Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as those set forth in our most recent Annual Report on Form 10-K filed with the SEC, which are incorporated by reference into this prospectus, as well as the other information set forth in this prospectus and the documents incorporated by reference herein, and therein, before deciding whether to invest in our common stock. Additional risks and uncertainties that we are unaware of may become important factors that affect us. If any of these risks actually occur, our business, financial condition or operating results may suffer, the trading price of our common stock could decline, and you may lose all or part of your investment.
Risks Relating to Our Business and Industry
If we are unable to attract and retain visitors to our owned and operated websites and mobile apps in a cost-effective manner, our business, financial condition and results of operations will be adversely affected.
Our primary strategy for attracting and retaining users to our websites and mobile applications is to provide content and community-focused digital experiences. The success of these efforts depends, in part, upon our ability to create and distribute high-quality content as well as to innovate and evolve our content and social media technology platforms at scale in a cost-effective manner. Failure to do so could adversely affect user experiences and reduce traffic to our owned-and-operated websites and mobile applications, which would adversely affect our business, financial condition, results of operations and cash flows. Additionally, our strategy could be flawed and might not result in the ability to attract and retain users in a cost-effective manner. A second strategy we utilize to attract traffic is search engine optimization related to our websites and the content published on them, a strategy that involves building websites with the objective of having them rank well in unpaid search engine results. Our ability to successfully manage search engine optimization efforts across our owned-and-operated websites is dependent on our timely and effective modification of search engine optimization practices implemented in response to periodic changes in search engine algorithms and methodologies and changes in search query trends and our ability to offer websites and content responsive to ever-changing consumer interests and trends. Our failure to successfully manage our search engine optimization strategy could result in a substantial decrease in traffic to our owned-and-operated websites, or an inability to attract traffic to new websites that we launch which would adversely affect our business, financial condition, results of operations and cash flows.
Even if we succeed in attracting traffic to our owned-and-operated websites, we may not be successful in monetizing the traffic. Additionally, the costs of attracting and retaining users to our websites may exceed our ability to generate revenues from such activities, which would have an adverse effect on our business, financial condition, results of operations and cash flows.
Our travel business derives a significant portion of its revenues from the Las Vegas market and is especially subject to certain risks, including economic and competitive risks, associated with conditions in the Las Vegas area.
Because our Vegas.com website provides travel and entertainment booking services in the Las Vegas market exclusively, we are subject to greater risks from conditions in the Las Vegas area than travel booking companies that are more geographically diversified. Risks from conditions in the Las Vegas area include the following:
· | local economic and competitive conditions; |
· | reduced land and air travel due to increasing fuel costs or transportation disruptions; |
· | inaccessibility of the area due to inclement weather, natural disasters, road construction or closure of primary access routes; |
· | the outbreak of public health threats in the area or the perception that such threats exist; and |
· | a decline in the number of visitors. |
Our travel business is particularly sensitive to reductions in discretionary consumer and corporate spending.
Expenditures on travel and entertainment and leisure activities are sensitive to personal and business-related discretionary spending levels and tend to decline or grow more slowly during economic downturns. Changes in discretionary spending or consumer preferences brought about by factors such as perceived or actual unfavorable changes in general economic conditions, high unemployment, perceived or actual changes in disposable consumer income and wealth, higher fuel or other transportation costs, or changes in consumer confidence could reduce demand for our services, which could adversely affect our travel business and our overall business, financial condition, results of operations and cash flows.
Declines or disruptions in the travel industry could adversely affect our travel business.
The success and financial performance of our travel business are affected by the health of the worldwide travel industry. Our business is sensitive to fluctuations in hotel supply, occupancy and average daily rates, decreases in airline capacity, periodically rising airline ticket prices, or the imposition of taxes or surcharges by regulatory authorities, all of which we have experienced historically.
Other factors that could negatively affect our business include:
· | continued air carrier consolidation; |
· | travel-related strikes or labor unrest, bankruptcies or liquidations; |
· | incidents of actual or threatened terrorism; |
· | periods of political instability or geopolitical conflict in which travelers become concerned about safety issues; |
· | natural disasters or events such as severe weather conditions, volcanic eruptions, hurricanes or earthquakes; and |
· | health-related risks, such as the Ebola, H1N1, SARs and avian flu outbreaks. |
Such concerns could result in a protracted decrease in demand for our travel services which, depending on its scope and duration and together with any future issues affecting travel safety, could adversely affect our business over the short and long-term. In addition, the disruption of the existing travel plans of a significant number of travelers upon the occurrence of certain events, such as severe weather conditions, actual or threatened terrorist activity or war, could result in the incurrence of significant additional costs and decrease our revenues leading to constrained liquidity if we provide relief to affected travelers by refunding the price or fees associated with hotel reservations and other travel products and services.
As a creator and a distributor of digital content, we face potential liability for legal claims based on the nature and content of the materials that we create or distribute, or that are accessible via our owned and operated websites.
As a creator and distributor of original content and content provided by third parties, we face potential liability for legal claims, including defamation, negligence, unlawful practice of a licensed profession, copyright or trademark infringement or other legal theories relating to the information we publish on our websites, and under various laws, including the Lanham Act, the Digital Millennium Copyright Act and the Copyright Act. We may also be exposed to similar liability in connection with content that is posted to our owned-and-operated websites by users and other third parties through comments, profile pages, discussion forums and other social media features. In addition, it is also possible that visitors to our owned-and-operated websites could make claims against us for losses incurred in reliance upon information provided on our owned-and-operated websites. Any of these claims could result in significant costs to investigate and defend, regardless of the merit of the claims. If we are not successful in our defense, we may be forced to pay substantial damages. While we run our content through a rigorous quality control process, there is no guarantee that we will avoid future liability and potential expenses for legal claims, which could affect our business, financial condition, results of operations and cash flows.
Laws relating to the liability of providers of online services for activities of their advertisers and for the content of their advertisers’ listings are currently unsettled. Such claims have been brought, sometimes successfully, against online services as well as other print publications in the past. We may not successfully avoid liability for unlawful activities carried out by advertisers displayed on our websites. If we are subjected to such lawsuits, it may adversely affect our business.
We are vulnerable to failures of third party network and technology providers who may fail to provide adequate services in the future. This could cause technical problems or failure of our websites or traffic, which could inhibit our revenues or damage our reputation and relationships with users, advertisers, and content providers.
We rely on many third-party businesses for technological, network, and expert services. Our ability to operate successfully depends on the successful operation of these third party businesses, which carry their own risks. If one of our third party vendors fails to deliver expected services, our websites and, therefore, our business could suffer operating problems or temporary failures. If there is a problem or failure with our websites, it could hurt our ability to advertise and damage our reputation with consumers and advertisers. Additionally, a termination of our hosting agreements or failure to renew on favorable terms could affect our business. Shifting hosting services could require management focus and time and potentially disrupt operations of our websites.
In addition, as operators of content websites reliant on user traffic to sell advertising, our users must have adequate and functioning Internet access. Technical problems with Internet access providers such as cable, DSL satellite or mobile companies may inhibit user access to our websites and slow traffic. Such events as power outages caused by blackouts, brown outs, storm outages or other power issues could also cause loss of user access to our websites.
We process, store and use personal information, payment card information and other consumer data, which subjects us to risks stemming from possible failure to comply with governmental regulation and other legal obligations.
We may acquire personal or confidential information from users of our websites and mobile applications, and we have posted our privacy policies and practices concerning the collection, use and disclosure of user data on such websites and mobile applications.
