10-Q

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, 2018

Commission File Number 001-33720

Remark Holdings, Inc.

Delaware	33-1135689
State of Incorporation	IRS Employer Identification Number
3960 Howard Hughes Parkway, Suite 900 Las Vegas, NV 89169	702-701-9514
Address, including zip code, of principal executive offices	Registrant’s telephone number, including area code

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 November 13, 2018, a total of 36,668,696 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	3
	Notes to Unaudited Condensed Consolidated Financial Statements	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
	Signature	35

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 per share amounts)

	September 30, 2018			December 31, 2017
	(Unaudited)
Assets
Cash and cash equivalents	$	9,902		$	22,632
Restricted cash	11,655			11,670
Trade accounts receivable, net	4,753			3,673
Prepaid expense and other current assets	8,710			5,518
Notes receivable, current	100			290
Total current assets	35,120			43,783
Notes receivable	—			100
Property and equipment, net	11,630			13,387
Investment in unconsolidated affiliates	2,030			1,030
Intangibles, net	19,950			23,946
Goodwill	20,099			20,099
Other long-term assets	1,620			1,192
Total assets	$	90,449		$	103,537
Liabilities and Stockholders’ Equity
Accounts payable	$	23,956		$	17,857
Accrued expense and other current liabilities	12,034			18,795
Deferred merchant booking	8,727			9,027
Contract liability	5,049			3,691
Note payable	3,000			3,000
Current maturities of long-term debt, net of unamortized discount and debt issuance cost	37,319			38,085
Total current liabilities	90,085			90,455
Warrant liability	7,072			89,169
Other liabilities	3,296			3,501
Total liabilities	100,453			183,125
Commitments and contingencies (Note 13)
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued	—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 36,468,696 and 28,406,026 shares issued and outstanding; each at September 30, 2018 and December 31, 2017, respectively	36			28
Additional paid-in-capital	304,006			220,117
Accumulated other comprehensive income	48			115
Accumulated deficit	(314,094		)	(299,848		)
Total stockholders’ deficit	(10,004		)	(79,588		)
Total liabilities and stockholders’ deficit	$	90,449		$	103,537

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 September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue	$	19,351		$	19,449		$	56,788		$	52,004
Cost and expense
Cost of revenue (excluding depreciation and amortization)	4,393			5,641			14,557			12,270
Sales and marketing	7,213			6,326			20,884			17,975
Technology and development	842			865			2,587			2,657
General and administrative	10,444			9,971			44,941			26,656
Depreciation and amortization	2,756			2,482			8,220			8,237
Impairments	—			28			—			28
Other operating expense	117			66			264			168
Total cost and expense	25,765			25,379			91,453			67,991
Operating loss	(6,414		)	(5,930		)	(34,665		)	(15,987		)
Other income (expense)
Interest expense	(1,307		)	(1,080		)	(3,968		)	(3,279		)
Other income, net	1			—			56			20
Change in fair value of warrant liability	3,525			(5,978		)	22,190			2,351
Other gain (loss)	(12		)	(33		)	511			(85		)
Total other income (expense), net	2,207			(7,091		)	18,789			(993		)
Loss before income taxes	(4,207		)	(13,021		)	(15,876		)	(16,980		)
Benefit from (provision for) income taxes	442			(229		)	1,437			(603		)
Net loss	$	(3,765	)	$	(13,250	)	$	(14,439	)	$	(17,583	)
Other comprehensive income (loss)
Foreign currency translation adjustments	(82		)	48			(67		)	20
Comprehensive loss	$	(3,847	)	$	(13,202	)	$	(14,506	)	$	(17,563	)
Weighted-average shares outstanding, basic and diluted	35,463			22,811			33,608			22,744
Net loss per share, basic and diluted	$	(0.11	)	$	(0.58	)	$	(0.43	)	$	(0.77	)

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 Cash Flows

(dollars in thousands)

	Nine Months Ended September 30,
	2018			2017
Net cash provided by (used in) operating activities	$	(18,691	)	$	616
Cash flows from investing activities:
Proceeds from disposition of assets	629			—
Purchases of property, equipment and software	(2,728		)	(2,631		)
Acquisition of unconsolidated affiliate	(480		)	(29		)
Net cash used in investing activities	(2,579		)	(2,660		)
Cash flows from financing activities:
Proceeds from issuance of common stock, net	10,951			8,315
Proceeds from debt issuance	—			3,000
Payment of loan fees and debt issuance cost	(1,526		)	—
Payment of contingent consideration in business acquisitions	(900		)	—
Payments of capital lease obligations	—			(179		)
Net cash provided by financing activities	8,525			11,136
Net change in cash, cash equivalents and restricted cash	(12,745		)	9,092
Cash, cash equivalents and restricted cash:
Beginning of period	34,302			18,548
End of period	$	21,557		$	27,640
Supplemental cash flow information:
Cash paid for interest	$	3,426		$	3,031
Supplemental schedule of non-cash investing and financing activities:
Issuance of common stock upon warrant exercise	$	59,907		$	—
Issuance of common stock upon conversion of debt instruments	$	—		$	121
Common stock subscription payable	$	520		$	—

See Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents 3 Financial Statement Index

REMARK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1. ORGANIZATION AND BUSINESS

Organization and Business

Remark Holdings, Inc. and subsidiaries (“Remark”, “we”, “us”, or “our”), which include its consolidated variable-interest entities (“VIEs”), are primarily technology-focused. Our KanKan data intelligence platform serves as the basis for our development and deployment of artificial-intelligence-based solutions for businesses in many industries and geographies. We also own and operate digital media properties across multiple verticals, such as travel and entertainment and young adult lifestyle, that deliver relevant, dynamic content that attracts and engages users on a global scale. Our common stock is listed on the Nasdaq Capital Market under the ticker symbol MARK.

Liquidity Considerations

During the nine months ended September 30, 2018, and in each fiscal year since our inception, we have incurred net losses which have resulted in an accumulated deficit of $314.1 million as of September 30, 2018. Additionally, our operations have historically used more cash than they have provided. As of September 30, 2018, our cash and cash equivalents balance was $9.9 million, and we had a negative working capital balance of $55.0 million. Our revenue during the nine months ended September 30, 2018 was $56.8 million.

On July 2, 2018, we entered into a common stock purchase agreement (the “2018 Aspire Purchase Agreement”) with Aspire Capital Fund, LLC (“Aspire Capital”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Aspire Capital to purchase up to an aggregate of $30.0 million of shares of our common stock over the 30-month term of the 2018 Aspire Purchase Agreement. The 2018 Aspire Purchase Agreement, which we describe in more detail in Note 14, terminated and replaced the common stock purchase agreement we had entered into with Aspire Capital on November 9, 2016 (the “2016 Aspire Purchase Agreement”).

Concurrently with entering into the 2018 Aspire Purchase Agreement, we also entered into a registration rights agreement with Aspire Capital, in which we agreed to file with the Securities and Exchange Commission (the “SEC”) one or more registration statements, as necessary, and to the extent permissible and subject to certain exceptions, to register under the Securities Act of 1933, as amended, the sale of the shares of our common stock that may be issued to Aspire Capital under the 2018 Aspire Purchase Agreement. We have filed with the SEC a prospectus supplement to our effective shelf Registration Statement on Form S-3 (File No. 333-225448) registering all of the shares of common stock that may be offered to Aspire Capital from time to time under the 2018 Aspire Purchase Agreement. As of September 30, 2018, Aspire Capital has purchased $10.0 million of shares of our common stock under the 2018 Aspire Purchase Agreement.

During the nine months ended September 30, 2017, we issued a total of 3,052,897 shares of our common stock to investors in exchange for approximately $8.3 million in cash, including a $5.0 million issuance to Aspire. We did not issue our common stock in private sales during the nine months ended September 30, 2018, although we did receive cash from the issuances to Aspire Capital and from stock option exercises.

We are a party to a financing agreement dated as of September 24, 2015 (as amended, the “Financing Agreement”) with certain of our subsidiaries as borrowers (together with Remark, the “Borrowers”), certain of our subsidiaries as guarantors (the “Guarantors”), the lenders from time to time party thereto (the “Lenders”) and MGG Investment Group LP, in its capacity as collateral agent and administrative agent for the Lenders (“MGG”), pursuant to which the Lenders extended credit to the Borrowers consisting of a term loan in the aggregate principal amount of $35.5 million (the “Loan”). The terms of the Financing Agreement, the amendments thereto, and related documents effective as of September 30, 2018 are described in Note 11, which also describes our ongoing event of default relating to our failure to make certain required payments under the Financing Agreement as well as certain other ongoing events of default.

We cannot provide assurance that revenue generated from our businesses will be sufficient to sustain our operations in the long term (including but not limited to payment of the amounts required under the Financing Agreement); therefore, we are actively evaluating strategic alternatives including the potential sale of certain non-core assets, investment assets and operating businesses. However, we may need to obtain additional capital through equity financing or debt financing. Conditions in the debt and equity markets, as well as the volatility of investor sentiment regarding macroeconomic and microeconomic conditions, will play primary roles in determining whether we can successfully obtain additional capital. Additionally, pursuant

Table of Contents 4 Financial Statement Index

to the Financing Agreement, we are subject to certain limitations on our ability and the ability of our subsidiaries to, among other things, incur additional debt and transfer, sell or otherwise dispose of assets, without the consent of the Lenders. We cannot be certain that we will be successful at raising additional capital.

A variety of factors, many of which are outside of our control, affect our cash flow; those factors include regulatory issues, competition, financial markets and other general business conditions. Based on financial projections, we believe that we will be able to meet our ongoing requirements for at least the next 12 months following this report (including the amounts required under the Financing Agreement, based on the current status of discussions with the Lenders regarding ongoing events of default) with existing cash, cash equivalents and cash resources, and based on the probable success of one or more of the following plans:

• monetize existing assets

• work with our creditors to modify existing arrangements or refinance our debt

• obtain additional capital through equity issuances, including but not limited to equity issuances to Aspire Capital under its existing purchase commitment (which equity issuances may dilute existing stockholders)

However, projections are inherently uncertain and we cannot assure you that we will generate sufficient income and cash flow to meet all of our liquidity requirements.

Comparability

We reclassified an amount in the December 31, 2017 Consolidated Balance Sheet to conform to the current presentation as of September 30, 2018. Specifically, we reclassified liabilities associated with gift cards and similar items from contract liability to other current liabilities as we continue to clarify our disclosures related to the newly-adopted revenue standard.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We prepared the accompanying unaudited Condensed Consolidated Balance Sheet as of September 30, 2018, with the audited Consolidated Balance Sheet amounts as of December 31, 2017 presented for comparative purposes, and the related unaudited Condensed Consolidated Statements of Operations and Statements of Cash Flows in accordance with the instructions for Form 10-Q. In compliance with those instructions, we have omitted certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), though management believes the disclosures made herein are sufficient to ensure that the information presented is not misleading.

Our results of operations and our cash flows as of the end of the interim periods reported herein do not necessarily indicate the results we may experience for the remainder of the year or for any other future period.

Management believes that we have included all adjustments (including those of a normal, recurring nature) considered necessary to fairly present our unaudited Condensed Consolidated Balance Sheet as of September 30, 2018, our unaudited Condensed Consolidated Statements of Operations and our unaudited Condensed Consolidated Statements of Cash Flows for all periods presented. You should read our unaudited condensed consolidated interim financial statements and footnotes in conjunction with our consolidated financial statements and footnotes included within the Annual Report on Form 10-K (the “2017 Form 10-K”).

Consolidation

We include all of our subsidiaries, which include the VIEs for which we are the primary beneficiary, in our consolidated financial statements, eliminating all significant intercompany balances and transactions during consolidation.

Table of Contents 5 Financial Statement Index

To comply with China’s laws which restrict foreign ownership of entities that operate within industries deemed sensitive by the Chinese government, we employ what we believe is a commonly-used organizational structure consisting of a wholly-foreign owned enterprise (“WFOE”) and the VIEs to operate our KanKan business. We own 100% of the equity of the WFOE, while the VIEs are companies formed in China under local laws which are owned by members of our management team. We funded the registered capital and operating expenses of the VIEs by extending loans to the VIEs’ owners. We are the primary beneficiary of the VIEs because the relationships between the VIEs and our WFOE are governed by contractual agreements, including in each case an Exclusive Call Option Agreement, an Exclusive Business Cooperation Agreement, a Proxy Agreement and an Equity Pledge Agreement, which give us control over the operations of the VIEs.

Use of Estimates

We prepare our consolidated financial statements in conformity with GAAP. While preparing our financial statements, we make estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and accompanying notes. Accordingly, actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, intangible assets, the useful lives of property and equipment, stock-based compensation, the fair value of the warrant liability, income taxes, inventory reserve and purchase price allocation, among other items.

Changes to Significant Accounting Policies - Revenue Recognition

On January 1, 2018, we adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and all subsequent amendments (collectively “ASC 606”) using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of Accumulated deficit (the amount was not material). We have not retrospectively adjusted the information for the comparative period reported herein, which information we continue to report under the accounting standards in effect for that period. The amounts of revenue, accounts receivable and contract balances that we reported under ASC 606 as of and for the three and nine months ended September 30, 2018, were not materially different than the amounts we would have reported under the accounting standards previously in effect.

We recognize revenue when we transfer control of the promised goods or services to our customers, and we recognize an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.

When customers pay us prior to when we satisfy our obligation to transfer control of promised goods or services, we record the amount that reflects the consideration to which we expect to be entitled as a contract liability until such time as we satisfy our performance obligation. As a result of our adoption of ASC 606, the line item previously labeled “Deferred revenue” on our condensed consolidated balance sheets is now labeled “Contract liability”; the comparative period balance as reported herein did not change as a result of our application of the modified retrospective transition approach.

For our contracts with customers, we only extend short-term credit policies to our customers, generally of 90 days or less.

We record the incremental costs of obtaining contracts as an expense when incurred, because such costs would otherwise be amortized over a period of less than one year if capitalized.

Transaction Services

Our Travel & Entertainment segment generates our transaction services revenue, most of which results from the use of the merchant model under which we remain the merchant of record, but various service providers with whom we maintain relationships are ultimately responsible for delivering the underlying services for which our customers transact, such as lodging, air travel, entertainment, or tours. Our obligation to our customers is to arrange for these service providers to provide the underlying services, and we satisfy our obligation at the point in time that these service providers begin to provide the underlying service (e.g., upon the check-in date for lodging stays, upon the show/performance date for entertainment transactions, etc.). Though we are the merchant of record for transactions in which other entities provide the ultimate service, under current accounting guidance we are an agent in such transactions; therefore, we recognize revenue from transactions

Table of Contents 6 Financial Statement Index

under the merchant model on a net basis (i.e., the amount we bill to our customers less the amounts we pay to the service providers).

To a lesser extent, we provide tour services directly to our customers. Our obligation to provide such services is satisfied at the point in time that we finish providing the tour, and we recognize the resulting revenue on a gross basis when our obligation is satisfied.

Our customers pay at the time the original transaction occurs via our sales channels, primarily the Vegas.com website and mobile application. Because the original transaction date almost always precedes the date that our performance obligation is satisfied, we record a Contract liability for the amount of consideration received (net of amounts owed to suppliers). In general, we satisfy most of our performance obligations within approximately three to four months from the original transaction date, and substantially all performance obligations are satisfied within one year from the original transaction date.

Data Platform Services

Our KanKan business generates our data platform services revenue. One of the business’s product offerings involves utilizing our proprietary data intelligence software to provide high-quality loan candidates to our customers, which are companies that help to market the loan products of banks and other lending institutions in China to potential loan candidates. We earn a commission for this service, which is deemed earned and is recognized at the point in time at which the related loan is issued to the candidate by a lending institution supporting the loan product being promoted by our customer. The amount of commission we recognize is determined by multiplying the commission rate specified in the applicable contract by the amount of the loan issued to the candidate.

Under contracts with two of our customers, we are required to reimburse those customers for as much as 10% of the commissions paid under the contract if the total amount of the defaults across all of the loans issued and outstanding with respect to such contract exceeds an established threshold (the “Reimbursement Obligation”). Such contracts also require us to maintain a cash deposit with those customers to support the Reimbursement Obligation, and they permit the customer to deduct the required amount of any reimbursement from such deposit. We no longer provide new candidates to those customers under those particular contracts, and none of our remaining contracts related to providing loan candidates to customers include the Reimbursement Obligation or similar terms, so the maximum amount of our liability with respect to the Reimbursement Obligation as of September 30, 2018 and going forward is $0.5 million, Further, as of September 30, 2018, the amount we have on deposit with the customers under those contracts to support the Reimbursement Obligation exceeds such maximum liability with respect to the Reimbursement Obligation, and we have not reimbursed any customer any amount of commissions paid under these contracts, nor are we required to do so because the total amount of the defaults has not exceeded the established threshold.

We have determined that the Reimbursement Obligation does not fall within the scope of ASC 606 and that we should account for it as a guarantee for accounting purposes using other GAAP. We recorded an initial liability, reported in Accrued expense and other current liabilities in our consolidated balance sheet, equal to our maximum potential Reimbursement Obligation, an amount which approximated fair value. As we are released from an amount of the Reimbursement Obligation, we record the amount of reduction in the Reimbursement Obligation as data platform services revenue. We have not recorded material amounts of revenue resulting from being released from the Reimbursement Obligation.

We also generate revenue by creating and delivering integrated artificial-intelligence-based solutions for clients. Under this type of contract, we provide a single, continuous service to clients who control the assets as we create them. Accordingly, we recognize the revenue over the period of time during which we provide the service.

Advertising and Other

Our Travel & Entertainment segment generates the majority of our advertising revenue, and we report the remaining amount of advertising revenue in Corporate Entity and Other in our segment information. We primarily generate advertising revenue from the use of sponsored links and display advertising placed directly on our website pages. Substantially all of our advertising contracts with customers are completed within one year or less.

Table of Contents 7 Financial Statement Index

In click-through advertising contracts with customers, our obligation is to place our customers’ interactive ads on our websites for a specified period of time. We recognize revenue from click-through advertising at the point in time at which visitors to our websites click through the ads to our advertising customers’ websites. Any variability regarding contract consideration is resolved within the reporting period.

Some of our advertising contracts with customers require us to place our advertising customers’ static display ads on our websites for a specified period of time or in a specific location on our websites, or both. We recognize revenue from such advertising placement arrangements either over time (ratably over the contract term) or based upon the delivery of advertising impressions, depending upon the terms of the contract.

We also generate revenue from other sources, such as from e-commerce activity in which we sell goods to our customers, or media production which involves us producing video or Internet-based content for our customers. We recognize the revenue from these contracts at the point in time when we transfer control of the good sold to the customer or when we deliver the promised media content.

Other than as noted above, we have made no changes to our significant accounting policies as reported in our 2017 Form 10-K.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, Leases (Topic 842), which changes GAAP primarily by requiring lessees to recognize, at lease commencement, a lease liability representing the present value of the lessee’s obligation to make lease payments, and a right-of-use asset representing the lessee’s right to use (or control the use of) a specified asset during the lease term, for leases classified as operating leases. For us, the amendments in ASU 2016-02 will become effective on January 1, 2019. We are designing appropriate internal controls and modifying key processes to allow for the implementation of ASU 2016-02, which we anticipate will have a material impact on our balance sheet, as we will be recording right-of-use assets and lease liabilities related to our operating leases, including our leases for office space. We do not anticipate that application of ASU 2016-02 will have a material impact on our statement of operations or cash flows.

We have reviewed all recently issued accounting pronouncements. The pronouncements that we have already adopted did not have a material effect on our financial condition, results of operations, cash flows or reporting thereof, and except as otherwise noted above, we do not believe that any of the pronouncements that we have not yet adopted will have a material effect upon our financial condition, results of operations, cash flows or reporting thereof.

NOTE 3. REVENUE

We are not required to include disclosures related to remaining performance obligations because substantially all of our contracts with customers have an original expected duration of one year or less.

Disaggregation of Revenue

The following table presents a disaggregation of our revenue by major category for the three and nine months ended September 30, 2018 (in thousands):

Revenue category	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Transaction services	$	16,619	$	46,272
Data platform services	1,039		5,591
Advertising and other	1,693		4,925
Revenue	$	19,351	$	56,788

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Significant Judgments

When accounting for revenue in accordance with ASC 606, we make certain judgments, such as whether we act as a principal or as an agent in transactions or whether our contracts with customers fall within the scope of ASC 606, that affect the determination of the amount and timing of our revenue from contracts with customers. Based on the current facts and circumstances related to our contracts with customers, none of the judgments we make involve an elevated degree of qualitative significance or complexity such that further disclosure is warranted in terms of their potential impact on the amount and timing of our revenue.

Contract Assets and Contract Liabilities

We do not currently generate material contract assets. Other than changes resulting from routine business activity, the balance of our Contract liability did not change significantly during the nine months ended September 30, 2018. We recognized revenue of $3.1 million during the nine months ended September 30, 2018, which was included in the beginning balance of Contract liability at January 1, 2018.

NOTE 4. FAIR VALUE MEASUREMENTS

Liabilities Related to Warrants to Purchase Common Stock

At the end of each reporting period, we use the Monte Carlo Simulation model to estimate and report the fair value of liabilities related to certain outstanding warrants to purchase our common stock that are subject to potential anti-dilution adjustments or that contain put options or call options. Our outstanding liability-classified warrants include the warrants we issued or that we are obligated to issue as part of the consideration for our acquisition (the “CBG Acquisition”) of assets of China Branding Group Limited (“CBG”) in September 2016 (the “CBG Acquisition Warrants”) and warrants we issued as a result of an amendment to the Financing Agreement related to the acquisition (the “CBG Financing Warrants”).

The following table presents the quantitative inputs, which we classify in Level 3 of the fair value hierarchy, used in estimating the fair value of the warrants:

	September 30,		December 31,
	2018		2017
CBG Financing Warrants
Expected volatility	60.00	%	60.00	%
Risk-free interest rate	2.81	%	1.96	%
Expected remaining term (years)	1.98		2.73
CBG Acquisition Warrants
Expected volatility	60.00	%	60.00	%
Risk-free interest rate	2.94	%	2.25	%
Expected remaining term (years)	4.97		5.72

In addition to the quantitative assumptions above, we also consider whether we would issue additional equity and, if so, the price per share of such equity. At September 30, 2018, we estimated that one future equity financing event would potentially occur within the subsequent twelve months.

