Delaware | 001-33720 | 33-1135689 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
3960 Howard Hughes Parkway, Suite 900 Las Vegas, NV | 89169 | 702-701-9514 | ||
(Address of principal executive offices) | (Zip Code) | (Registrant’s telephone number, including area code) | ||
(Former name or former address, if changed since last report.) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Common Stock, $0.001 par value per share | MARK | The NASDAQ Stock Market LLC |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit Number | Description | |
Remark Holdings, Inc. | ||||
Date: | November 12, 2019 | By: | /s/ Kai-Shing Tao | |
Name: | Kai-Shing Tao | |||
Title: | Chief Executive Officer |
• | Partnered with Hanvon Technology, a publicly-listed Chinese systems integrator that won the master retail contract to transform China Mobile’s 17,800 corporate stores into smart retail stores. The first phase of this partnership with Hanvon is expected to bring $50.0 million of revenue to the Company over the three-year life of the project. |
• | Announced the initial deployment of KanKan AI’s Smart Campus solution in the Hangzhou Primary School System in Hangzhou, China. The Smart Campus Solution uses facial recognition technology and object recognition technology to: automate student check-in and check-out at the school’s entrance and exit points; control access to dormitories, laboratories and libraries; alert school administrators of unauthorized persons who have trespassed on the school campus; ensure students are released only to parents or other pre-approved persons; and monitor for unauthorized objects, such as weapons, brought into school buildings. |
• | Announced a new partnership with Tongyue Technologies to bring its KanKan’s AI leading AI technology to Tongyue’s recent launch of its Kindergarten Medical Robot, which identifies a student’s health condition, weight, height, and body temperature within ten seconds to determine whether the student is suspected of contracting hand, foot, and mouth disease or other potentially infectious diseases. Initially launching in Hangzhou with 30 kindergartens representing 12,000 students, the partnership is expected to deploy to over 500 kindergartens in the Hangzhou province, representing 200,000 students. |
• | Sharecare received a strategic investment from Aflac Corporate Ventures, as a follow on to the investment by Quest Diagnostics, to accelerate digital health innovation, further highlighting the value Sharecare is creating. To date, Sharecare has raised in excess of $425 million. Additionally, Sharecare and Walmart announced a strategic partnership aimed at improving the health and wellbeing of the retailer’s associates, families and friends, as well as the people living in the communities in which their stores operate. Remark continues to explore avenues to optimize the monetization of its investment in Sharecare to best create long-term value for its shareholders. |
• | Revenue for the third quarter of 2019 was $0.7 million, down from $1.8 million during the comparable period of last year. Regulatory changes in China's financial services market caused the company to discontinue its FinTech business in 2018. At the same time, other business segments showed declining revenue associated with the expiration of contracts that were not renewed, and a decrease in e-commerce sales. |
• | AI-based product and service revenue fell by $0.1 million during the third quarter and was negatively impacted by celebrations related to the 70th anniversary of the founding of the People’s Republic of China, the ongoing US-China trade war which caused disruption in supply chain management, extended project testing and customization work on our larger projects and, finally, by working capital constraints. |
• | Total cost and expense for the third quarter of 2019 was $5.0 million, a decrease from the $8.1 million reported in the third quarter of 2018. The decrease is primarily attributable to decreases in cost of sales as a result of the discontinuation of FinTech services and declines in payroll and related cost as a result of headcount reductions, all of which was partially offset by an increase of approximately $0.8 million in the bad debt allowance resulting from an increased risk that certain trade receivables may not be fully collected. |
• | Operating loss declined to $4.3 million in the third quarter of 2019 from $6.4 million in the third quarter of 2018 commensurate with the cost and expense declines. |
• | Adjusted EBITDA was ($4.0) million from continuing operations, as compared to ($5.1) million. |
