EXHIBIT 99.2
REMARK HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Financial Information
The following unaudited pro forma consolidated balance sheet as of March 31, 2019 and the unaudited pro forma consolidated statements of operations and comprehensive loss for the three months ended March 31, 2019 and the years ended December 31, 2018 and 2017, have been derived from the historical consolidated financial statements of Remark Holdings, Inc. (together with its subsidiaries, “we”, “us”, “our”, “Remark Holdings” or “Remark”) as adjusted to give effect to our sale of all of the outstanding membership interests in Vegas.com, LLC (the “Vegas.com Sale”), and are intended to reflect the impact of the Vegas.com Sale on Remark on a pro forma basis as of and for the periods indicated.
Roomlia, Inc. owns and operates the mobile hotel booking application known as Roomlia. After the Vegas.com Sale, we will not continue to operate in the travel space; therefore, we will write off all of Roomlia, Inc.’s remaining assets.
The following unaudited pro forma consolidated financial information is based upon, and should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2019 and our historical audited consolidated financial statements and the related notes and MD&A included in our Annual Reports on Forms 10-K for the fiscal years ended December 31, 2018 and 2017, as filed with the Securities and Exchange Commission on May 10, 2019, April 1, 2019 and April 2, 2018, respectively.
The unaudited pro forma consolidated balance sheet as of March 31, 2019 reflects the Vegas.com Sale as if it had been consummated on March 31, 2019, and includes pro forma adjustments based on estimates made by management.
The unaudited pro forma consolidated statements of operations and comprehensive loss for the three months ended March 31, 2019 and for the years ended December 31, 2018 and 2017 give effect to the Vegas.com Sale as if it had been consummated on January 1st of the respective fiscal year.
We have prepared the unaudited pro forma consolidated financial information for informational purposes only and it is based upon estimates by Remark’s management, which are based upon available information and certain assumptions that Remark’s management believes are reasonable as of the date of this report. The unaudited pro forma combined financial information is not intended to be indicative of actual financial position or results of operations that would have been achieved had the Vegas.com Sale been consummated on the dates indicated, nor does it purport to indicate results which may be attained in the future. Actual amounts could differ materially from these estimates.
REMARK HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Balance Sheet
March 31, 2019
(dollars in thousands, except par values)
HISTORICAL | PRO FORMA ADJUSTMENTS | PRO FORMA | |||||||||||||||||
Remark Holdings, Inc. and Subsidiaries | Sale of Vegas.com and Subsidiaries | Disposal of Roomlia.com | Other | Remark Holdings, Inc. and Subsidiaries | |||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 16,512 | $ | (14,977 | ) | $ | — | $ | — | $ | 1,535 | ||||||||
Restricted cash | 11,139 | (11,139 | ) | — | — | — | |||||||||||||
Trade accounts receivable, net | 4,416 | (441 | ) | — | — | 3,975 | |||||||||||||
Prepaid expense and other current assets | 13,500 | (4,530 | ) | — | — | 8,970 | |||||||||||||
Notes receivable, current | 100 | — | — | — | 100 | ||||||||||||||
Total current assets | 45,667 | (31,087 | ) | — | — | 14,580 | |||||||||||||