Numerous laws exist regarding privacy and the storing, sharing, use, processing, disclosure and protection of personal information, payment card information and other consumer data, the scope of which are changing, subject to differing interpretations, and may be inconsistent between countries or conflict with other rules. We strive to comply with all applicable laws, policies, legal obligations and industry codes of conduct relating to privacy and data protection; however, these obligations may possibly be interpreted and applied in a manner that is inconsistent from one jurisdiction to another, and they may conflict with other rules or with our practices. Any failure or perceived failure by us, or our service providers, to comply with the privacy policies, privacy-related obligations to users or other third parties, or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information, payment card information or other consumer data, may result in governmental enforcement actions, litigation or public statements against the company by consumer advocacy groups or others and could cause our customers and members to lose trust in us, as well as subject us to bank fines, penalties or increased transaction costs, all of which could have an adverse effect on our business.
The regulatory framework for privacy issues worldwide is currently in flux and is likely to remain so for the foreseeable future. Practices regarding the collection, use, storage, transmission and security of personal information by companies operating over the Internet have recently come under increased public scrutiny. The U.S. Congress and federal agencies, including the Federal Trade Commission (“FTC”) and the Department of Commerce, are reviewing the need for greater regulation for the collection and use of information concerning consumer behavior on the Internet, including regulation aimed at restricting certain targeted advertising practices. Some U.S. courts are also considering the applicability of existing federal and state statutes, including computer trespass and wiretapping laws, to the collection and exchange of information online. Countries in other regions, most notably Asia, Eastern Europe and Latin America, are increasingly implementing new privacy regulations, resulting in additional compliance burdens and uncertainty as to how some of these laws will be interpreted.
Our network operations may be vulnerable to hacking, viruses and other disruptions, which may make our products and services less attractive and reliable and give rise to liabilities.
Our marketplaces and information technology platform generate and process a large quantity of personal, transactional, demographic and behavioral data. The security of data when engaging in e-commerce is essential to maintaining consumer and confidence in our services. Any security breach whether instigated internally or externally on our system or other Internet based systems could significantly harm our reputation and therefore our business, brand, market share and results of operations. We require user names and passwords to access our information technology systems. We also use encryption and authentication technologies to secure the transmission and storage of data and prevent access to our data or accounts. It is possible that computer circumvention capabilities, new discoveries or advances or other developments, including our own acts or omissions, could result in a compromise or breach of consumer data. For example, third parties may attempt to fraudulently induce employees or customers to disclose user names, passwords or other sensitive information (“phishing”), which may in turn be used to access our information technology systems or to defraud our customers.
Our existing security measures may not be successful in preventing security breaches. A party (whether internal, external, an affiliate or unrelated third party) that is able to circumvent our security systems could steal consumer information or transaction data or other proprietary information and cause disruptions in our service. We may be required to expend significant resources to protect against security breaches or to address problems caused and liabilities incurred by breaches. These issues are likely to become more difficult to manage as we expand the number of places where we operate and as the tools and techniques used in such attacks become more advanced. As recently experienced by Sony, security breaches could result in severe damage to our information technology infrastructure, including damage that could impair our ability to offer our services, as well as loss of customer, financial or other data that could materially and adversely affect our ability to conduct our business, satisfy our commercial obligations or meet our public reporting requirements in a timely fashion or at all. Security breaches could also result in negative publicity, damage our reputation, expose us to risk of loss or litigation and possible liability, subject us to regulatory penalties and sanctions, or cause consumers to lose confidence in our security and choose to use the services of our competitors, any of which would have a negative effect on the value of our brand, our market share and our results of operations. Our insurance policies carry low coverage limits, and would likely not be adequate to reimburse us for losses caused by security breaches.
We also face risks associated with security breaches affecting third parties conducting business over the Internet. Consumers generally are concerned with security and privacy on the Internet, and any publicized security problems could inhibit the growth of the Internet and negatively affect consumers’ willingness to provide private information or effect commercial transactions on the Internet generally, including through our services. Additionally, consumers using our services could be affected by security breaches at third parties such as travel service providers, payroll providers, health plan providers, payment processors or GDSs upon which we rely. A security breach at any such third party marketing affiliate, travel service provider, GDS or other third party on which we rely could be perceived by consumers as a security breach of our systems and in any event could result in negative publicity, damage our reputation, expose us to risk of loss or litigation and possible liability and subject us to regulatory penalties and sanctions. In addition, such third parties may not comply with applicable disclosure requirements, which could expose us to liability.
We are also subject to payment card association rules and obligations under our contracts with payment card processors. Under these rules and obligations, if information is compromised, we could be liable to payment card issuers for associated expenses and penalties. In addition, if we fail to follow payment card industry security standards, even if no customer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs.
Additionally, in December 2013, we converted from hardware storage in data room to a cloud-based infrastructure. Like many companies using the cloud, we continually strive to meet industry information security standards relevant to our business. We continuously perform vulnerability assessments, review log/access, perform system maintenance, and manage network perimeter protection. A breach of external perimeter may lead to the loss of confidential information.
Our products and internal systems rely on software that is highly technical, and if it contains undetected errors, our business could be adversely affected.
Our products and internal systems rely on software, including software developed or maintained internally and/or by third parties, that is highly technical and complex. In addition, our products and internal systems depend on the ability of such software to store, retrieve, process, and manage immense amounts of data. The software on which we rely has contained, and may now or in the future contain, undetected errors, bugs, or vulnerabilities. Some errors may only be discovered after the code has been released for external or internal use. Errors or other design defects within the software on which we rely may result in a negative experience for users and marketers who use our products, delay product introductions or enhancements, result in measurement or billing errors, or compromise our ability to protect the data of our users and/or our intellectual property. Any errors, bugs, or defects discovered in the software on which we rely could result in damage to our reputation, loss of users, loss of revenue, or liability for damages, any of which could adversely affect our business and financial results.
The successful operation of our KanKan mobile application will depend upon the performance and reliability of the Internet infrastructure in China.
The successful operation of KanKan will depend on the performance and reliability of the Internet infrastructure in China. Almost all access to the Internet is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology of China. In addition, the national networks in China are connected to the Internet through state-owned international gateways, which are the only channels through which a domestic user can connect to the Internet outside of China. We may not have access to alternative networks in the event of disruptions, failures or other problems with China’s Internet infrastructure. In addition, the Internet infrastructure in China may not support the demands associated with continued growth in Internet usage.
The failure of telecommunications network operators to provide us with the requisite bandwidth could also interfere with the speed and availability of KanKan. We have no control over the costs of the services provided by the national telecommunications operators. If the prices that we pay for telecommunications and Internet services rise significantly, our gross margins could be adversely affected. In addition, if Internet access fees or other charges to Internet users increase, our user traffic may decrease, which in turn may cause a decrease in our revenues.
We may be subject to liability in China with respect to KanKan for content that is alleged to be socially destabilizing, obscene, defamatory, libelous or otherwise unlawful.
Under the laws of the People’s Republic of China, we will be required to monitor our websites and the websites hosted on our servers and mobile interfaces for items or content deemed to be socially destabilizing, obscene, superstitious or defamatory, as well as items, content or services that are illegal to sell online or otherwise in other jurisdictions in which we operate, and promptly take appropriate action with respect to such items, content or services. We may also be subject to potential liability in China for any unlawful actions of our customers or users of our websites or mobile interfaces or for content we distribute that is deemed inappropriate. It may be difficult to determine the type of content that may result in liability to us, and if we are found to be liable, we may be subject to fines, have our relevant business operation licenses revoked, or be prevented from operating our websites or mobile interfaces in China.
