LAS VEGAS, Nov. 23, 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 third quarter ended September 30,
2020.
Revenue Climbs 285% to $2.6 Million
Net Income Totals $4.4 Million or
$0.04 Per Share
Management Commentary
"The third quarter of 2020 was highlighted by a sequential
quarter over quarter doubling of revenue from China as the country emerged from
post-COVID-19 lock-downs. We were able to restart certain projects,
including the conversion of bank and mobile retail outlets to smart
stores, and smart school safety installations at primary schools in
several Provinces of China. We
anticipate another doubling of revenue from China in our fourth quarter," noted
Kai-Shing Tao, Chairman and Chief
Executive Officer of Remark Holdings. "In the United States, we focused on growing our
distribution and channel partnerships for our AI platform, and we
expect to close additional deals in the fourth quarter."
Third Quarter 2020 Business Highlights
- Smart kiosks were delivered to approximately 200 China Mobile
stores. Software installations continued with the goal of having
the software queue management system available in 5,000 stores by
year's end, up from 2,000 at year end 2019. Additional development
was done on a smart customer analysis program that will be
delivered in 2021. We remain on track to fulfill the initial
$50 million China Mobile contract by
the end of 2021, and are pursuing additional opportunities with
China Mobile's 220,000 affiliated retail outlets.
- Smart retail bank branch solutions were delivered to 80 Bank of
China branches in Guangdong
Province. Additionally, the Agriculture Bank of China and the Construction Bank of
China began implementing Remark AI
systems, which reflects the initial capture of the $2 billion annual upgrade budget market
opportunity as 20,000 branches are scheduled to be upgraded each
year.
- Remark AI was chosen by China Mobile to partner on implementing
smart community solutions in the Sichuan
Province. The initial phase of this project began in the
fourth quarter and we expect to recognize revenue commensurately.
There are over 10,000 residential complexes in Sichuan and over 160,000 throughout
China, a $70 billion addressable market.
- Smart school solutions were delivered to approximately 120 new
locations during the third quarter. Software upgrades were
implemented to improve computer vision, time attendance system,
epidemic prevention system and smart energy saving systems.
Discussions are underway to expand our sales channel to additional
regions in order to compete for the 160,000 schools in major
cities.
- Remark AI's Thermal Kits were chosen by The Meadows School in
Las Vegas, a leading private pre
K-12 school in Las Vegas, to help
safely welcome back students and the educational staff on campus
for the 2020-2021 academic school year. The installations are
the first in a United States
school system for Remark AI.
- Remark AI won three out of five championships in the Visual
Object Tracking category at the 16th European Conference on
Computer Vision.
Third Quarter 2020 Financial Results
- Revenue for the third quarter of 2020 totaled $2.6 million, up from $0.7
million during the third quarter of 2019.
-
- Revenue in China more than
tripled to $2.1 million as personnel
in China were able to continue
previously-stalled projects as the country emerged from COVID-19
quarantines which allowed for installations, testing and
customization work on several projects.
- Revenue from the US-based biosafety business totaled
$0.4 million as thermal imaging
products were delivered to casinos, a school, hotels, medical
centers, office buildings, and customers in industries throughout
the United States.
- The company recorded an operating loss of ($3.1) million in the third quarter 2020, an
improvement from the operating loss of ($4.3) million in the third quarter of 2019.
Headcount reductions, decreased spending in sales and marketing,
and lower rent expense contributed to the improvement.
- Net Income totaled $4.4 million,
or $0.04 per diluted share in the
third quarter ended September 30,
2020, compared to a net loss of ($4.9) million, or ($0.11) per diluted share in the third quarter
ended September 30, 2019. The bulk of
the income is tied to the $5.6
million non-cash gain in the change in fair value of warrant
liability compared to a ($0.2)
million loss in the comparable period of 2019, as a result
of fluctuations in the share price of Remark's common shares and
the expiration of a substantial number of warrants during the
quarter.
- At September 30, 2020, the cash
and cash equivalents balance totaled $2.1
million, compared to a cash position of $0.3 million at December
31, 2019. Cash increased primarily due to $32.1 million in proceeds from common stock
issuances, whose increase was partially offset by use of the
proceeds to make debt principal repayments of $13.8 million, to make other liability payments,
and to generally operate the business.
"Our business has gone through a major transformation. We spent
the past five years building a robust AI platform that has been
recognized as having superior commercial solutions in the areas of
computer vision. We spent the past three years working to
commercialize the technology with world-class companies such as
China Mobile. Now, going into the fourth quarter of 2020 and the
first quarter of 2021, we are poised to report significant revenue
growth from China while
simultaneously addressing large total addressable market
opportunities, and signing up new channel partners. Finally, we are
confident that we will have the opportunity to monetize our stake
in Sharecare which will provide us with ample capital to execute
all of our growth opportunities, potentially repurchase shares and
maintain a rock-solid balance sheet," concluded Mr. Tao.
