LAS VEGAS, Aug. 14, 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 second
quarter ended June 30, 2020.
Management Commentary
"The second quarter of 2020 was highlighted by the initial
rollout of our AI-powered thermal imaging solutions for the U.S.
market that generated $1.1 million in
revenue during its introduction. With China now emerging from post-COVID-19
lockdowns, we anticipate growth on both sides of the Pacific moving
forward," noted Kai-Shing Tao,
Chairman and Chief Executive Officer of Remark Holdings. "During
the quarter we also successfully recapitalized our balance sheet by
paying off over $13 million of debt
and liabilities, while also ending the quarter with over
$10 million of cash. These funds will
help fuel our growth domestically and abroad as we grow our team,
services and solutions."
Second Quarter 2020 Business Development Highlights
- Announced that shipments and deployments of the
newly-repurposed Remark family of AI thermal solutions, including
thermal kits, thermal pads, and thermal helmets, began in
the United States and Japan.
- Received notification from Nasdaq that shares of Remark
Holdings, Inc. had regained compliance with Nasdaq's minimum bid
price and stockholders' equity rules and met the requirements of
the Nasdaq Hearing Panel decision which requires that the company
evidence compliance with all applicable criteria for continued
listing.
- Launched RemarkThermal.com. Remark's thermal imaging is
used to scan high-traffic areas to detect individuals with
higher-than-acceptable skin temperature and track the individual
for secondary screening. Each of the thermal imaging products is
customizable and can operate as a standalone product or integrated
into centralized control systems, specific to the needs of the
customer.
- Announced the company won Phase 2 implementation of China
Mobile's contract for the transformation of its 17,800 corporate
stores into smart retail stores. Phase 2 is worth approximately
$2.0 million.
Second Quarter 2020 Financial Results
- Revenue for the second quarter of 2020 was $2.3 million, down from $2.9 million during the second quarter of 2019.
Revenue from the new bio-safety business totaled $1.1 million as thermal imaging products were
delivered to casinos, restaurants, hotels, law enforcement
agencies, medical centers, office buildings, and customers in other
industries throughout the United
States.
Several factors, including COVID-19-related quarantines, continued
to adversely impact revenue from the company's China business early in the second quarter by
preventing personnel in China from
continuing project roll outs and by delaying project testing and
customization work on larger projects. However, projects resumed
during the latter part of the second quarter, leading to
approximately $1.0 million of
revenue.
- Total cost and expense for the second quarter of 2020 was
$5.1 million, a decrease from the
$5.8 million reported in the same
period of 2019. The decrease is primarily attributable to a
$0.3 million decline in the cost of
revenue resulting primarily from fewer international project
completions, and decreases in sales and marketing expense of
$0.2 million, and in general and
administrative expense of $0.6
million, as headcount declined. Such decreases were offset
by a $0.6 million increase in
share-based compensation expense in the technology and development
cost category caused by an increase in the liability associated
with share-based grants to our employees in China.
- Operating loss declined to $2.8
million in the second quarter of 2020 from $2.9 million in the second quarter of 2019
commensurate with the cost and expense declines.
- Loss from continuing operations totaled $9.8 million, or $0.11 per diluted share, in the second quarter
ended June 30, 2020, compared to a
net loss from continuing operations of $1.3
million, or $0.03 per diluted
share in the second quarter ended June 30,
2019. The bulk of the loss is tied to a non-cash change in
the fair value of warrant liability of ($6.3) million compared to a $2.1 million gain in the comparable period of
2019, as a result of the increased share price of Remark's common
shares.
At June 30, 2020, the cash and
cash equivalents balance was $10.2
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, which increase was partially offset by use of the
proceeds to make debt principal repayments of $13.3 million, to make other liability payments
and to generally operate the business.
Subsequent Event
- On August 3, 2020, Remark entered
into a Settlement Agreement and Release with the landlord of its
former office space in Las Vegas,
Nevada in exchange for a full release of all obligations and
claims against the company.
"Our U.S. thermal business is off to a great start. We are
seeing the momentum started in our second quarter carrying into our
third quarter, and initial orders are leading to many new and large
opportunities in various industries. Our ownership in Sharecare
continues to grow more valuable each quarter, especially in light
of Teladoc Health's recent acquisition of Livongo Health for
$18.5 billion, which validates
Sharecare's strategy of creating a platform versus a point
solution. Finally, we expect our businesses to grow as the world's
economies recover and reopen. Our AI-powered solutions are proven,
tested and live," concluded Mr. Tao.
Conference Call Information
Management will hold a conference call this morning at
9:00 a.m. Eastern Time (6:00 a.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: 800.289.0438
International Number: 323.794.2423
Conference ID: 8269351
Participant
Link: http://public.viavid.com/index.php?id=141180.
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
12:00 p.m. Eastern time on the same
day through August 19, 2020.
