LAS VEGAS, May 28, 2020 /PRNewswire/ -- Remark
Holdings, Inc. (NASDAQ: MARK), a diversified global technology
company with leading artificial intelligence ("AI") solutions and
digital media properties, today announced financial results for its
fiscal year ended December 31,
2019.
Management Commentary
"We spent the last three months of 2019 repositioning our
business for success in 2020 by streamlining costs and focusing on
recurring revenue generating lines of business," said Kai-Shing Tao, Chairman and Chief Executive
Officer of Remark Holdings. "Winning major contracts from the likes
of China Mobile has positioned us for substantial revenue growth in
2020," Mr. Tao added. "We are also announcing that, after
fortifying our cash position, we paid in full all our outstanding
obligations to MGG under our financing agreement with them, which
significantly deleverages our balance sheet while simultaneously
putting us in position to fulfill our existing contract backlog and
invest in expanding our AI product offerings like thermal imaging
and scanning."
Fiscal 2019 Business Development 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. At the end of
2019, implementations began across 2,000 retail outlets, with
projections to be in over 5,000 stores in 2020. Phase Two of the
project is out to bid, and the Company is a finalist.
- Expanded smart campus solutions, which provide attendance
management and temperature screening, beyond Hangzhou into two additional large cities in
China, Chongqing and Chengdu, and now deploying at 50 schools per
month. Plans are to accelerate as schools resume classes, with an
opportunity to serve China's more
than 160,000 K-5 schools.
- Launched a repurposed version of the company's thermal imaging
products for hospitals and businesses following the outbreak of
COVID-19 in China. The experience
gained in China is currently being
deployed in the United States
across many industries including casinos, restaurants, malls, law
enforcement agencies and hospitality providers.
Fiscal 2019 Financial Results
- Revenue for fiscal 2019 was $5.0
million, down from $10.1
million during fiscal 2018. Regulatory changes in
China's financial services market
caused the company to discontinue its FinTech services during 2018,
which was responsible for $3.7
million of the revenue decline. Remark's revenue from
AI-based solutions fell by $0.7
million during the year as a result of factors such as the
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 larger projects and, finally, working capital
constraints. Additionally, the company's advertising and other
revenue decreased $0.6 million due to
the sale of banks.com and the company's other personal financial
services Internet domains in 2018, the effects of which were
partially offset by a modest increase in e-commerce sales.
- Total cost and expense for 2019 was $27.8 million, a decrease from the $54.6 million reported in 2018. The decrease is
primarily attributable to a $12.4
million decrease in stock-based compensation expense due the
2018 fiscal year including a large grant to the company's CEO,
while no such large grant occurred in 2019. A decrease in cost of
sales as a result of the discontinuation of FinTech services also
significantly contributed to the cost and expense decrease, while
declines in payroll and related cost as a result of headcount
reductions also contributed to the decrease. The cost and expense
decreases were partially offset by an increase of approximately
$2.1 million in the bad debt
allowance resulting from an increased risk that certain trade
receivables may not be fully collected, and a $0.3 million increase in impairment charges.
- Operating loss declined to $22.8
million in fiscal 2019 from $44.5
million in fiscal 2018 commensurate with the cost and
expense declines.
- Net loss from continuing operations totaled $23.0 million or $0.52 per diluted share in the fiscal year ended
December 31, 2019, compared to a net
loss from continuing operations of $18.6
million, or $0.48 per diluted
share in the fiscal year ended December 31,
2018.
- At December 31, 2019, the cash
and cash equivalents balance was $0.3
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.
Subsequent Event
- Earlier today Remark paid MGG approximately $12.7 million, representing full settlement of
all loan principal, accrued but unpaid interest and accrued but
unpaid service fees outstanding under the financing agreement, plus
reasonable costs and expenses incurred by MGG to settle the
account. As a result of the full repayment, all liens on the
company's assets, including the investment in Sharecare, were
removed.
"With the cleanup of our balance sheet behind us and our
strengthened cash position, we can now focus on building out our
global platform of AI-based solutions for the Fortune 500 companies
we are servicing," concluded Mr. Tao.
Conference Call Information
Management will hold a conference call this afternoon at
5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss these
financial results and provide an update on recent business
developments. A question and answer session will follow
management's presentation.
Toll-Free Number: 866.548.4713
International Number: 323.794.2093
Conference ID: 4347844
Participant Link: http://public.viavid.com/index.php?id=139870
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 June 2, 2020.