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Our estimate of expected volatility and our stock price tend to have the most significant impact on the estimated fair value of the CBG Financing Warrants and the CBG Acquisition Warrants. If we added or subtracted five percentage points with regard to our estimate of expected volatility, or if our stock price increased or decreased by five percent, our estimates of fair value would change approximately as follows (in thousands):

Change in volatility	Increase		Decrease
CBG Financing Warrants	$	275	$	275
CBG Acquisition Warrants	805		865
Change in stock price
CBG Financing Warrants	$	245	$	245
CBG Acquisition Warrants	345		405

The following table presents the change in the liability balance associated with our liability-classified warrants (in thousands):

	Nine Months Ended September 30,			Year Ended December 31,
	2018			2017
Balance at beginning of period	$	89,169		$	25,030
Warrant exercises	(59,907		)	—
Increase (decrease) in fair value	(22,190		)	64,139
Balance at end of period	$	7,072		$	89,169

At January 1, 2018, our outstanding liability-classified warrants included warrants we issued in connection with our acquisition of all of the outstanding equity interests in Vegas.com, LLC in September 2015 (the “VDC Acquisition”) and the financing related thereto (the “VDC Acquisition Warrants” and the “VDC Financing Warrants”, respectively). On January 8, 2018, holders of VDC Acquisition Warrants with respect to 2,416,996 shares of our common stock exercised such warrants. Because the VDC Acquisition Warrants provided that such warrants were exercisable on a cashless basis only, we issued a total of 750,102 shares of common stock in settlement of such warrants without receiving any proceeds from the exercise thereof.

On January 10, 2018, we exercised our right to exercise all remaining VDC Acquisition Warrants and VDC Financing Warrants (which right became effective when the closing price of our common stock reached $14.00), exercising VDC Acquisition Warrants with respect to 6,184,414 shares of our common stock and VDC Financing Warrants with respect to 3,117,148 shares of our common stock. Because the VDC Acquisition Warrants and VDC Financing Warrants provided that such warrants were exercisable on a cashless basis only, we issued a total of 2,236,915 and 1,385,396 shares of common stock to the holders of the VDC Acquisition Warrants and the VDC Financing Warrants, respectively, in settlement of such warrants without receiving any proceeds from the exercise thereof.

Contingent Consideration Issued in Business Acquisition

We used the discounted cash flow valuation technique to estimate the fair value of the liability related to certain cash payments stipulated in the VDC Acquisition that were contingent upon the performance of Vegas.com in the years ended December 31, 2016 and 2017, and are contingent upon the performance of Vegas.com in the year ending December 31, 2018 (the “Earnout Payments”). The significant unobservable inputs that we used, which we classify in Level 3 of the fair value hierarchy, were projected earnings before interest, taxes, depreciation and amortization (“EBITDA”), the probability of achieving certain amounts of EBITDA, and the rate used to discount the liability.

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The following table presents the change during the nine months ended September 30, 2018 in the balance of the liability associated with the Earnout Payments (in thousands):

Balance at beginning of period	$	1,930
Payments	(1,000		)
Change in fair value of contingent consideration (included in Other loss)	50
Balance at end of period	$	980

On the Condensed Consolidated Balance Sheet, we included the liability for contingent consideration as a component of Accrued expense and other liabilities.

NOTE 5. RESTRICTED CASH

Regarding our restricted cash, $2.25 million relates to the Financing Agreement and secures our obligations under that agreement (see Note 17 for more information regarding this amount). The restriction on the cash related to the Financing Agreement will not be released until we have repaid all of our obligations under the Financing Agreement, unless we obtain the written authorization of the Lenders. The remaining amount of our restricted cash relates to the Letter of Credit Facility Agreement we have in place to satisfy the requirements of several of the vendors for whom we sell products (hotel rooms, air travel, show tickets, et cetera) through our online outlets. By contract, certain vendors require letters of credit as a means of securing our payment to them of amounts related to the sales we make on their behalf. We renew the letter of credit facility annually in May, and the restrictions on the cash related to the letters of credit will remain to the extent we continue to enter into contracts requiring the security of letters of credit.

The following table provides a reconciliation of the amounts separately reported as Cash and cash equivalents and Restricted cash on our consolidated balance sheets with the single line item reported on our consolidated statements of cash flows as Cash, cash equivalents and restricted cash (in thousands):

	September 30, 2018		December 31, 2017
Cash and cash equivalents	$	9,902	$	22,632
Restricted cash reported in current assets	11,655		11,670
Total cash, cash equivalents and restricted cash	$	21,557	$	34,302

NOTE 6. INVESTMENT IN UNCONSOLIDATED AFFILIATES

In 2009, we co-founded a U.S.-based venture, Sharecare, to build a web-based platform that simplifies the search for health and wellness information. The other co-founders of Sharecare were Dr. Mehmet Oz, HARPO Productions, Discovery Communications, Jeff Arnold and Sony Pictures Television. As of September 30, 2018, we owned approximately five percent of Sharecare’s issued stock and maintained representation on its Board of Directors.

During June 2018, one of our consolidated VIEs acquired a 20% interest in Beijing All-in-one Cloud Net Technology, Co. Ltd. (“AIO”), a Chinese technology company which provides consulting and data services to the Chinese film industry, in exchange for $1.0 million, a portion of which was paid by September 30, 2018, and a license to use our proprietary KanKan data intelligence platform in China. Based on our evaluation of the facts and circumstances related to the transaction, we determined that we will account for such transaction using the equity method of accounting. We will recognize our equity in the net earnings or losses relating to AIO on a one-quarter reporting lag in our Consolidated Statements of Operations and Comprehensive Income (Loss). For the three months ended September 30, 2018, the amount of our equity in AIO’s net earnings for their quarter ended June 30, 2018 was not material.

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NOTE 7. PREPAID EXPENSE AND OTHER CURRENT ASSETS

The following table presents the components of prepaid expense and other current assets (in thousands):

	September 30, 2018		December 31, 2017
Prepaid expense	$	2,918	$	2,036
Deposits	3,487		1,960
Inventory, net	744		234
Other current assets	1,561		1,288
Total	$	8,710	$	5,518

NOTE 8. PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands, except estimated lives):

	Estimated Life (Years)	September 30, 2018			December 31, 2017
Vehicles	5	$	1,350		$	447
Computers and equipment	2 - 12	1,978			1,635
Furniture and fixtures	2 - 9	221			220
Software	3 - 5	21,719			20,773
Software development in progress		2,010			1,935
Leasehold improvements	1 - 10	569			328
Total property, equipment and software		$	27,847		$	25,338
Less accumulated depreciation		(16,217		)	(11,951		)
Total property, equipment and software, net		$	11,630		$	13,387

For the nine months ended September 30, 2018 and 2017, depreciation (and amortization of software) expense was $4.4 million and $4.1 million, respectively.

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NOTE 9. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table summarizes intangible assets by category (in thousands):

	September 30, 2018							December 31, 2017
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Finite-lived intangible assets
Domain names	$	2,000	$	(1,358	)	$	642	$	2,591	$	(1,663	)	$	928
Customer relationships	23,186		(13,509		)	9,677		23,486		(10,539		)	12,947
Media content and broadcast rights	2,485		(1,309		)	1,176		2,485		(936		)	1,549
Acquired technology	578		(527		)	51		578		(461		)	117
Other intangible assets	68		(68		)	—		68		(68		)	—
	$	28,317	$	(16,771	)	$	11,546	$	29,208	$	(13,667	)	$	15,541
Indefinite-lived intangible assets
Trademarks and trade names	$	8,276				$	8,276	$	8,276				$	8,276
License to operate in China	128					128		129					129
Total intangible assets	$	36,721				$	19,950	$	37,613				$	23,946

Total amortization expense was $3.8 million and $4.1 million for the nine months ended September 30, 2018 and 2017, respectively.

The following table summarizes the changes in goodwill during the nine months ended September 30, 2018 and the year ended December 31, 2017 (in thousands):

	Nine Months Ended September 30, 2018						Year Ended December 31, 2017
	Travel & Entertainment Segment		Corporate Entity and Other Business Units		Total		Travel & Entertainment Segment		Corporate Entity and Other Business Units			Total
Balance at beginning of period	$	18,514	$	1,585	$	20,099	$	18,514	$	8,249		$	26,763
Business acquisitions	—		—		—		—		2,116			2,116
Impairment of goodwill	—		—		—		—		(8,796		)	(8,796		)
Other	—		—		—		—		16			16
Balance at end of period	$	18,514	$	1,585	$	20,099	$	18,514	$	1,585		$	20,099

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The amount in the table above related to business acquisitions in the year ended December 31, 2017 represents measurement-period adjustments related to the CBG Acquisition.

NOTE 10. INCOME TAX

Our effective tax rate (“ETR”) from continuing operations was 9.1% for the nine months ended September 30, 2018. The quarterly ETR has not significantly differed from our historical annual ETR. The ETR primarily results from recording a benefit associated with a partial valuation allowance release during 2018. The release was affected by the Tax Act, as described below, which changed the carryforward period of net operating losses for U.S. federal tax purposes from 20 years to an indefinite period.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), which makes broad and complex changes to the U.S. tax code that will affect the 2018 tax year.

We have not completed our accounting for the Tax Act. As noted in our 2017 Form 10-K:

• We were able to reasonably estimate certain effects and, therefore, recorded provisional adjustments associated with the impact on deferred tax assets and deferred tax liabilities from reduction of the U.S. federal corporate tax rate.

• We were not yet able to reasonably estimate the effects for global intangible low-taxed income (GILTI) and deemed repatriation taxes. Therefore, no provisional adjustments were recorded.

NOTE 11. DEBT

Short-Term Debt

On April 12, 2017, we issued a short-term note payable in the principal amount of $3.0 million to a private lender in exchange for cash in the same amount. The agreement, which does not have a stated interest rate, required us to repay the note plus a fee of $115 thousand on the maturity date of June 30, 2017. The note is accruing interest at $500 per day on the unpaid principal until we repay the note in full.

Other Debt

The following table presents long-term debt (in thousands) as of:

	September 30, 2018			December 31, 2017
Loan due September 2020	$	35,500		$	35,500
Unamortized original issue discount	(1,660		)	(836		)
Unamortized debt issuance cost	(21		)	(79		)
Carrying value of Loan	33,819			34,585
Exit fee payable in relation to Loan	3,500			3,500
Total long-term debt	$	37,319		$	38,085
Less: current portion	(37,319		)	(38,085		)
Long-term debt, less current portion and net of debt issuance cost	$	—		$	—

On September 24, 2015, we entered into the Financing Agreement, pursuant to which the Lenders provided us with the $27.5 million Loan. We entered into Amendment No. 1 to Financing Agreement on September 20, 2016 which, among other

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changes, increased the Loan by $8.0 million to a total aggregate principal amount of $35.5 million. As of September 30, 2018, after amendments and other events described below, the Loan bore interest at three-month LIBOR (with a floor of 1%) plus 11% per annum, payable monthly, and had a maturity date of September 30, 2020. As of September 30, 2018, the applicable interest rate on the Loan was approximately 13% per annum.

In connection with the Financing Agreement, we also entered into a security agreement dated as of September 24, 2015 (the “Security Agreement”) with the other Borrowers and the Guarantors for the benefit of MGG, as collateral agent for the Secured Parties referred to therein, to secure the obligations of the Borrowers and the Guarantors under the Financing Agreement. The Security Agreement provides for a first-priority lien on, and security interest in, all assets of Remark and our subsidiaries, subject to certain exceptions.

On October 25, 2017, we entered into Amendment No. 2 and Waiver and Consent to Financing Agreement, pursuant to which the Lenders waived specified events of default under the Financing Agreement occurring prior to January 1, 2018, including but not limited to events of default resulting from our non-compliance with covenants requiring minimum consolidated EBITDA of Remark and its subsidiaries and value of our assets. The Lenders also waived the covenant related to restricted cash balance through September 19, 2017.

On December 5, 2017, we entered into Amendment No. 3 to Financing Agreement pursuant to which the Lenders agreed, among other things, to modify certain of our covenants under the Financing Agreement, including (i) replacing the covenant regarding consolidated EBITDA of Remark and our subsidiaries with a covenant regarding consolidated gross revenue of our subsidiaries engaged in the operation of our KanKan business, (ii) modifying the covenants regarding consolidated EBITDA of Vegas.com and its subsidiaries and the value of certain of our assets, and (iii) increasing the amount we are permitted to invest in our non-U.S. subsidiaries operating our KanKan business, subject to certain conditions.

On April 30, 2018, we entered into Amendment No. 4 and Waiver to Financing Agreement (the “Fourth Financing Amendment”), which provided for, among other things, (i) a reduction in the interest rate on the remaining amount outstanding under the Financing Agreement to three-month LIBOR plus 8.5% per annum, (ii) an extension of the maturity date under the Financing Agreement to September 30, 2020, (iii) a modification of certain of our covenants under the Financing Agreement, including covenants regarding capital expenditures, minimum value of certain of our assets, consolidated EBITDA of Vegas.com and its subsidiaries, and revenue generated by KanKan, (iv) an increase in the amount we are permitted to invest in our non-U.S. subsidiaries operating our KanKan business (v) a waiver by the Lenders of certain events of default under the Financing Agreement and (vi) prepayment by the Borrowers of $8.0 million principal amount outstanding and $3.5 million of exit fees under the Financing Agreement within 60 days following the date of the Fourth Financing Amendment. In consideration for the Lenders’ entry into the Fourth Financing Amendment, we also paid a closing fee of approximately $413 thousand.

Effective as of June 29, 2018, we entered into Amendment No. 5 and Waiver to Financing Agreement (the “Fifth Financing Amendment”) pursuant to which the Lenders agreed, among other things, to extend the due date of the prepayments required by the Fourth Financing Amendment for up to three months, provided that we made extension payments on the first business day of each such month. The extension payments were $250,000 for each of the first two months and $500,000 for the third month, with the final extension period ending on September 28, 2018. We made the extension payments required by the Fifth Financing Amendment to extend the due date of the prepayments required by the Fourth Financing Amendment to September 28, 2018; however, we failed to prepay the $8.0 million principal amount and $3.5 million of exit fees due on such date. Such failure to make the required payments constitutes an event of default under the Financing Agreement and as a result, from September 28, 2018, the Loan bore interest at three-month LIBOR plus 11.0%, the default interest rate.

The Financing Agreement also contains certain affirmative and negative covenants (including, but not limited to, financial covenants with respect to quarterly EBITDA levels and the value of our assets). As of September 30, 2018, we were not in compliance with the covenant under the Financing Agreement requiring minimum revenue from our KanKan business during the trailing nine-month period ended September 30, 2018 of $12.6 million, as actual revenue from our KanKan business during such period was $5.6 million. Our non-compliance with such covenant constitutes an event of default under the Financing Agreement.

As a result of our events of default under the Financing Agreement, the Lenders may declare our obligations under the Financing Agreement, including all unpaid principal and interest, due and payable immediately and exercise such other rights available to them under the Financing Agreement, which could have a material adverse effect on our financial condition. We

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have classified the debt as current in the accompanying balance sheet. See Note 17 for more information regarding subsequent events relating to the Financing Agreement.

NOTE 12. OTHER LIABILITIES

The following table presents the components of other liabilities (in thousands):

	September 30, 2018		December 31, 2017
Deferred rent	$	1,650	$	1,820
Early lease termination liability	1,242		—
Contingent consideration liability, net of current portion	—		940
Deferred tax liability, net	369		741
Other	35		—
Total	$	3,296	$	3,501

During the first quarter of 2018, we determined that we would no longer use certain leased office space and, as a result, we sublet the majority of such office space to third parties. As a result of our decision, we recognized $2.3 million of unallocated rent expense in the corporate entity, and an associated liability for early lease termination. The current portion of the liability is recorded in Accrued expense and other current liabilities, with the long-term portion recorded in Other liabilities (see table above).

The following table presents the change in the liability balance related to the early lease termination (in thousands):

	Nine Months Ended September 30,
	2018
Balance at beginning of period	$	—
Establishment of early lease termination liability	2,295
Payment of rent and other costs	(798		)
Receipt of amounts due under subleases	95
Other	16
Balance at end of period	$	1,608

NOTE 13. COMMITMENTS AND CONTINGENCIES

We are neither a defendant in any material pending legal proceeding nor are we aware of any material threatened claims against us; therefore, we have not accrued any contingent liabilities, exclusive of the liability for the Earnout Payment related to the VDC Acquisition.

NOTE 14. STOCKHOLDERS' EQUITY AND NET LOSS PER SHARE

Equity Issuances

On July 2, 2018, we entered into the 2018 Aspire Purchase Agreement with Aspire Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Aspire Capital to purchase up to an aggregate of $30.0 million of shares of our common stock over the 30-month term of the 2018 Aspire Purchase Agreement.

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The 2018 Aspire Purchase Agreement replaced the 2016 Aspire Purchase Agreement, which was terminated under the terms of the 2018 Aspire Purchase Agreement.

Under the 2018 Aspire Purchase Agreement, on any trading day over the 30-month term of such agreement, we have the right, in our sole discretion, to present Aspire Capital with a purchase notice (each, a “Purchase Notice”) directing Aspire Capital to purchase up to 50,000 shares of our common stock per business day, up to an aggregate of $30.0 million under the 2018 Aspire Purchase Agreement, at a per share price (the “Purchase Price”) equal to the lesser of (i) the lowest sale price of our common stock on the purchase date or (ii) the arithmetic average of the three lowest closing sale prices for our common stock during the 10 consecutive trading days ending on the trading day immediately preceding the purchase date.

The aggregate purchase price payable by Aspire Capital on any one purchase date may not exceed $250,000, unless otherwise mutually agreed. The parties may mutually agree to increase the number of shares of our common stock that may be purchased per trading day pursuant to the terms of the 2018 Aspire Purchase Agreement to 3,000,000 shares.

In addition, on any trading day on which we submit a Purchase Notice to Aspire Capital to purchase at least 50,000 shares, we also have the right, in our sole discretion, to present Aspire Capital with a volume-weighted average price purchase notice (each, a “VWAP Purchase Notice”) directing Aspire Capital to purchase an amount of our common stock equal to up to 30% of the aggregate shares of our common stock traded on the next trading day (the “VWAP Purchase Date”), subject to a maximum number of shares we may determine, and a minimum purchase price threshold equal to the greater of (i) 80% of the closing price of our common stock on the business day immediately preceding the VWAP Purchase Date or (ii) a higher price that may be determined by us. The purchase price per share pursuant to such VWAP Purchase Notice will be equal to the lesser of (i) the closing sale price of our common stock on the VWAP Purchase Date, or (ii) 97% of the volume-weighted average price for our common stock traded on its principal market on the VWAP Purchase Date, subject to certain exceptions.

We may deliver multiple Purchase Notices and VWAP Purchase Notices to Aspire Capital from time to time during the term of the Purchase Agreement, so long as the most recent purchase has been completed.

In addition, Aspire Capital will not be required to buy any shares of our common stock pursuant to a Purchase Notice that is received by Aspire Capital on any trading day on which the last closing trade price of our common stock is below $1.00. There are no trading volume requirements or restrictions under the 2018 Aspire Purchase Agreement, and we will control the timing and amount of sales of our common stock to Aspire Capital. Aspire Capital has no right to require any sales by us, but is obligated to make purchases from us as directed by us in accordance with the 2018 Aspire Purchase Agreement. There are no limitations on use of proceeds, financial or business covenants, restrictions on future fundings, rights of first refusal, participation rights, penalties or liquidated damages in the 2018 Aspire Purchase Agreement. The 2018 Aspire Purchase Agreement may be terminated by us at any time, at our discretion, without any cost to us. Aspire Capital has agreed that neither it nor any of its agents, representatives and affiliates will engage in any direct or indirect short-selling or hedging our common stock during any time prior to the termination of the 2018 Aspire Purchase Agreement.

The 2018 Aspire Purchase Agreement provides that the total number of shares that may be issued pursuant to such agreement is limited to 6,629,039 shares (the “2018 Aspire Exchange Cap”), or 19.99% of our shares of common stock outstanding as of the date of the 2018 Aspire Purchase Agreement, unless stockholder approval is obtained in accordance with the rules of the Nasdaq Stock Market. If stockholder approval is not obtained, such limitation will not apply after the 2018 Aspire Exchange Cap is reached if at all times thereafter the average purchase price paid for all shares issued under the 2018 Aspire Purchase Agreement is equal to or greater than $3.91 per share. The 2018 Aspire Purchase Agreement also provides that at no time will Aspire Capital (together with its affiliates) beneficially own more than 19.99% of our outstanding shares of common stock.

As of September 30, 2018, we have issued to Aspire Capital a total of 3,308,812 shares of our common stock under the 2018 Aspire Purchase Agreement, including 3,095,238 shares purchased by Aspire Capital for an aggregate purchase price of $10.0 million, and 213,574 shares issued to Aspire Capital upon executing the 2018 Aspire Purchase Agreement. During the nine months ended September 30, 2018, we also issued 381,445 shares of our common stock as a result of stock option exercises, from which we obtained approximately $1.0 million as well as the shares of our common stock in settlement of the warrants as described in Note 4.

During the nine months ended September 30, 2017, we issued a total of 3,052,897 shares of our common stock to investors in exchange for approximately $8.3 million in cash, including a $5.0 million issuance to Aspire. We did not issue our common stock in private sales during the nine months ended September 30, 2018.

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Stock-Based Compensation 

We are authorized to issue equity-based awards under our 2010 Equity Incentive Plan, our 2014 Incentive Plan, and our 2017 Incentive Plan, each of which our stockholders have approved. We also award cash bonuses (“China Cash Bonuses”) to our employees in China, which grants are not subject to a formal incentive plan and which can only be settled in cash. We grant such awards to attract, retain and motivate eligible officers, directors, employees and consultants. Under each of the plans, we have granted shares of restricted stock and options to purchase common stock to our officers and employees with exercise prices equal to or greater than the fair value of the underlying shares on the grant date.

Stock options and China Cash Bonuses generally expire 10 years from the grant date. All forms of equity awards and China Cash Bonuses vest upon the passage of time, the attainment of performance criteria, or both. When participants exercise stock options, we issue any shares of our common stock resulting from such exercise from new authorized and unallocated shares available at the time of exercise.

