Remark Holdings Reports Second Quarter 2020 Results
Management Commentary
"The second quarter of 2020 was highlighted by the initial rollout of our AI-powered thermal imaging solutions for the U.S. market that generated
Second Quarter 2020 Business Development Highlights
- Announced that shipments and deployments of the newly-repurposed Remark family of AI thermal solutions, including thermal kits, thermal pads, and thermal helmets, began in
the United States andJapan . - Received notification from Nasdaq that shares of
Remark Holdings, Inc. had regained compliance with Nasdaq's minimum bid price and stockholders' equity rules and met the requirements of theNasdaq Hearing Panel decision which requires that the company evidence compliance with all applicable criteria for continued listing. - Launched RemarkThermal.com. Remark's thermal imaging is used to scan high-traffic areas to detect individuals with higher-than-acceptable skin temperature and track the individual for secondary screening. Each of the thermal imaging products is customizable and can operate as a standalone product or integrated into centralized control systems, specific to the needs of the customer.
- Announced the company won Phase 2 implementation of China Mobile's contract for the transformation of its 17,800 corporate stores into smart retail stores. Phase 2 is worth approximately
$2.0 million .
Second Quarter 2020 Financial Results
- Revenue for the second quarter of 2020 was
$2.3 million , down from$2.9 million during the second quarter of 2019. Revenue from the new bio-safety business totaled$1.1 million as thermal imaging products were delivered to casinos, restaurants, hotels, law enforcement agencies, medical centers, office buildings, and customers in other industries throughoutthe United States .
Several factors, including COVID-19-related quarantines, continued to adversely impact revenue from the company'sChina business early in the second quarter by preventing personnel inChina from continuing project roll outs and by delaying project testing and customization work on larger projects. However, projects resumed during the latter part of the second quarter, leading to approximately$1.0 million of revenue. - Total cost and expense for the second quarter of 2020 was
$5.1 million , a decrease from the$5.8 million reported in the same period of 2019. The decrease is primarily attributable to a$0.3 million decline in the cost of revenue resulting primarily from fewer international project completions, and decreases in sales and marketing expense of$0.2 million , and in general and administrative expense of$0.6 million , as headcount declined. Such decreases were offset by a$0.6 million increase in share-based compensation expense in the technology and development cost category caused by an increase in the liability associated with share-based grants to our employees inChina . - Operating loss declined to
$2.8 million in the second quarter of 2020 from$2.9 million in the second quarter of 2019 commensurate with the cost and expense declines. - Loss from continuing operations totaled
$9.8 million , or$0.11 per diluted share, in the second quarter endedJune 30, 2020 , compared to a net loss from continuing operations of$1.3 million , or$0.03 per diluted share in the second quarter endedJune 30, 2019 . The bulk of the loss is tied to a non-cash change in the fair value of warrant liability of($6.3) million compared to a$2.1 million gain in the comparable period of 2019, as a result of the increased share price of Remark's common shares.
At
Subsequent Event
- On
August 3, 2020 , Remark entered into a Settlement Agreement and Release with the landlord of its former office space inLas Vegas, Nevada in exchange for a full release of all obligations and claims against the company.
"Our
Conference Call Information
Management will hold a conference call this morning at
Toll-Free Number: 800.289.0438
International Number: 323.794.2423
Conference ID: 8269351
Participant Link: http://public.viavid.com/index.php?id=141180.
