Third Quarter Revenue increased 130% to
$2.8 Million
LAS
VEGAS, Nov. 14, 2022 /PRNewswire/ -- Remark
Holdings, Inc. (NASDAQ: MARK), a diversified global technology
company with leading artificial intelligence ("AI") solutions and
digital video analytics, today announced its financial results for
the fiscal third quarter ended September 30,
2022. For complete details of the condensed consolidated
financial statements and accompanying management's discussion and
analysis for the three and nine months ended September 30, 2022, please see Remark's filings
with the SEC (www.sec.gov).
Management
Commentary
"In the third quarter, we secured strategic partnerships with
global video analytics market leaders like Genetec and Axis to
increase the speed of deployment of our award-winning artificial
intelligence solutions to a new range of customers. This will build
upon the solid foundation which we believe will put us in the best
position for success in the coming quarters. Additionally, with
President Biden's $3 trillion
infrastructure bill, we believe this will provide a
once-in-a-lifetime opportunity to significantly increase our market
share by leveraging our critical position as a provider of
solutions addressing public safety and security that the nation
needs," noted Kai-Shing Tao,
Chairman and Chief Executive Officer of Remark Holdings. "Finally,
winning our first contract with a major top-ten sports and
entertainment arena having more than 2.5 million annual visitors is
a strong indicator of what is ahead of us not just in the US, but
globally."
Third Quarter 2022 Business
Highlights
- The company, with its AI-powered Smart Safety Platform ("SSP")
and related Smart Sentry units, has been selected by Genetec, Axis,
and other market-leading providers in the video management software
industry as strategic partners. RemarkAI's SSP will be offered to
their customers through Genetec's Security Center platform and to
customers of the other providers in a similar manner.
- Remark AI's SSP won the contract to provide its solutions to
one of the top ten US sports and entertainment arenas with over
2.5 million annual visitors. Solutions included are intrusion
detection, people counting, behavioral analysis, detection of
loitering, suspicious object detection, fire and smoke detection,
intelligent investigation, and trespassing detection.
- Remark AI's Smart Campus solutions were deployed at more than
70 campuses in China, bringing
total installations to more than 530 campuses and now cover in
excess of over 1 million students. In addition, Remark's AI student
evaluation system was recently launched and will sell on top of its
current safety products.
- The company, having completed an initial 60-site installation
project of its Smart Construction solution in the prior quarter,
completed an additional 19 installations at construction sites
during the third quarter of 2022, bringing the total installations
to 86 sites and continuing to work towards completion of a second
60-site project. Each initial construction project generates
$100,000 in revenue and is expected
to grow as China opens up.
- Remark's deployment of its systems in China Mobile's retail locations and various
banks remains halted as China
continues to implement its strict zero-COVID policies. With the
conclusion of China's 20th
National Congress, we are optimistic that these policies will
finally loosen.
Third Quarter 2022 Financial
Results
- Revenue for the third quarter of 2022 totaled $2.8 million, reflecting a 130% increase from
$1.2 million during the fiscal third
quarter of 2021.
-
- Revenue contributed by Remark's U.S. businesses decreased to
$0.1 million in the third quarter of
2022, compared to $0.4 million in the
same period of 2021, primarily due to a $0.2
million decrease from advertising business related to the
company's daily fantasy sports project in the prior-year third
quarter which did not repeat in the current year.
- Revenue from China grew by
227% to $2.7 million, with
construction project completions contributing about $1.9 million of the total and the remaining
amount primarily due to the completion of Smart Campus deployments
in various school districts.
- Gross profit of $0.4 million
remained essentially unchanged in the third quarter of 2022
compared to the prior year's third quarter, though such an amount
represented a gross profit percentage of 12.6% in the third quarter
of 2022 compared to 30.8% in the same period of 2021.
- The company's operating loss of $6.7
million in the third quarter of 2022 showed only a de
minimis increase from the operating loss in the comparable quarter
of 2021. The increase in revenue was offset by changes in several
operating expense categories.
