Document


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of report (Date of earliest event reported): March 29, 2018

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Remark Holdings, Inc.

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.)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act.






Item 2.02
Results of Operations and Financial Condition.

On March 29, 2018, Remark Holdings, Inc. (“we”, “us” or “our”) issued a press release announcing our financial results for the year ended December 31, 2017. A copy of such release is furnished herewith as Exhibit 99.1.

The information hereunder shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.


Item 9.01
Financial Statements and Exhibits.

(d)
Exhibits

Exhibit Number
 
Description
     






Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

    
 
 
 
 
Remark Holdings, Inc.
 
 
 
 
 
Date:
March 29, 2018
 
By:
/s/ Douglas Osrow
 
 
 
Name:
Douglas Osrow
 
 
 
Title:
Chief Financial Officer




Exhibit

EXHIBIT 99.1


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Remark Holdings Reports Fourth Quarter and Full Year 2017 Results

LAS VEGAS, NV - March 29, 2018 - 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 fourth quarter and full year ended December 31, 2017.

Management Commentary
“We are pleased to announce our increased guidance today as our businesses continue to outperform our initial expectations,” said Kai-Shing Tao, the company’s Chairman and Chief Executive Officer. “In 2017, our FinTech business generated our first significant revenue amounts from our KanKan operations, and we have quickly been able to monetize KanKan’s other AI technologies as evidenced by our recent successes in securing significant contracts.”

“Here in Las Vegas, our Vegas.com operations continue to do well, primarily driven by increases in show ticket sales, and we look forward to what 2018 will bring with new product enhancements to our offerings,” concluded Mr. Tao.

Three-Month and Twelve-Month 2017 Financial Results
Net revenue for the quarter was $18.6 million, a 24% increase year-over-year. Net revenue for 2017 was $70.6 million, a 19% increase year-over-year. The company's quarterly and full year financial results include Fanstang, which the company acquired in September 2016 and which was only a nominal part of the company's financial results for the same periods of 2016.

Three Months Ended December 31st: 2017 Compared to 2016
Net revenue was $18.6 million, compared to $15.0 million.
Total cost and expense was $40.0 million, compared to $24.7 million.
Operating loss was $21.4 million, compared to $9.7 million.
Net loss was $89.2 million, or $3.47 per diluted share, compared to $8.6 million, or $0.40 per diluted share. Net loss for the fourth quarter of 2017 included a $66.5 million non-cash charge related to a change in the fair value of the company’s warrant liability, which occurred as a result of the significant increase in the company’s stock price during the period. For the fourth quarter of 2016, the company recorded a $3.1 million gain related to the change in the fair value of the company’s warrant liability during the period.
At December 31, 2017, the cash and cash equivalents balance was $22.6 million, and total restricted cash was $11.7 million, bringing the total combined cash position to $34.3 million, compared to a total combined cash position of $18.5 million at December 31, 2016.

Twelve Months Ended December 31st: 2017 Compared to 2016
Net revenue was $70.6 million, compared to $59.3 million.
Total cost and expense was $108.0 million, compared to $81.9 million.
Operating loss was $37.4 million, compared to $22.6 million. Operating loss for 2017 included a $14.6 million non-cash charge related to the impairment of goodwill and other intangible assets purchased from China Branding Group Limited (including Fanstang) in September 2016.
Net loss was $106.7 million, or $4.49 per diluted share, compared to $31.7 million, or $1.54 per diluted share. Net loss for 2017 included a $64.1 million non-cash charge related to the change in the fair value of the company’s warrant liability, compared to a $5.8 million gain recorded for 2016.




2018 Financial Outlook
The company increased its limited guidance regarding certain revenue and EBITDA expectations.

For 2018, company management expects to generate consolidated net revenue in excess of $120 million. KanKan's Artificial Intelligence Platform will be the primary driver of the growth as its revenue rapidly increases. For the year ending December 31, 2018, management expects KanKan to generate more than $50 million in net revenue.

Remark Holdings management also indicated it expects its travel & entertainment segment to generate gross revenue of more than $375 million and net revenue between approximately $70 million to $80 million, with an EBITDA margin approximating 12% to 15% of net revenue, during 2018.

Conference Call Information
Mr. Tao and Remark Holdings' CFO Douglas Osrow will hold a conference call today (March 29, 2018) at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss these financial results. A question and answer session will follow management’s presentation.

