Remark Holdings Reports Fiscal Year 2019 Results

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 70(th)
        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 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

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:

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

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.


            Consolidated Balance Sheets

            (dollars in thousands, except share and per share amounts)

              December 31,

                                                    2019                            2018



      Cash and cash equivalents                               $
            272                           $

      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                          $

     Liabilities and Stockholders' Equity

     Accounts payable                                      $
            8,126                           $

      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                          $


         Consolidated Statements of Operations and Comprehensive Loss

           (dollars in thousands, except per share amounts)

                                                                                                                                           Year Ended December 31,

                                                                                                                               2019                                 2018


     Revenue, net                                                                                                                     $
        5,020                            $

     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)                         $

     Other comprehensive income (loss)

     Foreign currency translation adjustments                                                                                (259)                                  (83)

     Comprehensive loss                                                                                                            $
        (25,873)                         $

     Weighted-average shares outstanding, basic and diluted                                                                 44,432                                 39,053

     Net loss per share, basic and diluted

     Continuing operations                                                                                                           $
        (0.52)                           $

     Discontinued operations                                                                                                (0.06)                                (0.07)

     Consolidated                                                                                                                    $
        (0.58)                           $

View original content to download multimedia:

SOURCE Remark Holdings, Inc.