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.”