mark-20240630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2024

Commission File Number 001-33720

Remark Holdings, Inc.

Delaware

33-1135689

State of Incorporation

IRS Employer Identification Number

800 S. Commerce St.

Las Vegas, NV 89106

Address, including zip code, of principal executive offices

702-701-9514

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class

Trading Symbol

Name of each exchange on which registered

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☑

Smaller reporting company

☑

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 15, 2024, a total of 50,952,060 shares of the issuer’s common stock were outstanding.

TABLE OF CONTENTS


PART I
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets at June 30, 2024 (unaudited) and December 31, 2023	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2024 and 2023	2
	Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three and six months ended June 30, 2024 and 2023	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

PART II
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
	Signature	37


Table of Contents			i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The following information should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”) and our audited consolidated financial statements and related notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2024, as amended on April 29, 2024, (the “2023 Form 10-K”).

In addition to historical information, this Form 10-Q includes “forward-looking statements” about the plans, strategies, objectives, goals or expectations of Remark Holdings, Inc. and subsidiaries (“Remark”, “we”, “us”, “our”). You will find forward-looking statements principally in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Such forward-looking statements are identifiable by words or phrases indicating that Remark or management “expects,” “anticipates,” “plans,” “believes,” or “estimates,” or that a particular occurrence or event “will,” “may,” “could,” “should,” or “will likely” result, occur or be pursued or “continue” in the future, that the “outlook” or “trend” is toward a particular result or occurrence, that a development is an “opportunity,” “priority,” “strategy,” “focus,” that we are “positioned” for a particular result, or similarly-stated expectations. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report or such other report, release, presentation, or statement. The forward-looking statements contained in this Form 10-Q are based on the expectations, estimates, projections, beliefs, and assumptions of our management based on information available to management as of the date on which this Form 10-Q was filed with the SEC, or as of the date on which the information incorporated by reference was filed with the SEC, as applicable, all of which are subject to change. Forward-looking statements are subject to risks, uncertainties, and other factors that are difficult to predict and could cause actual results to differ materially from those stated or implied by our forward-looking statements.

In addition to other risks and uncertainties described in connection with the forward-looking statements contained in this report and other periodic reports filed with the SEC, there are many important factors that could cause actual results to differ materially. Such risks and uncertainties include general business conditions, changes in overall economic conditions, our ability to integrate acquired assets, the impact of competition and other factors which are often beyond our control.

This should not be construed as a complete list of all of the economic, competitive, governmental, technological and other factors that could adversely affect our expected consolidated financial position, results of operations or liquidity. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, operations, liquidity, financial condition and prospects. We undertake no obligation to update or revise our forward-looking statements to reflect developments that occur or information that we obtain after the date of this report.


Table of Contents			ii

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REMARK HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(dollars in thousands, except share and per share amounts)




	June 30, 2024		December 31, 2023
	(Unaudited)
Assets
Cash	$	438	$	145
Trade accounts receivable, net	4,361		1,287
Inventory, net	646		750

Deferred cost of revenue, current	—		6,644
Prepaid expense and other current assets	492		614
Total current assets	5,937		9,440
Deferred cost of revenue, long-term	6,290		—
Property and equipment, net	634		189
Operating lease assets	372		517
Other long-term assets	71		90
Total assets	$	13,304	$	10,236
Liabilities
Accounts payable	$	13,023	$	9,348
Advances from related parties	1,036		1,595
Obligations to issue common stock	12,548		10,033
Accrued expense and other current liabilities (including $1,356 and $495 of delinquent payroll taxes as of June 30, 2024 and December 31, 2023, respectively)	13,203		11,531
Contract liability	418		570
Notes payable (including a past due amount of $16,307 as of each of June 30, 2024, and December 31, 2023)	16,496		16,463
Funds received in advance of potential financing	2,750		—
Total current liabilities	59,474		49,540

Operating lease liabilities, long-term	179		286


Total liabilities	59,653		49,826

Commitments and contingencies

Stockholders’ Deficit
Preferred stock, $0.001 par value; 1,000,000 shares authorized; zero issued	—		—
Common stock, $0.001 par value; 175,000,000 shares authorized; 49,872,060 and 22,038,855 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	50		22
Additional paid-in-capital	391,538		379,244
Accumulated other comprehensive loss	(1,217)		(1,186)
Accumulated deficit	(436,720)		(417,670)
Total stockholders’ deficit	(46,349)		(39,590)
Total liabilities and stockholders’ deficit	$	13,304	$	10,236

See Notes to Unaudited Condensed Consolidated Financial Statements


Table of Contents			1			Financial Statement Index

REMARK HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(dollars in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue	$	3,699	$	3,167	$	4,086	$	3,993
Cost and expense
Cost of revenue (excluding depreciation and amortization)	2,925		2,511		3,275		2,966
Sales and marketing	269		387		569		753
Technology and development	366		567		712		736
General and administrative	3,294		3,244		6,317		6,077
Depreciation and amortization	58		25		122		71
Impairments	—		392		—		392

Total cost and expense	6,912		7,126		10,995		10,995
Operating loss	(3,213)		(3,959)		(6,909)		(7,002)
Other expense
Interest expense	(961)		(858)		(1,904)		(2,402)
Finance cost related to obligations to issue common stock	(925)		(1,050)		(10,072)		(4,626)


Other loss, net	(160)		(7)		(165)		(6)
Total other expense, net	(2,046)		(1,915)		(12,141)		(7,034)


Net loss	$	(5,259)	$	(5,874)	$	(19,050)	$	(14,036)
Other comprehensive income
Foreign currency translation adjustments	46		(227)		(31)		(545)
Comprehensive loss	$	(5,213)	$	(6,101)	$	(19,081)	$	(14,581)

