|
2,934
|
|
Liabilities of
disposal group, long-term
|
—
|
|
34
|
|
Total
liabilities
|
41,707
|
|
106,932
|
|
|
|
|
|
Preferred stock,
$0.001 par value; 1,000,000 shares authorized; none
issued
|
—
|
|
—
|
|
Common stock, $0.001
par value; 100,000,000 shares authorized; 48,430,159 and 39,053,312
shares issued and outstanding at September 30, 2019 and December
31, 2018, respectively
|
48
|
|
39
|
|
Additional
paid-in-capital
|
317,732
|
|
308,018
|
|
Accumulated other
comprehensive income
|
(224)
|
|
32
|
|
Accumulated
deficit
|
(337,780)
|
|
(321,213)
|
|
Total stockholders'
deficit
|
(20,224)
|
|
(13,124)
|
|
Total liabilities and
stockholders' deficit
|
$
|
21,483
|
|
$
|
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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Revenue
|
$
|
686
|
|
$
|
1,755
|
|
$
|
4,760
|
|
$
|
7,468
|
|
Cost and
expense
|
|
|
|
|
|
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
189
|
|
1,231
|
|
3,323
|
|
5,778
|
|
Sales and
marketing
|
736
|
|
1,108
|
|
2,282
|
|
3,165
|
|
Technology and
development
|
752
|
|
1,459
|
|
2,910
|
|
3,550
|
|
General and
administrative
|
3,052
|
|
3,760
|
|
8,483
|
|
25,410
|
|
Depreciation and
amortization
|
229
|
|
520
|
|
814
|
|
1,657
|
|
Other operating
expense
|
—
|
|
47
|
|
6
|
|
93
|
|
Total cost and
expense
|
4,958
|
|
8,125
|
|
17,818
|
|
39,653
|
|
Operating
loss
|
(4,272)
|
|
(6,370)
|
|
(13,058)
|
|
(32,185)
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
Interest
expense
|
(457)
|
|
(345)
|
|
(1,397)
|
|
(1,017)
|
|
Other income
(expense), net
|
(24)
|
|
—
|
|
23
|
|
44
|
|
Change in fair value
of warrant liability
|
(160)
|
|
3,525
|
|
502
|
|
22,190
|
|
Other gain (loss),
net
|
(28)
|
|
(16)
|
|
(27)
|
|
507
|
|
Total other income
(expense), net
|
(669)
|
|
3,164
|
|
(899)
|
|
21,724
|
|
Loss from continuing
operations before income taxes
|
(4,941)
|
|
(3,206)
|
|
(13,957)
|
|
(10,461)
|
|
Benefit from income
taxes
|
—
|
|
442
|
|
—
|
|
1,437
|
|
Loss from continuing
operations
|
$
|
(4,941)
|
|
$
|
(2,764)
|
|
$
|
(13,957)
|
|
$
|
(9,024)
|
|
Loss from discontinued
operations, net of tax
|
—
|
|
(1,001)
|
|
(2,610)
|
|
(5,415)
|
|
Net loss
|
$
|
(4,941)
|
|
$
|
(3,765)
|
|
$
|
(16,567)
|
|
$
|
(14,439)
|
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
(289)
|
|
(82)
|
|
(256)
|
|
(67)
|
|
Comprehensive
loss
|
$
|
(5,230)
|
|
$
|
(3,847)
|
|
$
|
(16,823)
|
|
$
|
(14,506)
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding, basic and diluted
|
46,282
|
|
35,463
|
|
43,085
|
|
33,608
|
|
|
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.11)
|
|
$
|
(0.08)
|
|
$
|
(0.32)
|
|
$
|
(0.27)
|
|
Discontinued
operations
|
—
|
|
(0.03)
|
|
(0.06)
|
|
(0.16)
|
|
Consolidated
|
$
|
(0.11)
|
|
$
|
(0.11)
|
|
$
|
(0.38)
|
|
$
|
(0.43)
|
|
|
|
|
|
|
|
|
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SOURCE Remark Holdings, Inc.