The following table summarizes activity under our equity incentive plans related to equity-classified stock option grants as of September 30, 2018, and changes during the nine months then ended:

	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2018	9,397,056		$	3.80
Granted	1,909,500		6.79
Exercised	(385,820	)	2.60
Forfeited, cancelled or expired	(46,377	)	6.09
Outstanding at September 30, 2018	10,874,359		$	4.36	7.8	$	2,885
Options exercisable at September 30, 2018	10,009,767		$	4.44	7.7	$	2,319

We granted an option to purchase 1.3 million shares of our common stock at an exercise price of $7.81 per share to Kai-Shing Tao, our Chief Executive Officer and Chairman of the Board, under the 2017 Incentive Plan, which our stockholders approved in January 2018. We recorded the entire $11.6 million of compensation expense associated with this award in January 2018 because Mr. Tao fully vested in the award at the time we received stockholder approval.

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The following table summarizes activity under our equity incentive plans related to the China Cash Bonuses as of September 30, 2018, and changes during the nine months then ended:

	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2018	266,500		$	3.84
Granted	1,367,375		6.02
Exercised	(7,875	)	4.28
Forfeited, cancelled or expired	(233,375	)	5.76
Outstanding at September 30, 2018	1,392,625		$	5.67	9.3	$	36
Bonuses exercisable at September 30, 2018	169,750		$	4.04	8.2	$	19

During the nine months ended September 30, 2018, we did not award restricted stock under our equity incentive plans.

We incurred share-based compensation expense of $0.9 million and $1.6 million, respectively, during the three months ended September 30, 2018 and 2017, and of $12.9 million and $2.2 million, respectively, during the nine months ended September 30, 2018 and 2017.

Net Income (Loss) per Share 

For the three and nine months ended September 30, 2018 and 2017, there were no reconciling items related to either the numerator or denominator of the loss per share calculation.

Securities which would have been anti-dilutive to a calculation of diluted earnings per share for the three and nine months ended September 30, 2018 and 2017 include:

• the outstanding stock options described above;

• the outstanding CBG Acquisition Warrant, which may be exercised to purchase 40,000 shares of our common stock at a per-share exercise price of $10.00 (we are also committed to the future issuance of additional CBG Acquisition Warrants at the same per-share exercise price as the CBG Acquisition Warrant that has already been issued), and the outstanding CBG Financing Warrants, which may be exercised to purchase 3,070,638 shares of our common stock at an exercise price of $4.78 per share;

• the warrants issued in conjunction with our acquisition of Hotelmobi, Inc., which may be exercised to purchase 1,000,000 shares of our common stock, half at an exercise price of $8.00 per share and half at an exercise price of $12.00 per share.

NOTE 15. SEGMENT INFORMATION

We currently report on two segments: our Travel & Entertainment segment, which provides our customers with access to a full range of travel and entertainment services in Las Vegas and surrounding areas, and our Technology & Data Intelligence segment, which provides services to our customers based upon the data collected and processed by our proprietary data intelligence software.

Our chief operating decision makers use Adjusted EBITDA as the primary measure of profitability for evaluating the operational performance of our reportable segments. Adjusted EBITDA represents operating income (loss) plus depreciation and amortization expense, share-based compensation expense, impairments and net other income, less other loss. For our Travel

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& Entertainment segment, Adjusted EBITDA includes an allocation of rent expense, which allocation we base on usage of space. We do not allocate certain other types of shared expense, such as legal and accounting, to our reportable segments; such costs are included in Corporate Entity and Other.

The following table presents certain financial information regarding our business segments and other entities for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Travel & Entertainment		Technology & Data Intelligence			Corporate Entity and Other			Consolidated
Three Months Ended September 30, 2018
Revenue	$	17,596	$	1,039		$	716		$	19,351
Adjusted EBITDA	$	2,324	$	(1,674	)	$	(3,428	)	$	(2,778	)
Three Months Ended September 30, 2017
Revenue	$	16,284	$	2,203		$	962		$	19,449
Adjusted EBITDA	$	1,955	$	(946	)	$	(2,833	)	$	(1,824	)
Nine Months Ended September 30, 2018
Revenue	$	49,320	$	5,591		$	1,877		$	56,788
Adjusted EBITDA	$	4,493	$	(5,166	)	$	(12,292	)	$	(12,965	)
Nine Months Ended September 30, 2017
Revenue	$	45,765	$	3,212		$	3,027		$	52,004
Adjusted EBITDA	$	4,322	$	(2,096	)	$	(7,788	)	$	(5,562	)

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The following table reconciles Adjusted EBITDA to Loss before income taxes (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Adjusted EBITDA	$	(2,778	)	$	(1,824	)	$	(12,965	)	$	(5,562	)
Depreciation and amortization	(2,756		)	(2,482		)	(8,220		)	(8,237		)
Impairments	—			(28		)	—			(28		)
Share-based compensation expense	(891		)	(1,629		)	(12,913		)	(2,225		)
Other loss	(1		)	—			(56		)	(20		)
Other loss (gain)	12			33			(511		)	85
Operating loss	$	(6,414	)	$	(5,930	)	$	(34,665	)	$	(15,987	)
Other income (expense)
Interest expense	(1,307		)	(1,080		)	(3,968		)	(3,279		)
Other income	1			—			56			20
Change in fair value of warrant liability	3,525			(5,978		)	22,190			2,351
Other gain (loss)	(12		)	(33		)	511			(85		)
Total other income, net	$	2,207		$	(7,091	)	$	18,789		$	(993	)
Income (loss) before income taxes	$	(4,207	)	$	(13,021	)	$	(15,876	)	$	(16,980	)

The following table presents total assets for our segments and the corporate and other entities (in thousands):

	September 30, 2018		December 31, 2017
Travel & Entertainment segment	$	69,296	$	75,820
Technology & Data Intelligence segment	3,824		5,105
Corporate entity and other business units	17,329		22,612
Consolidated	$	90,449	$	103,537

Capital expenditures for our Travel & Entertainment segment totaled $0.3 million and $0.7 million during the three months ended September 30, 2018 and 2017, respectively, while capital expenditures for our Technology & Data Intelligence segment totaled $0.1 million and $0.2 million during each of the same periods, respectively. Capital expenditures for our Travel & Entertainment segment totaled $2.0 million and $1.6 million during the nine months ended September 30, 2018 and 2017, respectively, while capital expenditures for our Technology & Data Intelligence segment totaled $0.6 million and $1.0 million during each of the same periods, respectively.

NOTE 16. RELATED PARTY TRANSACTION

On June 11, 2018, we sold the IRS.com web domain to a company in which our former CFO has a significant ownership interest. The consideration consisted of a cash payment of approximately $0.6 million and assumed liabilities of approximately $0.1 million. We recognized a gain of approximately $0.6 million on the transaction which is reported in Other gain (loss) on our Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

Table of Contents 21 Financial Statement Index

NOTE 17. SUBSEQUENT EVENTS

Events Related to the Financing Agreement

On October 4, 2018, $2.25 million held in a cash collateral account to secure our obligations under the Financing Agreement (such amount reflected in Restricted cash in our consolidated balance sheet) was transferred to the Lenders and applied to the amount of exit fees due and payable under the Financing Agreement. The Financing Agreement requires us to maintain a balance in that account of at least $2.25 million and we have not replaced that amount transferred to Lenders, which constitutes an event of default under the Financing Agreement.

We are actively engaged in discussions with the Lenders regarding a resolution of the events of default under the Financing Agreement described herein. On October 16, 2018, in connection with those discussions, we agreed to increase the amount of the exit fees payable to the Lenders under the Financing Agreement by $1.0 million. Also in connection with those discussions, the Lenders have informed us that they are willing to forebear from taking any enforcement actions against us through December 31, 2018 if we continue to pursue certain strategic alternatives. We have engaged a financial advisor to assist us in assessing and pursuing those strategic alternatives, and we intend to continue pursuing those strategic alternatives and others, including the potential sale of certain non-core assets, investment assets and operating businesses, and to explore other alternatives for obtaining financing. We cannot provide any assurance that we will be successful in completing a strategic transaction or obtaining alternative financing, or that the Lenders will forebear from taking any enforcement actions against us.

Common Stock Issuance

On November 2, 2018, we sold 200,000 shares of our common stock to an accredited investor in a private placement for $0.5 million.

Table of Contents 22 Financial Statement Index

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read our discussion and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2018 in conjunction with our unaudited condensed consolidated financial statements and notes thereto set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.  Such discussion and analysis includes forward-looking statements that involve risks and uncertainties and that are not historical facts, including statements about our beliefs and expectations. You should also read “Special Note Regarding Forward-Looking Statements” in the section following the table of contents of this report.

OVERVIEW

We are primarily a technology-focused company, devoting a large and increasing portion of our resources towards growing our KanKan business, which we report as our Technology & Data Intelligence segment. The segment generates our data platform services revenue by developing and deploying artificial intelligence (“AI”) products and AI-based solutions for businesses in many industries and geographies, as well as by providing financial technology (“FinTech”) services. Though we currently focus our KanKan business on the Asia-Pacific region, we have initiated marketing activities in Europe and the United States and are launching several proof-of-concept projects.

We have been developing AI-based vision products, computing devices and software-as-a-service products that we are deploying in the retail, food-safety, construction-safety, and public-safety industries. We constantly improve our KanKan data and AI platform with advanced data, algorithms and training; our facial-recognition algorithms recently received top rankings in Labeled Faces in the Wild (hosted by the University of Massachusetts) and MegaFace (hosted by the University of Washington), two widely-recognized global facial-recognition testing platforms. Among the other work that we have ramped up during 2018, we continue partnering with top universities on research projects targeting algorithm, artificial neural network and computing architectures, which we believe keeps us among the leaders in technology development.

In our FinTech business, we are currently testing new products that comply with the strict regulations recently imposed by the Chinese government during an extended shutdown of the lending market in China while the Chinese government conducted an industry-wide regulatory audit. We believe the new products, which we plan to launch in the near future, will serve the high demand for consumer loans in China.

We also own and operate Vegas.com, an online agency catering to the travel and entertainment needs of visitors to the Las Vegas area and those of Las Vegas locals. Our Travel & Entertainment segment generates transaction services revenue from sales of travel and entertainment products, such as show tickets and hotel rooms.

Various advertising mechanisms and other activity, such as online merchandise sales, also contribute to our consolidated revenue.

The following table presents our revenue categories as a percentage of total consolidated revenue during the three and nine months ended September 30, 2018.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Transaction services	86	%	77	%	82	%	82	%
Data platform services	5	%	11	%	10	%	6	%
Advertising and other	9	%	12	%	8	%	12	%

Our Travel & Entertainment segment experienced a record number of transactions during the first nine months of 2018, and is on pace for a record number of transactions during the 2018 year. Such activity, a large portion of which resulted from significant improvement in conversion rates related to entertainment bookings, gives us confidence that our strategy of gaining market share in the entertainment market by continuing to invest in technology and marketing is succeeding. As we have

Table of Contents 23 Financial Statement Index

previously noted, we continue to focus on expanding our presence on mobile devices and improving the user experience on our mobile online offerings, and will also continue making changes to our desktop experience such as those that led to our improved conversion rates.

We recognized revenue during the nine months ended September 30, 2018 from creating and deploying a data analytics product for one of our customers, from installing our retail product in the first two retail locations of one of our retail clients, and we are currently passing proof-of-concept tests and beginning deployment and implementation on additional AI projects. We will continue to accelerate our development and deployment of products and services built upon our KanKan data and AI platform, and we expect our operating expenses to increase in line with such activity.

Revenue from our FinTech services, which represents commissions we earn for providing high-quality loan candidates to our customers, was impacted by the industry-wide regulatory audit in China. After January 2018, due to the regulatory changes resulting from the audit, we ceased providing such services under our then-existing FinTech contracts that gave rise to Reimbursement Obligations (see Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements for more information), and the new FinTech products we are currently testing do not give rise to Reimbursement Obligations.

CRITICAL ACCOUNTING POLICIES

During the three and nine months ended September 30, 2018, we made no material changes to our critical accounting policies as we disclosed them in Part II, Item 7 of our 2017 Form 10-K.

RESULTS OF OPERATIONS

The following discussion summarizes our operating results for the three and nine months ended September 30, 2018 compared to the three and nine months ended September 30, 2017.

Reportable Segment Results

Travel & Entertainment

(dollars in thousands)	Three Months Ended September 30,				Change
	2018		2017		Dollars			Percentage
Revenue	$	17,596	$	16,284	$	1,312		8	%
Cost of revenue	3,162		2,896		266			9	%
Sales and marketing	6,923		6,151		772			13	%
Technology and development	625		626		(1		)	—	%
General and administrative	4,625		4,592		33			1	%
Depreciation and amortization	2,236		2,155		81			4	%
Other operating expense	69		65		4			6	%

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(dollars in thousands)	Nine Months Ended September 30,				Change
	2018		2017		Dollars		Percentage
Revenue	$	49,320	$	45,765	$	3,555	8	%
Cost of revenue	8,779		8,144		635		8	%
Sales and marketing	20,165		17,531		2,634		15	%
Technology and development	1,878		1,877		1		—	%
General and administrative	14,245		13,744		501		4	%
Depreciation and amortization	6,563		6,280		283		5	%
Other operating expense	170		167		3		2	%

Revenue. We continue to experience increased conversion of traffic through our sales channels. The increased transactions, as well as improved commissions we earn on sales of third-party products, increased transaction services revenue during the three and nine months ended September 30, 2018 by $2.2 million and $5.7 million, respectively.

The increased revenue from transaction growth was partially offset by decreases of approximately $0.3 million and $1.3 million, respectively, from hotel transactions resulting from lower average purchase prices due to market conditions.

We do not currently sell advertising on mobile devices, so the movement of online traffic from desktop devices to mobile devices caused a decline in advertising revenue during the three and nine months ended September 30, 2018 of approximately $0.2 million and $0.4 million, respectively, which also partially offset the increased revenue from transaction growth. Various immaterial declines in other revenue categories also contributed to offsetting of the increase resulting from show ticket sales.

Sales and marketing. The increase in our sales and marketing expense in the Travel & Entertainment segment during the three and nine months ended September 30, 2018 was driven primarily by increases of $0.8 million and $2.8 million, respectively, in paid search marketing cost at Vegas.com. The increases resulted from the competitive nature of the paid search marketplace. The increases in conversion of traffic allowed Vegas.com to spend more in paid search to increase market share, which resulted in more transactions and increased revenue.

General and administrative. Of the increase in general and administrative expense in the Travel & Entertainment segment during the nine months ended September 30, 2018, approximately $0.4 million resulted from recording share-based compensation expense in the segment during 2018, whereas all share-based compensation expense was recorded on the corporate entity during 2017 and prior years.

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Technology & Data Intelligence

(dollars in thousands)	Three Months Ended September 30,				Change
	2018		2017		Dollars			Percentage
Revenue	$	1,039	$	2,203	$	(1,164	)	(53	)%
Cost of revenue	612		2,056		(1,444		)	(70	)%
Sales and marketing	40		8		32			400	%
Technology and development	123		138		(15		)	(11	)%
General and administrative	1,974		946		1,028			109	%
Depreciation and amortization	169		172		(3		)	(2	)%
Other operating expense	47		1		46			4,600	%

(dollars in thousands)	Nine Months Ended September 30,				Change
	2018		2017		Dollars		Percentage
Revenue	$	5,591	$	3,212	$	2,379	74	%
Cost of revenue	5,004		3,028		1,976		65	%
Sales and marketing	88		22		66		300	%
Technology and development	398		391		7		2	%
General and administrative	5,088		1,863		3,225		173	%
Depreciation and amortization	486		379		107		28	%
Other operating expense	93		1		92		9,200	%

Revenue and Cost of revenue. During the three months ended September 30, 2018, revenue decreased by approximately $1.8 million as a result of regulatory changes impacting our FinTech business, which decrease was partially offset by an approximately $0.6 million increase in revenue from AI products and solutions. The amount of revenue from AI products and solutions was less than we expected due to delayed deployment primarily caused by extended proof-of-concept testing and clients’ schedule changes. We expect to begin deploying the delayed projects in the coming weeks.

For the nine months ended September 30, 2018, we recognized approximately $1.8 million more revenue related to AI projects as a result of passing proof-of-concept tests on several projects and beginning the deployment and implementation phases. Such projects include an AI-based data analytics product we developed for one of our customers and an AI-based retail solution for two of the largest retail chain stores in Asia, as well as other deployments of our solutions. Additionally, during the nine months ended September 30, 2018, despite the regulatory changes impacting our FinTech business, we provided more high-quality loan candidates to customers than we did during the same period of the prior year primarily because we had just begun providing FinTech services towards the end of the second quarter of 2017, resulting in an increase of approximately $0.6 million in revenue. The changes in our cost of revenue were directly related to the changes in our revenue.

General and administrative. Our recent personnel increase (which approximately doubled headcount and consists almost exclusively of IT-related employees) to accelerate product development and support an increased number of our projects in the proof-of-concept phase resulted in increases during the three and nine months ended September 30, 2018 of approximately $0.5 million and $2.1 million, respectively, in payroll and related cost. The accelerated product development and increase in proof-of-concept testing for clients also caused expense for rent, travel and professional services to increase by an aggregate of $0.3 million and $0.7 million, respectively, during the same periods. Individually immaterial increases in various other expenses contributed to the remaining increase in general and administrative expense.

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Consolidated Results

(dollars in thousands)	Three Months Ended September 30,						Change
	2018			2017			Dollars			Percentage
Revenue	$	19,351		$	19,449		$	(98	)	(1	)%
Cost of revenue	4,393			5,641			(1,248		)	(22	)%
Sales and marketing	7,213			6,326			887			14	%
Technology and development	842			865			(23		)	(3	)%
General and administrative	10,444			9,971			473			5	%
Depreciation and amortization	2,756			2,482			274			11	%
Other operating expense	117			66			51			77	%
Interest expense	(1,307		)	(1,080		)	(227		)	21	%
Other income (expense)	1			—			1
Change in FV of warrant liability	3,525			(5,978		)	9,503			(159	)%
Other gain (loss)	(12		)	(33		)	21			(64	)%
Provision for (benefit from) income taxes	442			(229		)	671			(293	)%

(dollars in thousands)	Nine Months Ended September 30,						Change
	2018			2017			Dollars			Percentage
Revenue	$	56,788		$	52,004		$	4,784		9	%
Cost of revenue	14,557			12,270			2,287			19	%
Sales and marketing	20,884			17,975			2,909			16	%
Technology and development	2,587			2,657			(70		)	(3	)%
General and administrative	44,941			26,656			18,285			69	%
Depreciation and amortization	8,220			8,237			(17		)	—	%
Other operating expense	264			168			96			57	%
Interest expense	(3,968		)	(3,279		)	(689		)	21	%
Other income (expense)	56			20			36			180	%
Change in FV of warrant liability	22,190			2,351			19,839			844	%
Other gain (loss)	511			(85		)	596			(701	)%
Provision for (benefit from) income taxes	1,437			(603		)	2,040			(338	)%

Consolidated results of operations were primarily impacted by the results of operations of our reportable segments, as described above.

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Revenue. The revenue reported by our Remark Entertainment business (formerly referred to as our Fanstang business) decreased during the nine months ended September 30, 2018 by approximately $0.9 million primarily due to contracts for live broadcast events and sponsorships that expired in the prior year and have not been renewed.

General and administrative. The decrease in general and administrative expense incurred by our non-reportable-segment businesses in the third quarter of 2018 from the corresponding 2017 period was affected by the following:

• A decrease of approximately $0.9 million in share-based compensation expense resulted because the prior-year period included significantly more stock options with early vesting.

• Our increased use of consultants for certain new strategic and administrative projects, primarily one to enhance the robustness of our global Sarbanes-Oxley compliance program, added approximately $0.4 million more than in the same period of the prior year.

The increase in general and administrative expense incurred by our non-reportable-segment businesses in the first nine months of 2018 from the corresponding 2017 period was affected by the following:

• In January 2018, we immediately recognized $11.6 million of stock-based compensation expense related to a grant of an option to purchase 1.3 million shares of our common stock at an exercise price of $7.81 per share to our Chief Executive Officer. The effect of that single award was partially offset by differences in the amount and timing of stock option grants to other employees, resulting in a net increase of $10.3 million in stock-based compensation expense.

• An increase in rent expense of approximately $1.9 million which resulted from our recording of a liability associated with the early abandonment of a lease for office space in March 2018. No similar transactions occurred during the same period of the prior year.

• Our increased use of consultants for certain new strategic and administrative projects, primarily one to enhance the rigor of our global Sarbanes-Oxley compliance program, added approximately $1.2 million more than in the same period of the prior year.

• Legal expense increased approximately $0.4 million, primarily as a result of litigation work related to the CBG Acquisition and contract review and translation services related to the increased number of contracts related to our business in China.

• Individually immaterial increases in other expense categories that contributed to the remaining increase.

Interest expense. The increase in interest expense was the result of amortization of discount on our debt. We accounted for the amendments to the Financing Agreement executed since October 2017 as debt modifications, adding $2.5 million to the amount of discount on our debt in the form of additional fees.

Change in fair value of warrant liability. The fair value of our warrant liability maintains a direct relationship with the price of our common stock, such that the significant decrease in our common stock price between December 31, 2017 and September 30, 2018 resulted in a corresponding decrease in the fair value of our warrant liability. The decrease in our common stock price was much larger than the decrease in our common stock price between December 31, 2016 and September 30, 2017 and, as a result, the amount of decrease in the warrant liability was much larger than during the same period of 2017. The same relationship between our common stock price and the estimated fair value of the warrants was the primary cause of the decrease in the fair value of our warrant liability during the third quarter of 2018, compared to an increase in the fair value of our warrant liability during the third quarter of 2017.

Other gain (loss). During June 2018, we disposed of the IRS.com domain, resulting in a $0.6 million gain on disposal.

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LIQUIDITY AND CAPITAL RESOURCES

Overview

During the nine months ended September 30, 2018, and in each fiscal year since our inception, we have incurred net losses which have resulted in an accumulated deficit of $314.1 million as of September 30, 2018. Additionally, our operations have historically used more cash than they have provided. As of September 30, 2018, our cash and cash equivalents balance was $9.9 million, and we had a negative working capital balance of $55.0 million. Our revenue during the nine months ended September 30, 2018 was $56.8 million.

