Remark Holdings Reports First Quarter 2020 Results

LAS VEGAS, July 6, 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 first quarter ended March 31, 2020.

Management Commentary

"The first quarter of 2020 was one of renewed focus for Remark Holdings as our development team localized our award winning AI-solutions for the U.S. market, and improved our educational thermal scanning product in response to the ongoing COVID-19 pandemic. Our product line of high-quality, highly-effective thermal imaging solutions leverages our innovative software to provide customers with the ability to scan crowds and areas of high foot traffic for indications that certain persons may require secondary screening," noted Kai-Shing Tao, Chairman and Chief Executive Officer of Remark Holdings. "We spent much of the quarter on product development and building out our U.S. sales and support team, recently showing initial success with casinos, entertainment complexes, sports venues, restaurants, hospitals and medical centers as well as other industries."

First Quarter 2020 Business Development Highlights

    --  Repurposed our AI-based product offerings for the United States and
        European markets. KanKan AI improved its already-robust Smart Monitor
        technology by adding thermal detection, including body temperature
        detection, and improved its facial recognition capability to include
        compliance with public sanitary regulations such as the wearing of
        protective masks. This builds upon the successful technology platform
        that has already been deployed among students within the Hangzhou school
        systems for early flu detection.
    --  Announced that following the successful openings of CP Lotus's Xuzhou
        University Road store and the Junsheng store in the Jiangsu Province,
        Remark's KanKan was once again chosen by CP Lotus to transform one of
        their traditional supermarkets into a "smart" store by applying their
        award winning AI technologies in facial recognition, object recognition,
        and behavior recognition.

First Quarter 2020 Financial Results

    --  Revenue for the first quarter of 2020 was $0.4 million, down from $1.2
        million during the first quarter of 2019. The company's business was
        adversely impacted by several factors including January's Chinese New
        Year celebrations, the trade war between the U.S. and China, the
        COVID-19-related quarantines and working capital constraints, which
        factors combined to negatively affect revenue by preventing personnel in
        China from continuing project roll outs and by delaying project testing
        and customization work on larger projects. The result was a slight
        decrease in the Company's Technology & Data Intelligence business
        segment instead of expected revenue growth.Additionally, Advertising and
        Other revenue decreased by nearly $0.7 million due to certain Remark
        Entertainment contracts that were not renewed as the company scaled back
        such business, and due to a decline in e-commerce revenue resulting from
        the combined effects of the COVID-19 pandemic changing consumer behavior
        and a decision by the company to sell certain inventory at lower prices.

    --  Total cost and expense for the first quarter of 2020 was $3.9 million, a
        decrease from the $7.1 million reported in the same period of 2019. The
        decrease is primarily attributable to a $1.6 million decline in the cost
        of revenue resulting from fewer project completions, while a $1.0
        million decrease in payroll and related expense as well as in
        stock-based compensation expense as headcount declined also contributed.
        The fewer project completions and headcount declines were heavily
        influenced by the trade war between the U.S. and China, the COVID-19
        pandemic and working capital constraints.

    --  Operating loss declined to $3.5 million in the first quarter of 2020
        from $5.9 million in the first quarter of 2019 commensurate with the
        cost and expense declines.

    --  Loss from continuing operations totaled $2.4 million, or $0.05 per
        diluted share, in the first quarter ended March 31, 2020, compared to a
        net loss from continuing operations of $7.7 million, or $0.20 per
        diluted share in the first quarter ended March 31, 2019.
    --  At March 31, 2020, the cash and cash equivalents balance was $1.6
        million, compared to a cash position of $0.3 million at December 31,
        2019. Cash increased primarily due to proceeds from common stock
        issuances, which proceeds offset operating losses, as well as from the
        timing of payments related to elements of working capital.

"We remain extremely optimistic about our current business prospects as we have been installing our solutions throughout the U.S. for a diverse group of customers. We are pleased to be helping the country safely get back to normal," concluded Mr. Tao.