Weighted-average shares outstanding, basic and diluted	45,683,329		14,132,862		39,928,507		13,819,643


Net loss per share, basic and diluted	$	(0.12)	$	(0.42)	$	(0.48)	$	(1.02)

See Notes to Unaudited Condensed Consolidated Financial Statements


Table of Contents			2			Financial Statement Index

REMARK HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Stockholders’ Deficit

(in thousands, except number of shares)


	Three Months Ended June 30, 2024
	Common Stock Shares	Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
Balance at March 31, 2024	41,153,044	$	41	$	390,247	$	(1,263)	$	(431,461)	(42,436)
Net loss	—	—		—		—		(5,259)		(5,259)

Common stock issued pursuant to agreements with Ionic (Note 12)	8,719,016	9		1,291		—		—		1,300

Foreign currency translation	—	—		—		46		—		46
Balance at June 30, 2024	49,872,060	$	50	$	391,538	$	(1,217)	$	(436,720)	$	(46,349)

	Three Months Ended June 30, 2023
	Common Stock Shares	Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
Balance at March 31, 2023	13,633,992	$	14	$	372,071	$	(1,177)	$	(396,685)	$	(25,777)
Net loss	—	—		—		—		(5,874)		(5,874)
Share-based compensation	—	—		12		—		—		12
Common stock issued pursuant to agreements with Ionic (Note 12)	2,978,274	3		3,434		—		—		3,437

Foreign currency translation	—	—		—		(227)		—		(227)

Balance at June 30, 2023	16,612,266	$	17	$	375,517	$	(1,404)	$	(402,559)	$	(28,429)

	Six Months Ended June 30, 2024
	Common Stock Shares	Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
Balance at December 31, 2023	22,038,855	$	22	$	379,244	$	(1,186)	$	(417,670)	$	(39,590)
Net loss	—	—		—		—		(19,050)		(19,050)
Share-based compensation	—	—		15		—		—		15
Common stock issued pursuant to agreements with Ionic (Note 12)	27,833,205	28		12,279		—		—		12,307

Foreign currency translation	—	—		—		(31)		—		(31)
Balance at June 30, 2024	49,872,060	$	50	$	391,538	$	(1,217)	$	(436,720)	$	(46,349)

	Six Months Ended June 30, 2023
	Common Stock Shares	Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
Balance at December 31, 2022	11,539,564	$	12	$	368,945	$	(859)	$	(388,523)	$	(20,425)
Net loss	—	—		—		—		(14,036)		(14,036)
Share-based compensation	—	—		156		—		—		156



Common stock issued pursuant to agreements with Ionic (Note 12)	5,072,702	5		6,416		—		—		6,421

Foreign currency translation	—	—		—		(545)		—		(545)

Balance at June 30, 2023	16,612,266	$	17	$	375,517	$	(1,404)	$	(402,559)	$	(28,429)

See Notes to Unaudited Condensed Consolidated Financial Statements


Table of Contents			3			Financial Statement Index

REMARK HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(dollars in thousands)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(19,050)	$	(14,036)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	122		71
Share-based compensation	6		153

Cost of extending note payable	—		750
Finance cost related to obligations to issue common stock	10,072		4,626
Accrued interest included in note payable	—		1,139


Impairment of assets	—		392
Provision for doubtful accounts	255		138
Other	18		36
Changes in operating assets and liabilities:
Accounts receivable	(3,386)		(957)
Inventory	99		(42)
Deferred cost of revenue	354		1,865
Prepaid expense and other assets	(16)		13
Operating lease assets	145		(607)
Accounts payable, accrued expense and other liabilities	5,512		745
Contract liability	(138)		145
Operating lease liabilities	(107)		342
Net cash used in operating activities	(6,114)		(5,227)
Cash flows from investing activities:

Purchases of property, equipment and software	(567)		(6)
Payment of amounts capitalized to software in progress	—		—
Net cash used in investing activities	(567)		(6)
Cash flows from financing activities:

Funds received in advance of potential financing	2,750		—
Proceeds from obligations to issue common stock - ELOC	4,750		3,000
Proceeds from obligations to issue common stock - Debentures	—		2,500
Proceeds from debt	50		—
Advances from related parties	720		697
Repayments of advances from related parties	(1,279)		(792)
Repayments of debt	(17)		(16)
Net cash provided by financing activities	6,974		5,389
Net change in cash	293		156
Cash:
Beginning of period	145		52
End of period	$	438	$	208

Supplemental cash flow information:
Cash paid for interest	$	150	$	988

Supplemental schedule of non-cash investing and financing activities:

Issuance of common stock - Ionic ELOC and Debentures (Note 12)	$	12,307	$	6,421



Purchase of property and equipment pursuant to notes payable	$	21	$	—

See Notes to Unaudited Condensed Consolidated Financial Statements


Table of Contents			4			Financial Statement Index

REMARK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

NOTE 1. ORGANIZATION AND BUSINESS

Organization and Business

Remark Holdings, Inc. and its subsidiaries (“Remark”, “we”, “us”, or “our”) constitute a diversified global technology business with leading artificial intelligence (“AI”) and data-analytics solutions. The common stock of Remark Holdings, Inc. is traded in the OTCQX Best market under the ticker symbol MARK.

We primarily sell AI-based products and services. We currently recognize substantially all of our revenue from the U.S., with additional revenue from sales in the U.K. and China.

Going Concern

During the six months ended June 30, 2024, and in each fiscal year since our inception, we have incurred operating losses which have resulted in a stockholders’ deficit of $46.3 million as of June 30, 2024. Additionally, our operations have historically used more cash than they have provided. Net cash used in operating activities was $

SEC Form 10-Q filed by Remark Holdings Inc.