We are a party to the Financing Agreement, pursuant to which the Lenders have extended credit to the Borrowers consisting of the Loan in the aggregate principal amount of $35.5 million. As of September 30, 2018, the Loan bore interest at three-month LIBOR (with a floor of 1%) plus 11% per annum, payable monthly, and had a maturity date of September 30, 2020. As of September 30, 2018, the applicable interest rate on the Loan was approximately 13% per annum. The material terms of the Financing Agreement, the amendments thereto, and related documents effective as of September 30, 2018 are described in Note 11. As of September 30, 2018, $35.5 million of aggregate principal remained outstanding under the Loan. Our available cash and other liquid assets are not sufficient to pay our obligations under the Financing Agreement in full.

Pursuant to the Fourth Financing Amendment dated as of April 30, 2018, the Borrowers agreed to make a prepayment of $8.0 million principal amount outstanding and $3.5 million of exit fees under the Financing Agreement within 60 days following the date of the Fourth Financing Amendment. Pursuant to the Fifth Financing Amendment dated as of June 29, 2018, the Lenders agreed, among other things, to extend the due date of the prepayments and fees required by the Fourth Financing Amendment for up to three months, provided that we made extension payments on the first business day of each such month. The extension payments were $250,000 for each of the first two months and $500,000 for the third month, with the final extension period ending on September 28, 2018. We made the extension payments required by the Fifth Financing Amendment to extend the payment date to September 28, 2018; however, we did not make the payments required on such date, which constitutes an event of default under the Financing Agreement. As a result of the default, from September 28, 2018, the Loan bore interest at three-month LIBOR plus 11.0%, the default interest rate.

The Financing Agreement also contains certain affirmative and negative covenants, including but not limited to financial covenants with respect to quarterly EBITDA levels and the value of our assets. As of September 30, 2018, we were not in compliance with the covenant under the Financing Agreement requiring minimum revenue from our KanKan business during the trailing nine-month period ended September 30, 2018 of $12.6 million, as actual revenue from our KanKan business during such period was $5.6 million. Our non-compliance with such covenant constitutes an event of default under the Financing Agreement.

On October 4, 2018, $2.25 million held in a cash collateral account to secure our obligations under the Financing Agreement (such amount reflected in Restricted cash in our consolidated balance sheet) was transferred to the Lenders and applied to the amount of exit fees due and payable under the Financing Agreement. The Financing Agreement requires us to maintain a balance in that account of at least $2.25 million and we have not replaced that amount transferred to Lenders, which constitutes an event of default under the Financing Agreement.

On October 16, 2018, in connection with our discussions with Lenders regarding a resolution of the events of default under the Financing Agreement described herein, we agreed to increase the amount of the exit fees payable to the Lenders under the Financing Agreement by $1.0 million.

As a result of our events of default under the Financing Agreement, the Lenders may declare our obligations under the Financing Agreement, including all unpaid principal and interest, due and payable immediately and exercise such other rights available to them under the Financing Agreement. We are actively engaged in discussions with the Lenders regarding a resolution of the events of default under the Financing Agreement. In connection with those discussions, the Lenders have informed us that they are willing to forebear from taking any enforcement actions against us for a specified period if we continue to pursue certain strategic alternatives. We have engaged a financial advisor to assist us in assessing and pursuing those strategic alternatives, and we intend to continue pursuing those strategic alternatives and others, including the potential sale of certain non-core assets, investment assets and operating businesses, and to explore other alternatives for obtaining financing. We cannot provide any assurance that we will be successful in completing a strategic transaction or obtaining alternative financing, or that the Lenders will forebear from taking any enforcement actions against us.

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On September 24, 2015, concurrently with the closing of the VDC Acquisition, Vegas.com entered into a Letter of Credit Facility Agreement with Bank of America, N.A., which currently expires on May 31, 2019, providing for a letter of credit facility with up to $9.3 million of availability. Amounts available under the letter of credit facility are subject to customary fees and are secured by a first-priority lien on, and security interest in, a cash collateral account with the bank containing cash equal to 101.25% of the aggregate outstanding undrawn face amount of all letters of credit under the letter of credit facility outstanding.

On April 12, 2017, we issued a short-term note payable in the principal amount of $3.0 million to a private lender in exchange for cash in the same amount. The agreement, which does not have a stated interest rate, required us to repay the note plus a fee of $115 thousand on the maturity date of June 30, 2017. The note is accruing interest at $500 per day on the unpaid principal until we repay the note in full.

Pursuant to the terms of the purchase agreement we entered into in connection with the VDC Acquisition, we are obligated to make an Earnout Payment based upon the performance of Vegas.com in the year ended December 31, 2018. We expect that the performance of Vegas.com during the year ended December 31, 2018 will trigger the maximum Earnout Payment of $1.0 million, which will be due in the second quarter of 2019.

On November 9, 2016, we entered into the 2016 Aspire Purchase Agreement with Aspire Capital, which provided that, upon the terms and subject to the conditions and limitations set forth therein, we had the right to direct Aspire Capital to purchase up to an aggregate of $20.0 million of shares of our common stock over the 30-month term of the 2016 Aspire Purchase Agreement. Purchases under the 2016 Aspire Purchase Agreement were made at prices calculated in accordance with the terms of the 2016 Aspire Purchase Agreement at the time of our submission to Aspire Capital of a purchase notice specifying such number of shares to be purchased, subject to maximum dollar and share amounts for sales on any one date unless the parties mutually agreed otherwise. Additionally, the total number of shares issuable pursuant to the 2016 Aspire Purchase Agreement was limited to 4,273,411 shares (the “2016 Aspire Exchange Cap”), or 19.99% of our shares of common stock outstanding as of the date of the 2016 Aspire Purchase Agreement, unless stockholder approval was obtained in accordance with the rules of the Nasdaq Stock Market. If stockholder approval was not obtained, such limitation would not apply after the 2016 Aspire Exchange Cap was reached if at all times thereafter the average purchase price paid for all shares issued under the 2016 Aspire Purchase Agreement was equal to or greater than $3.96 per share. As of the termination of the 2016 Aspire Purchase Agreement effective July 2, 2018, we had issued the maximum number of shares issuable within the 2016 Aspire Exchange Cap, including 4,121,896 shares purchased by Aspire Capital for an aggregate purchase price of $12.8 million and 151,515 shares issued to Aspire Capital upon executing the 2016 Aspire Purchase Agreement. As of July 2, 2018, we had not obtained stockholder approval and we were able to make subsequent issuances under the 2016 Aspire Purchase Agreement only if and to the extent that following such issuance the average purchase price paid was equal to or greater than $3.96 per share.

On July 2, 2018, we entered into the 2018 Aspire Purchase Agreement with Aspire Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Aspire Capital to purchase up to an aggregate of $30.0 million of shares of our common stock over the 30-month term of the 2018 Aspire Purchase Agreement. Purchases under the 2018 Aspire Purchase Agreement, which is described in more detail in Note 14, are made at prices calculated in accordance with the terms of the 2018 Aspire Purchase Agreement at the time of our submission to Aspire Capital of a purchase notice specifying such number of shares to be purchased, subject to maximum dollar and share amounts for sales on any one date unless the parties mutually agree otherwise. Additionally, the total number of shares that may be issued pursuant to the 2018 Aspire Purchase Agreement is limited to the 2018 Aspire Exchange Cap, which represents 19.99% of our shares of common stock outstanding as of the date of the 2018 Aspire Purchase Agreement, unless stockholder approval is obtained in accordance with the rules of the Nasdaq Stock Market. If stockholder approval is not obtained, such limitation will not apply after the 2018 Aspire Exchange Cap is reached if at all times thereafter the average purchase price paid for all shares issued under the 2018 Aspire Purchase Agreement is equal to or greater than $3.91 per share. As of September 30, 2018, we have issued to Aspire Capital a total of 3,308,812 shares of our common stock under the 2018 Aspire Purchase Agreement, including 3,095,238 shares purchased by Aspire Capital for an aggregate purchase price of $10.0 million, and 213,574 shares issued to Aspire Capital upon executing the 2018 Aspire Purchase Agreement. As of September 30, 2018, we had not obtained stockholder approval and we were able to issue to Aspire Capital up to a maximum of 3,320,227 additional shares under the 2018 Aspire Purchase Agreement, unless and to the extent that following such issuance the average purchase price paid was equal to or greater than $3.91 per share.

We cannot provide assurance that revenue generated from our businesses will be sufficient to sustain our operations in the long term (including but not limited to payment of the amounts required under the Financing Agreement); therefore, we are

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actively evaluating strategic alternatives including the potential sale of certain non-core assets, investment assets and operating businesses. However, we may need to obtain additional capital through equity financing or debt financing.

Conditions in the debt and equity markets, as well as the volatility of investor sentiment regarding macroeconomic and microeconomic conditions, will play primary roles in determining whether we can successfully obtain additional capital. Additionally, pursuant to the Financing Agreement, we are subject to certain limitations on our ability and the ability of our subsidiaries to, among other things, incur additional debt and transfer, sell or otherwise dispose of assets, without the consent of the Lenders. We cannot be certain that we will be successful at raising additional capital.

A variety of factors, many of which are outside of our control, affect our cash flow; those factors include regulatory issues, competition, financial markets and other general business conditions. Based on financial projections, we believe that we will be able to meet our ongoing requirements for at least the next 12 months following this report, (including repayment of our existing debt as it matures) with existing cash, cash equivalents and cash resources, and based on the probable success of one or more of the following plans:

• monetize existing assets

• work with our creditors to modify existing arrangements or refinance our debt

• obtain additional capital through equity issuances, including but not limited to under the 2018 Aspire Purchase Agreement (which issuances may dilute existing stockholders)

However, projections are inherently uncertain and we cannot assure you that we will generate sufficient income and cash flow to meet all of our liquidity requirements.

Cash Flows - Operating Activities

During the nine months ended September 30, 2018, we used $19.3 million more cash in operating activities than we did during the nine months ended September 30, 2017. The increase in cash used in operating activities is a result of an increase in operating losses, including the increase in our operations in China (which included increasing payroll costs); paying security deposits related to our travel and entertainment business; increasing the use of consultants for certain new strategic and administrative projects (primarily one to enhance the rigor of our global Sarbanes-Oxley compliance program) and the timing of payments related to elements of working capital.

Cash Flows - Investing Activities

During the nine months ended September 30, 2018, we received approximately $0.6 million upon the disposition of the IRS.com domain name in June 2018. The proceeds from such asset disposition were almost entirely offset by our payment of $0.5 million towards our investment in AIO (see Note 6 for more details).

Cash Flows - Financing Activities

During the nine months ended September 30, 2018, our financing activities provided $2.6 million more from the issuance of shares of our common stock, including from stock option exercises, than during the same period of 2017. The additional amount from common stock issuances, however, was offset by our payment in the current year of approximately $1.5 million in loan fees related to our debt modifications, $0.9 million of our payment of the Earnout Payment due in 2018 and the fact that the prior year period included $3.0 million of proceeds from our issuance of a note payable.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Table of Contents 31

Recently Issued Accounting Pronouncements

Please refer to Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements included in this report for a discussion regarding recently issued accounting pronouncements which may affect us.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to provide reasonable assurance that the information we must disclose in reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. We designed our disclosure controls with the objective of ensuring we accumulate and communicate this information to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under Exchange Act, as of the end of the period covered by this report. Based upon that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of September 30, 2018.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the fiscal quarter ended September 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

On February 21, 2018, we initiated a legal proceeding against CBG, Adam Roseman, and CBG’s Joint Official Liquidators (the “CBG Litigation”) arising from the CBG Acquisition. The CBG Litigation was filed in the United States District Court for the District of Nevada and is captioned as Remark Holdings, Inc., et al. v. China Branding Group, Limited (In Official Liquidation), et al., Case No. 2:18-cv-00322. In the CBG Litigation, we are seeking a declaration from the court that we are entitled to rescission of the CBG Purchase Agreement and all transactions related to the CBG Acquisition, a declaration that the CBG Purchase Agreement and the transactions consummated pursuant thereto be rescinded and void ab initio, a declaration that we are not required to deliver the remaining CBG Acquisition Warrants allowing for the purchase of 5,710,000 shares of common stock at a per-share exercise price of $10.00, an order directing release to us of any consideration held in escrow in connection with the CBG Acquisition, and disgorgement of all consideration paid by us in connection with the CBG Acquisition. We are alleging that the defendants fraudulently mispresented and concealed material information regarding the companies we acquired in the CBG Acquisition. The defendants filed motions to dismiss, which are sub judice.

Table of Contents 32

ITEM 1A. RISK FACTORS

The following risk factor supplements those included in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on April 2, 2018.

We are not in compliance with payment and certain other obligations under the Financing Agreement, constituting events of default as a result of which our obligations under the Financing Agreement, including all unpaid principal and interest, may be declared immediately due and payable.

We did not make a required prepayment of $8.0 million principal amount and $3.5 million of exit fees that was due on September 28, 2018 under the Financing Agreement. Also, as of September 30, 2018, we were not in compliance with the covenant under the Financing Agreement requiring minimum revenue from our KanKan business during the trailing nine-month period ended September 30, 2018, and subsequently were not in compliance with a covenant requiring us to maintain a balance of at least $2.25 million in a cash collateral account to secure our obligations under the Financing Agreement. These constitute events of default under the Financing Agreement for which we have not received a waiver as of the date of this report. As a result of our events of default, the Lenders may declare our obligations under the Financing Agreement, including all unpaid principal and interest, due and payable immediately and exercise such other rights available to them under the Financing Agreement. As of September 30, 2018, $35.5 million of aggregate principal remained outstanding under the Loan. Our available cash and other liquid assets are not sufficient to pay such obligations in full.

We are actively engaged in discussions with the Lenders regarding a resolution of such events of default. In connection with those discussions, the Lenders have informed us that they are willing to forebear from taking any enforcement actions against us for a specified period if we continue to pursue certain strategic alternatives. We have engaged a financial advisor to assist us in assessing and pursuing those strategic alternatives, and we intend to continue pursuing those strategic alternatives and others, including the potential sale of certain non-core assets, investment assets and operating businesses, and to explore other alternatives for obtaining financing. However, we cannot provide any assurance that we will be successful in completing a strategic transaction or obtaining alternative financing, or that the Lenders will forebear from taking any enforcement actions against us. The Lenders’ exercise of rights available to them under the Financing Agreement, including but not limited to their right to declare our obligations under the Financing Agreement, including all unpaid principal and interest, due and payable immediately, could have a material adverse effect on our financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

We did not make a required prepayment of $8.0 million principal amount and $3.5 million of exit fees that was due on September 28, 2018 under the Financing Agreement, and as of the date of this report, we have not paid any portion of that $8.0 million principal amount due. On October 4, 2018, $2.25 million held in a cash collateral account to secure our obligations under the Financing Agreement was transferred to Lenders and applied to the amount of exit fees due and payable under the Financing Agreement, such that $1.25 million of exit fees remain due. These and other matters described herein constitute events of default under the Financing Agreement for which we have not received a waiver as of the date of this report. As of the date of this report, $35.5 million of aggregate principal amount remained outstanding under the Loan.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

Table of Contents 33

ITEM 6. EXHIBITS

		Incorporated Herein By Reference To
Exhibit Number	Description	Document	Filed On	Exhibit Number
4.1	Registration Rights Agreement, dated as of July 2, 2018, by and between Remark Holdings, Inc. and Aspire Capital Fund, LLC.	8-K	07/03/18	4.1
10.1	Common Stock Purchase Agreement, dated as of July 2, 2018, by and between Remark Holdings, Inc. and Aspire Capital Fund, LLC.	8-K	07/03/18	10.2
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
101.INS	XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

Table of Contents 34 Financial Statement Index

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			REMARK HOLDINGS, INC.
Date:	November 14, 2018	By:	/s/ Alison Davidson
			Alison Davidson
			Interim Chief Financial Officer
			(principal financial and accounting officer)

Table of Contents 35 Financial Statement Index

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kai-Shing Tao (the registrant's principal executive officer), certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Remark Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2018

By:	/s/ Kai-Shing Tao
	Kai-Shing Tao
	Chief Executive Officer and Chairman

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alison Davidson, (the registrant's principal financial officer and principal accounting officer), certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Remark Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2018

By	/s/ Alison Davidson
	Alison Davidson
	Interim Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

We, Kai-Shing Tao, the registrant's principal executive officer, and Alison Davidson, the registrant's principal financial officer and principal accounting officer, certify that, to our knowledge:

1. the accompanying Quarterly Report on Form 10-Q for the period ended September 30, 2018 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Remark Holdings, Inc. at the dates and for the periods indicated.

Date: November 14, 2018

/s/ Kai-Shing Tao

Kai-Shing Tao

Chief Executive Officer and Chairman

/s/ Alison Davidson

Alison Davidson

Interim Chief Financial Officer

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 13, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	Remark Holdings, Inc.
Entity Central Index Key	0001368365
Current Fiscal year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Emerging Growth Company	false
Entity Small Business	true
Amendment Flag	false
Entity Common Stock, Outstanding (shares)		36,668,696

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Assets
Cash and cash equivalents	$ 9,902	$ 22,632
Restricted cash	11,655	11,670
Trade accounts receivable, net	4,753	3,673
Prepaid expense and other current assets	8,710	5,518
Notes receivable, current	100	290
Total current assets	35,120	43,783
Notes receivable	0	100
Property and equipment, net	11,630	13,387
Investment in unconsolidated affiliates	2,030	1,030
Intangibles, net	19,950	23,946
Goodwill	20,099	20,099
Other long-term assets	1,620	1,192
Total assets	90,449	103,537
Liabilities and Stockholders’ Equity
Accounts payable	23,956	17,857
Accrued expense and other current liabilities	12,034	18,795
Deferred merchant booking	8,727	9,027
Contract liability	5,049	3,691
Note payable	3,000	3,000
Current maturities of long-term debt, net of unamortized discount and debt issuance cost	37,319	38,085
Total current liabilities	90,085	90,455
Warrant liability	7,072	89,169
Other liabilities	3,296	3,501
Total liabilities	100,453	183,125
Commitments and contingencies (Note 13)
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued	0	0
Common stock, $0.001 par value; 100,000,000 shares authorized; 36,468,696 and 28,406,026 shares issued and outstanding; each at September 30, 2018 and December 31, 2017, respectively	36	28
Additional paid-in-capital	304,006	220,117
Accumulated other comprehensive income	48	115
Accumulated deficit	(314,094)	(299,848)
Total stockholders’ deficit	(10,004)	(79,588)
Total liabilities and stockholders’ deficit	$ 90,449	$ 103,537

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (shares)	1,000,000	1,000,000
Preferred stock, shares issued (shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (shares)	100,000,000	100,000,000
Common stock, shares issued (shares)	36,468,696	28,406,026
Common stock, shares outstanding (shares)	36,468,696	28,406,026

XML

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Revenue	$ 19,351	$ 19,449	$ 56,788	$ 52,004
Cost and expense
Cost of revenue (excluding depreciation and amortization)	4,393	5,641	14,557	12,270
Sales and marketing	7,213	6,326	20,884	17,975
Technology and development	842	865	2,587	2,657
General and administrative	10,444	9,971	44,941	26,656
Depreciation and amortization	2,756	2,482	8,220	8,237
Impairments	0	28	0	28
Other operating expense	117	66	264	168
Total cost and expense	25,765	25,379	91,453	67,991
Operating loss	(6,414)	(5,930)	(34,665)	(15,987)
Other income (expense)
Interest expense	(1,307)	(1,080)	(3,968)	(3,279)
Other income, net	1	0	56	20
Change in fair value of warrant liability	3,525	(5,978)	22,190	2,351
Other gain (loss)	(12)	(33)	511	(85)
Total other income (expense), net	2,207	(7,091)	18,789	(993)
Loss before income taxes	(4,207)	(13,021)	(15,876)	(16,980)
Benefit from (provision for) income taxes	442	(229)	1,437	(603)
Net loss	(3,765)	(13,250)	(14,439)	(17,583)
Other comprehensive income (loss)
Foreign currency translation adjustments	(82)	48	(67)	20
Comprehensive loss	$ (3,847)	$ (13,202)	$ (14,506)	$ (17,563)
Weighted-average shares outstanding, basic and diluted (in shares)	35,463	22,811	33,608	22,744
Net loss per share, basic and diluted (usd per share)	$ (0.11)	$ (0.58)	$ (0.43)	$ (0.77)

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Statement of Cash Flows [Abstract]
Net cash provided by (used in) operating activities	$ (18,691)	$ 616
Cash flows from investing activities:
Proceeds from disposition of assets	629	0
Purchases of property, equipment and software	(2,728)	(2,631)
Acquisition of unconsolidated affiliate	(480)	(29)
Net cash used in investing activities	(2,579)	(2,660)
Cash flows from financing activities:
Proceeds from issuance of common stock, net	10,951	8,315
Proceeds from debt issuance	0	3,000
Payment of loan fees and debt issuance cost	(1,526)	0
Payment of contingent consideration in business acquisitions	(900)	0
Payments of capital lease obligations	0	(179)
Net cash provided by financing activities	8,525	11,136
Net change in cash, cash equivalents and restricted cash	(12,745)	9,092
Cash, cash equivalents and restricted cash:
Beginning of period	34,302	18,548
End of period	21,557	27,640
Supplemental cash flow information:
Cash paid for interest	3,426	3,031
Supplemental schedule of non-cash investing and financing activities:
Issuance of common stock upon warrant exercise	59,907	0
Issuance of common stock upon conversion of debt instruments	0	121
Common stock subscription payable	$ 520	$ 0

XML

ORGANIZATION AND BUSINESS

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND BUSINESS

NOTE 1. ORGANIZATION AND BUSINESS

Organization and Business

Remark Holdings, Inc. and subsidiaries (“Remark”, “we”, “us”, or “our”), which include its consolidated variable-interest entities (“VIEs”), are primarily technology-focused. Our KanKan data intelligence platform serves as the basis for our development and deployment of artificial-intelligence-based solutions for businesses in many industries and geographies. We also own and operate digital media properties across multiple verticals, such as travel and entertainment and young adult lifestyle, that deliver relevant, dynamic content that attracts and engages users on a global scale. Our common stock is listed on the Nasdaq Capital Market under the ticker symbol MARK.