Conference Call Information

Management will hold a conference call this afternoon at 4:30 p.m. Eastern Time (1:30 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: 1160760
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 July 11, 2020.

Toll-Free Replay Number: 844.512.2921
International Replay Number: 412.317.6671
Replay ID: 1160760

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.


            Condensed Consolidated Balance Sheets

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

                                                           March 31,                                       December 31,
                                                                 2020                                               2019




      Cash and cash equivalents                                          $
            1,617                                               $

      Trade accounts receivable,
       net                                                      1,540                                                         1,964

      Receivable from related
       parties                                                    531

      Prepaid expense and other
       current assets                                           4,617                                                         4,623

     Total current assets                                      8,305                                                         6,859

      Property and equipment, net                                 180                                                           341

      Operating lease assets                                      314                                                         4,359

      Investment in unconsolidated
       affiliates                                               1,934                                                         1,935

     Intangibles, net                                            490                                                           509

      Other long-term assets                                      773                                                           824

     Total assets                                                      $
            11,996                                            $

     Liabilities and Stockholders' Deficit

     Accounts payable                                                   $
            8,525                                             $

      Accrued expense and other
       current liabilities                                     13,307                                                        14,326

     Contract liability                                          367                                                           313

     Note payable                                              3,000                                                         3,000

      Loans payable, current, net
       of unamortized discount and
       debt issuance cost                                      11,931                                                        12,025

      Total current liabilities                                37,130                                                        37,790

      Operating lease liabilities,
       long-term                                                   79                                                         4,650

     Warrant liability                                            58                                                           115

     Total liabilities                                        37,267                                                        42,555

     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; 66,133,888 and
       51,055,159 shares issued and
       outstanding at March 31,
       2020 and December 31, 2019,
       respectively                                                66                                                            51

      Additional paid-in-capital                              323,958                                                       319,275

      Accumulated other
       comprehensive income                                      (45)                                                        (227)

     Accumulated deficit                                   (349,250)                                                    (346,827)

      Total stockholders' deficit                            (25,271)                                                     (27,728)

      Total liabilities and
       stockholders' deficit                                            $
            11,996                                            $


              Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

              (dollars in thousands, except per share amounts)

                                                                                    Three Months Ended March 31,

                                                   2020                               2019


     Revenue                                                 $
              431                                       $

     Cost and expense

      Cost of revenue (excluding
       depreciation and amortization)                21                                          1,593

     Sales and marketing                           416                                            859

      Technology and development                    648                                          1,304

      General and administrative                  2,740                                          2,977

      Depreciation and amortization                  90                                            325

      Other operating expense                         -                                             6

      Total cost and expense                      3,915                                          7,064

     Operating loss                            (3,484)                                       (5,855)

     Other income (expense)

     Interest expense                            (461)                                         (387)

      Other income (expense), net                     -                                          (45)

      Change in fair value of warrant
       liability                                     57                                        (1,416)

      Gain on lease termination                   1,538

     Other loss, net                              (73)                                          (26)

      Total other income (expense),
       net                                        1,061                                        (1,874)

      Loss from continuing operations
       before income taxes                      (2,423)                                       (7,729)

      Benefit from income taxes                       -

      Loss from continuing operations                     $
              (2,423)                                    $

      Loss from discontinued
       operations, net of tax (Note
       17)                                            -                                       (1,123)

     Net loss                                            $
              (2,423)                                    $

     Other comprehensive income (loss)

      Foreign currency translation
       adjustments                                  182                                           (94)

     Comprehensive loss                                  $
              (2,241)                                    $

      Weighted-average shares
       outstanding, basic and diluted            53,775                                         39,258

     Net loss per share, basic and diluted

      Continuing operations                                $
              (0.05)                                     $

      Discontinued operations                         -                                        (0.03)

     Consolidated                                         $
              (0.05)                                     $

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SOURCE Remark Holdings, Inc.