EX-99.2 4 ex992proformafinancialinfo.htm PRO FORMA FINANCIAL INFORMATION Exhibit

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