Liquidity Considerations

During the nine months ended September 30, 2018, and in each fiscal year since our inception, we have incurred net losses which have resulted in an accumulated deficit of $314.1 million as of September 30, 2018. Additionally, our operations have historically used more cash than they have provided. As of September 30, 2018, our cash and cash equivalents balance was $9.9 million, and we had a negative working capital balance of $55.0 million. Our revenue during the nine months ended September 30, 2018 was $56.8 million.

On July 2, 2018, we entered into a common stock purchase agreement (the “2018 Aspire Purchase Agreement”) with Aspire Capital Fund, LLC (“Aspire Capital”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Aspire Capital to purchase up to an aggregate of $30.0 million of shares of our common stock over the 30-month term of the 2018 Aspire Purchase Agreement. The 2018 Aspire Purchase Agreement, which we describe in more detail in Note 14, terminated and replaced the common stock purchase agreement we had entered into with Aspire Capital on November 9, 2016 (the “2016 Aspire Purchase Agreement”).

Concurrently with entering into the 2018 Aspire Purchase Agreement, we also entered into a registration rights agreement with Aspire Capital, in which we agreed to file with the Securities and Exchange Commission (the “SEC”) one or more registration statements, as necessary, and to the extent permissible and subject to certain exceptions, to register under the Securities Act of 1933, as amended, the sale of the shares of our common stock that may be issued to Aspire Capital under the 2018 Aspire Purchase Agreement. We have filed with the SEC a prospectus supplement to our effective shelf Registration Statement on Form S-3 (File No. 333-225448) registering all of the shares of common stock that may be offered to Aspire Capital from time to time under the 2018 Aspire Purchase Agreement. As of September 30, 2018, Aspire Capital has purchased $10.0 million of shares of our common stock under the 2018 Aspire Purchase Agreement.

During the nine months ended September 30, 2017, we issued a total of 3,052,897 shares of our common stock to investors in exchange for approximately $8.3 million in cash, including a $5.0 million issuance to Aspire. We did not issue our common stock in private sales during the nine months ended September 30, 2018, although we did receive cash from the issuances to Aspire Capital and from stock option exercises.

We are a party to a financing agreement dated as of September 24, 2015 (as amended, the “Financing Agreement”) with certain of our subsidiaries as borrowers (together with Remark, the “Borrowers”), certain of our subsidiaries as guarantors (the “Guarantors”), the lenders from time to time party thereto (the “Lenders”) and MGG Investment Group LP, in its capacity as collateral agent and administrative agent for the Lenders (“MGG”), pursuant to which the Lenders extended credit to the Borrowers consisting of a term loan in the aggregate principal amount of $35.5 million (the “Loan”). The terms of the Financing Agreement, the amendments thereto, and related documents effective as of September 30, 2018 are described in Note 11, which also describes our ongoing event of default relating to our failure to make certain required payments under the Financing Agreement as well as certain other ongoing events of default.

We cannot provide assurance that revenue generated from our businesses will be sufficient to sustain our operations in the long term (including but not limited to payment of the amounts required under the Financing Agreement); therefore, we are actively evaluating strategic alternatives including the potential sale of certain non-core assets, investment assets and operating businesses. However, we may need to obtain additional capital through equity financing or debt financing. Conditions in the debt and equity markets, as well as the volatility of investor sentiment regarding macroeconomic and microeconomic conditions, will play primary roles in determining whether we can successfully obtain additional capital. Additionally, pursuant

to the Financing Agreement, we are subject to certain limitations on our ability and the ability of our subsidiaries to, among other things, incur additional debt and transfer, sell or otherwise dispose of assets, without the consent of the Lenders. We cannot be certain that we will be successful at raising additional capital.

A variety of factors, many of which are outside of our control, affect our cash flow; those factors include regulatory issues, competition, financial markets and other general business conditions. Based on financial projections, we believe that we will be able to meet our ongoing requirements for at least the next 12 months following this report (including the amounts required under the Financing Agreement, based on the current status of discussions with the Lenders regarding ongoing events of default) with existing cash, cash equivalents and cash resources, and based on the probable success of one or more of the following plans:

• monetize existing assets

• work with our creditors to modify existing arrangements or refinance our debt

• obtain additional capital through equity issuances, including but not limited to equity issuances to Aspire Capital under its existing purchase commitment (which equity issuances may dilute existing stockholders)

However, projections are inherently uncertain and we cannot assure you that we will generate sufficient income and cash flow to meet all of our liquidity requirements.

Comparability

We reclassified an amount in the December 31, 2017 Consolidated Balance Sheet to conform to the current presentation as of September 30, 2018. Specifically, we reclassified liabilities associated with gift cards and similar items from contract liability to other current liabilities as we continue to clarify our disclosures related to the newly-adopted revenue standard.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We prepared the accompanying unaudited Condensed Consolidated Balance Sheet as of September 30, 2018, with the audited Consolidated Balance Sheet amounts as of December 31, 2017 presented for comparative purposes, and the related unaudited Condensed Consolidated Statements of Operations and Statements of Cash Flows in accordance with the instructions for Form 10-Q. In compliance with those instructions, we have omitted certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), though management believes the disclosures made herein are sufficient to ensure that the information presented is not misleading.

Our results of operations and our cash flows as of the end of the interim periods reported herein do not necessarily indicate the results we may experience for the remainder of the year or for any other future period.

Management believes that we have included all adjustments (including those of a normal, recurring nature) considered necessary to fairly present our unaudited Condensed Consolidated Balance Sheet as of September 30, 2018, our unaudited Condensed Consolidated Statements of Operations and our unaudited Condensed Consolidated Statements of Cash Flows for all periods presented. You should read our unaudited condensed consolidated interim financial statements and footnotes in conjunction with our consolidated financial statements and footnotes included within the Annual Report on Form 10-K (the “2017 Form 10-K”).

Consolidation

We include all of our subsidiaries, which include the VIEs for which we are the primary beneficiary, in our consolidated financial statements, eliminating all significant intercompany balances and transactions during consolidation.

To comply with China’s laws which restrict foreign ownership of entities that operate within industries deemed sensitive by the Chinese government, we employ what we believe is a commonly-used organizational structure consisting of a wholly-foreign owned enterprise (“WFOE”) and the VIEs to operate our KanKan business. We own 100% of the equity of the WFOE, while the VIEs are companies formed in China under local laws which are owned by members of our management team. We funded the registered capital and operating expenses of the VIEs by extending loans to the VIEs’ owners. We are the primary beneficiary of the VIEs because the relationships between the VIEs and our WFOE are governed by contractual agreements, including in each case an Exclusive Call Option Agreement, an Exclusive Business Cooperation Agreement, a Proxy Agreement and an Equity Pledge Agreement, which give us control over the operations of the VIEs.

Use of Estimates

We prepare our consolidated financial statements in conformity with GAAP. While preparing our financial statements, we make estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and accompanying notes. Accordingly, actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, intangible assets, the useful lives of property and equipment, stock-based compensation, the fair value of the warrant liability, income taxes, inventory reserve and purchase price allocation, among other items.

Changes to Significant Accounting Policies - Revenue Recognition

On January 1, 2018, we adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and all subsequent amendments (collectively “ASC 606”) using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of Accumulated deficit (the amount was not material). We have not retrospectively adjusted the information for the comparative period reported herein, which information we continue to report under the accounting standards in effect for that period. The amounts of revenue, accounts receivable and contract balances that we reported under ASC 606 as of and for the three and nine months ended September 30, 2018, were not materially different than the amounts we would have reported under the accounting standards previously in effect.

We recognize revenue when we transfer control of the promised goods or services to our customers, and we recognize an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.

When customers pay us prior to when we satisfy our obligation to transfer control of promised goods or services, we record the amount that reflects the consideration to which we expect to be entitled as a contract liability until such time as we satisfy our performance obligation. As a result of our adoption of ASC 606, the line item previously labeled “Deferred revenue” on our condensed consolidated balance sheets is now labeled “Contract liability”; the comparative period balance as reported herein did not change as a result of our application of the modified retrospective transition approach.

For our contracts with customers, we only extend short-term credit policies to our customers, generally of 90 days or less.

We record the incremental costs of obtaining contracts as an expense when incurred, because such costs would otherwise be amortized over a period of less than one year if capitalized.

Transaction Services

Our Travel & Entertainment segment generates our transaction services revenue, most of which results from the use of the merchant model under which we remain the merchant of record, but various service providers with whom we maintain relationships are ultimately responsible for delivering the underlying services for which our customers transact, such as lodging, air travel, entertainment, or tours. Our obligation to our customers is to arrange for these service providers to provide the underlying services, and we satisfy our obligation at the point in time that these service providers begin to provide the underlying service (e.g., upon the check-in date for lodging stays, upon the show/performance date for entertainment transactions, etc.). Though we are the merchant of record for transactions in which other entities provide the ultimate service, under current accounting guidance we are an agent in such transactions; therefore, we recognize revenue from transactions

under the merchant model on a net basis (i.e., the amount we bill to our customers less the amounts we pay to the service providers).

To a lesser extent, we provide tour services directly to our customers. Our obligation to provide such services is satisfied at the point in time that we finish providing the tour, and we recognize the resulting revenue on a gross basis when our obligation is satisfied.

Our customers pay at the time the original transaction occurs via our sales channels, primarily the Vegas.com website and mobile application. Because the original transaction date almost always precedes the date that our performance obligation is satisfied, we record a Contract liability for the amount of consideration received (net of amounts owed to suppliers). In general, we satisfy most of our performance obligations within approximately three to four months from the original transaction date, and substantially all performance obligations are satisfied within one year from the original transaction date.

Data Platform Services

Our KanKan business generates our data platform services revenue. One of the business’s product offerings involves utilizing our proprietary data intelligence software to provide high-quality loan candidates to our customers, which are companies that help to market the loan products of banks and other lending institutions in China to potential loan candidates. We earn a commission for this service, which is deemed earned and is recognized at the point in time at which the related loan is issued to the candidate by a lending institution supporting the loan product being promoted by our customer. The amount of commission we recognize is determined by multiplying the commission rate specified in the applicable contract by the amount of the loan issued to the candidate.

Under contracts with two of our customers, we are required to reimburse those customers for as much as 10% of the commissions paid under the contract if the total amount of the defaults across all of the loans issued and outstanding with respect to such contract exceeds an established threshold (the “Reimbursement Obligation”). Such contracts also require us to maintain a cash deposit with those customers to support the Reimbursement Obligation, and they permit the customer to deduct the required amount of any reimbursement from such deposit. We no longer provide new candidates to those customers under those particular contracts, and none of our remaining contracts related to providing loan candidates to customers include the Reimbursement Obligation or similar terms, so the maximum amount of our liability with respect to the Reimbursement Obligation as of September 30, 2018 and going forward is $0.5 million, Further, as of September 30, 2018, the amount we have on deposit with the customers under those contracts to support the Reimbursement Obligation exceeds such maximum liability with respect to the Reimbursement Obligation, and we have not reimbursed any customer any amount of commissions paid under these contracts, nor are we required to do so because the total amount of the defaults has not exceeded the established threshold.

We have determined that the Reimbursement Obligation does not fall within the scope of ASC 606 and that we should account for it as a guarantee for accounting purposes using other GAAP. We recorded an initial liability, reported in Accrued expense and other current liabilities in our consolidated balance sheet, equal to our maximum potential Reimbursement Obligation, an amount which approximated fair value. As we are released from an amount of the Reimbursement Obligation, we record the amount of reduction in the Reimbursement Obligation as data platform services revenue. We have not recorded material amounts of revenue resulting from being released from the Reimbursement Obligation.

We also generate revenue by creating and delivering integrated artificial-intelligence-based solutions for clients. Under this type of contract, we provide a single, continuous service to clients who control the assets as we create them. Accordingly, we recognize the revenue over the period of time during which we provide the service.

Advertising and Other

Our Travel & Entertainment segment generates the majority of our advertising revenue, and we report the remaining amount of advertising revenue in Corporate Entity and Other in our segment information. We primarily generate advertising revenue from the use of sponsored links and display advertising placed directly on our website pages. Substantially all of our advertising contracts with customers are completed within one year or less.

In click-through advertising contracts with customers, our obligation is to place our customers’ interactive ads on our websites for a specified period of time. We recognize revenue from click-through advertising at the point in time at which visitors to our websites click through the ads to our advertising customers’ websites. Any variability regarding contract consideration is resolved within the reporting period.

Some of our advertising contracts with customers require us to place our advertising customers’ static display ads on our websites for a specified period of time or in a specific location on our websites, or both. We recognize revenue from such advertising placement arrangements either over time (ratably over the contract term) or based upon the delivery of advertising impressions, depending upon the terms of the contract.

We also generate revenue from other sources, such as from e-commerce activity in which we sell goods to our customers, or media production which involves us producing video or Internet-based content for our customers. We recognize the revenue from these contracts at the point in time when we transfer control of the good sold to the customer or when we deliver the promised media content.

Other than as noted above, we have made no changes to our significant accounting policies as reported in our 2017 Form 10-K.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, Leases (Topic 842), which changes GAAP primarily by requiring lessees to recognize, at lease commencement, a lease liability representing the present value of the lessee’s obligation to make lease payments, and a right-of-use asset representing the lessee’s right to use (or control the use of) a specified asset during the lease term, for leases classified as operating leases. For us, the amendments in ASU 2016-02 will become effective on January 1, 2019. We are designing appropriate internal controls and modifying key processes to allow for the implementation of ASU 2016-02, which we anticipate will have a material impact on our balance sheet, as we will be recording right-of-use assets and lease liabilities related to our operating leases, including our leases for office space. We do not anticipate that application of ASU 2016-02 will have a material impact on our statement of operations or cash flows.

We have reviewed all recently issued accounting pronouncements. The pronouncements that we have already adopted did not have a material effect on our financial condition, results of operations, cash flows or reporting thereof, and except as otherwise noted above, we do not believe that any of the pronouncements that we have not yet adopted will have a material effect upon our financial condition, results of operations, cash flows or reporting thereof.

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REVENUE

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

REVENUE

NOTE 3. REVENUE

We are not required to include disclosures related to remaining performance obligations because substantially all of our contracts with customers have an original expected duration of one year or less.

Disaggregation of Revenue

The following table presents a disaggregation of our revenue by major category for the three and nine months ended September 30, 2018 (in thousands):

Revenue category	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Transaction services	$	16,619	$	46,272
Data platform services	1,039		5,591
Advertising and other	1,693		4,925
Revenue	$	19,351	$	56,788

Significant Judgments

When accounting for revenue in accordance with ASC 606, we make certain judgments, such as whether we act as a principal or as an agent in transactions or whether our contracts with customers fall within the scope of ASC 606, that affect the determination of the amount and timing of our revenue from contracts with customers. Based on the current facts and circumstances related to our contracts with customers, none of the judgments we make involve an elevated degree of qualitative significance or complexity such that further disclosure is warranted in terms of their potential impact on the amount and timing of our revenue.

Contract Assets and Contract Liabilities

We do not currently generate material contract assets. Other than changes resulting from routine business activity, the balance of our Contract liability did not change significantly during the nine months ended September 30, 2018. We recognized revenue of $3.1 million during the nine months ended September 30, 2018, which was included in the beginning balance of Contract liability at January 1, 2018.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 4. FAIR VALUE MEASUREMENTS

Liabilities Related to Warrants to Purchase Common Stock

At the end of each reporting period, we use the Monte Carlo Simulation model to estimate and report the fair value of liabilities related to certain outstanding warrants to purchase our common stock that are subject to potential anti-dilution adjustments or that contain put options or call options. Our outstanding liability-classified warrants include the warrants we issued or that we are obligated to issue as part of the consideration for our acquisition (the “CBG Acquisition”) of assets of China Branding Group Limited (“CBG”) in September 2016 (the “CBG Acquisition Warrants”) and warrants we issued as a result of an amendment to the Financing Agreement related to the acquisition (the “CBG Financing Warrants”).

The following table presents the quantitative inputs, which we classify in Level 3 of the fair value hierarchy, used in estimating the fair value of the warrants:

	September 30,		December 31,
	2018		2017
CBG Financing Warrants
Expected volatility	60.00	%	60.00	%
Risk-free interest rate	2.81	%	1.96	%
Expected remaining term (years)	1.98		2.73
CBG Acquisition Warrants
Expected volatility	60.00	%	60.00	%
Risk-free interest rate	2.94	%	2.25	%
Expected remaining term (years)	4.97		5.72

In addition to the quantitative assumptions above, we also consider whether we would issue additional equity and, if so, the price per share of such equity. At September 30, 2018, we estimated that one future equity financing event would potentially occur within the subsequent twelve months.

Our estimate of expected volatility and our stock price tend to have the most significant impact on the estimated fair value of the CBG Financing Warrants and the CBG Acquisition Warrants. If we added or subtracted five percentage points with regard to our estimate of expected volatility, or if our stock price increased or decreased by five percent, our estimates of fair value would change approximately as follows (in thousands):

Change in volatility	Increase		Decrease
CBG Financing Warrants	$	275	$	275
CBG Acquisition Warrants	805		865
Change in stock price
CBG Financing Warrants	$	245	$	245
CBG Acquisition Warrants	345		405

The following table presents the change in the liability balance associated with our liability-classified warrants (in thousands):

	Nine Months Ended September 30,			Year Ended December 31,
	2018			2017
Balance at beginning of period	$	89,169		$	25,030
Warrant exercises	(59,907		)	—
Increase (decrease) in fair value	(22,190		)	64,139
Balance at end of period	$	7,072		$	89,169

At January 1, 2018, our outstanding liability-classified warrants included warrants we issued in connection with our acquisition of all of the outstanding equity interests in Vegas.com, LLC in September 2015 (the “VDC Acquisition”) and the financing related thereto (the “VDC Acquisition Warrants” and the “VDC Financing Warrants”, respectively). On January 8, 2018, holders of VDC Acquisition Warrants with respect to 2,416,996 shares of our common stock exercised such warrants. Because the VDC Acquisition Warrants provided that such warrants were exercisable on a cashless basis only, we issued a total of 750,102 shares of common stock in settlement of such warrants without receiving any proceeds from the exercise thereof.

On January 10, 2018, we exercised our right to exercise all remaining VDC Acquisition Warrants and VDC Financing Warrants (which right became effective when the closing price of our common stock reached $14.00), exercising VDC Acquisition Warrants with respect to 6,184,414 shares of our common stock and VDC Financing Warrants with respect to 3,117,148 shares of our common stock. Because the VDC Acquisition Warrants and VDC Financing Warrants provided that such warrants were exercisable on a cashless basis only, we issued a total of 2,236,915 and 1,385,396 shares of common stock to the holders of the VDC Acquisition Warrants and the VDC Financing Warrants, respectively, in settlement of such warrants without receiving any proceeds from the exercise thereof.

Contingent Consideration Issued in Business Acquisition

We used the discounted cash flow valuation technique to estimate the fair value of the liability related to certain cash payments stipulated in the VDC Acquisition that were contingent upon the performance of Vegas.com in the years ended December 31, 2016 and 2017, and are contingent upon the performance of Vegas.com in the year ending December 31, 2018 (the “Earnout Payments”). The significant unobservable inputs that we used, which we classify in Level 3 of the fair value hierarchy, were projected earnings before interest, taxes, depreciation and amortization (“EBITDA”), the probability of achieving certain amounts of EBITDA, and the rate used to discount the liability.

The following table presents the change during the nine months ended September 30, 2018 in the balance of the liability associated with the Earnout Payments (in thousands):

Balance at beginning of period	$	1,930
Payments	(1,000		)
Change in fair value of contingent consideration (included in Other loss)	50
Balance at end of period	$	980

On the Condensed Consolidated Balance Sheet, we included the liability for contingent consideration as a component of Accrued expense and other liabilities.

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RESTRICTED CASH

9 Months Ended

Sep. 30, 2018

Cash and Cash Equivalents [Abstract]

RESTRICTED CASH

NOTE 5. RESTRICTED CASH

Regarding our restricted cash, $2.25 million relates to the Financing Agreement and secures our obligations under that agreement (see Note 17 for more information regarding this amount). The restriction on the cash related to the Financing Agreement will not be released until we have repaid all of our obligations under the Financing Agreement, unless we obtain the written authorization of the Lenders. The remaining amount of our restricted cash relates to the Letter of Credit Facility Agreement we have in place to satisfy the requirements of several of the vendors for whom we sell products (hotel rooms, air travel, show tickets, et cetera) through our online outlets. By contract, certain vendors require letters of credit as a means of securing our payment to them of amounts related to the sales we make on their behalf. We renew the letter of credit facility annually in May, and the restrictions on the cash related to the letters of credit will remain to the extent we continue to enter into contracts requiring the security of letters of credit.

The following table provides a reconciliation of the amounts separately reported as Cash and cash equivalents and Restricted cash on our consolidated balance sheets with the single line item reported on our consolidated statements of cash flows as Cash, cash equivalents and restricted cash (in thousands):

	September 30, 2018		December 31, 2017
Cash and cash equivalents	$	9,902	$	22,632
Restricted cash reported in current assets	11,655		11,670
Total cash, cash equivalents and restricted cash	$	21,557	$	34,302

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INVESTMENT IN UNCONSOLIDATED AFFILIATES

9 Months Ended

Sep. 30, 2018

Noncontrolling Interest [Abstract]

INVESTMENT IN UNCONSOLIDATED AFFILIATES

NOTE 6. INVESTMENT IN UNCONSOLIDATED AFFILIATES

In 2009, we co-founded a U.S.-based venture, Sharecare, to build a web-based platform that simplifies the search for health and wellness information. The other co-founders of Sharecare were Dr. Mehmet Oz, HARPO Productions, Discovery Communications, Jeff Arnold and Sony Pictures Television. As of September 30, 2018, we owned approximately five percent of Sharecare’s issued stock and maintained representation on its Board of Directors.

During June 2018, one of our consolidated VIEs acquired a 20% interest in Beijing All-in-one Cloud Net Technology, Co. Ltd. (“AIO”), a Chinese technology company which provides consulting and data services to the Chinese film industry, in exchange for $1.0 million, a portion of which was paid by September 30, 2018, and a license to use our proprietary KanKan data intelligence platform in China. Based on our evaluation of the facts and circumstances related to the transaction, we determined that we will account for such transaction using the equity method of accounting. We will recognize our equity in the net earnings or losses relating to AIO on a one-quarter reporting lag in our Consolidated Statements of Operations and Comprehensive Income (Loss). For the three months ended September 30, 2018, the amount of our equity in AIO’s net earnings for their quarter ended June 30, 2018 was not material.

