Company Continues Expanding Strategic
Partnerships to Set Stage for Future Growth
LAS
VEGAS, April 17, 2023 /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 year ended December 31,
2022. For complete details of the consolidated financial
statements and accompanying management's discussion and analysis
the fiscal year ended December 31,
2022, please see the company's filings with the SEC
(www.sec.gov).
Management Commentary
"In the fourth quarter of 2022, the world refocused its attention
on how powerful artificial intelligence can be and on its ability
to change the world. Over the last eight years, we have built our
award-winning AI platform from the ground up, and now we can be
proud that our team has made us one of the leaders in artificial
intelligence, specifically in computer vision," noted Kai-Shing Tao, Chairman and Chief Executive
Officer of Remark Holdings. "While operating under the strict Covid
lockdowns in China, 2022 was a
transition year where we successfully diversified our business
primarily to the U.S. and the United
Kingdom, where we will reap the benefits in 2023. Our
recently-won customers and strategic partners like Genetech and
Milestone attest to our ability to deploy our AI-based solutions to
help businesses run more effectively and efficiently and provide an
immediate ROI. In 2023, you will see our team continue to deliver
with new customers, to expand our business with existing customers,
to expand into Latin America and
the Middle East, and to build and
create cutting-edge AI technology that makes a real
difference."
Fiscal Year 2022 Business Highlights
- The company, with its AI-powered Smart Safety Platform ("SSP")
and related Smart Sentry units, has been selected by Milestone and
other market-leading providers in the video management software
industry as strategic partners. Remark's integration with Milestone
Systems' XProtect® platform allows organizations to make real-time,
data-driven decisions and uncover data insights from the autonomous
detection of security incidents and breaches 24 hours per day.
- Remark AI won the contract to provide the SSP, Smart Sentry,
and related equipment to Fremont Street Experience to help maintain
the safety and security of Fremont Street Experience's more than 26
million annual visitors. The installed system provides real-time,
actionable alerts, performs crowd counts, analyzes behavior, and
detects intrusions, loitering, suspicious objects, fire, and smoke.
It allows for intelligent investigation of any security events.
- In the fourth quarter, the company deployed its Smart Campus
solutions at an additional 100 campuses in China, bringing total installations to more
than 600 campuses and helping protect more than 1.2 million
students. In addition, Remark's AI-based comprehensive student
reporting system has undergone pilot programs in a few cities,
which, upon completion of the pilot programs, will expand coverage
to an additional 350 schools.
- By the end of 2022, the company completed an additional 11
installations of its Smart Construction solution in China, bringing the total installations to 97
sites and continuing to work towards the completion of a second
60-site project. Each initial construction project generates
approximately $100,000 in revenue,
and the pace of Remark's installations is expected to grow as
China opens up.
- The Covid-19-related lockdowns that continued for long
stretches of time during 2022 in various regions in China prevented Remark from completing even
more deployments of its Smart Campus and Smart Construction systems
as had been planned, and the company had to re-evaluate the planned
deployments of its systems in China Mobile retail locations and at various
banks. Remark expects that deployments at China Mobile retail
locations and at banks will gradually resume in the second quarter
of 2023.
- As of December 31, 2022, Remark
was able to restart its China Mobile Smart Community installations,
and the company expects to complete installations of approximately
100 of its Smart Community systems in 2023.
Fiscal Year 2022 Financial Results
- Revenue for fiscal year 2022 totaled $11.7 million, reflecting a 27% decrease from
$16.0 million during fiscal year
2021.
-
- Revenue contributed by Remark's U.S. businesses decreased by
$3.5 million during fiscal year 2022
when compared to fiscal year 2021, primarily because the company
performed $2.8 million worth of AI
data intelligence services and advertising services related to a
daily fantasy sports project during fiscal year 2021 but did not
repeat the same or similar project during fiscal year 2022. A
decline in demand for Remark's thermal imaging products also
reduced U.S. revenue by approximately $0.4
million.
- Revenue from China decreased
to $11.4 million in fiscal year 2022
from $12.2 million in fiscal year
2021, primarily due to lengthy lockdowns and other restrictive
measures under China's Zero COVID
policy that were implemented and continued in many cities across
China well into the fourth quarter
of 2022. Such lockdowns and restrictive measures prevented the
company from completing as many projects as had been expected.
- Gross profit decreased to $0.3
million in fiscal 2022 from $4.5
million in fiscal 2021 commensurate with decreased
revenue.
- The company's operating loss of $21.3
million during fiscal year 2022 reflected an increase of
$7.4 million from an operating loss
of $13.9 million during fiscal year
2021. In addition to the decrease in revenue, changes in Remark's
technology and development expense, general and administrative
expense and a recovery of marketing expense in fiscal year 2021
that was not repeated in fiscal year 2022 contributed to the
increase in operating loss.
- Net loss totaled $55.5 million,
or $5.22 per diluted share, during
the fiscal year ended December 31,
2022, compared to net income of $27.5
million, or $2.70 per diluted
share, during the fiscal year ended December
31, 2021. The prior fiscal year included a $43.6 million non-operating gain on the
revaluation of the company's investment in the common stock of
Sharecare, Inc. The value of the investment declined significantly
since the prior fiscal year due to macroeconomic and stock market
conditions, such that when the company disposed of the investment
through sales and in partial settlement of debt, a $26.4 million loss on investment resulted.
Interest expense increased to approximately $6.0 million during the fiscal year ended
December 31, 2022, from $2.3 million during the fiscal year ended
December 31, 2021, primarily due to a
large increase in debt principal outstanding and debt discount
related to new debt.
