mark-20210630

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, 2021

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:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.001 par value per share

MARK

The Nasdaq Stock Market LLC

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 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 20, 2021, a total of 100,795,434 shares of our common stock were outstanding.

TABLE OF CONTENTS


PART I
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Unaudited Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
	Signature	30


Table of Contents			i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The matters discussed in this Quarterly Report on Form 10-Q include “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.

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 Securities and Exchange Commission (“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, 2021		December 31, 2020
	(Unaudited)
Assets
Cash (includes VIE $60 and $278, respectively)	$	122	$	854
Trade accounts receivable, net (includes VIE $7,788 and $4,850, respectively)	8,045		5,027
Inventory, net (includes VIE $58 and $112, respectively)	1,925		874
Prepaid expense and other current assets (includes VIE $819 and $248, respectively)	1,436		2,043
Total current assets	11,528		8,798
Property and equipment, net (includes VIE $— and $43, respectively)	264		321
Operating lease assets (includes VIE $173 and $281, respectively)	330		492
Investment in unconsolidated affiliate	1,030		1,030

Other long-term assets (includes VIE $29 and $68, respectively)	581		670
Total assets	$	13,733	$	11,311
Liabilities and Stockholders’ Deficit
Accounts payable (includes VIE $5,631 and $3,655, respectively)	$	11,112	$	8,589
Accrued expense and other current liabilities (includes VIE $3,386 and $3,782, respectively)	7,539		6,660
Contract liability (includes VIE $187 and $147, respectively)	590		310
Notes payable, net of unamortized discount and debt issuance cost	6,167		1,500

Total current liabilities	25,408		17,059
Loans payable	1,425		1,425
Operating lease liabilities, long-term (includes VIE $26 and $79, respectively)	98		194
Warrant liability	2,013		1,725
Total liabilities	28,944		20,403

Commitments and contingencies

Preferred stock, $0.001 par value; 1,000,000 shares authorized; zero issued	—		—
Common stock, $0.001 par value; 100,000,000 shares authorized; 99,918,941 and 99,505,041 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	100		100
Additional paid-in-capital	352,394		351,546
Accumulated other comprehensive income	(171)		(226)
Accumulated deficit	(367,534)		(360,512)
Total stockholders’ deficit	(15,211)		(9,092)
Total liabilities and stockholders’ deficit	$	13,733	$	11,311

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 Loss

(dollars in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue	$	4,016	$	2,299	$	8,422	$	2,730
Cost and expense
Cost of revenue (excluding depreciation and amortization)	2,252		1,210		5,004		1,231
Sales and marketing	398		486		1,399		902
Technology and development	1,305		1,477		2,855		2,125
General and administrative	2,482		1,898		5,179		4,638
Depreciation and amortization	49		66		115		156


Total cost and expense	6,486		5,137		14,552		9,052
Operating loss	(2,470)		(2,838)		(6,130)		(6,322)
Other income (expense)
Interest expense	(380)		(775)		(615)		(1,236)
Other income, net	6		57		7		57
Change in fair value of warrant liability	1,322		(6,260)		(288)		(6,203)
Gain on lease termination	—		—		—		1,538
Other income (loss), net	(30)		—		13		(73)
Total other income (expense), net	918		(6,978)		(883)		(5,917)
Loss from operations	$	(1,552)	$	(9,816)	$	(7,013)	$	(12,239)
Provision for income taxes	(9)		—		(9)		—
Net loss	$	(1,561)	$	(9,816)	$	(7,022)	$	(12,239)
Other comprehensive loss
Foreign currency translation adjustments	13		156		55		338
Comprehensive loss	$	(1,548)	$	(9,660)	$	(6,967)	$	(11,901)

Weighted-average shares outstanding, basic and diluted	99,917		89,264		99,838		71,527

Net loss per share, basic and diluted	$	(0.02)	$	(0.11)	$	(0.07)	$	(0.17)

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, 2021
	Common Stock Shares	Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
Balance at March 31, 2021	99,916,941	$	100	$	352,387	$	(184)	$	(365,973)	(13,670)
Net loss	—	—		—		—		(1,561)		(1,561)
Share-based compensation	—	—		6		—		—		6
Common stock issued	—	—		—		—		—		—
Equity instrument exercises	2,000	—		1		—		—		1
Foreign currency translation	—	—		—		13		—		13
Balance at June 30, 2021	99,918,941	$	100	$	352,394	$	(171)	$	(367,534)	$	(15,211)

	Three Months Ended June 30, 2020
	Common Stock Shares	Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
Balance at March 31, 2020	66,133,888	$	66	$	323,958	$	(45)	$	(349,250)	$	(25,271)
Net loss	—	—		—		—		(9,816)		(9,816)
Share-based compensation	—	—		47		—		—		47
Common stock issued	33,220,164	33		27,345		—		—		27,378
Equity instrument exercises	54,864	—		67		—		—		67
Foreign currency translation	—	—		—		156		—		156
Balance at June 30, 2020	99,408,916	$	99	$	351,417	$	111	$	(359,066)	$	(7,439)

	Six Months Ended June 30, 2021
	Common Stock Shares	Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
Balance at December 31, 2020	99,505,041	$	100	$	351,546	$	(226)	$	(360,512)	$	(9,092)
Net loss	—	—		—		—		(7,022)		(7,022)
Share-based compensation	—	—		25		—		—		25
Common stock issued	—	—		—		—		—		—
Equity instrument exercises	413,900	—		823		—		—		823
Other	—	—		—		55		—		55
Balance at June 30, 2021	99,918,941	$	100	$	352,394	$	(171)	$	(367,534)	$	(15,211)

	Six Months Ended June 30, 2020
	Common Stock Shares	Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
Balance at December 31, 2019	51,055,159	$	51	$	319,275	$	(227)	$	(346,827)	$	(27,728)
Net loss	—	—		—		—		(12,239)		(12,239)
Share-based compensation	—	—		93		—		—		93
Common stock issued	48,298,893	48		31,982		—		—		32,030
Equity instrument exercises	54,864	—		67		—		—		67
Other	—	—		—		338		—		338
Balance at June 30, 2020	99,408,916	$	99	$	351,417	$	111	$	(359,066)	$	(7,439)

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,
	2021	2020
Cash flows from operating activities:
Net loss	$

SEC Form 10-Q filed by Remark Holdings, Inc.