Unauthorized use of our intellectual property by third parties, and the expenses incurred in protecting our intellectual property rights, may adversely affect our business.
We regard our copyrights, service marks, trademarks, trade secrets and other intellectual property as critical to our success. Unauthorized use of our intellectual property by third parties may adversely affect our business and reputation. We rely on trademark and copyright law, trade secret protection and confidentiality agreements with our employees, customers, business partners and others to protect our intellectual property rights. Despite our precautions, it is possible for third parties to obtain and use our intellectual property without authorization. Furthermore, the validity, enforceability and scope of protection of intellectual property in Internet related industries are uncertain and still evolving. In particular, the laws of the People’s Republic of China do not protect intellectual property rights to the same extent as do the laws of the United States. Moreover, litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Future litigation could result in substantial costs and diversion of resources.
We may be subject to intellectual property infringement claims, which may force us to incur substantial legal expenses and, if determined adversely against us, materially disrupt our business.
We cannot be certain that our brands and services will not infringe valid patents, copyrights or other intellectual property rights held by third parties. We cannot provide assurance that we will avoid the need to defend against allegations of infringement of third-party intellectual property rights, regardless of their merit. Intellectual property litigation is very expensive, and becoming involved in such litigation could consume a substantial portion of our managerial and financial resources, regardless of whether we win. Substantially greater resources may allow some of our competitors to sustain the cost of complex intellectual property litigation more effectively than us; we may not be able to afford the cost of such litigation.
Should we suffer an adverse outcome from intellectual property litigation, we may incur significant liabilities, we may be required to license disputed rights from third parties, or we may have to cease using the subject technology. If we are found to infringe upon third-party intellectual property rights, we cannot provide assurance that we would be able to obtain licenses to such intellectual property on commercially reasonable terms, if at all, or that we could develop or obtain alternative technology. If we fail to obtain such licenses at a reasonable cost, such failure may materially disrupt the conduct of our business, and could consume substantial resources and create significant uncertainties. Any legal action against us or our collaborators could lead to:
· | payment of actual damages, royalties, lost profits, potentially treble damages and attorneys’ fees if we are found to have willfully infringed a third party’s patent rights; |
· | injunctive or other equitable relief that may effectively block our ability to further develop, commercialize and sell our products; |
· | us or our collaborators having to enter into license arrangements that may not be available on commercially acceptable terms, if at all; or |
· | significant cost and expense, as well as distraction of our management from our business. |
The negative outcomes discussed above could adversely affect our ability to conduct business, financial condition, results of operations and cash flows.
New regulations governing the Internet and e-commerce may negatively affect our business.
Any new legislation or regulation, or the application of existing laws and regulations to the Internet or other online services, could have a material adverse effect on our business, prospects, and financial conditions and results of operations.
In 2013, the FTC issued a letter reiterating the guidance it issued in 2002, which recommended that all search engine companies ensure that all paid search results are clearly distinguished from non-paid results, that the use of paid search is clearly and conspicuously explained and disclosed and that other disclosures are made to avoid misleading users about the possible effects of paid search listings on search results. The adoption of laws or regulations relating to placement of paid search advertisements or user privacy, defamation or taxation may inhibit the growth in use of the Internet, which in turn, could decrease the demand for our services and increase our cost of doing business or otherwise have a material adverse effect on our business, prospects, financial condition and results of operations.
The application of new and existing laws and regulations to the Internet or other online services has had a material adverse effect on our business, prospects, financial condition and results of operations in the past. For example, on April 17, 2007, the U.S. House of Representatives passed H.R. 1677, The Taxpayer Protection Act of 2007 (“H.R. 1677”). Section 8 of H.R. 1677 would have amended Section 333, Title 31 of the U.S. Code to include Internet domain addresses in the prohibition on certain use of the U.S. Department of the Treasury names and symbols. Although the legislation was never passed by the Senate or signed into law and the bill ceased with the ending of the 110th Congress in January 2009, there is no guarantee that similar legislation won’t be introduced and passed into law by the current or future Congress. While the ultimate impact of any such proposed legislation is not presently determinable, if enacted, such legislation may adversely impact our overall operations. We own the Internet domain address US Tax Center at www.irs.com, which is an acronym commonly associated with the Internal Revenue Service, a division of the U.S. Department of the Treasury. While the bill was never passed into law, if enacted, the passage of such legislation could have severely adversely affected our use of our Internet domain address US Tax Center at www.irs.com as well as our overall operations. In the event a bill such as H.R. 1677 were to become law, we intend to be continue to be diligent in our communications with the Internal Revenue Service and Congress in an effort to mitigate any potential negative effects of such legislation.
We face intense competition from larger, more established companies, and we may not be able to compete effectively, which could reduce demand for our services.
The market for the services we offer is increasingly and intensely competitive. Nearly all our competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than we do. Our competitors may secure more favorable revenue arrangements with advertisers, devote greater resources to marketing and promotional campaigns, adopt more aggressive growth strategies and devote substantially more resources to website and systems development than we do. In addition, the Internet media and advertising industries continue to experience consolidation, including the acquisitions of companies offering finance-related content and services and paid search services. Industry consolidation has resulted in larger, more established and well-financed competitors with a greater focus. If these industry trends continue, or if we are unable to compete in the Internet media and paid search markets, our financial results may suffer.
Additionally, larger companies may implement policies and/or technologies into their search engines or software that make it less likely that consumers can reach our websites and less likely that consumers will click-through on sponsored listings from our advertisers. The implementation of such technologies could result in a decrease in our revenues. If we are unable to successfully compete against current and future competitors, our operating results will be adversely affected.
If we do not effectively manage our growth, our operating performance will suffer and our financial condition could be adversely affected.
Substantial future growth will be required in order for us to realize our business objectives. To the extent we are capable of achieving this growth, it will place significant demands on our managerial, operational and financial resources. Additionally, this growth will require us to make significant capital expenditures, hire, train and manage a larger work force, and allocate valuable management resources. We must manage any such growth through appropriate systems and controls in each of these areas. If we do not manage the growth of our business effectively, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
In addition, as our business grows, our technological and network infrastructure must keep in-line with our traffic and advertiser needs. Future demand is difficult to forecast and we may not be able to adequately handle large increases unless we spend substantial amounts to augment our ability to handle increased traffic. Additionally, the implementation of increased network capacity contains some execution risks and may lead to ineffectiveness or inefficiency. This could lead to a diminished experience for our consumers and advertisers and damage our reputation and relationship with them, leading to lower marketability and negative effects on our operating results. Moreover, the pace of innovative change in network technology is fast and if we do not keep up, we may lag behind competitors. The costs of upgrading and improving technology could be substantial and negatively affect our business, financial condition, results of operations and cash flows.
Risks Relating to our Company
We have a history of operating losses and we may not generate sufficient revenue to support our operations.
During the six months ended June 30, 2015, and in each fiscal year since our inception, we have incurred net losses and generated negative cash flow from operations, resulting in an accumulated deficit of $136.2 million.
