LAS VEGAS, Nov. 15, 2021 /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 third
quarter ended September 30, 2021.
Management Commentary
Company Reports 3Q EPS of $0.72
"Our third quarter was highlighted by the continued advancement
of our AI software and platforms. Our computer vision software was
once again named one of the best in the world, and we delivered on
a new platform for AI-driven safety in schools," noted Kai-Shing Tao, Chairman and Chief Executive
Officer of Remark Holdings. "Despite stringent, periodic citywide
lockdowns associated with COVID-19 in China and a major U.S. customer slowing its
product rollout due to technical difficulties, we have been able to
achieve revenue through the first nine months of 2021 of
$9.7 million, nearly matching full
year 2020 revenue of $10.1 million.
Finally, our long-term vision in large total addressable markets
was manifested in the third quarter as we recognized a $78.9 million gain on our $1.0 million investment in Sharecare, providing
us the building block to meet the capital requirements necessary to
meet current demand while allowing us to continue to invest in
areas that will assure future growth."
Third Quarter 2021 Business Highlights
- During the third quarter, the latest Remark AI software
achieved a top-five ranking in a computer-vision test (the Face
Recognition Vendor Test, or "FRVT") conducted by the U.S. National
Institute of Standards and Technology. Specifically, 198 systems
were tested in the FRVT for their ability to verify that a person
is wearing a face mask.
- Remark announced the receipt of a contract totaling
$5.0 million to deliver the company's
AI-driven workplace safety solutions to 100 industrial real estate
construction sites. Primarily in Shanghai, Shenzhen and Guangzhou, 30 sites are expected to be
installed by the end of the calendar year, with the balance
completed by the end of the first quarter of 2022.
- The Company entered into a definitive agreement with Armistice
Capital in a private placement of 4,237,290 shares of common stock
and warrants to purchase up to 4,237,290 shares of common stock at
a combined purchase price of $1.18
per share and accompanying warrant for gross proceeds of
approximately $5.0 million before
deducting transaction fees and other estimated offering expenses.
The warrants will have an exercise price of $1.35 per share, will be immediately exercisable
and will expire five years from the date of an effective
registration statement covering the shares underlying the
warrants.
- Finally, Remark launched an upgraded KanKan AI Platform for
school campus management intended to meet educational reform and
technology requirements in China.
Additionally, the company announced the expansion of its
distributor network, adding five resellers in existing and new
territories throughout China.
Fiscal Third Quarter 2021 Financial Results
- Revenue for the fiscal third quarter of 2021 totaled
$1.2 million, a decline from
$2.6 million during fiscal third
quarter of 2020.
-
- Revenue from China fell by
$1.2 million to $0.8 million due primarily to China's zero COVID-19 policy which led to
citywide lockdowns if even only one case of COVID-19 was detected
in a particular area. The strict COVID-19 preventative measures
negatively impacted Remark's ability to rollout its DMP platform
for banks, schools, and China Mobile projects during the third
quarter.
- Revenue from the U.S. was impacted principally by a newer
client which has been using the Company's AI-driven data
intelligence offering for marketing activities. Though the software
helped the customer reduce customer acquisition cost and increase
its conversion rate, the customer temporarily ceased its marketing
activities in the third quarter of 2021 while it works through
technical difficulties with onboarding its new customers. Remark is
now marketing its data intelligence software to other large
entities.
- Gross profit fell to $0.4 million
in the third quarter of 2021 from $1.0
million in the third quarter of 2020, commensurate with
decreased revenue. The overall gross profit margin for the third
quarter of 2021 was 30.8%.
- The company incurred an operating loss of $6.7 million in the third quarter of 2021
compared to an operating loss of $3.1
million in the comparable quarter of 2020. The increase in
operating loss is primarily attributable to the decline in gross
profit and a $3.2 million increase to
share-based compensation expense related to stock options
originally issued in July of 2020 that had an accounting grant date
of July 8, 2021.
- Net income totaled $72.7 million,
or $0.72 per diluted share in the
third quarter ended September 30,
2021, compared to net income of $4.4
million, or $0.04 per diluted
share in the third quarter ended September
30, 2020. The increase is primarily from the re-measurement
of Remark's investment in Sharecare, Inc. after it became a public
company in July of 2021. A gain on revaluation of the investment of
$78.9 million resulted.
