LAS VEGAS, Nov. 14, 2018 /PRNewswire/ -- Remark Holdings, Inc. (NASDAQ: MARK), a diversified global technology company with leading artificial intelligence (AI) solutions and digital media properties, including Vegas.com, reported its financial results for the third quarter ended September 30, 2018.
Management Commentary
"We are actively working with our blue-chip clients to deploy our advanced AI technology across a broad range of applications within multiple sectors in China and Southeast Asia," said Kai-Shing Tao, Chairman and Chief Executive Officer of Remark Holdings. "The KanKan platform is unique in that it supports the development and launch of very accessible, customizable and easy-to-install AI solutions at reasonable price points for our clients. In turn, our business model is designed to generate a stream of recurring revenues combined with low capital costs. We continue to expect a substantial increase in our KanKan revenue as our current projects begin to scale in the months ahead.
"Given our growth potential and our strong assets, we continue to believe our share price is undervalued. As a result, we are currently working with our advisors to explore a range of options to unlock the value of our assets to the benefit of our shareholders. The consummation of any of our monetization efforts should provide ample liquidity that could be used to eliminate debt, fund growth or buyback shares."
KanKan Artificial Intelligence Platform Recent Operational Highlights
Travel & Entertainment Segment Three-Month Operational Highlights
Three Months Ended September 30, 2018 compared to 2017
Review of Strategic Alternatives
Remark also announced today that it is evaluating strategic alternatives, including the potential sale of certain non-core assets, investment assets and operating businesses. Remark has engaged The Raine Group LLC as financial advisor for the strategic review process. The company does not plan to make any further statements about the strategic review process until a decision has been reached.
Update on Debt Repayment
On September 28, 2018 Remark did not make the $11.5 million payment required by its Financing Agreement, which constitutes an event of default. As a result of the default, the debt has been classified as current on the Company's balance sheet. Remark is actively engaged in discussions with the Lenders regarding resolution of the default. In connection with those discussions, Remark has agreed to increase the amount of exit fees payable to the Lender by $1 million. The Lenders have informed Remark that they are willing to forebear from taking any enforcement action against the Company through the end of the year if the Company continues to pursue certain strategic alternatives.
2018 Financial Outlook
For the year ending December 31, 2018, management has updated its outlook to reflect the further impact of the lending industry regulatory audit on its FinTech business, as well as projected timing of revenue streams related to the various KanKan projects in early deployment. The Company now expects consolidated revenue of approximately $75 to $80 million in 2018, including $19 to $23 million in the fourth quarter. The low end of the range for the fourth quarter forecast includes nominal contributions from the Company's Technology & Data Intelligence business.
Remark's AI results have primarily been impacted by the recent shutdown of China's lending market due to an industry-wide regulatory audit and the effect of this development on its FinTech business. The Company started to see signs that liquidity in the lending market was beginning to loosen during the third quarter, but activity has remained far below normal. The Company is continuing to monitor the audit process and regulatory implications to determine the full impact on its FinTech operations, with the goal of making the necessary adjustments to its infrastructure and product approach.
Remark remains on plan in executing its strategy and rolling out its portfolio of AI solutions in conjunction with its clients in the retail and workplace and public safety sectors. Remark's previous 2018 revenue guidance included the projected contribution from these combined initiatives based on the Company's internal model, which has not changed. However, the timing of the revenue contribution from these initiatives has been pushed out as the scope of services Remark is working on with most current clients has expanded. Given the substantial agreements the Company has signed, and the actual deployments that are currently taking place, the Company believes it remains well positioned to accelerate its revenue growth in the months ahead.
Conference Call Information
Mr. Tao will hold a conference call today, November 14, 2018 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss these financial results. A question and answer session will follow management's presentation.
Toll-Free Number: 888-394-8218
International Number: 323-701-0225
Conference ID: 8378226
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 p.m. Eastern time on the same day through November 18, 2018.
Toll-Free Replay Number: 844-512-2921
International Replay Number: 412-317-6671
Replay ID: 8378226
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:
Alison Davidson
Remark Holdings, Inc.
[email protected]
702-701-9514
Investor Relations Contact:
Colton Krueger
The Plunkett Group, Inc.