We believe that the Vegas.com Acquisition will provide us with additional revenue sources, but we cannot provide assurance that the results of Vegas.com or revenue growth at our other businesses will be sufficient to sustain our operations in the long term. Management has implemented measures to reduce operating costs, and they continuously evaluate other opportunities to reduce costs. Additionally, we are actively assessing the sale of certain non-core assets, considering sales of minority interests in certain of our operating businesses, and evaluating potential acquisitions that would provide additional revenue. However, we may need to obtain additional capital through equity or debt financing and/or by divesting of certain assets or businesses, none of which we can assure will happen on commercially reasonable terms, if at all. In addition, if we obtain capital by issuing equity, such transaction(s) may dilute existing stockholders.
We can neither be certain that we will be successful at raising capital at all, nor be certain regarding what amount of capital we may raise. 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, the Financing Agreement contains 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. Should we fail to successfully implement our plans described herein, such failure would have a material adverse effect on our business, including the possible cessation of operations.
Our substantial indebtedness could adversely affect our financial health.
We have outstanding principal indebtedness of $27.5 million under the Loan. The Loan amount outstanding accrues interest at the three month LIBOR plus 10.0% per annum, payable monthly, and the Loan has a maturity date of September 24, 2018. The Loan is secured by a first-priority lien on, and security interest in, all assets of Remark and our subsidiaries, subject to certain exceptions.
Our substantial indebtedness could have important consequences to our stockholders. For example, it could:
· | require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for working capital and general corporate purposes; |
· | increase our vulnerability to and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
· | place us at a competitive disadvantage compared to our competitors that have less debt; |
· | limit our ability to borrow additional funds; and |
· | make us more vulnerable to a general economic downturn than a company that is less leveraged. |
The Financing Agreement contains certain covenants that restrict our ability to engage in certain transactions and may impair our ability to respond to changing business and economic conditions.
The Financing Agreement requires us to satisfy various covenants, including financial covenants with respect to quarterly EBITDA levels and the value of our assets. The Financing Agreement also contains restrictions on our abilities to engage in certain transactions without the consent of the Lenders, and may limit our ability to respond to changing business and economic conditions. These restrictions include, among other things, limitations on our ability and the ability of our subsidiaries to:
· | create liens on assets to secure debt; |
· | merge or consolidate with another company; |
· | transfer, sell or otherwise dispose of assets; |
· | engage in other businesses; |
· | enter into transactions with affiliates; and |
· | create dividend and other payment restrictions affecting subsidiaries. |
Our recently-completed Vegas.com Acquisition and any future acquisitions, business combinations and other transactions present integration risk and may have negative consequences for our business and our stockholders.
We recently completed the Vegas.com Acquisition and plan to continuously monitor certain strategic acquisition opportunities. The process of integrating acquired businesses into our existing operations may result in unforeseen difficulties, liabilities and costs. The Vegas.com Acquisition involves the integration of a company that had previously operated independently as a privately-held company. Significant management attention and resources will be required to integrate the companies, as may be the case with any future acquisitions. Difficulties that we encounter in integrating the operations of Vegas.com and other acquired businesses could have a material adverse effect on our business, financial condition, results of operations, cash flows, and stock price following the acquisition. Even if the combined company is able to integrate the business operations successfully, there can be no assurance that this integration will result in the realization of the anticipated benefits of synergies, innovation and operational efficiencies or that these benefits will be achieved within a reasonable period of time and cost effectively.
We continue to evolve our business strategy and develop new brands and services, and our future prospects are difficult to evaluate.
We are in varying stages of development with regard to our business, so our prospects must be considered in light of the many risks, uncertainties, expenses, delays, and difficulties frequently encountered by companies in their early stages of development. Some of such risks and difficulties include our ability to, among other things:
· | increase the number of users of our websites and mobile apps; |
· | manage and implement new business strategies; |
· | successfully commercialize and monetize our assets; |
· | successfully attract advertisers for our owned and operated websites; |
· | continue to raise additional working capital; |
· | manage operating expenses; |
· | establish and take advantage of strategic relationships; |
· | manage and adapt to rapidly changing and expanding operations; |
· | respond effectively to competitive developments; and |
· | attract, retain and motivate qualified personnel. |
Because of the early stage of development of certain of our business operations, we cannot be certain that our business strategy will be successful or that it will successfully address the risks described or alluded to above. Any failure by us to successfully implement our new business plans could have a material adverse effect on our business, financial condition, results of operations and cash flows. Furthermore, growth into new areas may require changes to our cost structure, modifications to our infrastructure and exposure to new regulatory, legal and competitive risks.
If we are not able to attract and retain key management, we may not successfully integrate the acquired assets into our historical business or achieve our other business objectives.
We will depend upon the contributions of our senior management, including our Chief Executive Officer and Chief Financial Officer, for our future business success. The loss of the service of any of the key members of our senior management may significantly delay or prevent the integration of the contributed assets and other business objectives.
Our investment in Sharecare’s equity securities involves a substantial degree of risk.
Sharecare has a limited history of operations and you must consider its prospects in light of the many risks, uncertainties, expenses, delays and difficulties encountered by companies in their early stages of development. Moreover, Sharecare operates in the highly competitive Internet industry and might not achieve profitability or consumer acceptance in the near term, if ever. Our investment in Sharecare’s equity securities is illiquid and might fail to appreciate and might decline in value or become worthless. It is unlikely our Sharecare equity securities will pay current dividends, and our ability to realize a return on our investment, as well as to recover our investment, will be dependent on the success of Sharecare.
Even if Sharecare is successful, our ability to realize the value of our investment might be limited. Because it is a private company, there is no public market for Sharecare’s securities, and the Sharecare securities are subject to restrictions on resale that might prevent us from selling these securities during periods in which it would be advantageous to do so. As a result, we might have to wait for a liquidity event, such as a public offering or the sale of Sharecare, to realize the value of our investment, if any. We do not expect a liquidity event in the near term.
Sharecare will likely need to raise additional capital, or make additional acquisitions, and our equity position in Sharecare may be diluted if Sharecare issues additional equity, options, or warrants. If Sharecare makes a capital call of its existing equity holders, our position may be diluted if we choose not to contribute additional capital.
Historically, a few of our advertising networks and direct advertisers have provided a substantial portion of our revenue. The loss of one of these partners may have a material adverse effect on our operating results.
As is common in the industry, our marketers do not have long-term advertising commitments with us. We cannot assure you that, should agreements with our advertising networks, strategic sales and marketing partners, and/or direct advertisers fail to be renewed or should the contracts be terminated or modified in advance of their expiration, we will be able to timely replace the sponsored listings they provide us. We have had similar agreements in the past that have failed to be renewed or been modified prior to their termination, resulting in adverse effects on our financial results.
We could incur asset impairment charges for intangible assets or other long-lived assets.
We have intangible assets and other long-lived assets, therefore future lower-than-anticipated financial performance or changes in estimates and assumptions, which in many cases require significant judgment, could result in impairment charges. We test intangible assets that are determined to have an indefinite life for impairment during the fourth quarter of each fiscal year, and assess whether factors or indicators, such as unfavorable variances from established business plans, significant changes in forecasted results or volatility inherent to external markets and industries, become apparent that would require an interim test. Adverse changes in the operating environment and related key assumptions used to determine the fair value of our indefinite lived intangible assets or declines in the value of our common stock may result in future impairment charges for a portion or all of these assets. An impairment charge could have a material adverse effect on our business, financial position and results of operations, but would not be expected to have an impact on our cash flows or liquidity.
We expect our operating results to fluctuate on a quarterly basis, which may make it difficult to predict our future performance.