- At September 30, 2021, cash
balance totaled $3.1 million,
compared to a cash balance of $0.9
million at December 31, 2020.
The predominant contributors to the change were proceeds of
$5.5 million from the equity offering
in September 2021 and from stock
option exercises, $4.8 million from a
short-term debt issuance and $2.3
million proceeds from the Sharecare transaction, which were
partially offset by $10.1 million of
cash used in operations.
"Finally, we highlight our AI platform as an integral building
block to position us for the ongoing transition to Web 3.0,
including opportunities in the Metaverse and NFT markets, where our
platform allows us to efficiently and rapidly enter these markets
and capture initial business. With the fortification of our balance
sheet, we are poised to continue growing core business in banking,
schools and retail while expanding infrastructure and construction
opportunities and simultaneously investing in Metaverse
opportunities that leverage our brands," 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 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: 866.548.4713
International Number: 323.794.2093
Conference ID: 5036951
Online Webcast:
https://viavid.webcasts.com/starthere.jsp?ei=1512093&tp_key=062fda5464.
Participants are advised to login 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
November 20, 2021.
Toll-Free Replay Number: 844.512.2921
International Replay Number: 412.317.6671
Replay ID: 5036951
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, public safety and
workplace arenas. The company also owns and operates an e-commerce
digital media property focused on a luxury beach lifestyle. 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 Contacts
E. Brian Harvey
Senior Vice President of Capital Markets and Investor Relations
Remark Holdings, Inc.
ebharvey@remarkholdings.com
702.701.9514
Fay Tian
Vice President of Investor Relations
F.Tian@remarkholdings.com
(+1) 626.623.2000
(+86) 13702108000
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
Consolidated Balance
Sheets
|
(dollars in
thousands, except share and per share amounts)
|
|
|
September 30,
2021
|
|
December 31,
2020
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Cash (includes VIE
$1,100 and $278, respectively)
|
$
|
3,168
|
|
|
$
|
854
|
|
Trade accounts
receivable, net (includes VIE $7,281 and $4,850,
respectively)
|
7,318
|
|
|
5,027
|
|
Inventory, net
(includes VIE $58 and $112, respectively)
|
1,936
|
|
|
874
|
|
Investment in
marketable securities
|
77,625
|
|
|
—
|
|
Prepaid expense and
other current assets (includes VIE $735 and $248,
respectively)
|
1,964
|
|
|
2,043
|
|
Total current
assets
|
92,011
|
|
|
8,798
|
|
Property and
equipment, net (includes VIE $— and $43, respectively)
|
329
|
|
|
321
|
|
Operating lease assets
(includes VIE $124 and $281, respectively)
|
257
|
|
|
492
|
|
Investment in
unconsolidated affiliate
|
—
|
|
|
1,030
|
|
Other long-term assets
(includes VIE $24 and $68, respectively)
|
483
|
|
|
670
|
|
Total
assets
|
$
|
93,080
|
|
|
$
|
11,311
|
|
Liabilities
|
|
|
|
Accounts payable
(includes VIE $5,843 and $3,655, respectively)
|
$
|
11,230
|
|
|
$
|
8,589
|
|
Accrued expense and
other current liabilities (includes VIE $2,977 and $3,782,
respectively)
|
6,057
|
|
|
6,660
|
|
Contract liability
(includes VIE $215 and $147, respectively)
