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.
Vegas.com which is privately owned is a online booking company for all things Vegas.
Under The terms of the proposed deal, which is subject to approval by shareholders of Remark Media (Remark),The Greenspun Corporation, the owners of Vegas.com would get:
$15.5 million in cash
$9.5 million in shares of stock in Remark.
$10 million in five-year warrants to purchase shares of common stock in Remark at an exercise price of $9.00 per share and
Up to a total of $3 million in Earn out payments based on the performance of Vegas.com in the years ending December 31, 2016, 2017 and 2018
According to the AP story Vegas.com gets 3.4 million visitors a month and Remark Media based out of Las Vegas 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 among other web properties and that is where the story gets even more interesting.
You might recall that another public comapny, InterSearch Group, Inc. (OTCBB:IGPN) acquired Banks.com in 2006, after reportedly paying somewhere around $12.5 Million for IRS.com in 2005
In 2007, InterSearch Group, Inc. changed it’s name and wound up trading as Banks.com, on the AMEX in 2007: under the stock symbol BNX.
In 2011, Banks.com which at the time still owned IRS.com, got delisted from the American Stock Exchange.
Banks.com then started trading as Banks.com, Inc. on the OTCQB: under the stock symbol BNNX.
In June 2012, Remark Media, Inc. announced it had acquired Banks.com (the company) which included the domain names Banks.com and irs.com, in a deal where the shareholders of the company, Banks.com, became shareholders of Remark Media, Inc.
So 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, more than double the price of what Remark shares 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 Million 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 Remark has been operating they says the 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 mark”
“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. The company is headquartered in Las Vegas, Nevada, with additional operations in Beijing, China and Sao Paolo, Brazil.”
HI Michael,
Its an interesting deal. Will study it. As far as I know I was the only one whoever reported about the acquisition of IRS.com which I found in SEC filings at their former company. According to the filings I found the acquisition and date were shown as: IRS.com $12,909,369 9/29/2005. And for a period of time there was tremendous ad revenue being produced from the traffic to that domain from what I found in the fiings. Then the govt wanted to be assured the site would not be confused with their dot gov site and some changes were made to the appearance, and the landing page was moved to the banks.com portal. It appears it now directs to its own site again, but hadn’t checked it in years to be honest.
nice informations tnx a lot
I guess the Quinstreet – Bankrate models might be evolving with Remark Media ? serendipity taking a hand but noted this but:
http://www.crowdfundinsider.com/2015/08/73114-earlyshares-downtown-las-vegas-redevelopment-update-metroplex-group-closed-escrow-and-acquired-property/
I would never, ever, ever, buy stock in a company that has domainers at the helm…this scenario almost never ends well for retail stock investors.
Not sure why they didnt just registered a $10 USD fabulous Dot Vegas? and save the rest,
37,999990 USD for marketing and development…
(not sarcasm)
Mike,
Actually, according to SEC filings, the deal has not been closed yet, we have a purchase agreement here, which is subject to termination provisions.
The main issue is that, at the moment, as far as I see, Remark Media, a very small cash-strapped, loss-making company (net sales of less than 2.0 mln USD in 2014, net equity of less than 7 mln USD, net debt of approx 10 mln USD, it looks like a shell company … ) has not enough financial resources to close the deal, and they need to get more financing to get it done.
They have to pay 15.5 mln USD cash but, as of Q1 2015, they have cash and cash equivalent for only 2.6 mln USD …
If you check the SEC filing you’ll see that they will deposit only a very small cash amount in Escrow.
They clearly stated “The parties will deposit the following portions of the Purchase Price into escrow at closing: (i) approximately $2.6 million of the Equity Payment to secure certain obligations of Sellers under the Purchase Agreement; and (ii) $2.2 million of a combination of the Cash Payment and the Equity Payment to secure payment of any post-closing liabilities in connection with a specified contract dispute, with an additional ability to offset up to $600,000 of Earnout Payments.” and “The Purchase Agreement is subject to customary termination provisions. Additionally, the Purchase Agreement may be terminated by any party if closing has not occurred on or before October 25, 2015 (the “Outside Closing Date”) or by us if we have not obtained, or it becomes apparent that we will not obtain, financing in an amount sufficient for us to consummate the Transaction.”
There is a termination fee of 1 mln USD, payable cash or in shares.
I think they will try to issue new shares (which IMHO at the moment are grossly overvalued …), as they state here: “In accordance with our obligations under Nasdaq Listing Rule 5635(d), we are not permitted to issue any shares under the Purchase Agreement and in related transactions (including under the Warrants) to the extent that the issuance of such shares, when aggregated together in accordance with Nasdaq rules, would exceed 19.9% of the shares outstanding, unless we obtain the approval of our stockholders for issuances in excess of such amount (the “Stockholder Approval”). We intend to hold a special meeting of stockholders following closing of the Transaction to seek the Stockholder Approval.”
Basically it looks like they will finance the acquisition unloading “expensive paper” and maybe new financing … are they gonna use Vegas.com as collateral as well?
It would be interesting to know Vegas.com revenue and profitability figures … that could allow us to dig a bit more into the deal.
Agree with you it’s a very weird deal, it looks like it’s just a move to inflate (pump) the perception of Vegas.com market value …
P.S.
As far as I can see, in light of its current financials, Remark Media shares are IMHO basically worthless.
Given their cash burn rate, without new financing (or equity issues at “ripoff prices”) the company would go bankrupt very quickly …
Mike and Andrea Paladini,
Very interesting research. It is all somewhat confusing. Maybe somebody should contact Remark Media and ask them some questions. It seems like it would be a pretty big risk for a company of their small financial standing to lose $1 million by not completing the deal, so they must have some good plan in place.
In my book (shameless plug – download it for free at http://www.impulsecorp.com/download-my-ebook-for-free) I talk about how when I sold Bored.com in 2008 I had similar situation, where the buyer gave me a $500,000 non-refundable deposit (in escrow) with the $4 million balance due in 3 months. They were not public, and did not need to raise the money, but a transaction is never done until it closes, so there was always a chance it could fall through. I was actually hoping they would back out, as getting $500,000 for doing nothing was pretty appealing to me.
The price was obviously due to the names and traffic the site gets. For the name only without any traffic I would still value it at over $10 million, but I am surprised at the huge price paid.
One word : b u l l s h i t
Very interesting sell. Lets see how share stock progress!
O.K aside from all the technical attributes to this situation I have a small question…what is the most desirable GEO domain on the planet? Is there a better one than Vegas? And for the best question: what is VegasDeals.com worth? I’ll bet there is not a “broker” that would attempt to sell it if was $ 9999. The truth remains that VegasDeals.com is EVERYTHING and more than just Vegas.com…..but we will just play stupid and continue to see terms like this bring NOTHING!!!!! THAT friends shows how stupid the “frenzy” over much of this “one word” and 2 and 3 letter terms are! If there was a way to put the both terms indexed beside each other what would be clicked on the most….ratio wise…but that means nothing…
Too many conditions for a sale.
This name for $15.5 million in cash is still a good sale!
Reports out on Remark (Zacks and Roth). Still heavily levered but a lot of fires in the iron.
http://files.shareholder.com/downloads/HSWI/3442495469x0x920024/B600429A-360C-410A-ADAC-0AB1E653330E/Remark_Media_Investor_Deck_-_LD_Micro_2016.pdf
Vegas.com may be generating the most revenues, but Fanstag, KanKan and 5% ownership in ShareCare have massive hidden (for now) potential. Stock near new lows @ $3.35.