- On December 31, 2022, the cash
balance totaled $0.1 million,
compared to a cash balance of $14.2
million on December 31, 2021.
Net cash used in operating activities was $16.6 million during fiscal year 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.
- On October 6, 2022, the company
obtained an equity line of credit pursuant to which, after certain
conditions are met, it can sell its common stock to Ionic Ventures
LLC in exchange for as much as $50.0
million.
- On December 21, 2022, the company
effected a 1-for-10 reverse split of our common stock.
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: 877.407.4018
International Number: 201.689.8471
Conference ID: 13737786
Online Webcast:
https://callme.viavid.com/viavid/?callme=true&passcode=13737786&h=true&info=company&r=true&B=6
Participants are advised to log in for the live webcast 10
minutes prior to the scheduled start time.
A call replay will be available after 7:30 p.m. Eastern time on the same day through
April 22, 2023, at 11:59 p.m. Eastern time.
Toll-Free Replay Number: 844.512.2921
International Replay Number: 412.317.6671
Replay PIN: 13737786
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 sectors including retail, federal agencies,
public safety, hospitality, and transportation. The company's
headquarters are in Las Vegas,
Nevada, USA, with operational offices in New York and international offices in
London, England. For more
information, please visit the company's website:
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 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 Consolidated Balance Sheets
(dollars in thousands, except share and per share
amounts)
|
|
|
December
31,
|
|
2022
|
|
2021
|
Assets
|
|
|
|
Cash
|
$
52
|
|
$
14,187
|
Trade accounts
receivable, net
|
3,091
|
|
10,267
|
Inventory,
net
|
308
|
|
1,346
|
Investment in
marketable securities
|
—
|
|
42,349
|
Deferred cost of
revenue
|
7,463
|
|
589
|
Prepaid expense and
other current assets
|
1,374
|
|
5,774
|
Total current
assets
|
12,288
|
|
74,512
|
Property and
equipment, net
|
1,699
|
|
357
|
Operating lease
assets
|
180
|
|
194
|
Other long-term
assets
|
269
|
|
440
|
Total
assets
|
$
14,436
|
|
$
75,503
|
Liabilities
|
|
|
|
Accounts
payable
|
$
9,602
|
|
$
10,094
|
Advances from related
parties
|
1,174
|
|
—
|
Liability related to
convertible debenture
|
1,892
|
|
—
|
Accrued expense and
other current liabilities
|
7,222
|
|
5,963
|
Contract
liability
|
308
|
|
576
|
Notes payable, net of
unamortized discount and debt issuance cost of $0 and
$2,189 at December 31, 2022 and 2021, respectively
|
14,607
|
|
27,811
|
Total current
liabilities
|
34,805
|
|
44,444
|
Operating lease
liabilities, long-term
|
56
|
|
25
|
Total
liabilities
|
34,861
|
|
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; 11,539,564 and
10,515,777 shares issued and outstanding at December 31, 2022 and
2021,
respectively
|
12
|
|
11
|
Additional
paid-in-capital
|
368,945
|
|
364,333
|
Accumulated other
comprehensive loss
|
(859)
|
|
(270)
|
Accumulated
deficit
|
(388,523)
|
|
(333,040)
|
Total stockholders'
equity (deficit)
|
(20,425)
|
|
31,034
|
Total liabilities and
stockholders' equity (deficit)
|
$
14,436
|
|
$
75,503
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES Unaudited Condensed Consolidated
Statements of Operations and Comprehensive Loss
(dollars in thousands, except per share amounts)
|
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
Revenue, including
amounts from China Business Partner
|
$
11,666
|
|
$
15,990
|
Cost and
expense
|
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
11,331
|
|
11,455
|
Sales and
marketing
|
971
|
|
971
|
Recovery of marketing
expense - China Business Partner activity
|
—
|
|
(1,530)
|
Technology and
development
|
2,101
|
|
4,692
|
General and
administrative
|
18,399
|
|
14,120
|
Depreciation and
amortization
|
166
|
|
191
|
Total cost and
expense
|
32,968
|
|
29,899
|
Operating
loss
|
(21,302)
|
|
(13,909)
|
Other income
(expense)
|
|
|
|
Interest
expense
|
(6,073)
|
|
(2,308)
|
Finance cost on
liability related to convertible debenture
|
(1,422)
|
|
—
|
Change in fair value
of warrant liability
|
—
|
|
123
|
Gain (loss) on
investment
|
(26,356)
|
|
43,642
|
Gain on debt
extinguishment
|
—
|
|
425
|
Other loss,
net
|
(339)
|
|
(492)
|
Total other income
(expense), net
|
(34,190)
|
|
41,390
|
Income (loss) from
before income taxes
|
(55,492)
|
|
27,481
|
Benefit from
(provision for) income taxes
|
9
|
|
(9)
|
Net income
(loss)
|
$
(55,483)
|
|
$
27,472
|
Other comprehensive
loss
|
|
|
|
Foreign currency
translation adjustments
|
(589)
|
|
(44)
|
Comprehensive income
(loss)
|
$
(56,072)
|
|
$
27,428
|
|
|
|
|
Weighted-average shares
outstanding, basic
|
10,630,771
|
|
10,136,210
|
Weighted-average shares
outstanding, diluted
|
10,630,771
|
|
10,171,924
|
|
|
|
|
Net income (loss) per
share, basic
|
$
(5.22)
|
|
$
2.71
|
Net income (loss) per
share, diluted
|
$
(5.22)
|
|
$
2.70
|
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SOURCE Remark Holdings, Inc.