|
746
|
|
|
310
|
|
Notes payable, net of
unamortized discount and debt issuance cost
|
6,297
|
|
|
1,500
|
|
Total current
liabilities
|
24,330
|
|
|
17,059
|
|
Loans
payable
|
—
|
|
|
1,425
|
|
Operating lease
liabilities, long-term (includes VIE $— and $79,
respectively)
|
49
|
|
|
194
|
|
Warrant
liability
|
—
|
|
|
1,725
|
|
Total
liabilities
|
24,379
|
|
|
20,403
|
|
|
|
|
|
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; 105,108,724 and
99,505,041 shares issued and outstanding at September 30, 2021 and
December 31, 2020, respectively
|
105
|
|
|
100
|
|
Additional
paid-in-capital
|
363,564
|
|
|
351,546
|
|
Accumulated other
comprehensive income
|
(180)
|
|
|
(226)
|
|
Accumulated
deficit
|
(294,788)
|
|
|
(360,512)
|
|
Total stockholders'
equity (deficit)
|
68,701
|
|
|
(9,092)
|
|
Total liabilities and
stockholders' equity (deficit)
|
$
|
93,080
|
|
|
$
|
11,311
|
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
Consolidated
Statements of Operations and Comprehensive Loss
|
(dollars in
thousands, except per share amounts)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenue
|
$
|
1,234
|
|
|
$
|
2,646
|
|
|
$
|
9,656
|
|
|
$
|
5,376
|
|
Cost and
expense
|
|
|
|
|
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
854
|
|
|
1,679
|
|
|
5,858
|
|
|
2,910
|
|
Sales and
marketing
|
882
|
|
|
417
|
|
|
2,281
|
|
|
1,319
|
|
Technology and
development
|
635
|
|
|
738
|
|
|
3,490
|
|
|
2,863
|
|
General and
administrative
|
5,493
|
|
|
2,380
|
|
|
10,672
|
|
|
7,018
|
|
Depreciation and
amortization
|
35
|
|
|
72
|
|
|
150
|
|
|
228
|
|
Impairments
|
—
|
|
|
463
|
|
|
—
|
|
|
463
|
|
Total cost and
expense
|
7,899
|
|
|
5,749
|
|
|
22,451
|
|
|
14,801
|
|
Operating
loss
|
(6,665)
|
|
|
(3,103)
|
|
|
(12,795)
|
|
|
(9,425)
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest
expense
|
(438)
|
|
|
(60)
|
|
|
(1,053)
|
|
|
(1,296)
|
|
Other income
(expense), net
|
—
|
|
|
(58)
|
|
|
7
|
|
|
(1)
|
|
Change in fair value
of warrant liability
|
411
|
|
|
5,570
|
|
|
123
|
|
|
(633)
|
|
Gain on investment
revaluation
|
78,917
|
|
|
—
|
|
|
78,917
|
|
|
—
|
|
Gain on debt
extinguishment
|
425
|
|
|
—
|
|
|
425
|
|
|
—
|
|
Gain on lease
termination
|
—
|
|
|
2,044
|
|
|
—
|
|
|
3,582
|
|
Other gain (loss),
net
|
96
|
|
|
21
|
|
|
109
|
|
|
(52)
|
|
Total other income,
net
|
79,411
|
|
|
7,517
|
|
|
78,528
|
|
|
1,600
|
|
Income (loss) from
operations
|
$
|
72,746
|
|
|
$
|
4,414
|
|
|
$
|
65,733
|
|
|
$
|
(7,825)
|
|
Provision for income
taxes
|
—
|
|
|
—
|
|
|
(9)
|
|
|
—
|
|
Net income
(loss)
|
$
|
72,746
|
|
|
$
|
4,414
|
|
|
$
|
65,724
|
|
|
$
|
(7,825)
|
|
Other comprehensive
loss
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
(9)
|
|
|
65
|
|
|
46
|
|
|
403
|
|
Comprehensive income
(loss)
|
$
|
72,737
|
|
|
$
|
4,479
|
|
|
$
|
65,770
|
|
|
$
|
(7,422)
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding, basic
|
100,141
|
|
|
99,450
|
|
|
100,087
|
|
|
80,903
|
|
Weighted-average shares
outstanding, diluted
|
100,380
|
|
|
99,450
|
|
|
100,410
|
|
|
80,903
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share, basic
|
$
|
0.73
|
|
|
$
|
0.04
|
|
|
$
|
0.66
|
|
|
$
|
(0.10)
|
|
Net income (loss) per
share, diluted
|
$
|
0.72
|
|
|
$
|
0.04
|
|
|
$
|
0.65
|
|
|
$
|
(0.10)
|
|
|
|
|
|
|
|
|
|
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SOURCE Remark Holdings, Inc.