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 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.