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
Toll-Free Replay Number: 844.512.2921
International Replay Number: 412.317.6671
Replay ID: 8269351
About
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
Company Contact
Director of Capital Markets and Investor Relations
ebharvey@remarkholdings.com
702-701-9514
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|||||||
Condensed Consolidated Balance Sheets |
|||||||
(dollars in thousands, except share and per share amounts) |
|||||||
|
|
||||||
(Unaudited) |
|||||||
Assets |
|||||||
Cash and cash equivalents |
$ |
10,233 |
$ |
272 |
|||
Trade accounts receivable, net |
2,235 |
1,964 |
|||||
Receivable from related parties |
531 |
— |
|||||
Prepaid expense and other current assets |
5,803 |
4,623 |
|||||
Total current assets |
18,802 |
6,859 |
|||||
Property and equipment, net |
156 |
341 |
|||||
Operating lease assets |
470 |
4,359 |
|||||
Investment in unconsolidated affiliates |
1,922 |
1,935 |
|||||
Intangibles, net |
472 |
509 |
|||||
Other long-term assets |
1,254 |
824 |
|||||
Total assets |
$ |
23,076 |
$ |
14,827 |
|||
Liabilities and Stockholders' Deficit |
|||||||
Accounts payable |
$ |
7,709 |
$ |
8,126 |
|||
Accrued expense and other current liabilities |
13,295 |
14,326 |
|||||
Contract liability |
566 |
313 |
|||||
Note payable |
2,000 |
3,000 |
|||||
Loans payable, current, net of unamortized discount and debt issuance cost |
— |
12,025 |
|||||
Total current liabilities |
23,570 |
37,790 |
|||||
Operating lease liabilities, long-term |
202 |
4,650 |
|||||
Warrant liability |
6,318 |
115 |
|||||
Total liabilities |
30,515 |
42,555 |
|||||
Commitments and contingencies |
|||||||
Preferred stock, |
— |
— |
|||||
Common stock, |
99 |
51 |
|||||
Additional paid-in-capital |
351,417 |
319,275 |
|||||
Accumulated other comprehensive income |
111 |
(227) |
|||||
Accumulated deficit |
(359,066) |
(346,827) |
|||||
Total stockholders' deficit |
(7,439) |
(27,728) |
|||||
Total liabilities and stockholders' deficit |
$ |
23,076 |
$ |
14,827 |
|
|||||||||||||||
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss |
|||||||||||||||
(dollars in thousands, except per share amounts) |
|||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||
Revenue |
$ |
2,299 |
$ |
2,865 |
$ |
2,730 |
$ |
4,074 |
|||||||
Cost and expense |
|||||||||||||||
Cost of revenue (excluding depreciation and amortization) |
1,210 |
1,541 |
1,231 |
3,134 |
|||||||||||
Sales and marketing |
486 |
687 |
902 |
1,546 |
|||||||||||
Technology and development |
1,477 |
854 |
2,125 |
2,158 |
|||||||||||
General and administrative |
1,898 |
2,454 |
4,638 |
5,431 |
|||||||||||
Depreciation and amortization |
66 |
260 |
156 |
585 |
|||||||||||
Other operating expense |
— |
— |
— |
6 |
|||||||||||
Total cost and expense |
5,137 |
5,796 |
9,052 |
12,860 |
|||||||||||
Operating loss |
(2,838) |
(2,931) |
(6,322) |
(8,786) |
|||||||||||
Other income (expense) |
|||||||||||||||
Interest expense |
(775) |
(553) |
(1,236) |
(940) |
|||||||||||
Other income (expense), net |
57 |
92 |
57 |
47 |
|||||||||||
Change in fair value of warrant liability |
(6,260) |
2,078 |
(6,203) |
662 |
|||||||||||
Gain on lease termination |
— |
— |
1,538 |
— |
|||||||||||
Other loss, net |
— |
27 |
(73) |
1 |
|||||||||||
Total other income (expense), net |
(6,978) |
1,644 |
(5,917) |
(230) |
|||||||||||
Loss from continuing operations before income taxes |
(9,816) |
(1,287) |
(12,239) |
(9,016) |
|||||||||||
Benefit from income taxes |
— |
— |
— |
— |
|||||||||||
Loss from continuing operations |
$ |
(9,816) |
$ |
(1,287) |
$ |
(12,239) |
$ |
(9,016) |
|||||||
Loss from discontinued operations, net of tax |
— |
(1,487) |
— |
(2,610) |
|||||||||||
Net loss |
$ |
(9,816) |
$ |
(2,774) |
$ |
(12,239) |
$ |
(11,626) |
|||||||
Other comprehensive income (loss) |
|||||||||||||||
Foreign currency translation adjustments |
156 |
127 |
338 |
33 |
|||||||||||
Comprehensive loss |
$ |
(9,660) |
$ |
(2,647) |
$ |
(11,901) |
$ |
(11,593) |
|||||||
Weighted-average shares outstanding, basic and diluted |
89,264 |
43,335 |
71,527 |
39,994 |
|||||||||||
Net loss per share, basic and diluted |
|||||||||||||||
Continuing operations |
$ |
(0.11) |
$ |
(0.03) |
$ |
(0.17) |
$ |
(0.23) |
|||||||
Discontinued operations |
— |
(0.03) |
— |
(0.07) |
|||||||||||
Consolidated |
$ |
(0.11) |
$ |
(0.06) |
$ |
(0.17) |
$ |
(0.30) |
|||||||
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