[email protected]
210-602-4078
[Tables to follow]
REMARK HOLDINGS, INC. AND SUBSIDIARIES | |||||
Condensed Consolidated Balance Sheets | |||||
(dollars in thousands, except per share amounts) | |||||
September 30, | December 31, | ||||
(unaudited) | |||||
Assets | |||||
Cash and cash equivalents | $ | 9,902 | $ | 22,632 | |
Restricted cash | 11,655 | 11,670 | |||
Trade accounts receivable, net | 4,753 | 3,673 | |||
Prepaid expense and other current assets | 8,710 | 5,518 | |||
Notes receivable, current | 100 | 290 | |||
Total current assets | 35,120 | 43,783 | |||
Notes receivable | ? | 100 | |||
Property and equipment, net | 11,630 | 13,387 | |||
Investment in unconsolidated affiliates | 2,030 | 1,030 | |||
Intangibles, net | 19,950 | 23,946 | |||
Goodwill | 20,099 | 20,099 | |||
Other long-term assets | 1,620 | 1,192 | |||
Total assets | $ | 90,449 | $ | 103,537 | |
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ | 23,956 | $ | 17,857 | |
Accrued expense and other current liabilities | 12,034 | 18,795 | |||
Deferred merchant booking | 8,727 | 9,027 | |||
Contract liability | 5,049 | 3,691 | |||
Note payable | 3,000 | 3,000 | |||
Current maturities of long-term debt, net of unamortized discount and debt | 37,319 | 38,085 | |||
Total current liabilities | 90,085 | 90,455 | |||
Warrant liability | 7,072 | 89,169 | |||
Other liabilities | 3,296 | 3,501 | |||
Total liabilities | 100,453 | 183,125 | |||
Commitments and contingencies | |||||
Stockholders' equity | |||||
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued | ? | ? | |||
Common stock, $0.001 par value; 100,000,000 shares authorized; 36,468,696 | 36 | 28 | |||
Additional paid-in-capital | 304,006 | 220,117 | |||
Accumulated other comprehensive income | 48 | 115 | |||
Accumulated deficit | (314,094) | (299,848) | |||
Total stockholders' equity (deficit) | (10,004) | (79,588) | |||
Total liabilities and stockholders' equity | $ | 90,449 | $ | 103,537 |
REMARK HOLDINGS, INC. AND SUBSIDIARIES | |||||||
Unaudited Condensed Consolidated Statements of Operations | |||||||
(dollars in thousands, except per share amounts) | |||||||
Three Months Ended | Nine Months Ended September 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
Revenue | 19,351 | 19,449 | 56,788 | 52,004 | |||
Cost and expense | |||||||
Cost of revenue (excluding depreciation and | 4,393 | 5,641 | 14,557 | 12,270 | |||
Sales and marketing | 7,213 | 6,326 | 20,884 | 17,975 | |||
Technology and development | 842 | 865 | 2,587 | 2,657 | |||
General and administrative | 10,444 | 9,971 | 44,941 | 26,656 | |||
Depreciation and amortization | 2,756 | 2,482 | 8,220 | 8,237 | |||
Impairments | ? | 28 | ? | 28 | |||
Other operating expense | 117 | 66 | 264 | 168 | |||
Total cost and expense | 25,765 | 25,379 | 91,453 | 67,991 | |||
Operating loss | (6,414) | (5,930) | (34,665) | (15,987) | |||
Other income (expense) | |||||||
Interest expense | (1,307) | (1,080) | (3,968) | (3,279) | |||
Other income, net | 1 | ? | 56 | 20 | |||
Change in fair value of warrant liability | 3,525 | (5,978) | 22,190 | 2,351 | |||
Other gain (loss) | (12) | (33) | 511 | (85) | |||
Total other income, net | 2,207 | (7,091) | 18,789 | (993) | |||
Income (loss) before income taxes | (4,207) | (13,021) | (15,876) | (16,980) | |||
Benefit from (provision for) income taxes | 442 | (229) | 1,437 | (603) | |||
Net income (loss) | (3,765) | (13,250) | (14,439) | (17,583) | |||
Other comprehensive income (loss) | |||||||
Foreign currency translation adjustments | (82) | 48 | (67) | 20 | |||
Comprehensive income (loss) | (3,847) | (13,202) | (14,506) | (17,563) | |||
Weighted-average shares outstanding, basic and | 35,463 | 22,811 | 33,608 | 22,744 | |||
Net loss per share, basic and diluted | (0.11) | (0.58) | (0.43) | (0.77) |
SOURCE Remark Holdings, Inc.
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