Our quarterly results have fluctuated in the past and will likely fluctuate in the future due to a variety of factors, many of which may be outside of our control. Specifically, we expect the revenues associated with our tax-related service businesses to be largely seasonal in nature, with peak revenues occurring during January through April, corresponding to the U.S. tax season.
Risks Relating to this Offering and Our Common Stock
Our stock price has fluctuated considerably and is likely to remain volatile, and various factors could negatively affect the market price or market for our common stock.
The trading price of our common stock has been and may continue to be volatile. From January 1, 2013,2016, through November 3, 2015,June 1, 2018, the high and low sales prices for our common stock were $9.11$15.10 and $1.12,$1.93, respectively. In addition to the factors discussed in this prospectus, theThe trading price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
· | general market and economic conditions; |
· | the low trading volume and limited public market for our common stock; |
· | minimal third party research regarding our company; and |
the low trading volume and limited public market for our common stock;· | the current and anticipated future operating performance and equity valuation of Sharecare in which we have a significant equity investment. |
minimal third-party research regarding our company; and
the current and anticipated future operating performance and equity valuation of Sharecare, in which we have a significant equity investment.
In addition, the stock market in general, and the market prices for Internet-related companies in particular, have experienced volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance.
The concentration of our stock ownership may limit individual stockholder ability to influence corporate matters.
As of November 3, 2015,June 1, 2018, our Chairman and Chief Executive Officer, Kai-Shing Tao, may be deemed to beneficially own 6,780,63410,200,634 shares, or 33.0%27.3% of our common stock, and Ashford Capital Management, Inc.DRG Legacy, LP may be deemed to beneficially own 1,488,3382,520,704 shares, or 7.7%7.6% of our common stock (based upon the most recent information available to us), and Ernest T. Lee may be deemed to beneficially own 2,193,336 shares, or 6.7% of our common stock. The interests of these stockholders may not always coincide with the interests of other stockholders, and they may act in a manner that advances their best interests and not necessarily those of other stockholders, and might affect the prevailing market price for our securities.
If these stockholders act together, they may be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate actions. ThisSuch concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock.
Sales of our common stock to Aspire Capital may cause substantial dilution to our existing stockholders and the sale of the shares of common stock acquired by Aspire Capital could cause the price of our common stock to decline.
Pursuant to our public equity line with Aspire Capital, we issued 151,515 shares of our common stock and, upon the terms and subject to the conditions and limitations set forth therein, we may sell as much as an aggregate of $20 million of our common stock to Aspire Capital from time to time over the 30-month term of the Aspire Purchase Agreement, which expires May 9, 2019. The number of shares ultimately sold to Aspire Capital is dependent upon our election to sell to Aspire Capital under the Aspire Purchase Agreement. Depending on a variety of factors, including market liquidity of our common stock, the sale of shares under the Aspire Purchase Agreement may cause the trading price of our common stock to decline.
After Aspire Capital has acquired shares under the Aspire Purchase Agreement, it may sell all, some or none of those shares. Sales to Aspire Capital pursuant to the Aspire Purchase Agreement may result in dilution to the interests of other holders of our common stock. The sale of a substantial number of shares of our common stock to Aspire Capital, or anticipation of such sales, could cause the trading price of our common stock to decline or make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise desire. However, we have the right under the Aspire Purchase Agreement to control the timing and amount of sales of our shares to Aspire Capital, and the Aspire Purchase Agreement may be terminated by us at any time at our discretion without any penalty or cost to us. As of June 1, 2018, we have sold 4,121,896 shares of common stock to Aspire Capital in exchange for $12.8 million pursuant to the Aspire Purchase Agreement.
A significant number of additional shares of our common stock may be issued uponunder the exercise or conversionterms of existing securities, which issuances would substantially dilute existing stockholders and may depress the market price of our common stock.
As of November 3, 2015,June 1, 2018, we had outstanding options to purchase 4,339,778approximately 10.8 million shares of common stock and warrants to purchase 12,397,1114,001,774 shares of common stock outstanding. Suchstock. The number of outstanding warrants include certain of the warrants we issued in connection with our acquisition of assets of China Branding Group Limited and the financing related thereto (referred to herein as the CBG Acquisition Warrants and the CBG Financing WarrantWarrants, respectively) providing for the right to purchase a total40,000 and 2,961,774 shares of 11,181,833common stock, respectively, at per-share exercise prices of $10.00 and $4.96, respectively, and it also includes additional unissued CBG Acquisition Warrants allowing for the purchase of 5,710,000 shares of common stock at ana per-share exercise price of $9.00, which warrants$10.00. The CBG Acquisition Warrants and the CBG Financing Warrants are exercisable on a cashless basis onlyonly. As a result of the cashless exercise requirement, neither the CBG Acquisition Warrants nor the CBG Financing Warrants can be exercised for the entire amount of shares purchasable under the warrants, and thereforethey effectively cannot be exercised to purchase shares of common stock unless the applicable market value of the common stock exceeds the applicable exercise price under the terms thereof.
Though the CBG Acquisition Warrants cannot be exercised unless the applicable market value of the common stock exceeds the applicable exercise price under the terms thereof, they also provide that if the closing price of our common stock does not exceed the sum of $10.00 per share plus the fair value of the CBG Acquisition Warrants at the time of issuance (the “Assumed Warrant Value”) for any 15 individual trading days in any consecutive 30-trading-day period between the closing date and September 20, 2020, we will issue on September 20, 2020, in exchange for the CBG Acquisition Warrants, such number of shares of common stock equal to (x) the number of shares issuable upon exercise of the CBG Acquisition Warrants, multiplied by (y) 50% of the Assumed Warrant Value, divided by (z) the volume weighted average price of our common stock during the 30 trading days ending on September 20, 2020.
The issuance of these shares of common stock pursuant to the warrants described above would substantially dilute the proportionate ownership and voting power of existing stockholders, and their issuance, or the possibility of their issuance, may depress the market price of our common stock.
You will experience immediate dilution in the book value per share of the common stock you purchase.
Because the price per share of the common stock being offered is substantially higher than the book value per share of our common stock, you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. See the section entitled “Dilution” below for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.
Future sales or issuances of our securities may dilute the ownership of existing stockholders and cause the market price of our common stock to decline.
Absent acquisitions of new businesses or material increases in revenue from our existing customers, current revenue growth will not be sufficient to sustain our operations in the long term; therefore, we will likely need to obtain additional capital through equity or debt financing and/or by divesting of certain assets or businesses, neither of which we can assure will happen on commercially reasonable terms, if at all. In addition, if we obtain capital by issuing equity, such transaction(s) may dilute the proportionate ownership and voting power of existing stockholders.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of the CompanyRemark more difficult, which acquisition may be beneficial to stockholders.
Provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, as well as provisions of the General Corporation Law of the State of Delaware (“DGCL”), which may discourage, delay or prevent a merger with, acquisition of or other change in control of Remark, even if such a change in control would be beneficial to our stockholders, include the following:
· | only our Board of Directors may call special meetings of our stockholders; |
· | our stockholders may take action only at a meeting of our stockholders and not by written consent; |
· | we have authorized undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval. |
our stockholders may take action only at a meeting of our stockholders and not by written consent;
we have authorized, undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval.
Additionally, Section 203 of the DGCL prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. We have not opted out of the restriction under Section 203, as permitted under the DGCL.