Property and equipment, net | 9,654 | (7,691 | ) | — | — | 1,963 | |||||||||||||
Operating lease assets | 6,108 | (1,395 | ) | — | — | 4,713 | |||||||||||||
Investment in unconsolidated affiliates | 1,960 | — | — | — | 1,960 | ||||||||||||||
Intangibles, net | 16,749 | (14,434 | ) | (1,391 | ) | — | 924 | ||||||||||||
Goodwill | 18,514 | (15,044 | ) | (3,470 | ) | — | — | ||||||||||||
Other long-term assets | 852 | (3,595 | ) | — | 3,201 | A | 458 | ||||||||||||
Total assets | $ | 99,504 | $ | (73,246 | ) | $ | (4,861 | ) | $ | 3,201 | $ | 24,598 | |||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||
Accounts payable | $ | 21,276 | $ | (17,086 | ) | $ | — | $ | 3,900 | B | $ | 8,090 | |||||||
Accrued expense and other current liabilities | 31,921 | (11,265 | ) | — | — | 20,656 | |||||||||||||
Deferred merchant booking | 10,747 | (10,747 | ) | — | — | — | |||||||||||||
Contract liability | 6,089 | (6,049 | ) | — | — | 40 | |||||||||||||
Note payable | 3,000 | — | — | — | 3,000 | ||||||||||||||
Current maturities of long-term debt, net of unamortized discount and debt issuance cost | 35,547 | — | — | (28,797 | ) | C | 6,750 | ||||||||||||
Total current liabilities | 108,580 | (45,147 | ) | — | (24,897 | ) | 38,536 | ||||||||||||
Operating lease liabilities, long-term | 7,339 | (1,968 | ) | — | — | 5,371 | |||||||||||||
Warrant liability | 2,799 | — | — | — | 2,799 | ||||||||||||||
Other liabilities | 254 | (3,170 | ) | — | 3,129 | A | 213 | ||||||||||||
Total liabilities | 118,972 | (50,285 | ) | — | (21,768 | ) | 46,919 | ||||||||||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 40,722,229 shares issued and outstanding at March 31, 2019 | 41 | — | — | — | 41 | ||||||||||||||
Additional paid-in-capital | 310,618 | (40,787 | ) | (6,810 | ) | 40,787 | D | 303,808 | |||||||||||
Accumulated other comprehensive income | (62 | ) | — | — | — | (62 | ) | ||||||||||||
Accumulated deficit | (330,065 | ) | 17,826 | 1,949 | (15,818 | ) | E | (326,108 | ) | ||||||||||
Total stockholders’ deficit | (19,468 | ) | (22,961 | ) | (4,861 | ) | 24,969 | (22,321 | ) | ||||||||||
Total liabilities and stockholders’ deficit | $ | 99,504 | $ | (73,246 | ) | $ | (4,861 | ) | $ | 3,201 | $ | 24,598 |
REMARK HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Operations and Comprehensive Loss
For the Three Months Ended March 31, 2019
(dollars in thousands, except per share values)
HISTORICAL | PRO FORMA ADJUSTMENTS | PRO FORMA | |||||||||||||||||
Remark Holdings, Inc. and Subsidiaries | Sale of Vegas.com and Subsidiaries | Disposal of Roomlia.com | Other | Remark Holdings, Inc. and Subsidiaries | |||||||||||||||
Revenue | $ | 19,463 | $ | (18,254 | ) | $ | — | $ | — | $ | 1,209 | ||||||||
Cost and expense | — | ||||||||||||||||||
Cost of revenue (excluding depreciation and amortization) | 4,369 | (2,776 | ) | — | — | 1,593 | |||||||||||||
Sales and marketing | 10,107 | (9,248 | ) | — | — | 859 | |||||||||||||
Technology and development | 3,502 | (2,198 | ) | — | — | 1,304 | |||||||||||||
General and administrative | 4,606 | (1,628 | ) | (1 | ) | — | 2,977 | ||||||||||||
Depreciation and amortization | 2,472 | (2,068 | ) | (79 | ) | — | 325 | ||||||||||||
Other operating expense | 251 | (245 | ) | — | — | 6 | |||||||||||||
Total cost and expense | 25,307 | (18,163 | ) | (80 | ) | — | 7,064 | ||||||||||||
Operating loss | (5,844 | ) | (91 | ) | 80 | — | (5,855 | ) | |||||||||||
Other income (expense) | |||||||||||||||||||
