Remark Holdings, Inc. (MARK) Earnings Call Transcript & Summary

Hello and welcome to the Annual Meeting of the Stockholders of Remark Holdings, Inc. Please note that today's meeting is being recorded. During the meeting, we'll have a question-and-answer session for any registered holders attending the meeting. It is now my pleasure to turn today's meeting over to Brian Harvey, Director of Capital Markets and Investor Relations of Remark Holdings, Inc. Mr. Harvey, the floor is yours.

Thank you, Justin, and good morning and thank you for joining us today. As Justin noted, I'm Brian Harvey, Director of Capital Markets and Investor Relations for Remark Holdings, and welcome to the Annual Meeting of Stockholders. On the call with me today are our Chairman and Chief Executive Officer, Kai-Shing Tao. Board members, Theodore Botts, Dr. Elizabeth Xu, Brett Ratner and Daniel Stein. We will first conduct the formal business of this meeting and vote on the matters presented in the notice of annual meeting. Afterwards, you will have an opportunity to ask questions that you may have for all registered shareholders. There is, before this meeting, a list of stockholders entitled to vote at this meeting furnished by Computershare, the company's transfer agent. The list will be available for inspection throughout the meeting. There is also, before this meeting, a copy of the notice of annual meeting and proxy statement mailed beginning on or about June 12, 2020, to each stockholder of record at the close of business on May 28, 2020, the record date for the annual meeting, together with an affidavit of due mailing of such notice. The affidavit and the notice will be appended to the minutes of this meeting together with a copy of the proxy statement. Consuelo Galicia of Computershare has been appointed as the inspector of the election at this meeting. She is neither a director nor employee of the company. Her oath as inspector of the election has been submitted to this meeting and will be appended to the minutes. The inspector of election has polled the stockholders and examined the proxies. Her report of stockholders represented at this meeting has been submitted and it indicates that holders of shares in excess of the number necessary to constitute a quorum are represented by proxy. This report will be available for inspection throughout this meeting and will be appended to the minutes of the meeting. Having reported that there is a quorum is present for the transaction of business, I declare that the Annual Meeting of Stockholders of Remark Holdings is duly and legally convened. As indicated in the notice of annual meeting, we are scheduled to conduct 3 items of business at this meeting: the election of directors to the company's Board of Directors; a vote on whether to ratify Cherry Bekaert LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020; and a vote to approve an amendment to our amended and restated certificate of incorporation to increase the number of authorized shares of our common stock to 300 million. The Board of Directors has recommended a vote for each of the nominees; votes in favor of ratifying Cherry Bekaert LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020; and in favor of approving the increase in the number of authorized shares of our common stock to 300 million. I now declare the polls open for voting. If you have not yet voted or wish to change your vote, you may do so now by clicking the link provided online. Any shareholder who has already voted and does not want to change their vote need not take any further action. [Voting]

The online voting will now be closed. Based on a preliminary review of the votes cast, the inspector has informed me that all votes are in. Now the inspector of elections will tabulate the vote and submit a report to me in writing. This will take about 10 or 15 seconds. The inspector of election has submitted her report. The report indicates that: stockholders have duly elected each of the company's nominee for director; and have duly approved by the requisite number of votes the proposal to ratify Cherry Bekaert LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020; and the proposal to increase the number of authorized shares of our common stock to 300 million. Being no further business to come before this meeting and in absence of any objection, I declare the formal portion of this meeting adjourned. I will now provide a brief update on our business and then registered shareholders can ask questions by clicking on the Message button as Justin presented. So on a basic stock overview, all of you -- I'm sure all the shareholders realize we are -- the symbol of our company is MARK. We're headquartered in Las Vegas, Nevada. Our share price at the end -- at the close of business yesterday was $1.41, representing a market cap of $140 million. Our average daily trading volume is about 35 million shares over the past month -- excuse me, past 3 months and about 5 million over the past 3 weeks. Our 52-week stock price range is $0.25 to $3.56. And as you know, we are a diversified global technology company with leading AI solutions and a portfolio of digital media properties. RemarkAI is our proven technology tailored -- and tailored applications that are launched in the retail space, the workplace, food safety industries, construction and smart city businesses. We recently launched Remark Thermal in the United States to help protect employees, customers and businesses from individuals showing fever symptoms. And we also own a digital media portfolio, including minority ownership in Sharecare, which is an established health and wellness platform with over 100 million users, Remark Entertainment and Bikini.com. The industries our AI business serves is retail. As you're aware, we have a large contract, a $50 million contract, which is Phase 1 of the rollout, to convert China Mobile's 17,800 stores into smart stores. We've begun the software implementations of that prior to the shutdown. And in the current quarter, third quarter of this year, we expect to begin launching the kiosk portion of that. So we're expecting accelerated revenues on our China Mobile business to start being seen in our third and fourth quarter. We also won Phase 2 in June, and that's another $2 million contract to provide additional software modules and applications. So that business is expected also to accelerate into 2021. Workplace and food safety is another market that we're having success in and smart city and public safety, including a kindergarten program to provide thermal imaging that is rolling out in over 50 kindergartens per month beginning in this quarter. Our Remark Thermal serves the following industries. The first is casinos and entertainment venues. We have multiple casinos that we are launched in Las Vegas. We have other casinos in the United States that we're currently serving and also international. We are involved in hotels and offices, medical centers and public safety locations as well as sporting venues. We have our second quarter earnings call coming up, and we'll have more information at that time. Finally, we have our digital media portfolio, including a minority interest in Sharecare, which we're very excited about. It provides us a very large opportunity for monetization. If you follow the space, you'll see that Livongo, Health Catalyst, Teladoc have all been performing exceptionally well in this marketplace. And now that we're out of debt, we believe that we can truly realize the full value of Sharecare as we move forward. Our digital media portfolio also includes Bikini.com and Remark Entertainment. Sharecare, as we noted, provides a monetization opportunity. In 2019, Sharecare did sign strategic partnerships and received strategic investments from Quest Diagnostics, Walmart, Aflac Venture and Blue Cross Blue Shield of Arizona. In 2020, Sharecare has made several acquisitions, including MindSciences and Visualize Health. And with that, I'm going to turn it over to the Q&A portion. [Operator Instructions] And Shing and I will do our best to answer those questions. So operator, we'll take a minute or 2 to fill up the queue, and then we'll start taking questions.

[Operator Instructions]

And just 1 question that I did receive prior to the earnings -- to the Annual Shareholder Meeting call was regarding our recent S-1 filing for the preferred units. Shing, would you like to address that, the units and/or why we chose to go that route?