Toll-Free Number: 888-882-4478
International Number: 323-701-0225
Conference ID: 5682880

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact the Liolios Group at 949-574-3860.

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 11:30 a.m. Eastern time on the same day through April 2, 2018.

Toll-Free Replay Number: 844-512-2921
International Replay Number: 412-317-6671
Replay ID: 5682880

About Remark Holdings, Inc.
Remark Holdings, Inc. (NASDAQ: MARK) primarily focuses on the development and deployment of artificial-intelligence-based solutions for businesses in many industries. Additionally, the company owns and operates digital media properties that deliver relevant, dynamic content. The company’s U.S. operations are headquartered in Las Vegas, Nevada, with additional operations in Los Angeles, California, and its China operations are headquartered in Chengdu, China with additional operations in Beijing, Shanghai, and Hangzhou. 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:
Douglas Osrow
Remark Holdings, Inc.
dosrow@remarkholdings.com
702-701-9514 ext. 3025

Investor Relations Contact:
Matt Glover or Tom Colton
Liolios Group, Inc.
MARK@liolios.com
949-574-3860

[Tables to follow]



REMARK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(dollars in thousands, except per share amounts)

 
December 31,
 
2017
 
2016
Assets
 
 
 
Cash and cash equivalents
$
22,632

 
$
6,893

Restricted cash
11,670

 
9,405

Trade accounts receivable
3,673

 
1,372

Prepaid expense and other current assets
5,518

 
3,323

Notes receivable, current
290

 
181

Assets held for sale

 

Total current assets
43,783

 
21,174

Restricted cash

 
2,250

Notes receivable
100

 
190

Property and equipment, net
13,387

 
15,531

Investment in unconsolidated affiliate
1,030

 
1,030

Intangibles, net
23,946

 
37,406

Goodwill
20,099

 
26,763

Other long-term assets
1,192

 
1,355

Total assets
$
103,537

 
$
105,699

 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Accounts payable
$
17,857

 
$
16,546

Accrued expense and other current liabilities
16,679

 
13,965

Deferred merchant booking
9,027

 
6,991

Deferred revenue
5,807

 
4,072

Note payable
3,000

 

Current maturities of long-term debt, net of debt issuance cost
38,085

 
100

Capital lease obligations

 
179

Total current liabilities
90,455

 
41,853

Long-term debt, less current portion and net of debt issuance cost

 
37,825

Warrant liability
89,169

 
25,030

Other liabilities
3,501

 
3,591

Total liabilities
183,125

 
108,299

 
 
 
 
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; 28,406,026 and 22,232,004 shares issued and outstanding; each at December 31, 2017 and 2016, respectively
28

 
22

Additional paid-in-capital
220,117

 
190,507

Accumulated other comprehensive income (loss)
115

 
(16
)
Accumulated deficit
(299,848
)
 
(193,113
)
Total stockholders’ equity (deficit)
(79,588
)
 
(2,600
)
Total liabilities and stockholders’ equity
$
103,537

 
$
105,699




REMARK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(dollars in thousands, except per share amounts)

 
Year Ended December 31,
 
2017
 
2016
Revenue, net
70,601

 
59,328

 
 
 
 
Cost and expense
 
 
 
Cost of revenue (excluding depreciation and amortization)
16,909

 
11,155

Sales and marketing
23,600

 
19,541

Technology and development
3,551

 
2,796

General and administrative
37,689

 
36,460

Depreciation and amortization
11,070

 
10,299

Impairments
14,646

 
1,159

Other operating expense
515

 
515

Total cost and expense
107,980

 
81,925

 
 
 
 
Operating loss
(37,379
)
 
(22,597
)
Other income (expense)
 
 
 
Interest expense
(4,645
)
 
(4,685
)
Other income, net
23

 
29

Loss on extinguishment of debt

 
(9,157
)
Change in fair value of warrant liability
(64,139
)
 
5,790

Other loss
(317
)
 
(313
)
Total other income, net
(69,078
)
 
(8,336
)
 
 
 
 
Income (loss) before income taxes
(106,457
)
 
(30,933
)
Provision for income taxes
(278
)
 
(746
)
Net loss
(106,735
)
 
(31,679
)
Other comprehensive income (loss)
 
 
 
Foreign currency translation adjustments
131

 

Comprehensive loss
(106,604
)
 
(31,679
)
 
 
 
 
Weighted-average shares outstanding, basic and diluted
23,763

 
20,529

Net loss per share, basic and diluted
(4.49
)
 
(1.54
)