Interest expense | (1,525 | ) | (1 | ) | — | 543 | F | (983 | ) | ||||||||||
Other income (expense), net | (41 | ) | (4 | ) | — | — | (45 | ) | |||||||||||
Change in fair value of warrant liability | (1,416 | ) | — | — | — | (1,416 | ) | ||||||||||||
Other loss | (26 | ) | 13,516 | (3,115 | ) | (10,401 | ) | G | (26 | ) | |||||||||
Total other income (expense), net | (3,008 | ) | 13,511 | (3,115 | ) | (9,858 | ) | (2,470 | ) | ||||||||||
Loss before income taxes | (8,852 | ) | 13,420 | (3,035 | ) | (9,858 | ) | (8,325 | ) | ||||||||||
Benefit from (provision for) income taxes | — | — | — | — | — | ||||||||||||||
Net loss | $ | (8,852 | ) | $ | 13,420 | $ | (3,035 | ) | $ | (9,858 | ) | $ | (8,325 | ) | |||||
Other comprehensive income (loss) | |||||||||||||||||||
Foreign currency translation adjustments | (94 | ) | — | — | — | (94 | ) | ||||||||||||
Comprehensive loss | $ | (8,946 | ) | $ | 13,420 | $ | (3,035 | ) | $ | (9,858 | ) | $ | (8,419 | ) | |||||
Weighted-average shares outstanding, basic and diluted | 39,258 | — | — | — | 39,258 | ||||||||||||||
Net loss per share, basic and diluted | $ | (0.23 | ) | $ | — | $ | — | $ | — | $ | (0.21 | ) | |||||||
REMARK HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Operations and Comprehensive Loss
For the Year Ended December 31, 2018
(dollars in thousands, except per share values)
HISTORICAL | PRO FORMA ADJUSTMENTS | PRO FORMA | |||||||||||||||||
Remark Holdings, Inc. and Subsidiaries | Sale of Vegas.com and Subsidiaries | Disposal of Roomlia.com | Other | Remark Holdings, Inc. and Subsidiaries | |||||||||||||||
Revenue | $ | 79,110 | $ | (69,055 | ) | $ | (2 | ) | $ | — | $ | 10,053 | |||||||
Cost and expense | — | ||||||||||||||||||
Cost of revenue (excluding depreciation and amortization) | 24,628 | (11,724 | ) | — | — | 12,904 | |||||||||||||
Sales and marketing | 38,391 | (34,083 | ) | — | — | 4,308 | |||||||||||||
Technology and development | 13,332 | (8,935 | ) | (3 | ) | — | 4,394 | ||||||||||||
General and administrative | 33,343 | (4,819 | ) | (6 | ) | — | 28,518 | ||||||||||||
Depreciation and amortization | 10,875 | (8,472 | ) | (314 | ) | — | 2,089 | ||||||||||||
Impairments | 2,209 | — | — | — | 2,209 | ||||||||||||||
Other operating expense | 1,084 | (954 | ) | — | — | 130 | |||||||||||||
Total cost and expense | 123,862 | (68,987 | ) | (323 | ) | — | 54,552 | ||||||||||||
Operating loss | (44,752 | ) | (68 | ) | 321 | — | (44,499 | ) | |||||||||||
Other income (expense) | |||||||||||||||||||
Interest expense | (6,491 | ) | (3 | ) | — | 3,968 | F | (2,526 | ) | ||||||||||
Other income, net | 282 | (15 | ) | — | — | 267 | |||||||||||||
Change in fair value of warrant liability | 27,879 | — | — | — | 27,879 | ||||||||||||||
Other gain | 858 | 28 | — | — | 886 | ||||||||||||||
Total other income (expense), net | 22,528 | 10 | — | 3,968 | 26,506 | ||||||||||||||
Loss before income taxes | (22,224 | ) | (58 | ) | 321 | 3,968 | (17,993 | ) | |||||||||||
Benefit from income taxes | 667 | — | — | — | 667 | ||||||||||||||
Net loss | $ | (21,557 | ) | $ | (58 | ) | $ | 321 | $ | 3,968 | $ | (17,326 | ) | ||||||
Other comprehensive income (loss) | |||||||||||||||||||
Foreign currency translation adjustments | (83 | ) | — | — | — | (83 | ) | ||||||||||||
Comprehensive loss | $ | (21,640 | ) | $ | (58 | ) | $ | 321 | $ | 3,968 | $ | (17,409 | ) | ||||||
Weighted-average shares outstanding, basic and diluted | 34,545 | — | — | — | 34,545 | ||||||||||||||
Net loss per share, basic and diluted | $ | (0.62 | ) | $ | — | $ | — | $ | — | $ | (0.50 | ) | |||||||