- Net loss totaled $8.9 million, or
$0.08 per diluted share, in the third
quarter ended September 30, 2022,
compared to a net income of $72.7
million, or $0.72 per diluted
share, in the third quarter ended September
30, 2021. The prior-year third quarter included a
$78.9 million gain on the revaluation
of the company's investment in the common stock of Sharecare, Inc.,
and the value of the asset declined significantly since the
prior-year third quarter due to macroeconomic and stock market
conditions.
- On September 30, 2022, the cash
balance totaled $0.4 million,
compared to a cash balance of $14.2
million on December 31, 2021.
Net cash used in operating activities was $13.6 million during the nine months that ended
September 30, 2022.
- In response to a notice received on July
2, 2022, from the company's senior lenders, Remark
delivered, on July 11, 2022, its
remaining 6,250,000 shares of Sharecare, Inc. to its senior
lenders, which reduced the outstanding principal amount on its
senior secured loans by approximately $9.7
million. As a result, the company no longer owns any equity
interests in Sharecare, Inc.
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 the Company's
financial results and provide an update on recent business
developments. A question and answer session will follow
management's presentation.
The live conference may be accessed via telephone or online
webcast.
Toll-Free Number: 1-888-394-8218
International Number: 1-323-701-0225
Conference ID: 7679745
Online Webcast:
https://viavid.webcasts.com/starthere.jsp?ei=1580141&tp_key=5ff711d41b
Participants are advised to log in for the live webcast 10 minutes
prior to the scheduled start time.
A replay of the call will be available after 7:30 p.m. Eastern time on the same day through
Saturday, Nov 19, 2022, at
11:59 p.m. Eastern time.
Toll-Free Replay Number: 1-844-512-2921
International Replay Number: 1-412-317-6671
Replay PIN: 7679745
About Remark Holdings,
Inc.
Remark Holdings, Inc. (NASDAQ: MARK) delivers an integrated
suite of AI solutions that help organizations monitor, understand,
and act on threats in real-time. Remark consists of an
international team of sector-experienced professionals that have
created award-winning video analytics. The company's GDPR-compliant
and CCPA-compliant solutions focus on market sectors including
retail, federal and state governmental entities, public safety,
hospitality, and transportation. Remark maintains its headquarters
in Las Vegas, Nevada, with an
additional North American office in New
York and New York and
international offices in London,
England, and Chengdu,
China.
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 the 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
Fay Tian
Vice President of Investor Relations
F.Tian@remarkholdings.com
(+1) 626-623-2000
(+65) 8715-8007
REMARK HOLDINGS,
INC. AND SUBSIDIARIES Condensed Consolidated Balance
Sheets
(dollars in thousands, except share and per share
amounts)
|
|
|
September 30,
2022
|
|
December 31,
2021
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Cash
|
$
376
|
|
$
14,187
|
Trade accounts
receivable, net
|
5,753
|
|
10,267
|
Inventory,
net
|
1,545
|
|
1,346
|
Investment in
marketable securities
|
—
|
|
42,349
|
Deferred cost of
revenue
|
5,630
|
|
589
|
Prepaid expense and
other current assets
|
1,550
|
|
5,774
|
Total current
assets
|
14,854
|
|
74,512
|
Property and
