mark-20240930

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 September 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 January 8, 2025, a total of 61,902,455 shares of the issuer’s common stock were outstanding.

TABLE OF CONTENTS


PART I
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets at September 30, 2024 (unaudited) and December 31, 2023	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023	2
	Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three and nine months ended September 30, 2024 and 2023	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 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)




	September 30, 2024		December 31, 2023
	(Unaudited)
Assets
Cash	$	21	$	145
Trade accounts receivable, net	302		1,287
Inventory, net	814		750

Deferred cost of revenue, current	—		6,644
Prepaid expense and other current assets	477		614
Total current assets	1,614		9,440

Property and equipment, net	615		189
Operating lease assets	324		517
Other long-term assets	59		90
Total assets	$	2,612	$	10,236
Liabilities
Accounts payable	$	10,714	$	9,348
Advances from related parties	1,548		1,595
Accrued expense and other current liabilities (including $1,391 and $495 of delinquent payroll taxes as of September 30, 2024 and December 31, 2023, respectively)	11,328		11,687
Contract liability	433		570
Notes payable	19,489		16,307
Obligations to issue common stock	11,844		10,033
Funds received in advance of potential financing	2,750		—
Total current liabilities	58,106		49,540

Operating lease liabilities, long-term	121		286


Total liabilities	58,227		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; 53,770,968 and 22,038,855 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	54		22
Additional paid-in-capital	391,934		379,244
Accumulated other comprehensive loss	(1,269)		(1,186)
Accumulated deficit	(446,334)		(417,670)
Total stockholders’ deficit	(55,615)		(39,590)
Total liabilities and stockholders’ deficit	$	2,612	$	10,236

See Notes to Unaudited Condensed Consolidated Financial Statements


Table of Contents			1

REMARK HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

(dollars in thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue	$	320	$	183	$	4,406	$	4,176
Cost and expense
Cost of revenue (excluding depreciation and amortization)	107		254		3,382		3,220
Sales and marketing	281		340		850		1,093
Technology and development	698		768		1,410		1,504
General and administrative	2,763		2,843		9,080		8,920
Depreciation and amortization	53		107		175		178
Impairments	6,463		—		6,624		392

Total cost and expense	10,365		4,312		21,521		15,307
Operating loss	(10,045)		(4,129)		(17,115)		(11,131)
Other expense
Interest expense	(376)		(949)		(2,280)		(3,351)
Finance cost related to obligations to issue common stock	809		(2,086)		(9,263)		(6,712)


Other loss, net	(2)		(8)		(6)		(14)
Total other expense, net	431		(3,043)		(11,549)		(10,077)


Net loss	$	(9,614)	$	(7,172)	$	(28,664)	$	(21,208)
Other comprehensive income
Foreign currency translation adjustments	(52)		175		(83)		(370)
Comprehensive loss	$	(9,666)	$	(6,997)	$	(28,747)	$	(21,578)

Weighted-average shares outstanding, basic and diluted	50,815,505		18,377,384		43,583,994		15,355,583


Net loss per share, basic and diluted	$	(0.19)	$	(0.39)	$	(0.66)	$	(1.38)

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 September 30, 2024
	Common Stock Shares	Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
Balance at June 30, 2024	49,872,060	$	50	$	391,537	$	(1,217)	$	(436,720)	(46,350)
Net loss	—	—		—		—		(9,614)		(9,614)
Share-based compensation	130,000	—		12		—		—		12
Common stock issued pursuant to agreements with Ionic (Note 12)	3,280,715	4		330		—		—		334
Common stock issued pursuant to convertible instruments (Note 10)	488,193	—		55		—		—		55

Foreign currency translation	—	—		—		(52)		—		(52)
Balance at September 30, 2024	53,770,968	$	54	$	391,934	$	(1,269)	$	(446,334)	$	(55,615)

	Three Months Ended September 30, 2023
	Common Stock Shares	Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
Balance at June 30, 2023	16,612,266	$	17	$	375,517	$	(1,404)	$	(402,559)	$	(28,429)
Net loss	—	—		—		—		(7,172)		(7,172)
Share-based compensation	—	—		11		—		—		11
Common stock issued pursuant to agreements with Ionic (Note 12)	3,099,589	3		2,494		—		—		2,497

Foreign currency translation	—	—		—		175		—		175

Balance at September 30, 2023	19,711,855	$	20	$	378,022	$	(1,229)	$	(409,731)	$	(32,918)

	Nine Months Ended September 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	—	—		—		—		(28,664)		(28,664)
Share-based compensation	130,000	—		27		—		—		27
Common stock issued pursuant to agreements with Ionic (Note 12)	31,113,920	32		12,608		—		—		12,640
Common stock issued pursuant to convertible instruments (Note 10)	488,193	—		55		—		—		55

Foreign currency translation	—	—		—		(83)		—		(83)
Balance at September 30, 2024	53,770,968	$	54	$	391,934	$	(1,269)	$	(446,334)	$	(55,615)

	Nine Months Ended September 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	—	—		—		—		(21,208)		(21,208)
Share-based compensation	—	—		167		—		—		167
Common stock issued pursuant to agreements with Ionic (Note 12)	8,172,291	8		8,910		—		—		8,918

Foreign currency translation	—	—		—		(370)		—		(370)

Balance at September 30, 2023	19,711,855	$	20	$	378,022	$	(1,229)	$	(409,731)	$	(32,918)

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)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(28,664)	$	(21,208)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	175		178
Share-based compensation	17		149

Cost of extending note payable	—		750
Finance cost related to obligations to issue common stock	9,700		6,712
Finance cost related to secured convertible debenture liability	(437)		—
Accrued interest included in note payable	—		1,139


Impairment of assets	6,624		392
Provision for doubtful accounts	665		138
Other	(82)		224
Changes in operating assets and liabilities:
Accounts receivable	318		(593)
Inventory	(174)		83
Deferred cost of revenue	150		1,564
Prepaid expense and other assets	233		85
Operating lease assets	193		(503)
Accounts payable, accrued expense and other liabilities	4,552		1,437
Contract liability	(139)		90
Operating lease liabilities	(165)		280
Net cash used in operating activities	(7,034)		(9,083)
Cash flows from investing activities:

Purchases of property, equipment and software	(569)		(32)

Net cash used in investing activities	(569)		(32)
Cash flows from financing activities:

Funds received in advance of potential financing	2,750		—
Proceeds from obligations to issue common stock - ELOC	4,750		7,000
Proceeds from obligations to issue common stock - Debentures	—		2,500
Proceeds from debt	50		—
Advances from related parties	1,489		1,002
Repayments of advances from related parties	(1,536)		(1,145)
Repayments of debt	(24)		(24)
Net cash provided by financing activities	7,479		9,333
Net change in cash	(124)		218
Cash:
Beginning of period	145		52
End of period	$	21	$	270

Supplemental cash flow information:
Cash paid for interest	$	150	$	1,578

SEC Form 10-Q filed by Remark Holdings Inc.