Further, we have adopted a Tax Benefit Preservation Plan, dated as of June 4, 2015, that generally is designed to deter any person from acquiring shares of our common stock if the acquisition would result in such person beneficially owning 4.99% or more of our common stock without the approval of our Board of Directors.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information included or incorporated by reference in this prospectus contains “forward-looking statements” about our plans, strategies, objectives, goals or expectations. You will find forward-looking statements including information relating to future events, future financial performance, strategies, expectations, competitive environment and regulation. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary” and “Risk Factors.” Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,”Factors”. These forward-looking statements are identifiable by words or phrases indicating that we or our management “expects,” “anticipates,” “future,” “intends,” “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. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date of this prospectus, other report, release, presentation, or statement.
In addition to other risks and similar expressions,uncertainties described in connection with the forward-looking statements contained in this prospectus and other periodic reports filed with the SEC, there are many important factors that could cause actual results to differ materially. Such risks and uncertainties include general business conditions, changes in overall economic conditions, our ability to integrate acquired assets, the impact of competition and other factors which are often beyond our control.
This should not be construed as well as statements in future tense, identify forward-looking statements. These statements involve known and unknown risks, uncertaintiesa complete list of all of the economic, competitive, governmental, technological and other factors that could causeadversely affect our actualexpected consolidated financial position, results levels of activity, performanceoperations or achievement to differ materially from those expressed or implied by these forward-looking statements. Theseliquidity. Additional risks and uncertainties include, among others:
· | our financial condition including our losses and our need to raise additional capital; |
· | our ability to successfully execute our growth and acquisitions strategy, including integration of any new companies into our business; |
· | our ability to procure content and monetize audiences; |
· | our ability to successfully attract advertisers for our owned and operated websites; |
· | changes in advertising market conditions or advertising expenditures due to, among other things, economic conditions, changes in consumer behavior, pressure from public interest groups, changes in laws and regulations and other societal or political developments; |
· | our ability to attract and retain key personnel to manage our business effectively; |
· | our ability to compete effectively with larger, more established companies; |
· | competitive pressures, including as a result of user fragmentation and changes in technology; |
· | recent and future changes in technology, services and standards; |
· | a disruption or failure of our or our vendors' network and information systems or other technology relied on by us; |
· | changes in consumer behavior, including changes in spending behavior and changes in when, where and how content is consumed; |
· | changes in the popularity of our products and services; |
· | changes in our plans, initiatives and strategies, and consumer acceptance thereof; |
· | piracy and our ability to exploit and protect our intellectual property rights in and to our content and other products; |
· | risks of doing business in foreign countries, notably China, including obtaining regulatory approvals and adjusting to changing political and economic policies; governmental laws and regulations, including unclear and changing laws and regulations related to the internet sector in foreign countries; |
· | general economic conditions including advertising rate, interest rate and currency exchange rate fluctuations; |
· | the liquidity and trading volume of our common stock; and |
· | other factors discussed in the section titled “Risk Factors” herein. |
Any forward-looking statements in this prospectus reflectnot currently known to us or that we currently believe are immaterial also may impair our current views with respect to future events, are based on assumptionsbusiness, operations, liquidity, financial condition and are subject to risks and uncertainties. Given such uncertainties, you should not place undue reliance on any forward-looking statements, which represent our estimates and assumptions only as of the date hereof. Except as required by law, weprospects. We undertake no obligation to update or revise publicly anyour forward-looking statements to reflect developments that occur or information that we obtain after the date hereof, whetherof this prospectus.
USE OF PROCEEDS
Except as a result of new information, future events or otherwise.
We are not sellingmay be otherwise set forth in any securities underprospectus supplement accompanying this prospectus, we will use the net proceeds we receive from sales of securities offered hereby for general corporate purposes, which may include working capital, acquisitions, repayment and refinancing of debt and capital expenditures. We will not receive any ofset forth
in the applicable prospectus supplement our intended use for the net proceeds received from the sale of shares of our common stock by the selling stockholders. The Acquisition Warrants and the Financing Warrant are exercisable on a cashless basis only, and as a result,related securities. Accordingly, we will not receive cash proceeds fromretain broad discretion over the exerciseuse of such warrants if they are exercised.proceeds. Pending use of the net proceeds, we intend to invest the net proceeds in interest-bearing, investment-grade securities.
The selling stockholders will pay any underwriting discounts and commissions and any expenses incurred by the selling stockholders for brokerage, accounting, tax or legal services or any other expenses incurred by such selling stockholders
PLAN OF DISTRIBUTION
We may sell securities described in disposing of securities covered by this prospectus. We will bear the costs, fees and expenses incurred to effect the registration of securities covered by this prospectus including all registration fees and filing fees, NASDAQ listing fees and fees and expenses of our counsel and our independent registered public accounting firm.
This prospectus relates to the sale, from time to time in one or more of the following ways:
through underwriters;
through dealers;
through agents;
directly to purchasers; or
through a combination of any of these methods or any other method permitted by law.
In addition, we may issue the date hereof, of upsecurities as a dividend or distribution or in a subscription rights offering to 14,227,086 shares of our common stock by the selling stockholders named below, and their pledgees, assigneesexisting security holders.
We may directly solicit offers to purchase securities, or other successors-in-interest. The following table sets forth the name of each selling stockholder, the number of shares of common stock owned beneficially by each selling stockholder as of November 3, 2015, the number of shares of common stock thatagents may be offered pursuantdesignated to thissolicit such offers. In the prospectus and the number of shares of common stocksupplement relating to such offering, we will name any agent that could be owned by each selling stockholder after this offering, assuming the sale of all shares offered by this prospectus. All of the information below with respect to the selling stockholders is based on information provided to the Company by the selling stockholders.
The shares of common stock being covered hereby may be sold or otherwise disposed of from time to time during the period the registration statement of which this prospectus is a part remains effective, by or for the account of the selling stockholders. The registration of these shares does not require that any of the shares be offered or sold by the selling stockholders. The selling stockholders may from time to time offer and sell all or a portion of their shares in the over-the-counter market, in negotiated transactions, or otherwise, at prices then prevailing or related to the then current market price or at negotiated prices. After the date of effectiveness, the selling stockholders may have sold or transferred, in transactions covered by this prospectus or in transactions exempt from the registration requirements ofviewed as an underwriter under the Securities Act of 1933, as amended (the “Securities Act”), some or all of their common stock.
Exceptand describe any commissions that we must pay to any such agent. Any such agent will be acting on a best efforts basis for the ownership by certain selling stockholdersperiod of equity interests in Vegas.com acquired by the Companyits appointment or, if indicated in the Vegas.com Acquisition andapplicable prospectus supplement, on a selling stockholder’s participation as a Lender underfirm commitment basis. This prospectus may be used in connection with any offering of our securities through any of these methods or other methods described in the Financing Agreement, and as otherwise noted herein, noneapplicable prospectus supplement.
Each prospectus supplement will describe the method of distribution of the selling stockholders orsecurities and any of their respective affiliates has held a position or office, or had any other material relationship, with us or our affiliates during the past three years. Noneapplicable restrictions. The distribution of the selling stockholders is a broker-dealer or affiliate of any broker-dealer.
Information concerning the selling stockholderssecurities may changebe effected from time to time. Anytime in one or more transactions:
at a fixed price, or prices, which may be changed informationfrom time to time;
at market prices prevailing at the time of sale;
at prices related to such prevailing market prices; or
at negotiated prices.