Toll-Free Replay Number: 844.512.2921
International Replay Number: 412.317.6671
Replay ID: 8269351
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 http://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
|
Condensed
Consolidated Balance Sheets
|
(dollars in
thousands, except share and per share amounts)
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
10,233
|
|
$
|
272
|
Trade accounts
receivable, net
|
2,235
|
|
1,964
|
Receivable from
related parties
|
531
|
|
—
|
Prepaid expense and
other current assets
|
5,803
|
|
4,623
|
Total current
assets
|
18,802
|
|
6,859
|
Property and
equipment, net
|
156
|
|
341
|
Operating lease
assets
|
470
|
|
4,359
|
Investment in
unconsolidated affiliates
|
1,922
|
|
1,935
|
Intangibles,
net
|
472
|
|
509
|
Other long-term
assets
|
1,254
|
|
824
|
Total
assets
|
$
|
23,076
|
|
$
|
14,827
|
Liabilities and
Stockholders' Deficit
|
|
|
|
Accounts
payable
|
$
|
7,709
|
|
$
|
8,126
|
Accrued expense and
other current liabilities
|
13,295
|
|
14,326
|
Contract
liability
|
566
|
|
313
|
Note
payable
|
2,000
|
|
3,000
|
Loans payable,
current, net of unamortized discount and debt issuance
cost
|
—
|
|
12,025
|
Total current
liabilities
|
23,570
|
|
37,790
|
Operating lease
liabilities, long-term
|
202
|
|
4,650
|
Warrant
liability
|
6,318
|
|
115
|
Total
liabilities
|
30,515
|
|
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; 99,408,916 and 51,055,159
shares issued and outstanding at June 30, 2020 and December 31,
2019, respectively
|
99
|
|
51
|
Additional
paid-in-capital
|
351,417
|
|
319,275
|
Accumulated other
comprehensive income
|
111
|
|
(227)
|
Accumulated
deficit
|
(359,066)
|
|
(346,827)
|
Total stockholders'
deficit
|
(7,439)
|
|
(27,728)
|
Total liabilities and
stockholders' deficit
|
$
|
23,076
|
|
$
|
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
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue
|
$
|
2,299
|
|
$
|
2,865
|
|
$
|
2,730
|
|
$
|
4,074
|
Cost and
expense
|
|
|
|
|
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
1,210
|
|
1,541
|
|
1,231
|
|
3,134
|
Sales and
marketing
|
486
|
|
687
|
|
902
|
|
1,546
|
Technology and
development
|
1,477
|
|
854
|
|
2,125
|
|
2,158
|
General and
administrative
|
1,898
|
|
2,454
|
|
4,638
|
|
5,431
|
Depreciation and
amortization
|
66
|
|
260
|
|
156
|
|
585
|
Other operating
expense
|
—
|
|
—
|
|
—
|
|
6
|
Total cost and
expense
|
5,137
|
|
5,796
|
|
9,052
|
|
12,860
|
Operating
loss
|
(2,838)
|
|
(2,931)
|
|
(6,322)
|
|
(8,786)
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest
expense
|
(775)
|
|
(553)
|
|
(1,236)
|
|
(940)
|
Other income
(expense), net
|
57
|
|
92
|
|
57
|
|
47
|
Change in fair value
of warrant liability
|
(6,260)
|
|
2,078
|
|
(6,203)
|
|
662
|
Gain on lease
termination
|
—
|
|
—
|
|
1,538
|
|
—
|
Other loss,
net
|
—
|
|
27
|
|
(73)
|
|
1
|
Total other income
(expense), net
|
(6,978)
|
|
1,644
|
|
(5,917)
|
|
(230)
|
Loss from continuing
operations before income taxes
|
(9,816)
|
|
(1,287)
|
|
(12,239)
|
|
(9,016)
|
Benefit from income
taxes
|
—
|
|
—
|
|
—
|
|
—
|
Loss from continuing
operations
|
$
|
(9,816)
|
|
$
|
(1,287)
|
|
$
|
(12,239)
|
|
$
|
(9,016)
|
Loss from
discontinued operations, net of tax
|
—
|
|
(1,487)
|
|
—
|
|
(2,610)
|
Net loss
|
$
|
(9,816)
|
|
$
|
(2,774)
|
|
$
|
(12,239)
|
|
$
|
(11,626)
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
156
|
|
127
|
|
338
|
|
33
|
Comprehensive
loss
|
$
|
(9,660)
|
|
$
|
(2,647)
|
|
$
|
(11,901)
|
|
$
|
(11,593)
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding, basic and diluted
|
89,264
|
|
43,335
|
|
71,527
|
|
39,994
|
|
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.11)
|
|
$
|
(0.03)
|
|
$
|
(0.17)
|
|
$
|
(0.23)
|
Discontinued
operations
|
—
|
|
(0.03)
|
|
—
|
|
(0.07)
|
Consolidated
|
$
|
(0.11)
|
|
$
|
(0.06)
|
|
$
|
(0.17)
|
|
$
|
(0.30)
|
|
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SOURCE Remark Holdings, Inc.