• | Net loss from continuing operations totaled $4.9 million or ($0.11) per diluted share in the third quarter ended September 30, 2019, compared to a net loss of $3.8 million, or ($0.08) per diluted share in the comparable period of the prior year. |
• | At September 30, 2019, the cash and cash equivalents balance was $0.7 million, compared to a cash position of $1.4 million at December 31, 2018. Cash declined primarily due to timing of payments related to elements of working capital, offsetting proceeds from common stock issuances. |
September 30, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Cash and cash equivalents | $ | 656 | $ | 1,410 | |||
Trade accounts receivable, net | 3,792 | 5,762 | |||||
Prepaid expense and other current assets | 6,233 | 7,907 | |||||
Notes receivable, current | — | 100 | |||||
Assets of disposal group, current | — | 28,966 | |||||
Total current assets | 10,681 | 44,145 | |||||
Property and equipment, net | 1,591 | 2,075 | |||||
Operating lease assets | 5,294 | — | |||||
Investment in unconsolidated affiliates | 1,920 | 2,005 | |||||
Intangibles, net | 752 | 1,010 | |||||
Other long-term assets | 1,245 | 450 | |||||
Assets of disposal group, long-term | — | 44,123 | |||||
Total assets | $ | 21,483 | $ | 93,808 | |||
Liabilities and Stockholders’ Equity | |||||||
Accounts payable | $ | 7,585 | $ | 5,675 | |||
Accrued expense and other current liabilities | 12,861 | 16,812 | |||||
Contract liability | 312 | 132 | |||||
Note payable | 3,000 | 3,000 | |||||
Loans payable, current, net of unamortized discount and debt issuance cost | 11,632 | 35,314 | |||||
Liabilities of disposal group, current | — | 41,648 | |||||
Total current liabilities | 35,390 | 102,581 | |||||
Operating lease liabilities, long-term | 5,436 | — | |||||
Warrant liability | 881 | 1,383 | |||||
Other liabilities | — | 2,934 | |||||
Liabilities of disposal group, long-term | — | 34 | |||||
Total liabilities | 41,707 | 106,932 | |||||
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued | — | — | |||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 48,430,159 and 39,053,312 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 48 | 39 | |||||
Additional paid-in-capital | 317,732 | 308,018 | |||||
Accumulated other comprehensive income | (224 | ) | 32 | ||||
Accumulated deficit | (337,780 | ) | (321,213 | ) | |||
Total stockholders’ deficit | (20,224 | ) | (13,124 | ) | |||
Total liabilities and stockholders’ deficit | $ | 21,483 | $ | 93,808 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue | $ | 686 | $ | 1,755 | $ | 4,760 | $ | 7,468 | |||||||
Cost and expense | |||||||||||||||
Cost of revenue (excluding depreciation and amortization) | 189 | 1,231 | 3,323 | 5,778 | |||||||||||
Sales and marketing | 736 | 1,108 | 2,282 | 3,165 | |||||||||||
Technology and development | 752 | 1,459 | 2,910 | 3,550 | |||||||||||
General and administrative | 3,052 | 3,760 | 8,483 | 25,410 | |||||||||||
Depreciation and amortization | 229 | 520 | 814 | 1,657 | |||||||||||
Other operating expense | — | 47 | 6 | 93 | |||||||||||
Total cost and expense | 4,958 | 8,125 | 17,818 | 39,653 | |||||||||||
Operating loss | (4,272 | ) | (6,370 | ) | (13,058 | ) | (32,185 | ) | |||||||
Other income (expense) | |||||||||||||||
Interest expense | (457 | ) | (345 | ) | (1,397 | ) | (1,017 | ) | |||||||
Other income (expense), net | (24 | ) | — | 23 | 44 | ||||||||||
Change in fair value of warrant liability | (160 | ) | 3,525 | 502 | 22,190 | ||||||||||
Other gain (loss), net | (28 | ) | (16 | ) | (27 | ) | 507 | ||||||||
Total other income (expense), net | (669 | ) | 3,164 | (899 | ) | 21,724 | |||||||||
Loss from continuing operations before income taxes | (4,941 | ) | (3,206 | ) | (13,957 | ) | (10,461 | ) | |||||||
Benefit from income taxes | — | 442 | — | 1,437 | |||||||||||
Loss from continuing operations | $ | (4,941 | ) | $ | (2,764 | ) | $ | (13,957 | ) | $ | (9,024 | ) | |||
Loss from discontinued operations, net of tax | — | (1,001 | ) | (2,610 | ) | (5,415 | ) | ||||||||
Net loss | $ | (4,941 | ) | $ | (3,765 | ) | $ | (16,567 | ) | $ | (14,439 | ) | |||
Other comprehensive income (loss) | |||||||||||||||
Foreign currency translation adjustments | (289 | ) | (82 | ) | (256 | ) | (67 | ) | |||||||
Comprehensive loss | $ | (5,230 | ) | $ | (3,847 | ) | $ | (16,823 | ) | $ | (14,506 | ) | |||
Weighted-average shares outstanding, basic and diluted | 46,282 | 35,463 | 43,085 | 33,608 | |||||||||||
Net loss per share, basic and diluted | |||||||||||||||
Continuing operations | $ | (0.11 | ) | $ | (0.08 | ) | $ | (0.32 | ) | $ | (0.27 | ) | |||
Discontinued operations | — | (0.03 | ) | (0.06 | ) | (0.16 | ) | ||||||||
Consolidated | $ | (0.11 | ) | $ | (0.11 | ) | $ | (0.38 | ) | $ | (0.43 | ) | |||