The prospectus supplement with respect to the securities of a particular series will describe the terms of the offering of the securities, including the following:
the name of the agent or any underwriters;
the public offering or purchase price;
any discounts and commissions to be allowed or paid to the agent or underwriters;
all other items constituting underwriting compensation;
any discounts and commissions to be allowed or paid to dealers; and
any exchanges on which the securities will be listed.
If any underwriters or agents are used in the sale of the securities in respect of which this prospectus is delivered, we will enter into an underwriting agreement, sales agreement or other agreement with them at the time of sale to them, and we will set forth in the prospectus supplement relating to such offering the names of the underwriters or agents and the terms of the related agreement with them.
In connection with the offering of securities, we may grant to the underwriters an option to purchase additional securities with an additional underwriting commission, as may be set forth in the accompanying prospectus supplement. If we grant any such option, the terms of such option will be set forth in an amendmentthe prospectus supplement for such securities.
If a dealer is used in the sale of the securities in respect of which the prospectus is delivered, we will sell such securities to the registration statement or a supplement to this prospectus, to the extent required by law.
dealer, as principal. The amounts and percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power, which includes the power to vote or direct the voting of a security, or investment power, which includes the power to dispose of or to direct the disposition of a security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a persondealer, who may be deemed to be a beneficial owner ofan "underwriter" as that term is defined in the Securities Act, may then resell such securities as to which such person has no economic interest. Except as otherwise noted herein, to our knowledge, each selling stockholder has sole voting and investment power with respect to the indicated shares of common stock.
The Acquisition Warrants and the Financing Warrant, which provide for the rightpublic at varying prices to purchase 11,181,833 shares of common stock at an exercise price of $9.00, are exercisable on a cashless basis only and, therefore, effectively cannot be exercised to purchase shares of common stock unless the applicable market value of the common stock exceeds the applicable exercise price thereunder. Further, the shares of common stock issuable upon exercise of the Acquisition Warrants and the Financing Warrant are subject to an issuance limitation in accordance with our obligations under Nasdaq Listing Rule 5635 unless we obtain the Stockholder Approval. We intend to seek the Stockholder Approval at a special meeting of stockholders within 90 days after the closing of the Vegas.com Acquisition.
| | | Shares Beneficially Owned Prior to | | Maximum Number of | | Shares Beneficially Owned After the Offering(1) |
| Name | | the Offering | | Shares Offered | | Number | Percent(2) |
| Alyson Fine Marmur 2010 Legacy Trust | | 101,575 | | 101,575(3) | | 0 | – |
| Amy Greenspun Arenson 2010 Legacy Trust | | 375,148 | | 1,455,485(4) | | 0 | – |
| DRG Holdings, LP | | 198,224 | | 1,122,928(5) | | 0 | – |
| DRG Legacy Limited Partnership | | 268,089 | | 1,518,683(6) | | 0 | – |
| G.C. Investments, LLC | | 518,630 | | 1,855,289(7) | | 0 | – |
| James Adam Greenspun 2010 Legacy Trust | | 252,364 | | 2,256,922(8) | | 0 | – |
| Jeffrey Aaron Fine 2010 Legacy Trust | | 101,582 | | 101,582(9) | | 0 | – |
| Jonathan M. Fine 2010 Legacy Trust | | 101,575 | | 101,575(10) | | 0 | – |
| Kathryn A. Fine 2010 Legacy Trust | | 101,575 | | 101,575(11) | | 0 | – |
MGG Specialty Finance Fund LP(12) | | 0 | | 3,354,550(13) | | 0 | – |
| Moira Greenspun Tarmy 2010 Legacy Trust | | 252,364 | | 2,256,922(14) | | 0 | – |
______________________
* Represents holdings of less than 1% of shares outstanding.
(1) | Assumes the sale of all shares of common stock being offered and registered hereunder. |
(2) | The applicable percentage of ownership is based on 19,435,382 shares of common stock outstanding as of November 3, 2015. |
(3) | Susan Fine, as the trustee of the Alyson Fine Marmur 2010 Legacy Trust, may be deemed to have voting and dispositive power over the securities held by such trust. The address for the Alyson Fine Marmur 2010 Legacy Trust is 18 Quail Hollow Drive, Henderson, NV 89014. |
(4) | Consists of 375,148 shares and 1,080,337 shares issuable upon exercise of an Acquisition Warrant. Brian Greenspun, as the trustee of the Amy Greenspun Arenson 2010 Legacy Trust, may be deemed to have voting and dispositive power over the securities held by such trust. The address for the Amy Greenspun Arenson 2010 Legacy Trust is c/o David W. Dachelet, Esq., 2360 Corporate Circle, Suite 330, Henderson, NV 89074. |
(5) | Consists of 198,224 shares and 924,704 shares issuable upon exercise of an Acquisition Warrant. Daniel Greenspun and Robin Greenspun, as the trustees of The Daniel A. Greenspun and Robin S. Greenspun Family Trust, the general partner of DRG Holdings, LP, may be deemed to have voting and dispositive power over the securities held by such entity. The address for DRG Holdings, LP is 1 Quail Beak Way, Henderson, NV 89014. |
(6) | Consists of 268,089 shares and 1,250,594 shares issuable upon exercise of an Acquisition Warrant. Daniel Greenspun, as the trustee of the Daniel A. Greenspun Separate Property Trust, the general partner of DRG Legacy Limited Partnership, may be deemed to have voting and dispositive power over the securities held by such entity. The address for DRG Legacy Limited Partnership, is 1 Quail Beak Way, Henderson, NV 89014. |
(7) | Consists of 518,630 shares and 1,336,659 shares issuable upon exercise of an Acquisition Warrant. Paul Hamilton, as the authorized signatory of G.C. Investments, LLC, acting individually, or a majority of Brian Greenspun, Daniel Greenspun, Jane Gale and Susan Fine, as the managers of G.C. Investments, LLC, may be deemed to have voting and dispositive power over the securities held by such entity. The address for G.C. Investments, LLC is c/o David W. Dachelet, Esq., 2360 Corporate Circle, Suite 330, Henderson, NV 89074. |
(8) | Consists of 252,364 shares and 2,004,558 shares issuable upon exercise of an Acquisition Warrant. Steven Gluckstern, as the trustee of the James Adam Greenspun 2010 Legacy Trust, may be deemed to have voting and dispositive power over the securities held by such trust. The address for the James Adam Greenspun 2010 Legacy Trust is 1 Quail Beak Way, Henderson, NV 89014. |
(9) | Susan Fine, as the trustee of the Jeffrey Aaron Fine 2010 Legacy Trust, may be deemed to have voting and dispositive power over the securities held by such trust. The address for the Jeffrey Aaron Fine 2010 Legacy Trust is 18 Quail Hollow Drive, Henderson, NV 89014. |
(10) | Susan Fine, as the trustee of the Jonathan M. Fine 2010 Legacy Trust, may be deemed to have voting and dispositive power over the securities held by such trust. The address for the Jonathan M. Fine 2010 Legacy Trust is 18 Quail Hollow Drive, Henderson, NV 89014. |
(11) | Susan Fine, as the trustee of the Kathryn A. Fine 2010 Legacy Trust, may be deemed to have voting and dispositive power over the securities held by such trust. The address for the Kathryn A. Fine 2010 Legacy Trust is 18 Quail Hollow Drive, Henderson, NV 89014. |
(12) | The address for MGG Specialty Finance Fund LP, a Delaware limited partnership (“MGG Fund”), is c/o MGG Investment Group LP, 888 Seventh Avenue, 43rd Floor, New York, New York 10106. |
(13) | Represents 130% of the number of shares underlying the Financing Warrant required to be registered for resale by the Company pursuant to the MGG Registration Rights Agreement. MGG Investment Group LP, a Delaware limited partnership, as the investment manager of MGG Fund, has investment discretion and voting power over the securities held by MGG Fund and may be deemed to be the beneficial owner of these securities. Kevin Griffin, in his capacity as the Chief Executive Officer and Chief Investment Officer of MGG Investment Group LP and the non-member manager of MGG GP, LLC, a Delaware limited liability company, which serves as the general partner of MGG Investment Group LP, may also be deemed to have investment discretion and voting power over the securities held by MGG Fund. |
(14) | Consists of 252,364 shares and 2,004,558 shares issuable upon exercise of an Acquisition Warrant. Steven Gluckstern, as the trustee of the Moira Greenspun Tarmy 2010 Legacy Trust, may be deemed to have voting and dispositive power over the securities held by such trust. The address for the Moira Greenspun Tarmy 2010 Legacy Trust is 1 Quail Beak Way, Henderson, NV 89014. |
The selling stockholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby from time to time directly or through one or more underwriters, broker-dealers or agents on the NASDAQ Capital Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed prices, at prevailing market pricesdetermined by such dealer at the time of resale.
