Publicly traded Remark Media, Inc. (NASDAQ: MARK) announced today they entered into an agreement to buy Vegas.com in a deal that could be valued up to $38 Million dollars.
The terms of the proposed deal, which is subject to approval by shareholders of Remark Media (Remark) are:
$15.5 million of cash
$9.5 million in shares of stock
$10 million of five-year warrants to purchase shares of our common stock at an exercise price of $9.00 per share.
Up to a total of $3 million in Earnout payments based on the performance of Vegas.com in the years ending December 31, 2016, 2017 and 2018
Remark Media is based on Las Vegas Nevada and according to the AP, its board includes “Las Vegas Strip executives connected to the Venetian and Palazzo hotel-casinos, CityCenter resorts and the Tao group of nightclubs”.
Remark Media owns Bikini.com, Banks.com and IRS.com
According to the AP story Vegas.com gets 3.4 million visitors a month.
A few thoughts.
Remark Media is trading at $4.10 a share and only has a market cap of $59 Million.
Remark Media has a 52 week high of $7.60 and the $10 million in Warrants carry an exercise price of $9 a share, less than half of what Remark closed at yesterday and 20% more than its 52 week high.
$9.5 million dollars in shares of Remark based on yesterday’s close of $4.10 would be around 2.4 million shares.
Shares of Remark have a 3 month moving average, trading around 31K shares a day with just 11K shares traded yesterday.
According to its latest financial statement filed on August 15th, Remark only had 821,000 in revenue for the quarter ending June 30, 2015 and $1.6 for the six months ending June 30, 2015 and has “in each fiscal year since our inception, incurred net losses and generated negative cash flow from operations, resulting in an accumulated deficit of $136.2 million”
So since they have been operating they have lost a total of $136.2 Million dollars.
According to that same filing Remark, as of June 30, 2015, “”owed $9.8 million of aggregate principal remained outstanding under debt agreements, $6.0 million of which we owe to a related party under senior secured convertible promissory notes. Of the amount owed to the related party, $2.5 million of principal plus any accrued but unpaid interest is due and payable in November 2015, and $3.5 million of principal plus any accrued but unpaid interest is due and payable in January 2016.”
“Remark during the six months ended June 30, 2015, issued a total of 1,100,000 shares of our common stock to investors in certain private placements and registered direct offerings in exchange for approximately $4.1 million in cash.”
On its face in my opinion, Its a very strange deal.
According to Remark Media they are a global digital media company focusing on the 18-year-old to 34-year-old’s.
“The company’s primary operations consist of owning and operating digital media properties, such as websites and applications for mobile devices, that provide unique, dynamic digital media experiences in multiple content verticals, including personal finance, young adult lifestyle, travel, education and entertainment. Remark’s websites and mobile applications provide what it believes are compelling content, trusted brands, and valuable resources for consumers. The company is headquartered in Las Vegas, Nevada, with additional operations in Beijing, China and Sao Paolo, Brazil.”