Toll-Free Replay Number: 844.512.2921
International Replay Number: 412.317.6671
Replay ID: 4347844
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, Director of
Capital Markets and Investor Relations
Remark Holdings, Inc.
ebharvey@remarkholdings.com
702-701-9514
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
|
Consolidated Balance
Sheets
|
|
(dollars in
thousands, except share and per share amounts)
|
|
|
December
31,
|
|
2019
|
|
2018
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
272
|
|
|
$
|
1,410
|
|
|
Trade accounts
receivable, net
|
1,964
|
|
|
5,762
|
|
|
Prepaid expense and
other current assets
|
4,623
|
|
|
7,907
|
|
|
Notes receivable,
current
|
—
|
|
|
100
|
|
|
Assets of disposal
group, current
|
—
|
|
|
28,966
|
|
|
Total current
assets
|
6,859
|
|
|
44,145
|
|
|
Property and
equipment, net
|
341
|
|
|
2,075
|
|
|
Operating lease
assets
|
4,359
|
|
|
—
|
|
|
Investments in
unconsolidated affiliates
|
1,935
|
|
|
2,005
|
|
|
Intangibles,
net
|
509
|
|
|
1,010
|
|
|
Other long-term
assets
|
824
|
|
|
450
|
|
|
Assets of disposal
group, long-term
|
—
|
|
|
44,123
|
|
|
Total
assets
|
$
|
14,827
|
|
|
$
|
93,808
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Accounts
payable
|
$
|
8,126
|
|
|
$
|
5,675
|
|
|
Accrued expense and
other current liabilities
|
14,326
|
|
|
16,812
|
|
|
Contract
liability
|
313
|
|
|
132
|
|
|
Note
payable
|
3,000
|
|
|
3,000
|
|
|
Current maturities of
long-term debt, net of unamortized discount and debt issuance
cost
|
12,025
|
|
|
35,314
|
|
|
Liabilities of
disposal group, current
|
—
|
|
|
41,648
|
|
|
Total current
liabilities
|
37,790
|
|
|
102,581
|
|
|
Operating lease
liabilities, long-term
|
4,650
|
|
|
—
|
|
|
Warrant
liability
|
115
|
|
|
1,383
|
|
|
Other
liabilities
|
—
|
|
|
2,934
|
|
|
Liabilities of
disposal group, long-term
|
—
|
|
|
34
|
|
|
Total
liabilities
|
42,555
|
|
|
106,932
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.001 par value; 1,000,000 shares authorized; none
issued
|
—
|
|
|
—
|
|
|
Common stock, $0.001
par value; 100,000,000 shares authorized: 51,055,159 and 39,053,312
shares issued and outstanding; each at December 31, 2019 and
2018, respectively
|
51
|
|
|
39
|
|
|
Additional
paid-in-capital
|
319,275
|
|
|
308,018
|
|
|
Accumulated other
comprehensive loss
|
(227)
|
|
|
32
|
|
|
Accumulated
deficit
|
(346,827)
|
|
|
(321,213)
|
|
|
Total stockholders'
equity (deficit)
|
(27,728)
|
|
|
(13,124)
|
|
|
Total liabilities and
stockholders' equity
|
$
|
14,827
|
|
|
$
|
93,808
|
|
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
|
Consolidated
Statements of Operations and Comprehensive Loss
|
|
(dollars in
thousands, except per share amounts)
|
|
|
Year Ended
December 31,
|
|
2019
|
|
2018
|
|
Revenue,
net
|
$
|
5,020
|
|
|
$
|
10,053
|
|
|
Cost and
expense
|
|
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
3,514
|
|
|
12,903
|
|
|
Sales and
marketing
|
3,003
|
|
|
4,308
|
|
|
Technology and
development
|
3,573
|
|
|
4,393
|
|
|
General and
administrative
|
14,174
|
|
|
28,521
|
|
|
Depreciation and
amortization
|
982
|
|
|
2,089
|
|
|
Impairments
|
2,522
|
|
|
2,209
|
|
|
Other operating
expense
|
6
|
|
|
130
|
|
|
Total cost and
expense
|
27,774
|
|
|
54,553
|
|
|
Operating loss from
continuing operations
|
(22,754)
|
|
|
(44,500)
|
|
|
Other income
(expense)
|
|
|
|
|
Interest
expense
|
(1,876)
|
|
|
(3,237)
|
|
|
Other income,
net
|
530
|
|
|
267
|
|
|
Change in fair value
of warrant liability
|
1,268
|
|
|
27,879
|
|
|
Other gain
(loss)
|
(172)
|
|
|
886
|
|
|
Total other income
(expense), net
|
(250)
|
|
|
25,795
|
|
|
Loss from continuing
operations before income tax
|
(23,004)
|
|
|
(18,705)
|
|
|
Benefit from income
taxes
|
—
|
|
|
140
|
|
|
Loss from continuing
operations
|
(23,004)
|
|
|
(18,565)
|
|
|
Loss from
discontinued operations, net of tax
|
(2,610)
|
|
|
(2,993)
|
|
|
Net loss
|
$
|
(25,614)
|
|
|
$
|
(21,558)
|
|
|
Other comprehensive
income (loss)
|
|
|
|
|
Foreign currency
translation adjustments
|
(259)
|
|
|
(83)
|
|
|
Comprehensive
loss
|
$
|
(25,873)
|
|
|
$
|
(21,641)
|
|
|
|
|
|
|
Weighted-average
shares outstanding, basic and diluted
|
44,432
|
|
|
39,053
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
|
|
|
|
Continuing
operations
|
$
|
(0.52)
|
|
|
$
|
(0.48)
|
|
|
Discontinued
operations
|
(0.06)
|
|
|
(0.07)
|
|
|
Consolidated
|
$
|
(0.58)
|
|
|
$
|
(0.55)
|
|
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SOURCE Remark Holdings, Inc.