•

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. At the end of 2019, implementations began across 2,000 retail outlets, with projections to be in over 5,000 stores in 2020. Phase Two of the project is out to bid, and the Company is a finalist.

•	Expanded smart campus solutions, which provide attendance management and temperature screening, beyond Hangzhou into two additional large cities in China, Chongqing and Chengdu, and now deploying at 50 schools per month. Plans are to accelerate as schools resume classes, with an opportunity to serve China’s more than 160,000 K-5 schools.

•	Launched a repurposed version of the company’s thermal imaging products for hospitals and businesses following the outbreak of COVID-19 in China. The experience gained in China is currently being deployed in the United States across many industries including casinos, restaurants, malls, law enforcement agencies and hospitality providers.

•

Revenue for fiscal 2019 was $5.0 million, down from $10.1 million during fiscal 2018. Regulatory changes in China's financial services market caused the company to discontinue its FinTech services during 2018, which was responsible for $3.7 million of the revenue decline. Remark's revenue from AI-based solutions fell by $0.7 million during the year as a result of factors such as the 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 larger projects and, finally, working capital constraints. Additionally, the company's advertising and other revenue decreased $0.6 million due to the sale of banks.com and the company's other personal financial services Internet domains in 2018, the effects of which were partially offset by a modest increase in e-commerce sales.

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Total cost and expense for 2019 was $27.8 million, a decrease from the $54.6 million reported in 2018. The decrease is primarily attributable to a $12.4 million decrease in stock-based compensation expense due the 2018 fiscal year including a large grant to the company's CEO, while no such large grant occurred in 2019. A decrease in cost of sales as a result of the discontinuation of FinTech services also significantly contributed to the cost and expense decrease, while declines in payroll and related cost as a result of headcount reductions also contributed to the decrease. The cost and expense decreases were partially offset by an increase of approximately $2.1 million in the bad debt allowance resulting from an increased risk that certain trade receivables may not be fully collected, and a $0.3 million increase in impairment charges.

•	Operating loss declined to $22.8 million in fiscal 2019 from $44.5 million in fiscal 2018 commensurate with the cost and expense declines.

•	Net loss from continuing operations totaled $23.0 million or $0.52 per diluted share in the fiscal year ended December 31, 2019, compared to a net loss from continuing operations of $18.6 million, or $0.48 per diluted share in the fiscal year ended December 31, 2018.

•	At December 31, 2019, the cash and cash equivalents balance was $0.3 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.

•

Earlier today Remark paid MGG approximately $12.7 million, representing full settlement of all loan principal, accrued but unpaid interest and accrued but unpaid service fees outstanding under the financing agreement, plus reasonable costs and expenses incurred by MGG to settle the account. As a result of the full repayment, all liens on the company's assets, including the investment in Sharecare, were removed.

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REMARK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(dollars in thousands, except share and per share amounts)

	December 31,
	2019				2018
Assets
Cash and cash equivalents	$	272			$	1,410
Trade accounts receivable, net	1,964				5,762
Prepaid expense and other current assets	4,623				7,907
Notes receivable, current	—				100
Assets of disposal group, current	—				28,966
Total current assets	6,859				44,145
Property and equipment, net	341				2,075
Operating lease assets	4,359				—
Investments in unconsolidated affiliates	1,935				2,005
Intangibles, net	509				1,010
Other long-term assets	824				450
Assets of disposal group, long-term	—				44,123
Total assets	$	14,827			$	93,808
Liabilities and Stockholders’ Equity
Accounts payable	$	8,126			$	5,675
Accrued expense and other current liabilities	14,326				16,812
Contract liability	313				132
Note payable	3,000				3,000
Current maturities of long-term debt, net of unamortized discount and debt issuance cost	12,025				35,314
Liabilities of disposal group, current	—				41,648
Total current liabilities	37,790				102,581
Operating lease liabilities, long-term	4,650				—
Warrant liability	115				1,383
Other liabilities	—				2,934
Liabilities of disposal group, long-term	—				34
Total liabilities	42,555				106,932
Commitments and contingencies
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued	—				—
Common stock, $0.001 par value; 100,000,000 shares authorized: 51,055,159 and 39,053,312 shares issued and outstanding; each at December 31, 2019 and 2018, respectively	51				39
Additional paid-in-capital	319,275				308,018
Accumulated other comprehensive loss	(227		)		32
Accumulated deficit	(346,827		)		(321,213		)
Total stockholders’ equity (deficit)	(27,728		)		(13,124		)
Total liabilities and stockholders’ equity	$	14,827			$	93,808

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REMARK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Loss

(dollars in thousands, except per share amounts)

	Year Ended December 31,
	2019				2018
Revenue, net	$	5,020			$	10,053
Cost and expense
Cost of revenue (excluding depreciation and amortization)	3,514				12,903
Sales and marketing	3,003				4,308
Technology and development	3,573				4,393
General and administrative	14,174				28,521
Depreciation and amortization	982				2,089
Impairments	2,522				2,209
Other operating expense	6				130
Total cost and expense	27,774				54,553
Operating loss from continuing operations	(22,754		)		(44,500		)
Other income (expense)
Interest expense	(1,876		)		(3,237		)
Other income, net	530				267
Change in fair value of warrant liability	1,268				27,879
Other gain (loss)	(172		)		886
Total other income (expense), net	(250		)		25,795
Loss from continuing operations before income tax	(23,004		)		(18,705		)
Benefit from income taxes	—				140
Loss from continuing operations	(23,004		)		(18,565		)
Loss from discontinued operations, net of tax	(2,610		)		(2,993		)
Net loss	$	(25,614	)		$	(21,558	)
Other comprehensive income (loss)
Foreign currency translation adjustments	(259		)		(83		)
Comprehensive loss	$	(25,873	)		$	(21,641	)
Weighted-average shares outstanding, basic and diluted	44,432				39,053
Net loss per share, basic and diluted
Continuing operations	$	(0.52	)		$	(0.48	)
Discontinued operations	(0.06		)		(0.07		)
Consolidated	$	(0.58	)		$	(0.55	)