Remark Holdings(US:MARK)2022-05-16 20:34Revenue Performance - Revenue for the three months ended March 31, 2022, was $4.67 million, compared to $4.41 million for the same period in 2021, representing a 5.9% increase[9]. - The company recognized $2.2 million in revenue from its China business partner during the reporting period[9]. - AI-based products and services generated $4.546 million in revenue, including $2.2 million from a China business partner, compared to $4.020 million in 2021[67]. - Consolidated total revenue for the period was $4.667 billion, with a significant contribution from VIEs amounting to $4.653 billion[116]. Cost and Expenses - The total cost and expense for the three months ended March 31, 2022, was $8.85 million, up from $8.07 million in the same period of 2021, indicating a 9.7% increase[9]. - Operating loss reached $4.186 billion, driven by high costs and expenses totaling $8.853 billion[116]. - Total cost of revenue (excluding depreciation and amortization) was $4.270 billion, highlighting the high operational costs[116]. Net Loss and Financial Health - The net loss for the three months ended March 31, 2022, was $25.43 million, compared to a net loss of $5.46 million for the same period in 2021, reflecting a significant increase in losses[9]. - The company faces substantial doubt regarding its ability to continue as a going concern due to recurring operating losses and negative cash flows[36]. - The net loss for the period was $25.429 billion, reflecting a substantial increase in losses compared to previous periods[116]. Cash Flow and Liquidity - Cash used in operating activities for the three months ended March 31, 2022, was $8.69 million, compared to $5.53 million for the same period in 2021, showing a 56.5% increase in cash outflow[14]. - The company ended the period with cash of $2.69 million, down from $14.19 million at the beginning of the period, indicating a decrease of 81.0%[14]. - Cash used in operating activities was $6.479 billion, indicating a negative cash flow situation[118]. - The company ended the period with cash of $2.604 billion, down from $13.947 billion at the beginning of the period[118]. Investments and Losses - The company reported a loss on investment of $19.06 million for the three months ended March 31, 2022, with no such loss reported in the same period of 2021[9]. - A total loss on investment during the three months ended March 31, 2022, was $19.056 million, consisting of a realized loss of $1.518 million and an unrealized loss of $17.538 million[77]. - The investment in New Sharecare was valued at $21.4 million as of March 31, 2022, down from $42.3 million on December 31, 2021[76]. Shareholder Equity and Stock Options - As of March 31, 2022, the company has incurred an accumulated deficit of $358.5 million within stockholders' equity[35]. - The total stockholders' equity of the company was $6,121,000 as of March 31, 2022[113]. - The company had 14,892,134 outstanding equity-classified stock options with a weighted average exercise price of $3.29 and a remaining contractual term of 5.8 years[102]. Regulatory and Operational Risks - The company is subject to risks regarding the validity and enforcement of VIE contractual arrangements, which may not provide effective operational control[22]. - Current Chinese regulations allow the WFOE to pay dividends only out of its registered capital after meeting a statutory reserve equal to 50% of registered capital[28]. - The Chinese government imposes controls on the conversion of RMB into foreign currencies, which may hinder the company's ability to remit foreign currency for dividend payments[29]. - The impact of the COVID-19 pandemic has significantly limited the operational capabilities of the VIEs, affecting business performance[32]. Future Plans and Strategic Alternatives - The company plans to fund future operations through revenue growth from AI offerings and sales of thermal-imaging products, but there is uncertainty regarding the sufficiency of these revenues[37]. - The company is actively evaluating strategic alternatives, including debt and equity financings, to meet financial obligations[37].