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, public safety and
workplace arenas. The company also owns and operates an e-commerce
digital media property focused on a luxury beach lifestyle. 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 Contacts
E. Brian Harvey
Senior Vice President of Capital Markets and Investor Relations
Remark Holdings, Inc.
ebharvey@remarkholdings.com
702-701-9514
Fay Tian
Vice President of Investor Relations
F.Tian@remarkholdings.com
(+1) 626-623-2000
(+86) 13702108000
REMARK HOLDINGS,
INC. AND SUBSIDIARIES Condensed Consolidated Balance
Sheets
(dollars in thousands, except share and per share
amounts)
|
|
|
September 30,
2020
|
|
December 31,
2019
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
2,090
|
|
|
$
|
272
|
|
Trade accounts
receivable, net
|
2,850
|
|
|
1,964
|
|
Inventory,
net
|
1,062
|
|
|
—
|
|
Prepaid expense and
other current assets
|
5,831
|
|
|
4,623
|
|
Total current
assets
|
11,833
|
|
|
6,859
|
|
Property and
equipment, net
|
267
|
|
|
341
|
|
Operating lease
assets
|
385
|
|
|
4,359
|
|
Investment in
unconsolidated affiliates
|
1,065
|
|
|
1,935
|
|
Intangibles,
net
|
355
|
|
|
509
|
|
Other long-term
assets
|
2,177
|
|
|
824
|
|
Total
assets
|
$
|
16,082
|
|
|
$
|
14,827
|
|
Liabilities and
Stockholders' Deficit
|
|
|
|
Accounts
payable
|
$
|
6,570
|
|
|
$
|
8,126
|
|
Accrued expense and
other current liabilities
|
8,987
|
|
|
14,326
|
|
Contract
liability
|
541
|
|
|
313
|
|
Note
payable
|
1,500
|
|
|
3,000
|
|
Loans payable,
current
|
—
|
|
|
12,025
|
|
Total current
liabilities
|
17,598
|
|
|
37,790
|
|
Loans payable,
long-term
|
425
|
|
|
—
|
|
Operating lease
liabilities, long-term
|
158
|
|
|
4,650
|
|
Warrant
liability
|
748
|
|
|
115
|
|
Total
liabilities
|
18,929
|
|
|
42,555
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Preferred stock,$0.001
par value; 1,000,000 shares authorized; zero issued
|
—
|
|
|
—
|
|
Common stock, $0.001
par value; 100,000,000 shares authorized; 99,502,416 and
51,055,159 shares issued and outstanding at September 30, 2020 and
December 31,
2019, respectively
|
100
|
|
|
51
|
|
Additional
paid-in-capital
|
351,529
|
|
|
319,275
|
|
Accumulated other
comprehensive income
|
176
|
|
|
(227)
|
|
Accumulated
deficit
|
(354,652)
|
|
|
(346,827)
|
|
Total stockholders'
deficit
|
(2,847)
|
|
|
(27,728)
|
|
Total liabilities and
stockholders' deficit
|
$
|
16,082
|
|
|
$
|
14,827
|
|
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,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue
|
$
|
2,646
|
|
|
$
|
686
|
|
|
$
|
5,376
|
|
|
$
|
4,760
|
|
Cost and
expense
|
|
|
|
|
|
|
|
Cost of revenue
(excluding
depreciation and amortization)
|
1,679
|
|
|
189
|
|
|
2,910
|
|
|
3,323
|
|
Sales and
marketing
|
417
|
|
|
736
|
|
|
1,319
|
|
|
2,282
|
|
Technology and
development
|
738
|
|
|
752
|
|
|
2,863
|
|
|
2,910
|
|
General and
administrative
|
2,380
|
|
|
3,052
|
|
|
7,018
|
|
|
8,483
|
|
Depreciation and
amortization
|
72
|
|
|
229
|
|
|
228
|
|
|
814
|
|
Impairments
|
463
|
|
|
—
|
|
|
463
|
|
|
—
|
|
Other operating
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Total cost and
expense
|
5,749
|
|
|
4,958
|
|
|
14,801
|
|
|
17,818
|
|
Operating
loss
|
(3,103)
|
|
|
(4,272)
|
|
|
(9,425)
|
|
|
(13,058)
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest
expense
|
(60)
|
|
|
(457)
|
|
|
(1,296)
|
|
|
(1,397)
|
|
Other income,
net
|
(58)
|
|
|
(24)
|
|
|
(1)
|
|
|
23
|
|
Change in fair value
of warrant liability
|
5,570
|
|
|
(160)
|
|
|
(633)
|
|
|
502
|
|
Gain on lease
termination
|
2,044
|
|
|
—
|
|
|
3,582
|
|
|
—
|
|
Other loss,
net
|
21
|
|
|
(28)
|
|
|
(52)
|
|
|
(27)
|
|
Total other income
(expense), net
|
7,517
|
|
|
(669)
|
|
|
1,600
|
|
|
(899)
|
|
Income (loss) from
continuing operations
|
4,414
|
|
|
(4,941)
|
|
|
(7,825)
|
|
|
(13,957)
|
|
Loss from discontinued
operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,610)
|
|
Net income
(loss)
|
$
|
4,414
|
|
|
$
|
(4,941)
|
|
|
$
|
(7,825)
|
|
|
$
|
(16,567)
|
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
65
|
|
|
(289)
|
|
|
403
|
|
|
(256)
|
|
Comprehensive income
(loss)
|
$
|
4,479
|
|
|
$
|
(5,230)
|
|
|
$
|
(7,422)
|
|
|
$
|
(16,823)
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding,
basic and diluted
|
99,450
|
|
|
46,282
|
|
|
80,903
|
|
|
43,085
|
|
|
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.04
|
|
|
$
|
(0.11)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.32)
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.06)
|
|
Consolidated
|
$
|
0.04
|
|
|
$
|
(0.11)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.38)
|
|
|
|
|
|
|
|
|
|
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SOURCE Remark Holdings, Inc.