REMARK HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Operations and Comprehensive Loss
For the Year Ended December 31, 2017
(dollars in thousands, except per share values)
HISTORICAL | PRO FORMA ADJUSTMENTS | PRO FORMA | |||||||||||||||||
Remark Holdings, Inc. and Subsidiaries | Sale of Vegas.com and Subsidiaries | Disposal of Roomlia.com | Other | Remark Holdings, Inc. and Subsidiaries | |||||||||||||||
Revenue | $ | 70,601 | $ | (61,541 | ) | $ | (2 | ) | $ | — | $ | 9,058 | |||||||
Cost and expense | — | ||||||||||||||||||
Cost of revenue (excluding depreciation and amortization) | 16,909 | (10,768 | ) | — | — | 6,141 | |||||||||||||
Sales and marketing | 33,252 | (30,201 | ) | — | — | 3,051 | |||||||||||||
Technology and development | 11,642 | (8,141 | ) | (3 | ) | — | 3,498 | ||||||||||||
General and administrative | 19,391 | (4,990 | ) | 9 | — | 14,410 | |||||||||||||
Depreciation and amortization | 11,070 | (8,155 | ) | (318 | ) | — | 2,597 | ||||||||||||
Impairments | 14,646 | — | — | — | 14,646 | ||||||||||||||
Other operating expense | 1,070 | (783 | ) | — | — | 287 | |||||||||||||
Total cost and expense | 107,980 | (63,038 | ) | (312 | ) | — | 44,630 | ||||||||||||
Operating loss | (37,379 | ) | 1,497 | 310 | — | (35,572 | ) | ||||||||||||
Other income (expense) | |||||||||||||||||||
Interest expense | (4,645 | ) | (4 | ) | — | 158 | F | (4,491 | ) | ||||||||||
Other income, net | 23 | (19 | ) | — | — | 4 | |||||||||||||
Change in fair value of warrant liability | (64,139 | ) | — | — | — | (64,139 | ) | ||||||||||||
Other loss | (317 | ) | 125 | — | — | (192 | ) | ||||||||||||
Total other income (expense), net | (69,078 | ) | 102 | — | 158 | (68,818 | ) | ||||||||||||
Loss before income taxes | (106,457 | ) | 1,599 | 310 | 158 | (104,390 | ) | ||||||||||||
Provision for income taxes | (278 | ) | — | — | — | (278 | ) | ||||||||||||
Net loss | $ | (106,735 | ) | $ | 1,599 | $ | 310 | $ | 158 | $ | (104,668 | ) | |||||||
Other comprehensive income (loss) | |||||||||||||||||||
Foreign currency translation adjustments | 131 | — | — | — | 131 | ||||||||||||||
Comprehensive loss | $ | (106,604 | ) | $ | 1,599 | $ | 310 | $ | 158 | $ | (104,537 | ) | |||||||
Weighted-average shares outstanding, basic and diluted | 23,763 | — | — | — | 23,763 | ||||||||||||||
Net loss per share, basic and diluted | $ | (4.49 | ) | $ | — | $ | — | $ | — | $ | (4.40 | ) | |||||||
REMARK HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Financial Information
The unaudited pro forma consolidated financial information above reflects the following pro forma adjustments:
A. | Elimination of intercompany accounts receivable and accounts payable |
B. | Increase in accounts payable and accrued expense for costs incurred directly as a result of the Vegas.com Sale, including bankers’ fees, legal fees, and insurance costs for runoff policies (primarily six years of Directors and Officers coverage) |
C. | Paydown of debt using the $30 million of proceeds from the Vegas.com Sale, partially offset by a write off of unamortized debt discount and debt issuance cost |
D. | Elimination of investment in Vegas.com subsidiary |
E. | Net effect of pro forma adjustments |
F. | Decrease in interest expense, including amortization of debt discount and debt issuance cost, resulting from the paydown of debt principal plus additional interest due upon early paydown |
G. | Elimination of gain on forgiveness of intercompany accounts receivable and accounts payable balances |