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PREPAID EXPENSE AND OTHER CURRENT ASSETS

9 Months Ended

Sep. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

PREPAID EXPENSE AND OTHER CURRENT ASSETS

NOTE 7. PREPAID EXPENSE AND OTHER CURRENT ASSETS

The following table presents the components of prepaid expense and other current assets (in thousands):

	September 30, 2018		December 31, 2017
Prepaid expense	$	2,918	$	2,036
Deposits	3,487		1,960
Inventory, net	744		234
Other current assets	1,561		1,288
Total	$	8,710	$	5,518

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PROPERTY AND EQUIPMENT

9 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 8. PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands, except estimated lives):

	Estimated Life (Years)	September 30, 2018			December 31, 2017
Vehicles	5	$	1,350		$	447
Computers and equipment	2 - 12	1,978			1,635
Furniture and fixtures	2 - 9	221			220
Software	3 - 5	21,719			20,773
Software development in progress		2,010			1,935
Leasehold improvements	1 - 10	569			328
Total property, equipment and software		$	27,847		$	25,338
Less accumulated depreciation		(16,217		)	(11,951		)
Total property, equipment and software, net		$	11,630		$	13,387

For the nine months ended September 30, 2018 and 2017, depreciation (and amortization of software) expense was $4.4 million and $4.1 million, respectively.

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GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 9. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table summarizes intangible assets by category (in thousands):

	September 30, 2018							December 31, 2017
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Finite-lived intangible assets
Domain names	$	2,000	$	(1,358	)	$	642	$	2,591	$	(1,663	)	$	928
Customer relationships	23,186		(13,509		)	9,677		23,486		(10,539		)	12,947
Media content and broadcast rights	2,485		(1,309		)	1,176		2,485		(936		)	1,549
Acquired technology	578		(527		)	51		578		(461		)	117
Other intangible assets	68		(68		)	—		68		(68		)	—
	$	28,317	$	(16,771	)	$	11,546	$	29,208	$	(13,667	)	$	15,541
Indefinite-lived intangible assets
Trademarks and trade names	$	8,276				$	8,276	$	8,276				$	8,276
License to operate in China	128					128		129					129
Total intangible assets	$	36,721				$	19,950	$	37,613				$	23,946

Total amortization expense was $3.8 million and $4.1 million for the nine months ended September 30, 2018 and 2017, respectively.

The following table summarizes the changes in goodwill during the nine months ended September 30, 2018 and the year ended December 31, 2017 (in thousands):

	Nine Months Ended September 30, 2018						Year Ended December 31, 2017
	Travel & Entertainment Segment		Corporate Entity and Other Business Units		Total		Travel & Entertainment Segment		Corporate Entity and Other Business Units			Total
Balance at beginning of period	$	18,514	$	1,585	$	20,099	$	18,514	$	8,249		$	26,763
Business acquisitions	—		—		—		—		2,116			2,116
Impairment of goodwill	—		—		—		—		(8,796		)	(8,796		)
Other	—		—		—		—		16			16
Balance at end of period	$	18,514	$	1,585	$	20,099	$	18,514	$	1,585		$	20,099

The amount in the table above related to business acquisitions in the year ended December 31, 2017 represents measurement-period adjustments related to the CBG Acquisition.

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INCOME TAX

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

INCOME TAX

NOTE 10. INCOME TAX

Our effective tax rate (“ETR”) from continuing operations was 9.1% for the nine months ended September 30, 2018. The quarterly ETR has not significantly differed from our historical annual ETR. The ETR primarily results from recording a benefit associated with a partial valuation allowance release during 2018. The release was affected by the Tax Act, as described below, which changed the carryforward period of net operating losses for U.S. federal tax purposes from 20 years to an indefinite period.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), which makes broad and complex changes to the U.S. tax code that will affect the 2018 tax year.

We have not completed our accounting for the Tax Act. As noted in our 2017 Form 10-K:

• We were able to reasonably estimate certain effects and, therefore, recorded provisional adjustments associated with the impact on deferred tax assets and deferred tax liabilities from reduction of the U.S. federal corporate tax rate.

•

We were not yet able to reasonably estimate the effects for global intangible low-taxed income (GILTI) and deemed repatriation taxes. Therefore, no provisional adjustments were recorded.

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DEBT

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

DEBT

NOTE 11. DEBT

Short-Term Debt

On April 12, 2017, we issued a short-term note payable in the principal amount of $3.0 million to a private lender in exchange for cash in the same amount. The agreement, which does not have a stated interest rate, required us to repay the note plus a fee of $115 thousand on the maturity date of June 30, 2017. The note is accruing interest at $500 per day on the unpaid principal until we repay the note in full.

Other Debt

The following table presents long-term debt (in thousands) as of:

	September 30, 2018			December 31, 2017
Loan due September 2020	$	35,500		$	35,500
Unamortized original issue discount	(1,660		)	(836		)
Unamortized debt issuance cost	(21		)	(79		)
Carrying value of Loan	33,819			34,585
Exit fee payable in relation to Loan	3,500			3,500
Total long-term debt	$	37,319		$	38,085
Less: current portion	(37,319		)	(38,085		)
Long-term debt, less current portion and net of debt issuance cost	$	—		$	—

On September 24, 2015, we entered into the Financing Agreement, pursuant to which the Lenders provided us with the $27.5 million Loan. We entered into Amendment No. 1 to Financing Agreement on September 20, 2016 which, among other

changes, increased the Loan by $8.0 million to a total aggregate principal amount of $35.5 million. As of September 30, 2018, after amendments and other events described below, the Loan bore interest at three-month LIBOR (with a floor of 1%) plus 11% per annum, payable monthly, and had a maturity date of September 30, 2020. As of September 30, 2018, the applicable interest rate on the Loan was approximately 13% per annum.

In connection with the Financing Agreement, we also entered into a security agreement dated as of September 24, 2015 (the “Security Agreement”) with the other Borrowers and the Guarantors for the benefit of MGG, as collateral agent for the Secured Parties referred to therein, to secure the obligations of the Borrowers and the Guarantors under the Financing Agreement. The Security Agreement provides for a first-priority lien on, and security interest in, all assets of Remark and our subsidiaries, subject to certain exceptions.

On October 25, 2017, we entered into Amendment No. 2 and Waiver and Consent to Financing Agreement, pursuant to which the Lenders waived specified events of default under the Financing Agreement occurring prior to January 1, 2018, including but not limited to events of default resulting from our non-compliance with covenants requiring minimum consolidated EBITDA of Remark and its subsidiaries and value of our assets. The Lenders also waived the covenant related to restricted cash balance through September 19, 2017.

On December 5, 2017, we entered into Amendment No. 3 to Financing Agreement pursuant to which the Lenders agreed, among other things, to modify certain of our covenants under the Financing Agreement, including (i) replacing the covenant regarding consolidated EBITDA of Remark and our subsidiaries with a covenant regarding consolidated gross revenue of our subsidiaries engaged in the operation of our KanKan business, (ii) modifying the covenants regarding consolidated EBITDA of Vegas.com and its subsidiaries and the value of certain of our assets, and (iii) increasing the amount we are permitted to invest in our non-U.S. subsidiaries operating our KanKan business, subject to certain conditions.

On April 30, 2018, we entered into Amendment No. 4 and Waiver to Financing Agreement (the “Fourth Financing Amendment”), which provided for, among other things, (i) a reduction in the interest rate on the remaining amount outstanding under the Financing Agreement to three-month LIBOR plus 8.5% per annum, (ii) an extension of the maturity date under the Financing Agreement to September 30, 2020, (iii) a modification of certain of our covenants under the Financing Agreement, including covenants regarding capital expenditures, minimum value of certain of our assets, consolidated EBITDA of Vegas.com and its subsidiaries, and revenue generated by KanKan, (iv) an increase in the amount we are permitted to invest in our non-U.S. subsidiaries operating our KanKan business (v) a waiver by the Lenders of certain events of default under the Financing Agreement and (vi) prepayment by the Borrowers of $8.0 million principal amount outstanding and $3.5 million of exit fees under the Financing Agreement within 60 days following the date of the Fourth Financing Amendment. In consideration for the Lenders’ entry into the Fourth Financing Amendment, we also paid a closing fee of approximately $413 thousand.

Effective as of June 29, 2018, we entered into Amendment No. 5 and Waiver to Financing Agreement (the “Fifth Financing Amendment”) pursuant to which the Lenders agreed, among other things, to extend the due date of the prepayments required by the Fourth Financing Amendment for up to three months, provided that we made extension payments on the first business day of each such month. The extension payments were $250,000 for each of the first two months and $500,000 for the third month, with the final extension period ending on September 28, 2018. We made the extension payments required by the Fifth Financing Amendment to extend the due date of the prepayments required by the Fourth Financing Amendment to September 28, 2018; however, we failed to prepay the $8.0 million principal amount and $3.5 million of exit fees due on such date. Such failure to make the required payments constitutes an event of default under the Financing Agreement and as a result, from September 28, 2018, the Loan bore interest at three-month LIBOR plus 11.0%, the default interest rate.

The Financing Agreement also contains certain affirmative and negative covenants (including, but not limited to, financial covenants with respect to quarterly EBITDA levels and the value of our assets). As of September 30, 2018, we were not in compliance with the covenant under the Financing Agreement requiring minimum revenue from our KanKan business during the trailing nine-month period ended September 30, 2018 of $12.6 million, as actual revenue from our KanKan business during such period was $5.6 million. Our non-compliance with such covenant constitutes an event of default under the Financing Agreement.

As a result of our events of default under the Financing Agreement, the Lenders may declare our obligations under the Financing Agreement, including all unpaid principal and interest, due and payable immediately and exercise such other rights available to them under the Financing Agreement, which could have a material adverse effect on our financial condition. We

have classified the debt as current in the accompanying balance sheet. See Note 17 for more information regarding subsequent events relating to the Financing Agreement.

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OTHER LIABILITIES

9 Months Ended

Sep. 30, 2018

Other Liabilities Disclosure [Abstract]

OTHER LIABILITIES

NOTE 12. OTHER LIABILITIES

The following table presents the components of other liabilities (in thousands):

	September 30, 2018		December 31, 2017
Deferred rent	$	1,650	$	1,820
Early lease termination liability	1,242		—
Contingent consideration liability, net of current portion	—		940
Deferred tax liability, net	369		741
Other	35		—
Total	$	3,296	$	3,501

During the first quarter of 2018, we determined that we would no longer use certain leased office space and, as a result, we sublet the majority of such office space to third parties. As a result of our decision, we recognized $2.3 million of unallocated rent expense in the corporate entity, and an associated liability for early lease termination. The current portion of the liability is recorded in Accrued expense and other current liabilities, with the long-term portion recorded in Other liabilities (see table above).

The following table presents the change in the liability balance related to the early lease termination (in thousands):

	Nine Months Ended September 30,
	2018
Balance at beginning of period	$	—
Establishment of early lease termination liability	2,295
Payment of rent and other costs	(798		)
Receipt of amounts due under subleases	95
Other	16
Balance at end of period	$	1,608

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 13. COMMITMENTS AND CONTINGENCIES We are neither a defendant in any material pending legal proceeding nor are we aware of any material threatened claims against us; therefore, we have not accrued any contingent liabilities, exclusive of the liability for the Earnout Payment related to the VDC Acquisition.

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STOCKHOLDERS' EQUITY AND NET LOSS PER SHARE

9 Months Ended

Sep. 30, 2018

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY AND NET LOSS PER SHARE

NOTE 14. STOCKHOLDERS' EQUITY AND NET LOSS PER SHARE

Equity Issuances

On July 2, 2018, we entered into the 2018 Aspire Purchase Agreement with Aspire Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Aspire Capital to purchase up to an aggregate of $30.0 million of shares of our common stock over the 30-month term of the 2018 Aspire Purchase Agreement.

The 2018 Aspire Purchase Agreement replaced the 2016 Aspire Purchase Agreement, which was terminated under the terms of the 2018 Aspire Purchase Agreement.

Under the 2018 Aspire Purchase Agreement, on any trading day over the 30-month term of such agreement, we have the right, in our sole discretion, to present Aspire Capital with a purchase notice (each, a “Purchase Notice”) directing Aspire Capital to purchase up to 50,000 shares of our common stock per business day, up to an aggregate of $30.0 million under the 2018 Aspire Purchase Agreement, at a per share price (the “Purchase Price”) equal to the lesser of (i) the lowest sale price of our common stock on the purchase date or (ii) the arithmetic average of the three lowest closing sale prices for our common stock during the 10 consecutive trading days ending on the trading day immediately preceding the purchase date.

The aggregate purchase price payable by Aspire Capital on any one purchase date may not exceed $250,000, unless otherwise mutually agreed. The parties may mutually agree to increase the number of shares of our common stock that may be purchased per trading day pursuant to the terms of the 2018 Aspire Purchase Agreement to 3,000,000 shares.

In addition, on any trading day on which we submit a Purchase Notice to Aspire Capital to purchase at least 50,000 shares, we also have the right, in our sole discretion, to present Aspire Capital with a volume-weighted average price purchase notice (each, a “VWAP Purchase Notice”) directing Aspire Capital to purchase an amount of our common stock equal to up to 30% of the aggregate shares of our common stock traded on the next trading day (the “VWAP Purchase Date”), subject to a maximum number of shares we may determine, and a minimum purchase price threshold equal to the greater of (i) 80% of the closing price of our common stock on the business day immediately preceding the VWAP Purchase Date or (ii) a higher price that may be determined by us. The purchase price per share pursuant to such VWAP Purchase Notice will be equal to the lesser of (i) the closing sale price of our common stock on the VWAP Purchase Date, or (ii) 97% of the volume-weighted average price for our common stock traded on its principal market on the VWAP Purchase Date, subject to certain exceptions.

We may deliver multiple Purchase Notices and VWAP Purchase Notices to Aspire Capital from time to time during the term of the Purchase Agreement, so long as the most recent purchase has been completed.

In addition, Aspire Capital will not be required to buy any shares of our common stock pursuant to a Purchase Notice that is received by Aspire Capital on any trading day on which the last closing trade price of our common stock is below $1.00. There are no trading volume requirements or restrictions under the 2018 Aspire Purchase Agreement, and we will control the timing and amount of sales of our common stock to Aspire Capital. Aspire Capital has no right to require any sales by us, but is obligated to make purchases from us as directed by us in accordance with the 2018 Aspire Purchase Agreement. There are no limitations on use of proceeds, financial or business covenants, restrictions on future fundings, rights of first refusal, participation rights, penalties or liquidated damages in the 2018 Aspire Purchase Agreement. The 2018 Aspire Purchase Agreement may be terminated by us at any time, at our discretion, without any cost to us. Aspire Capital has agreed that neither it nor any of its agents, representatives and affiliates will engage in any direct or indirect short-selling or hedging our common stock during any time prior to the termination of the 2018 Aspire Purchase Agreement.

The 2018 Aspire Purchase Agreement provides that the total number of shares that may be issued pursuant to such agreement is limited to 6,629,039 shares (the “2018 Aspire Exchange Cap”), or 19.99% of our shares of common stock outstanding as of the date of the 2018 Aspire Purchase Agreement, unless stockholder approval is obtained in accordance with the rules of the Nasdaq Stock Market. If stockholder approval is not obtained, such limitation will not apply after the 2018 Aspire Exchange Cap is reached if at all times thereafter the average purchase price paid for all shares issued under the 2018 Aspire Purchase Agreement is equal to or greater than $3.91 per share. The 2018 Aspire Purchase Agreement also provides that at no time will Aspire Capital (together with its affiliates) beneficially own more than 19.99% of our outstanding shares of common stock.

As of September 30, 2018, we have issued to Aspire Capital a total of 3,308,812 shares of our common stock under the 2018 Aspire Purchase Agreement, including 3,095,238 shares purchased by Aspire Capital for an aggregate purchase price of $10.0 million, and 213,574 shares issued to Aspire Capital upon executing the 2018 Aspire Purchase Agreement. During the nine months ended September 30, 2018, we also issued 381,445 shares of our common stock as a result of stock option exercises, from which we obtained approximately $1.0 million as well as the shares of our common stock in settlement of the warrants as described in Note 4.

During the nine months ended September 30, 2017, we issued a total of 3,052,897 shares of our common stock to investors in exchange for approximately $8.3 million in cash, including a $5.0 million issuance to Aspire. We did not issue our common stock in private sales during the nine months ended September 30, 2018.

Stock-Based Compensation 

We are authorized to issue equity-based awards under our 2010 Equity Incentive Plan, our 2014 Incentive Plan, and our 2017 Incentive Plan, each of which our stockholders have approved. We also award cash bonuses (“China Cash Bonuses”) to our employees in China, which grants are not subject to a formal incentive plan and which can only be settled in cash. We grant such awards to attract, retain and motivate eligible officers, directors, employees and consultants. Under each of the plans, we have granted shares of restricted stock and options to purchase common stock to our officers and employees with exercise prices equal to or greater than the fair value of the underlying shares on the grant date.

Stock options and China Cash Bonuses generally expire 10 years from the grant date. All forms of equity awards and China Cash Bonuses vest upon the passage of time, the attainment of performance criteria, or both. When participants exercise stock options, we issue any shares of our common stock resulting from such exercise from new authorized and unallocated shares available at the time of exercise.

The following table summarizes activity under our equity incentive plans related to equity-classified stock option grants as of September 30, 2018, and changes during the nine months then ended:

	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2018	9,397,056		$	3.80
Granted	1,909,500		6.79
Exercised	(385,820	)	2.60
Forfeited, cancelled or expired	(46,377	)	6.09
Outstanding at September 30, 2018	10,874,359		$	4.36	7.8	$	2,885
Options exercisable at September 30, 2018	10,009,767		$	4.44	7.7	$	2,319

We granted an option to purchase 1.3 million shares of our common stock at an exercise price of $7.81 per share to Kai-Shing Tao, our Chief Executive Officer and Chairman of the Board, under the 2017 Incentive Plan, which our stockholders approved in January 2018. We recorded the entire $11.6 million of compensation expense associated with this award in January 2018 because Mr. Tao fully vested in the award at the time we received stockholder approval.

The following table summarizes activity under our equity incentive plans related to the China Cash Bonuses as of September 30, 2018, and changes during the nine months then ended:

	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2018	266,500		$	3.84
Granted	1,367,375		6.02
Exercised	(7,875	)	4.28
Forfeited, cancelled or expired	(233,375	)	5.76
Outstanding at September 30, 2018	1,392,625		$	5.67	9.3	$	36
Bonuses exercisable at September 30, 2018	169,750		$	4.04	8.2	$	19

During the nine months ended September 30, 2018, we did not award restricted stock under our equity incentive plans.

We incurred share-based compensation expense of $0.9 million and $1.6 million, respectively, during the three months ended September 30, 2018 and 2017, and of $12.9 million and $2.2 million, respectively, during the nine months ended September 30, 2018 and 2017.

Net Income (Loss) per Share 

For the three and nine months ended September 30, 2018 and 2017, there were no reconciling items related to either the numerator or denominator of the loss per share calculation.

Securities which would have been anti-dilutive to a calculation of diluted earnings per share for the three and nine months ended September 30, 2018 and 2017 include:

• the outstanding stock options described above;

• the outstanding CBG Acquisition Warrant, which may be exercised to purchase 40,000 shares of our common stock at a per-share exercise price of $10.00 (we are also committed to the future issuance of additional CBG Acquisition Warrants at the same per-share exercise price as the CBG Acquisition Warrant that has already been issued), and the outstanding CBG Financing Warrants, which may be exercised to purchase 3,070,638 shares of our common stock at an exercise price of $4.78 per share;

•

the warrants issued in conjunction with our acquisition of Hotelmobi, Inc., which may be exercised to purchase 1,000,000 shares of our common stock, half at an exercise price of $8.00 per share and half at an exercise price of $12.00 per share.

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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE 15. SEGMENT INFORMATION

We currently report on two segments: our Travel & Entertainment segment, which provides our customers with access to a full range of travel and entertainment services in Las Vegas and surrounding areas, and our Technology & Data Intelligence segment, which provides services to our customers based upon the data collected and processed by our proprietary data intelligence software.

Our chief operating decision makers use Adjusted EBITDA as the primary measure of profitability for evaluating the operational performance of our reportable segments. Adjusted EBITDA represents operating income (loss) plus depreciation and amortization expense, share-based compensation expense, impairments and net other income, less other loss. For our Travel

& Entertainment segment, Adjusted EBITDA includes an allocation of rent expense, which allocation we base on usage of space. We do not allocate certain other types of shared expense, such as legal and accounting, to our reportable segments; such costs are included in Corporate Entity and Other.

The following table presents certain financial information regarding our business segments and other entities for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Travel & Entertainment		Technology & Data Intelligence			Corporate Entity and Other			Consolidated
Three Months Ended September 30, 2018
Revenue	$	17,596	$	1,039		$	716		$	19,351
Adjusted EBITDA	$	2,324	$	(1,674	)	$	(3,428	)	$	(2,778	)
Three Months Ended September 30, 2017
Revenue	$	16,284	$	2,203		$	962		$	19,449
Adjusted EBITDA	$	1,955	$	(946	)	$	(2,833	)	$	(1,824	)
Nine Months Ended September 30, 2018
Revenue	$	49,320	$	5,591		$	1,877		$	56,788
Adjusted EBITDA	$	4,493	$	(5,166	)	$	(12,292	)	$	(12,965	)
Nine Months Ended September 30, 2017
Revenue	$	45,765	$	3,212		$	3,027		$	52,004
Adjusted EBITDA	$	4,322	$	(2,096	)	$	(7,788	)	$	(5,562	)

The following table reconciles Adjusted EBITDA to Loss before income taxes (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Adjusted EBITDA	$	(2,778	)	$	(1,824	)	$	(12,965	)	$	(5,562	)
Depreciation and amortization	(2,756		)	(2,482		)	(8,220		)	(8,237		)
Impairments	—			(28		)	—			(28		)
Share-based compensation expense	(891		)	(1,629		)	(12,913		)	(2,225		)
Other loss	(1		)	—			(56		)	(20		)
Other loss (gain)	12			33			(511		)	85
Operating loss	$	(6,414	)	$	(5,930	)	$	(34,665	)	$	(15,987	)
Other income (expense)
Interest expense	(1,307		)	(1,080		)	(3,968		)	(3,279		)
Other income	1			—			56			20
Change in fair value of warrant liability	3,525			(5,978		)	22,190			2,351
Other gain (loss)	(12		)	(33		)	511			(85		)
Total other income, net	$	2,207		$	(7,091	)	$	18,789		$	(993	)
Income (loss) before income taxes	$	(4,207	)	$	(13,021	)	$	(15,876	)	$	(16,980	)

The following table presents total assets for our segments and the corporate and other entities (in thousands):

	September 30, 2018		December 31, 2017
Travel & Entertainment segment	$	69,296	$	75,820
Technology & Data Intelligence segment	3,824		5,105
Corporate entity and other business units	17,329		22,612
Consolidated	$	90,449	$	103,537

Capital expenditures for our Travel & Entertainment segment totaled $0.3 million and $0.7 million during the three months ended September 30, 2018 and 2017, respectively, while capital expenditures for our Technology & Data Intelligence segment totaled $0.1 million and $0.2 million during each of the same periods, respectively. Capital expenditures for our Travel & Entertainment segment totaled $2.0 million and $1.6 million during the nine months ended September 30, 2018 and 2017, respectively, while capital expenditures for our Technology & Data Intelligence segment totaled $0.6 million and $1.0 million during each of the same periods, respectively.