equipment, net
|
1,404
|
|
357
|
Operating lease
assets
|
118
|
|
194
|
Other long-term
assets
|
312
|
|
440
|
Total
assets
|
$
16,688
|
|
$
75,503
|
Liabilities
|
|
|
|
Accounts
payable
|
$
9,202
|
|
$
10,094
|
Advances from related
parties
|
870
|
|
—
|
Accrued expense and
other current liabilities
|
6,570
|
|
5,963
|
Contract
liability
|
293
|
|
576
|
Notes payable, net of
unamortized discount and debt issuance cost of $2,189 at
December 31, 2021
|
14,418
|
|
27,811
|
Total current
liabilities
|
31,353
|
|
44,444
|
Operating lease
liabilities, long-term
|
25
|
|
25
|
Total
liabilities
|
31,378
|
|
44,469
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Stockholders' Equity
(Deficit)
|
|
|
|
Preferred stock,
$0.001 par value; 1,000,000 shares authorized; zero
issued
|
—
|
|
—
|
Common stock, $0.001
par value; 175,000,000 shares authorized; 106,407,769
and 105,157,769 shares issued and outstanding at September 30, 2022
and
December 31, 2021, respectively
|
106
|
|
105
|
Additional
paid-in-capital
|
366,263
|
|
364,239
|
Accumulated other
comprehensive loss
|
(1,137)
|
|
(270)
|
Accumulated
deficit
|
(379,922)
|
|
(333,040)
|
Total stockholders'
equity (deficit)
|
(14,690)
|
|
31,034
|
Total liabilities and
stockholders' equity (deficit)
|
$
16,688
|
|
$
75,503
|
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,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue, including
amounts from
China Business Partner
|
$
2,812
|
|
$
1,234
|
|
$
10,037
|
|
$
9,656
|
Cost and
expense
|
|
|
|
|
|
|
|
Cost of revenue
(excluding
depreciation and amortization)
|
2,459
|
|
854
|
|
8,576
|
|
5,858
|
Sales and
marketing
|
270
|
|
882
|
|
606
|
|
2,281
|
Technology and
development
|
41
|
|
635
|
|
1,004
|
|
3,490
|
General and
administrative
|
6,726
|
|
5,493
|
|
14,598
|
|
10,672
|
Depreciation and
amortization
|
43
|
|
35
|
|
121
|
|
150
|
Total cost and
expense
|
9,539
|
|
7,899
|
|
24,905
|
|
22,451
|
Operating
loss
|
(6,727)
|
|
(6,665)
|
|
(14,868)
|
|
(12,795)
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest
expense
|
(1,365)
|
|
(438)
|
|
(5,325)
|
|
(1,053)
|
Change in fair value
of warrant
liability
|
—
|
|
411
|
|
—
|
|
123
|
Gain (loss) on
investment
|
(348)
|
|
78,917
|
|
(26,356)
|
|
78,917
|
Loss on transfer of
assets
|
—
|
|
—
|
|
—
|
|
—
|
Gain on debt
extinguishment
|
—
|
|
425
|
|
—
|
|
425
|
Other gain (loss),
net
|
(493)
|
|
96
|
|
(342)
|
|
116
|
Total other income
(expense),
net
|
(2,206)
|
|
79,411
|
|
(32,023)
|
|
78,528
|
Loss before income
taxes
|
(8,933)
|
|
72,746
|
|
(46,891)
|
|
65,733
|
Provision for income
taxes
|
9
|
|
—
|
|
9
|
|
(9)
|
Net income
(loss)
|
$
(8,924)
|
|
$
72,746
|
|
$
(46,882)
|
|
$
65,724
|
Other comprehensive
income
|
|
|
|
|
|
|
|
Foreign currency
translation
adjustments
|
(445)
|
|
(9)
|
|
(867)
|
|
46
|
Comprehensive income
(loss)
|
$
(9,369)
|
|
$
72,737
|
|
$
(47,749)
|
|
$
65,770
|
|
|
|
|
|
|
|
|
Weighted-average
shares
outstanding, basic
|
105,290,553
|
|
100,140,650
|
|
105,290,553
|
|
100,087,288
|
Weighted-average
shares
outstanding, diluted
|
105,290,553
|
|
100,379,533
|
|
105,290,553
|
|
100,409,650
|
|
|
|
|
|
|
|
|
Net income (loss) per
share, basic
|
$
(0.08)
|
|
$
0.73
|
|
$
(0.45)
|
|
$
0.66
|
Net income (loss) per
share, diluted
|
$
(0.08)
|
|
$
0.72
|
|
$
(0.45)
|
|
$
0.65
|
|
|
|
|
|
|
|
|
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SOURCE Remark Holdings, Inc.