Remark Announces Kankan Rollout Underway

June 6, 2018 at 3:09 am Leave a comment

Remark (NASDAQ: MARK) announced yesterday that the company has commenced the roll-out of its Kan Kan Smart Eyes for Retail SAAS AI product. In the announcement it was mentioned that the company has secured agreements to install KanKan Smart Eyes in more than 10,000 stores in Shanghai and sees an addressable market of more than 500,000 retail stores in China and Southeast Asia. Per the release, these “easy to install” AI products give businesses “…greater insight s into their consumer’s behavior and into the businesses’ daily operations”. In addition to the 10,000 stores announced for Shanghai, the release mentioned that Remark’s Kankan was already working to install a more comprehensive data and AI solution in a deal that will see this product installed at 20,000 retail stores in China and Southeast Asia including food stores, supermarkets, convenience stores, super-brand malls and fast food restaurants.

We are pleased to see that the company’s AI products are gaining such traction as the company’s achievement of the 10,000 Shanghai store milestone for its lower end AI solution is an unexpected surprise, at least with regards to its timing. We fully expected the company to hit that number towards the end of the year and into 2019, but reaching that level by June 5 is a huge accomplishment. Not mentioned in the press release, but covered in a presentation at the LD Micro conference is that the company’s technology will eventually be able to offer those stores a solution that could convert their check out procedures to be similar to what Amazon (NASDAQ: AMZN) is testing in Seattle with its “Amazon Go” shops, where consumers merely pick up the items they want and leave with no waiting in line / check out procedure necessary due to the Smart Eyes camera system’s ability to bill the items to the customer’ account. We see the mention of this potential upgrade on the same day as the company announced it now has contracts for an additional 10,000 retail locations as a very bullish indicator of just one of the many ways this company is expecting to create additional value in the near future.

We were also pleased to see that the company filed a new shelf offering after the close, replacing its recently expired shelf. We see this as very bullish in that the company can still raise up to $7.2 million through its arrangement with Aspire and it could do so on essentially any weekday it so chooses. Thus, if the company wanted to raise capital quickly at a price within the current trading range, it could easily tap the Aspire deal. However, the filing of the shelf leads us to believe that the company may be considering a different direction – hopefully like another strategic deal similar to what we saw back in December when CP Group invested $10m at a $12 per share valuation when the stock was trading at $8 per share. If the company were able to complete another placement with a strategic partner at a price substantially higher than the current $5ish price, we believe that would push the stock to a much higher trading range. Plus we do not believe that our top shareholder and CEO (Shing) would allow any more MARK shares to be sold in the $5s. The rapidly growing Vegas.com is worth more than the current per share price of MARK in an acquisition scenario, as is the Sharecare stake and we think yesterday’s announcement suggests that Kankan is likely worth more than either Vegas.com and/or our Sharecare stake. We think Groove investors would do well to add shares here to hold for the long term and expect to see very significant price appreciation in Remark shares over the next few months.

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