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RELATED PARTY TRANSACTION

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTION

NOTE 16. RELATED PARTY TRANSACTION On June 11, 2018, we sold the IRS.com web domain to a company in which our former CFO has a significant ownership interest. The consideration consisted of a cash payment of approximately $0.6 million and assumed liabilities of approximately $0.1 million. We recognized a gain of approximately $0.6 million on the transaction which is reported in Other gain (loss) on our Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 17. SUBSEQUENT EVENTS

Events Related to the Financing Agreement

On October 4, 2018, $2.25 million held in a cash collateral account to secure our obligations under the Financing Agreement (such amount reflected in Restricted cash in our consolidated balance sheet) was transferred to the Lenders and applied to the amount of exit fees due and payable under the Financing Agreement. The Financing Agreement requires us to maintain a balance in that account of at least $2.25 million and we have not replaced that amount transferred to Lenders, which constitutes an event of default under the Financing Agreement.

We are actively engaged in discussions with the Lenders regarding a resolution of the events of default under the Financing Agreement described herein. On October 16, 2018, in connection with those discussions, we agreed to increase the amount of the exit fees payable to the Lenders under the Financing Agreement by $1.0 million. Also in connection with those discussions, the Lenders have informed us that they are willing to forebear from taking any enforcement actions against us through December 31, 2018 if we continue to pursue certain strategic alternatives. We have engaged a financial advisor to assist us in assessing and pursuing those strategic alternatives, and we intend to continue pursuing those strategic alternatives and others, including the potential sale of certain non-core assets, investment assets and operating businesses, and to explore other alternatives for obtaining financing. We cannot provide any assurance that we will be successful in completing a strategic transaction or obtaining alternative financing, or that the Lenders will forebear from taking any enforcement actions against us.

Common Stock Issuance

On November 2, 2018, we sold 200,000 shares of our common stock to an accredited investor in a private placement for $0.5 million.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of Accounting

We prepared the accompanying unaudited Condensed Consolidated Balance Sheet as of September 30, 2018, with the audited Consolidated Balance Sheet amounts as of December 31, 2017 presented for comparative purposes, and the related unaudited Condensed Consolidated Statements of Operations and Statements of Cash Flows in accordance with the instructions for Form 10-Q. In compliance with those instructions, we have omitted certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), though management believes the disclosures made herein are sufficient to ensure that the information presented is not misleading.

Our results of operations and our cash flows as of the end of the interim periods reported herein do not necessarily indicate the results we may experience for the remainder of the year or for any other future period.

Management believes that we have included all adjustments (including those of a normal, recurring nature) considered necessary to fairly present our unaudited Condensed Consolidated Balance Sheet as of September 30, 2018, our unaudited Condensed Consolidated Statements of Operations and our unaudited Condensed Consolidated Statements of Cash Flows for all periods presented. You should read our unaudited condensed consolidated interim financial statements and footnotes in conjunction with our consolidated financial statements and footnotes included within the Annual Report on Form 10-K (the “2017 Form 10-K”).

Consolidation

Consolidation

We include all of our subsidiaries, which include the VIEs for which we are the primary beneficiary, in our consolidated financial statements, eliminating all significant intercompany balances and transactions during consolidation.

To comply with China’s laws which restrict foreign ownership of entities that operate within industries deemed sensitive by the Chinese government, we employ what we believe is a commonly-used organizational structure consisting of a wholly-foreign owned enterprise (“WFOE”) and the VIEs to operate our KanKan business. We own 100% of the equity of the WFOE, while the VIEs are companies formed in China under local laws which are owned by members of our management team. We funded the registered capital and operating expenses of the VIEs by extending loans to the VIEs’ owners. We are the primary beneficiary of the VIEs because the relationships between the VIEs and our WFOE are governed by contractual agreements, including in each case an Exclusive Call Option Agreement, an Exclusive Business Cooperation Agreement, a Proxy Agreement and an Equity Pledge Agreement, which give us control over the operations of the VIEs.

Use of Estimates

Use of EstimatesWe prepare our consolidated financial statements in conformity with GAAP. While preparing our financial statements, we make estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and accompanying notes. Accordingly, actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, intangible assets, the useful lives of property and equipment, stock-based compensation, the fair value of the warrant liability, income taxes, inventory reserve and purchase price allocation, among other items.

Changes to Significant Accounting Policies - Revenue Recognition

Changes to Significant Accounting Policies - Revenue Recognition

On January 1, 2018, we adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and all subsequent amendments (collectively “ASC 606”) using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of Accumulated deficit (the amount was not material). We have not retrospectively adjusted the information for the comparative period reported herein, which information we continue to report under the accounting standards in effect for that period. The amounts of revenue, accounts receivable and contract balances that we reported under ASC 606 as of and for the three and nine months ended September 30, 2018, were not materially different than the amounts we would have reported under the accounting standards previously in effect.

We recognize revenue when we transfer control of the promised goods or services to our customers, and we recognize an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.

When customers pay us prior to when we satisfy our obligation to transfer control of promised goods or services, we record the amount that reflects the consideration to which we expect to be entitled as a contract liability until such time as we satisfy our performance obligation. As a result of our adoption of ASC 606, the line item previously labeled “Deferred revenue” on our condensed consolidated balance sheets is now labeled “Contract liability”; the comparative period balance as reported herein did not change as a result of our application of the modified retrospective transition approach.

For our contracts with customers, we only extend short-term credit policies to our customers, generally of 90 days or less.

We record the incremental costs of obtaining contracts as an expense when incurred, because such costs would otherwise be amortized over a period of less than one year if capitalized.

Transaction Services

Our Travel & Entertainment segment generates our transaction services revenue, most of which results from the use of the merchant model under which we remain the merchant of record, but various service providers with whom we maintain relationships are ultimately responsible for delivering the underlying services for which our customers transact, such as lodging, air travel, entertainment, or tours. Our obligation to our customers is to arrange for these service providers to provide the underlying services, and we satisfy our obligation at the point in time that these service providers begin to provide the underlying service (e.g., upon the check-in date for lodging stays, upon the show/performance date for entertainment transactions, etc.). Though we are the merchant of record for transactions in which other entities provide the ultimate service, under current accounting guidance we are an agent in such transactions; therefore, we recognize revenue from transactions

under the merchant model on a net basis (i.e., the amount we bill to our customers less the amounts we pay to the service providers).

To a lesser extent, we provide tour services directly to our customers. Our obligation to provide such services is satisfied at the point in time that we finish providing the tour, and we recognize the resulting revenue on a gross basis when our obligation is satisfied.

Our customers pay at the time the original transaction occurs via our sales channels, primarily the Vegas.com website and mobile application. Because the original transaction date almost always precedes the date that our performance obligation is satisfied, we record a Contract liability for the amount of consideration received (net of amounts owed to suppliers). In general, we satisfy most of our performance obligations within approximately three to four months from the original transaction date, and substantially all performance obligations are satisfied within one year from the original transaction date.

Data Platform Services

Our KanKan business generates our data platform services revenue. One of the business’s product offerings involves utilizing our proprietary data intelligence software to provide high-quality loan candidates to our customers, which are companies that help to market the loan products of banks and other lending institutions in China to potential loan candidates. We earn a commission for this service, which is deemed earned and is recognized at the point in time at which the related loan is issued to the candidate by a lending institution supporting the loan product being promoted by our customer. The amount of commission we recognize is determined by multiplying the commission rate specified in the applicable contract by the amount of the loan issued to the candidate.

Under contracts with two of our customers, we are required to reimburse those customers for as much as 10% of the commissions paid under the contract if the total amount of the defaults across all of the loans issued and outstanding with respect to such contract exceeds an established threshold (the “Reimbursement Obligation”). Such contracts also require us to maintain a cash deposit with those customers to support the Reimbursement Obligation, and they permit the customer to deduct the required amount of any reimbursement from such deposit. We no longer provide new candidates to those customers under those particular contracts, and none of our remaining contracts related to providing loan candidates to customers include the Reimbursement Obligation or similar terms, so the maximum amount of our liability with respect to the Reimbursement Obligation as of September 30, 2018 and going forward is $0.5 million, Further, as of September 30, 2018, the amount we have on deposit with the customers under those contracts to support the Reimbursement Obligation exceeds such maximum liability with respect to the Reimbursement Obligation, and we have not reimbursed any customer any amount of commissions paid under these contracts, nor are we required to do so because the total amount of the defaults has not exceeded the established threshold.

We have determined that the Reimbursement Obligation does not fall within the scope of ASC 606 and that we should account for it as a guarantee for accounting purposes using other GAAP. We recorded an initial liability, reported in Accrued expense and other current liabilities in our consolidated balance sheet, equal to our maximum potential Reimbursement Obligation, an amount which approximated fair value. As we are released from an amount of the Reimbursement Obligation, we record the amount of reduction in the Reimbursement Obligation as data platform services revenue. We have not recorded material amounts of revenue resulting from being released from the Reimbursement Obligation.

We also generate revenue by creating and delivering integrated artificial-intelligence-based solutions for clients. Under this type of contract, we provide a single, continuous service to clients who control the assets as we create them. Accordingly, we recognize the revenue over the period of time during which we provide the service.

Advertising and Other

Our Travel & Entertainment segment generates the majority of our advertising revenue, and we report the remaining amount of advertising revenue in Corporate Entity and Other in our segment information. We primarily generate advertising revenue from the use of sponsored links and display advertising placed directly on our website pages. Substantially all of our advertising contracts with customers are completed within one year or less.

In click-through advertising contracts with customers, our obligation is to place our customers’ interactive ads on our websites for a specified period of time. We recognize revenue from click-through advertising at the point in time at which visitors to our websites click through the ads to our advertising customers’ websites. Any variability regarding contract consideration is resolved within the reporting period.

Some of our advertising contracts with customers require us to place our advertising customers’ static display ads on our websites for a specified period of time or in a specific location on our websites, or both. We recognize revenue from such advertising placement arrangements either over time (ratably over the contract term) or based upon the delivery of advertising impressions, depending upon the terms of the contract.

We also generate revenue from other sources, such as from e-commerce activity in which we sell goods to our customers, or media production which involves us producing video or Internet-based content for our customers. We recognize the revenue from these contracts at the point in time when we transfer control of the good sold to the customer or when we deliver the promised media content.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, Leases (Topic 842), which changes GAAP primarily by requiring lessees to recognize, at lease commencement, a lease liability representing the present value of the lessee’s obligation to make lease payments, and a right-of-use asset representing the lessee’s right to use (or control the use of) a specified asset during the lease term, for leases classified as operating leases. For us, the amendments in ASU 2016-02 will become effective on January 1, 2019. We are designing appropriate internal controls and modifying key processes to allow for the implementation of ASU 2016-02, which we anticipate will have a material impact on our balance sheet, as we will be recording right-of-use assets and lease liabilities related to our operating leases, including our leases for office space. We do not anticipate that application of ASU 2016-02 will have a material impact on our statement of operations or cash flows.

We have reviewed all recently issued accounting pronouncements. The pronouncements that we have already adopted did not have a material effect on our financial condition, results of operations, cash flows or reporting thereof, and except as otherwise noted above, we do not believe that any of the pronouncements that we have not yet adopted will have a material effect upon our financial condition, results of operations, cash flows or reporting thereof.

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REVENUE (Tables)

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Schedule of disaggregation of revenue

The following table presents a disaggregation of our revenue by major category for the three and nine months ended September 30, 2018 (in thousands):

Revenue category	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Transaction services	$	16,619	$	46,272
Data platform services	1,039		5,591
Advertising and other	1,693		4,925
Revenue	$	19,351	$	56,788

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Quantitative inputs

The following table presents the quantitative inputs, which we classify in Level 3 of the fair value hierarchy, used in estimating the fair value of the warrants:

	September 30,		December 31,
	2018		2017
CBG Financing Warrants
Expected volatility	60.00	%	60.00	%
Risk-free interest rate	2.81	%	1.96	%
Expected remaining term (years)	1.98		2.73
CBG Acquisition Warrants
Expected volatility	60.00	%	60.00	%
Risk-free interest rate	2.94	%	2.25	%
Expected remaining term (years)	4.97		5.72

In addition to the quantitative assumptions above, we also consider whether we would issue additional equity and, if so, the price per share of such equity. At September 30, 2018, we estimated that one future equity financing event would potentially occur within the subsequent twelve months.

Our estimate of expected volatility and our stock price tend to have the most significant impact on the estimated fair value of the CBG Financing Warrants and the CBG Acquisition Warrants. If we added or subtracted five percentage points with regard to our estimate of expected volatility, or if our stock price increased or decreased by five percent, our estimates of fair value would change approximately as follows (in thousands):

Change in volatility	Increase		Decrease
CBG Financing Warrants	$	275	$	275
CBG Acquisition Warrants	805		865
Change in stock price
CBG Financing Warrants	$	245	$	245
CBG Acquisition Warrants	345		405

Reconciliation of liabilities of warrants

The following table presents the change in the liability balance associated with our liability-classified warrants (in thousands):

	Nine Months Ended September 30,			Year Ended December 31,
	2018			2017
Balance at beginning of period	$	89,169		$	25,030
Warrant exercises	(59,907		)	—
Increase (decrease) in fair value	(22,190		)	64,139
Balance at end of period	$	7,072		$	89,169

Reconciliation of earnout payments

The following table presents the change during the nine months ended September 30, 2018 in the balance of the liability associated with the Earnout Payments (in thousands):

Balance at beginning of period	$	1,930
Payments	(1,000		)
Change in fair value of contingent consideration (included in Other loss)	50
Balance at end of period	$	980

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RESTRICTED CASH (Tables)

9 Months Ended

Sep. 30, 2018

Cash and Cash Equivalents [Abstract]

Schedule of cash, cash equivalents and restricted cash

The following table provides a reconciliation of the amounts separately reported as Cash and cash equivalents and Restricted cash on our consolidated balance sheets with the single line item reported on our consolidated statements of cash flows as Cash, cash equivalents and restricted cash (in thousands):

	September 30, 2018		December 31, 2017
Cash and cash equivalents	$	9,902	$	22,632
Restricted cash reported in current assets	11,655		11,670
Total cash, cash equivalents and restricted cash	$	21,557	$	34,302

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PREPAID EXPENSE AND OTHER CURRENT ASSETS (Tables)

9 Months Ended

Sep. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid expense and other current assets

The following table presents the components of prepaid expense and other current assets (in thousands):

	September 30, 2018		December 31, 2017
Prepaid expense	$	2,918	$	2,036
Deposits	3,487		1,960
Inventory, net	744		234
Other current assets	1,561		1,288
Total	$	8,710	$	5,518

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PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Abstract]

Property and equipment

Property and equipment consist of the following (in thousands, except estimated lives):

	Estimated Life (Years)	September 30, 2018			December 31, 2017
Vehicles	5	$	1,350		$	447
Computers and equipment	2 - 12	1,978			1,635
Furniture and fixtures	2 - 9	221			220
Software	3 - 5	21,719			20,773
Software development in progress		2,010			1,935
Leasehold improvements	1 - 10	569			328
Total property, equipment and software		$	27,847		$	25,338
Less accumulated depreciation		(16,217		)	(11,951		)
Total property, equipment and software, net		$	11,630		$	13,387

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Finite-lived intangible assets

The following table summarizes intangible assets by category (in thousands):

	September 30, 2018							December 31, 2017
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Finite-lived intangible assets
Domain names	$	2,000	$	(1,358	)	$	642	$	2,591	$	(1,663	)	$	928
Customer relationships	23,186		(13,509		)	9,677		23,486		(10,539		)	12,947
Media content and broadcast rights	2,485		(1,309		)	1,176		2,485		(936		)	1,549
Acquired technology	578		(527		)	51		578		(461		)	117
Other intangible assets	68		(68		)	—		68		(68		)	—
	$	28,317	$	(16,771	)	$	11,546	$	29,208	$	(13,667	)	$	15,541
Indefinite-lived intangible assets
Trademarks and trade names	$	8,276				$	8,276	$	8,276				$	8,276
License to operate in China	128					128		129					129
Total intangible assets	$	36,721				$	19,950	$	37,613				$	23,946

Indefinite-lived intangible assets

The following table summarizes intangible assets by category (in thousands):

	September 30, 2018							December 31, 2017
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Finite-lived intangible assets
Domain names	$	2,000	$	(1,358	)	$	642	$	2,591	$	(1,663	)	$	928
Customer relationships	23,186		(13,509		)	9,677		23,486		(10,539		)	12,947
Media content and broadcast rights	2,485		(1,309		)	1,176		2,485		(936		)	1,549
Acquired technology	578		(527		)	51		578		(461		)	117
Other intangible assets	68		(68		)	—		68		(68		)	—
	$	28,317	$	(16,771	)	$	11,546	$	29,208	$	(13,667	)	$	15,541
Indefinite-lived intangible assets
Trademarks and trade names	$	8,276				$	8,276	$	8,276				$	8,276
License to operate in China	128					128		129					129
Total intangible assets	$	36,721				$	19,950	$	37,613				$	23,946

Goodwill

The following table summarizes the changes in goodwill during the nine months ended September 30, 2018 and the year ended December 31, 2017 (in thousands):

	Nine Months Ended September 30, 2018						Year Ended December 31, 2017
	Travel & Entertainment Segment		Corporate Entity and Other Business Units		Total		Travel & Entertainment Segment		Corporate Entity and Other Business Units			Total
Balance at beginning of period	$	18,514	$	1,585	$	20,099	$	18,514	$	8,249		$	26,763
Business acquisitions	—		—		—		—		2,116			2,116
Impairment of goodwill	—		—		—		—		(8,796		)	(8,796		)
Other	—		—		—		—		16			16
Balance at end of period	$	18,514	$	1,585	$	20,099	$	18,514	$	1,585		$	20,099

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DEBT (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Schedule of long-term debt instruments

The following table presents long-term debt (in thousands) as of:

	September 30, 2018			December 31, 2017
Loan due September 2020	$	35,500		$	35,500
Unamortized original issue discount	(1,660		)	(836		)
Unamortized debt issuance cost	(21		)	(79		)
Carrying value of Loan	33,819			34,585
Exit fee payable in relation to Loan	3,500			3,500
Total long-term debt	$	37,319		$	38,085
Less: current portion	(37,319		)	(38,085		)
Long-term debt, less current portion and net of debt issuance cost	$	—		$	—

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OTHER LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2018

Other Liabilities Disclosure [Abstract]

Other liabilities

The following table presents the components of other liabilities (in thousands):

	September 30, 2018		December 31, 2017
Deferred rent	$	1,650	$	1,820
Early lease termination liability	1,242		—
Contingent consideration liability, net of current portion	—		940
Deferred tax liability, net	369		741
Other	35		—
Total	$	3,296	$	3,501

Early lease termination liability

The following table presents the change in the liability balance related to the early lease termination (in thousands):

	Nine Months Ended September 30,
	2018
Balance at beginning of period	$	—
Establishment of early lease termination liability	2,295
Payment of rent and other costs	(798		)
Receipt of amounts due under subleases	95
Other	16
Balance at end of period	$	1,608

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STOCKHOLDERS' EQUITY AND NET LOSS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2018

Stockholders' Equity Note [Abstract]

Stock option activity under equity incentive plans

The following table summarizes activity under our equity incentive plans related to the China Cash Bonuses as of September 30, 2018, and changes during the nine months then ended:

	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2018	266,500		$	3.84
Granted	1,367,375		6.02
Exercised	(7,875	)	4.28
Forfeited, cancelled or expired	(233,375	)	5.76
Outstanding at September 30, 2018	1,392,625		$	5.67	9.3	$	36
Bonuses exercisable at September 30, 2018	169,750		$	4.04	8.2	$	19

The following table summarizes activity under our equity incentive plans related to equity-classified stock option grants as of September 30, 2018, and changes during the nine months then ended:

	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2018	9,397,056		$	3.80
Granted	1,909,500		6.79
Exercised	(385,820	)	2.60
Forfeited, cancelled or expired	(46,377	)	6.09
Outstanding at September 30, 2018	10,874,359		$	4.36	7.8	$	2,885
Options exercisable at September 30, 2018	10,009,767		$	4.44	7.7	$	2,319

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SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Schedule of segment reporting information, by segment

The following table presents certain financial information regarding our business segments and other entities for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Travel & Entertainment		Technology & Data Intelligence			Corporate Entity and Other			Consolidated
Three Months Ended September 30, 2018
Revenue	$	17,596	$	1,039		$	716		$	19,351
Adjusted EBITDA	$	2,324	$	(1,674	)	$	(3,428	)	$	(2,778	)
Three Months Ended September 30, 2017
Revenue	$	16,284	$	2,203		$	962		$	19,449
Adjusted EBITDA	$	1,955	$	(946	)	$	(2,833	)	$	(1,824	)
Nine Months Ended September 30, 2018
Revenue	$	49,320	$	5,591		$	1,877		$	56,788
Adjusted EBITDA	$	4,493	$	(5,166	)	$	(12,292	)	$	(12,965	)
Nine Months Ended September 30, 2017
Revenue	$	45,765	$	3,212		$	3,027		$	52,004
Adjusted EBITDA	$	4,322	$	(2,096	)	$	(7,788	)	$	(5,562	)

The following table reconciles Adjusted EBITDA to Loss before income taxes (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Adjusted EBITDA	$	(2,778	)	$	(1,824	)	$	(12,965	)	$	(5,562	)
Depreciation and amortization	(2,756		)	(2,482		)	(8,220		)	(8,237		)
Impairments	—			(28		)	—			(28		)
Share-based compensation expense	(891		)	(1,629		)	(12,913		)	(2,225		)
Other loss	(1		)	—			(56		)	(20		)
Other loss (gain)	12			33			(511		)	85
Operating loss	$	(6,414	)	$	(5,930	)	$	(34,665	)	$	(15,987	)
Other income (expense)
Interest expense	(1,307		)	(1,080		)	(3,968		)	(3,279		)
Other income	1			—			56			20
Change in fair value of warrant liability	3,525			(5,978		)	22,190			2,351
Other gain (loss)	(12		)	(33		)	511			(85		)
Total other income, net	$	2,207		$	(7,091	)	$	18,789		$	(993	)
Income (loss) before income taxes	$	(4,207	)	$	(13,021	)	$	(15,876	)	$	(16,980	)

The following table presents total assets for our segments and the corporate and other entities (in thousands):

	September 30, 2018		December 31, 2017
Travel & Entertainment segment	$	69,296	$	75,820
Technology & Data Intelligence segment	3,824		5,105
Corporate entity and other business units	17,329		22,612
Consolidated	$	90,449	$	103,537

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ORGANIZATION AND BUSINESS (Details) - USD ($)		3 Months Ended		9 Months Ended
	Jul. 02, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Sep. 20, 2016	Sep. 24, 2015
Debt Instrument [Line Items]
Accumulated deficit		$ 314,094,000		$ 314,094,000		$ 299,848,000
Cash and cash equivalents		9,902,000		9,902,000		22,632,000
Working capital		55,000,000.0		55,000,000.0
Revenue		19,351,000	$ 19,449,000	56,788,000	$ 52,004,000
Original principal amount							$ 35,500,000
Loans Payable
Debt Instrument [Line Items]
Original principal amount		35,500,000		$ 35,500,000		$ 35,500,000	$ 35,500,000	$ 27,500,000
Common Stock
Debt Instrument [Line Items]
Common stock issuances (in shares)				0	3,052,897
Common stock issuances (in shares)				$ 0	$ 8,300,000
Common Stock | Aspire Capital Fund, LLC
Debt Instrument [Line Items]
Common stock issuances (in shares)					$ 5,000,000.0
Common Stock | 2018 Aspire Purchase Agreement
Debt Instrument [Line Items]
Period of purchase stock	30 months
2018 Aspire Purchase Agreement | Common Stock
Debt Instrument [Line Items]
Common stock issuances (in shares)				3,095,238
Value of shares purchased to date		$ 10,000,000.0		$ 10,000,000.0

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Typical maximum term of short-term credit policies extended to customers	90 days
Reimbursement requirement, percentage of commissions paid	10.00%
Reimbursement obligation	$ 0.5
Transaction services
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Substantially all performance period	1 year
Transaction services | Minimum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Typical performance period	3 months
Transaction services | Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Typical performance period	4 months
Advertising and other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Substantially all performance period	1 year

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REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Term of contract			1 year
Revenue	$ 19,351	$ 19,449	$ 56,788	$ 52,004
Revenue recognized			3,100
Transaction services
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue	16,619		46,272
Data platform services
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue	1,039		5,591
Advertising and other
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue	$ 1,693		$ 4,925

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FAIR VALUE MEASUREMENTS - Schedule of Assumptions Used in Calculating the Fair Value of Warrants (Details) - Fair Value, Inputs, Level 3 - China Branding Group Limited	Sep. 30, 2018	Dec. 31, 2017
Expected volatility | CBG Financing Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, measurement input	0.6000	0.6000
Expected volatility | CBG Acquisition Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, measurement input	0.6000	0.6000
Risk-free interest rate | CBG Financing Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, measurement input	0.0281	0.0196
Risk-free interest rate | CBG Acquisition Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, measurement input	0.0294	0.0225
Expected remaining term (years) | CBG Financing Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, expected remaining term	1 year 11 months 23 days	2 years 8 months 23 days
Expected remaining term (years) | CBG Acquisition Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, expected remaining term	4 years 11 months 19 days	5 years 8 months 19 days

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FAIR VALUE MEASUREMENTS - Estimate of Expected Volatility and Stock Price (Details) - China Branding Group Limited $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
CBG Financing Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Changes in fair value resulting from 5% increase in expected volatility	$ 275
Changes in fair value resulting from 5% decrease in expected volatility	275
Changes in fair value resulting from 5% increase of stock price	245
Changes in fair value resulting from 5% decrease of stock price	245
CBG Acquisition Warrants
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Changes in fair value resulting from 5% increase in expected volatility	805
Changes in fair value resulting from 5% decrease in expected volatility	865
Changes in fair value resulting from 5% increase of stock price	345
Changes in fair value resulting from 5% decrease of stock price	$ 405

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FAIR VALUE MEASUREMENTS - Narrative (Details)	Jan. 10, 2018 $ / shares shares	Jan. 08, 2018 shares	Sep. 30, 2018 future_event
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated future equity financing events | future_event			1
Stock price trigger (in dollars per share) | $ / shares	$ 14.00
Former Owner of Subsidiary
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Exercised warrants (shares)		2,416,996
Shares issued in conversion of stock (shares)	2,236,915	750,102
Warrants that would have been issued to holders on as-exercised basis (shares)	6,184,414
Lender
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Shares issued in conversion of stock (shares)	1,385,396
Warrants that would have been issued to holders on as-exercised basis (shares)	3,117,148

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FAIR VALUE MEASUREMENTS - Change in Fair Value of Warrants Accounted for as Derivative Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Warrant liabilities
Contingent Consideration
Balance at beginning of period	$ 89,169	$ 25,030
Payments/exercises	(59,907)	0
Increase (decrease) in fair value	(22,190)	64,139
Balance at end of period	7,072	89,169
Earnout payment liabilities | Vegas.com LLC
Contingent Consideration
Balance at beginning of period	1,930
Payments/exercises	(1,000)
Increase (decrease) in fair value	50
Balance at end of period	$ 980	$ 1,930

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RESTRICTED CASH (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Cash and Cash Equivalents [Abstract]
Restricted cash	$ 2,250
Cash and cash equivalents	9,902	$ 22,632
Restricted cash reported in current assets	11,655	11,670
Total cash, cash equivalents and restricted cash	$ 21,557	$ 34,302	$ 27,640	$ 18,548

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INVESTMENT IN UNCONSOLIDATED AFFILIATE (Details) - USD ($) $ in Millions	1 Months Ended
	Jun. 30, 2018	Sep. 30, 2018
Sharecare
Noncontrolling Interest [Line Items]
Ownership percentage in unconsolidated affiliate		5.00%
All-in-one Cloud Net Technology, Co
Noncontrolling Interest [Line Items]
Interest in VIE acquired	20.00%
Payments to acquire VIE	$ 1.0

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PREPAID EXPENSE AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Prepaid Expense and Other Current Assets
Prepaid expense	$ 2,918	$ 2,036
Deposits	3,487	1,960
Inventory, net	744	234
Other current assets	1,561	1,288
Total	$ 8,710	$ 5,518

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PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Total property, equipment and software	$ 27,847		$ 25,338
Less accumulated depreciation	(16,217)		(11,951)
Total property, equipment and software, net	11,630		13,387
Depreciation and amortization	$ 4,400	$ 4,100
Vehicles
Property, Plant and Equipment [Line Items]
Estimated Life (Years)	5 years
Total property, equipment and software	$ 1,350		447
Computers and equipment
Property, Plant and Equipment [Line Items]
Total property, equipment and software	1,978		1,635
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total property, equipment and software	221		220
Software
Property, Plant and Equipment [Line Items]
Total property, equipment and software	21,719		20,773
Software development in progress
Property, Plant and Equipment [Line Items]
Total property, equipment and software	2,010		1,935
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property, equipment and software	$ 569		$ 328
Minimum | Computers and equipment
Property, Plant and Equipment [Line Items]
Estimated Life (Years)	2 years
Minimum | Furniture and fixtures
Property, Plant and Equipment [Line Items]
Estimated Life (Years)	2 years
Minimum | Software
Property, Plant and Equipment [Line Items]
Estimated Life (Years)	3 years
Minimum | Leasehold improvements
Property, Plant and Equipment [Line Items]
Estimated Life (Years)	1 year
Maximum | Computers and equipment
Property, Plant and Equipment [Line Items]
Estimated Life (Years)	12 years
Maximum | Furniture and fixtures
Property, Plant and Equipment [Line Items]
Estimated Life (Years)	9 years
Maximum | Software
Property, Plant and Equipment [Line Items]
Estimated Life (Years)	5 years
Maximum | Leasehold improvements
Property, Plant and Equipment [Line Items]
Estimated Life (Years)	10 years

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GOODWILL AND OTHER INTANGIBLE ASSETS - Intangible Assets Rollforward (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Finite-lived intangible assets
Gross Amount	$ 28,317		$ 29,208
Accumulated Amortization	(16,771)		(13,667)
Net Amount	11,546		15,541
Indefinite-lived intangible assets
Total intangible assets, Gross Amount	36,721		37,613
Total intangible assets, Net Amount	19,950		23,946
Amortization expense	3,800	$ 4,100
Trademarks and trade names
Indefinite-lived intangible assets
Indefinite lived intangible assets	8,276		8,276
License to operate in China
Indefinite-lived intangible assets
Indefinite lived intangible assets	128		129
Domain names
Finite-lived intangible assets
Gross Amount	2,000		2,591
Accumulated Amortization	(1,358)		(1,663)
Net Amount	642		928
Customer relationships
Finite-lived intangible assets
Gross Amount	23,186		23,486
Accumulated Amortization	(13,509)		(10,539)
Net Amount	9,677		12,947
Media content and broadcast rights
Finite-lived intangible assets
Gross Amount	2,485		2,485
Accumulated Amortization	(1,309)		(936)
Net Amount	1,176		1,549
Acquired technology
Finite-lived intangible assets
Gross Amount	578		578
Accumulated Amortization	(527)		(461)
Net Amount	51		117
Other intangible assets
Finite-lived intangible assets
Gross Amount	68		68
Accumulated Amortization	(68)		(68)
Net Amount	$ 0		$ 0

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GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill Rollforward (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Goodwill [Roll Forward]
Balance at beginning of period	$ 20,099	$ 26,763
Business acquisitions	0	2,116
Impairment of goodwill	0	(8,796)
Other	0	16
Balance at end of period	20,099	20,099
Operating Segments | Travel & Entertainment
Goodwill [Roll Forward]
Balance at beginning of period	18,514	18,514
Business acquisitions	0	0
Impairment of goodwill	0	0
Other	0	0
Balance at end of period	18,514	18,514
Corporate Entity and Other Business Units
Goodwill [Roll Forward]
Balance at beginning of period	1,585	8,249
Business acquisitions	0	2,116
Impairment of goodwill	0	(8,796)
Other	0	16
Balance at end of period	$ 1,585	$ 1,585

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INCOME TAX (Details)	9 Months Ended
	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Effective tax rate	9.10%

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DEBT - Short-Term Debt (Details) - Short-term note payable to private lender	Apr. 12, 2017 USD ($)
Short-term Debt [Line Items]
Short-term note payable	$ 3,000,000.0
Fee payable in relation to short-term note payable	115,000
Daily interest accrued on unpaid balance after maturity	$ 500

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DEBT - Schedule of Debt Instruments (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Sep. 20, 2016	Sep. 24, 2015
Debt Instrument [Line Items]
Original principal amount			$ 35,500,000
Less: current portion	$ (37,319,000)	$ (38,085,000)
Loans Payable
Debt Instrument [Line Items]
Original principal amount	35,500,000	35,500,000	$ 35,500,000	$ 27,500,000
Unamortized original issue discount	(1,660,000)	(836,000)
Unamortized debt issuance cost	(21,000)	(79,000)
Carrying value of Loan	33,819,000	34,585,000
Exit fee payable in relation to Loan	3,500,000	3,500,000
Total long-term debt	37,319,000	38,085,000
Less: current portion	(37,319,000)	(38,085,000)
Long-term debt, less current portion and net of debt issuance cost	$ 0	$ 0

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DEBT - Long-Term Debt Narrative (Details) - USD ($)				9 Months Ended
	Jun. 29, 2018	Apr. 30, 2018	Sep. 20, 2016	Sep. 30, 2018	Dec. 31, 2017	Sep. 24, 2015
Debt Instrument [Line Items]
Original principal amount			$ 35,500,000
Additional principal amount			$ 8,000,000.0
Interest rate floor of variable rate			1.00%
Loans Payable
Debt Instrument [Line Items]
Original principal amount			$ 35,500,000	$ 35,500,000	$ 35,500,000	$ 27,500,000
Effective interest rate				13.00%
Exit fee payable in relation to Loan				$ 3,500,000	$ 3,500,000
LIBOR | Loans Payable
Debt Instrument [Line Items]
Basis spread on variable rate		8.50%		11.00%
Amendment
Debt Instrument [Line Items]
Exit fee payable in relation to Loan		$ 3,500,000
Prepayment of debt		8,000,000.0
Closing fee		$ 413,000
Extension period for debt repayment	3 months
Amendment | Loans Payable
Debt Instrument [Line Items]
Post-default rate				11.00%
First Two Months | Amendment
Debt Instrument [Line Items]
Prepayment of debt	$ 250,000
Third Month | Amendment
Debt Instrument [Line Items]
Prepayment of debt	$ 500,000
KanKan
Debt Instrument [Line Items]
Revenues				$ 5,600,000
KanKan | Amendment
Debt Instrument [Line Items]
Minimum revenue requirement				$ 12,600,000

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OTHER LIABILITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Other Liabilities Disclosure [Abstract]
Deferred rent	$ 1,650	$ 1,820
Early lease termination liability	1,242	0
Contingent consideration liability, net of current portion	0	940
Deferred tax liability, net	369	741
Other	35	0
Total	$ 3,296	$ 3,501

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OTHER LIABILITIES - Early Lease Termination Liability (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2018	Sep. 30, 2018
Restructuring Reserve [Roll Forward]
Balance at beginning of period	$ 0	$ 0
Establishment of early lease termination liability		2,295
Payment of rent and other costs		(798)
Receipt of amounts due under subleases		95
Other		16
Balance at end of period		$ 1,608
Corporate Entity and Other
Restructuring Cost and Reserve [Line Items]
Rent expense	$ 2,300

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STOCKHOLDERS' EQUITY AND NET LOSS PER SHARE - Narrative (Details) - USD ($)		1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 02, 2018	Jan. 31, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense			$ 891,000	$ 1,629,000	$ 12,913,000	$ 2,225,000
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock issuances (in shares)					$ 0	$ 8,300,000
Common stock issuances (in shares)					0	3,052,897
Option award expiration period					10 years
CEO and Chairman of the Board | 2017 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)		1,300,000
Share price (in dollars per share)		$ 7.81
Share-based compensation expense		$ 11,600,000
2018 Aspire Purchase Agreement | Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock issuances (in shares)					$ 3,095,238
Value of shares purchased			$ 10,000,000.0		$ 10,000,000.0
Stock options exercised (in shares)					381,445
Proceeds from stock options exercised					$ 1,000,000.0
Aspire Capital Fund, LLC | Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock issuances (in shares)						$ 5,000,000.0
Aspire Capital Fund, LLC | Private Placement
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Purchase amount of shares authorized	$ 30,000,000.0
Term of agreement	30 months
Purchase amount of shares authorized (in shares)	50,000
Purchase price covenant, consecutive trading days	10 days
Aggregate purchase price payable, daily maximum	$ 250,000
Maximum daily increase in shares for purchase	$ 3,000,000
Percentage of aggregate shares of common stock	30.00%
Percentage of closing price of common stock	80.00%
Percentage of volume-weighted average price of common stock	97.00%
Threshold minimum stock price (in dollars per share)	$ 1.00
Shares authorized in transaction (in shares)	6,629,039
Shares authorized, percentage of shares of common stock	19.99%
Minimum price per share to maintain average purchase price (in dollars per share)	$ 3.91
Number of shares issued (in shares)	213,574				3,308,812

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STOCKHOLDERS' EQUITY AND NET LOSS PER SHARE - Stock Options Activity (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($) $ / shares shares
Stock Options
Shares
Outstanding at beginning of period (in shares) | shares	9,397,056
Granted (in shares) | shares	1,909,500
Exercised (in shares) | shares	(385,820)
Forfeited, cancelled or expired (in shares) | shares	(46,377)
Outstanding at end of period (in shares) | shares	10,874,359
Options exercisable at end of period (in shares) | shares	10,009,767
Weighted-Average Exercise Price (in dollars per share)
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 3.80
Granted (in dollars per share) | $ / shares	6.79
Exercised (in dollars per share) | $ / shares	2.60
Forfeited, cancelled or expired (in dollars per share) | $ / shares	6.09
Outstanding at end of period (in dollars per share) | $ / shares	4.36
Options exercisable at end of period (in dollars per share) | $ / shares	$ 4.44
Weighted-Average Remaining Contractual Term (in years)
Outstanding at end of period	7 years 9 months 18 days
Options exercisable at end of period	7 years 8 months 12 days
Aggregate Intrinsic Value (in thousands)
Outstanding at end of period | $	$ 2,885
Options exercisable at end of period | $	$ 2,319
China Cash Bonus Awards
Shares
Outstanding at beginning of period (in shares) | shares	266,500
Granted (in shares) | shares	1,367,375
Exercised (in shares) | shares	(7,875)
Forfeited, cancelled or expired (in shares) | shares	(233,375)
Outstanding at end of period (in shares) | shares	1,392,625
Options exercisable at end of period (in shares) | shares	169,750
Weighted-Average Exercise Price (in dollars per share)
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 3.84
Granted (in dollars per share) | $ / shares	6.02
Exercised (in dollars per share) | $ / shares	4.28
Forfeited, cancelled or expired (in dollars per share) | $ / shares	5.76
Outstanding at end of period (in dollars per share) | $ / shares	5.67
Options exercisable at end of period (in dollars per share) | $ / shares	$ 4.04
Weighted-Average Remaining Contractual Term (in years)
Outstanding at end of period	9 years 3 months 18 days
Options exercisable at end of period	8 years 2 months 12 days
Aggregate Intrinsic Value (in thousands)
Outstanding at end of period | $	$ 36
Options exercisable at end of period | $	$ 19

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STOCKHOLDERS' EQUITY AND NET LOSS PER SHARE - Net Loss Per Share (Details)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Hotelmobi, Inc. | Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares) | shares	1,000,000
CBG Acquisition Warrants | China Branding Group Limited
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Equity interests issued (in shares) | shares	40,000
Exercise price (usd per share)	$ 10.00
CBG Financing Warrants | China Branding Group Limited
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Equity interests issued (in shares) | shares	3,070,638
Exercise price (usd per share)	$ 4.78
Warrant One | Hotelmobi, Inc.
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Exercise price (usd per share)	8.00
Warrant Two | Hotelmobi, Inc.
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Exercise price (usd per share)	$ 12.00

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SEGMENT INFORMATION (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) segment	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment			2
Revenue	$ 19,351	$ 19,449	$ 56,788	$ 52,004
Adjusted EBITDA	(2,778)	(1,824)	(12,965)	(5,562)
Depreciation and amortization	(2,756)	(2,482)	(8,220)	(8,237)
Impairments	0	(28)	0	(28)
Share-based compensation expense	(891)	(1,629)	(12,913)	(2,225)
Other loss	(1)	0	(56)	(20)
Other loss (gain)	12	33	(511)	85
Operating loss	(6,414)	(5,930)	(34,665)	(15,987)
Other income
Interest expense	(1,307)	(1,080)	(3,968)	(3,279)
Other income	1	0	56	20
Change in fair value of warrant liability	3,525	(5,978)	22,190	2,351
Other gain (loss)	(12)	(33)	511	(85)
Total other income (expense), net	2,207	(7,091)	18,789	(993)
Loss before income taxes	(4,207)	(13,021)	(15,876)	(16,980)
Assets	90,449		90,449		$ 103,537
Capital expenditures			2,728	2,631
Travel & Entertainment
Other income
Capital expenditures	300	700	2,000	1,600
Technology & Data Intelligence
Other income
Capital expenditures	100	200	600	1,000
Operating Segments | Travel & Entertainment
Segment Reporting Information [Line Items]
Revenue	17,596	16,284	49,320	45,765
Adjusted EBITDA	2,324	1,955	4,493	4,322
Other income
Assets	69,296		69,296		75,820
Operating Segments | Technology & Data Intelligence
Segment Reporting Information [Line Items]
Revenue	1,039	2,203	5,591	3,212
Adjusted EBITDA	(1,674)	(946)	(5,166)	(2,096)
Other income
Assets	3,824		3,824		5,105
Corporate Entity and Other
Segment Reporting Information [Line Items]
Revenue	716	962	1,877	3,027
Adjusted EBITDA	(3,428)	$ (2,833)	(12,292)	$ (7,788)
Other income
Assets	$ 17,329		$ 17,329		$ 22,612

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RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Jun. 11, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Related Party Transaction [Line Items]
Gain (loss) on related party transaction		$ (12)	$ (33)	$ 511	$ (85)
Related Party Sale Of IRS Web Domain
Related Party Transaction [Line Items]
Payment from related party	$ 600
Debt assumed by related party	100
Gain (loss) on related party transaction	$ 600

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SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands	Nov. 02, 2018	Oct. 04, 2018	Oct. 16, 2018	Sep. 30, 2018	Dec. 31, 2017
Subsequent Event
Subsequent Event [Line Items]
Proceeds from debt in collateral account		$ 2,250
The Financing Agreement | Subsequent Event
Subsequent Event [Line Items]
Minimum amount required in collateral account		$ 2,250
Loans Payable
Subsequent Event [Line Items]
Exit fee payable in relation to Loan				$ 3,500	$ 3,500
Loans Payable | Subsequent Event
Subsequent Event [Line Items]
Exit fee payable in relation to Loan			$ 1,000
Private Placement | Subsequent Event
Subsequent Event [Line Items]
Number of shares issued (in shares)	200,000
Consideration received on sale of stock	$ 500