If we offer securities in a subscription rights offering to our existing security holders, we may enter into a standby underwriting agreement with dealers, acting as standby underwriters. We may pay the sale, at varying prices determinedstandby underwriters a commitment fee for the securities they commit to purchase on a standby basis. If we do not enter into a standby underwriting arrangement, we may retain a dealer-manager to manage a subscription rights offering for us.
Agents, underwriters, dealers and other persons may be entitled under agreements which they may enter into with us to indemnification by us against certain civil liabilities, including liabilities under the Securities Act, and may be customers of, engage in transactions with or perform services for us in the ordinary course of business.
If so indicated in the applicable prospectus supplement, we will authorize underwriters or other persons acting as our agents to solicit offers by certain institutions to purchase securities from us pursuant to delayed delivery contracts providing for payment and delivery on the date stated in the prospectus supplement. Each contract will be for an amount not less than, and the aggregate amount of securities sold pursuant to such contracts shall not be less nor more than, the respective amounts stated in the prospectus supplement. Institutions with whom the contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and other institutions, but shall in all cases be subject to our approval. Delayed delivery contracts will not be subject to any conditions except that:
the purchase by an institution of the securities covered under that contract shall not at the time of sale,delivery be prohibited under the laws of the jurisdiction to which that institution is subject; and
if the securities are also being sold to underwriters acting as principals for their own account, the underwriters shall have purchased such securities not sold for delayed delivery. The underwriters and other persons acting as our agents will not have any responsibility in respect of the validity or at negotiated prices. Exceptperformance of delayed delivery contracts.
Offered securities may also be offered and sold, if so indicated in the prospectus supplement, in connection with a remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise, by one or more remarketing firms, acting as otherwise provided herein,principals for their own accounts or as agents for us. Any remarketing firm will be identified and the selling stockholdersterms of its agreement, if any, with us and its compensation will be described in the applicable prospectus supplement. Remarketing firms may use anybe deemed to be underwriters in connection with their remarketing of offered securities.
Certain agents, underwriters and dealers, and their associates and affiliates, may be customers of, have borrowing relationships with, engage in other transactions with, or perform services, including investment banking services, for us or one or more of our respective affiliates in the following methods when selling securities:ordinary course of business.
· | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
· | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
· | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
· | an exchange distribution in accordance with the rules of the applicable exchange; |
· | privately negotiated transactions; |
· | in transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such securities at a stipulated price per security; |
· | a combination of any such methods of sale; or |
· | any other method permitted pursuant to applicable law. |
A selling stockholder that is an entity may elect to make a pro rata in-kind distributionTo facilitate the offering of the sharessecurities, any underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of common stock to its members, partnersthe securities or shareholders pursuant toany other securities the registration statementprices of which this prospectus is a part by delivering a prospectus. To the extent thatmay be used to determine payments on such members, partners or shareholders are not affiliates of ours, such members, partners or shareholders would thereby receive freely tradeable shares of common stock pursuant to the distribution through a registration statement.
The selling stockholderssecurities. Specifically, any underwriters may from time to time, pledge or grant a security interestoverallot in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer or donate the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the saleoffering, creating a short position for their own accounts. In addition, to cover overallotments or to stabilize the price of our common stockthe securities or interests therein,of any such other securities, the underwriters may bid for, and purchase, the securities or any such other securities in the open market. Finally, in any offering of the securities through a syndicate of underwriters, the underwriting syndicate may reclaim selling stockholdersconcessions allowed to an underwriter or a dealer for distributing the securities in the offering if the syndicate repurchases previously distributed securities in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the securities above independent market levels. Any such underwriters are not required to engage in these activities and may end any of these activities at any time.
We may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act. In addition, we may enter into hedgingderivative transactions with broker-dealersthird parties, or other financial institutions, whichsell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement so indicates, in connection with those derivatives, the third parties may in turn engagesell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securitiesor to close out their short positions, orany related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock. The third party in such sale transactions will be an underwriter and, if not identified in this prospectus, will be named in the applicable prospectus supplement (or a post-effective amendment). In addition, we may otherwise loan or pledge the common stocksecurities to broker-dealersa financial institution or other third party that in turn may sell these securities. The selling stockholders may also enter into optionthe securities short using this prospectus and an applicable prospectus supplement. Such financial institution or other transactions with broker-dealers or other financial institutions or the creation of one or more derivativethird party may transfer its economic short position to investors in our securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchaseconnection with a concurrent offering of common stock to be made directly or through agents. We will not receive anyother securities.
Under Rule 15c6-1 of the proceeds from this offering.
The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided that they meet the criteria and conform to the requirements of that rule.
The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.
To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealers or underwriters and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
To comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), may apply to sales of sharestrades in the secondary market andgenerally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. The applicable prospectus supplement may provide that the original issue date for your securities may be more than three scheduled business days after the trade date for your securities. Accordingly, in such a case, if you wish to trade securities on any date prior to the activitiesthird business day before the original issue date for your securities, you will be required, by virtue of the selling stockholdersfact that your securities initially are expected to settle in more than three scheduled business days after the trade date for your securities, to make alternative settlement arrangements to prevent a failed settlement.
The securities may be new issues of securities and their affiliates. In addition,may have no established trading market. The securities may or may not be listed on a national securities exchange. We can make no assurance as to the extent applicable we will make copiesliquidity of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholdersexistence of trading markets for the purpose of satisfying the prospectus delivery requirementsany of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.securities.
Under the Investors’ Rights Agreement and the MGG Registration Rights Agreement, as applicable, we have agreed to indemnify certain selling stockholders against certain liabilities, including liabilities under the Securities Act and state securities laws, or such selling stockholders will be entitled to contribution, relating to the registration of the shares offered by this prospectus.
Under the Investors’ Rights Agreement and the MGG Registration Rights Agreement, as applicable, we have agreed to maintain the effectiveness of the registration statement of which this prospectus constitutes a part until the earlier of such time that all of the shares of common stock covered by the registration statement (x) have been sold by the selling stockholders or (y) are permitted to be sold by each selling stockholder without volume or manner-of-sale restrictions and without the requirement for the Company to be inIn compliance with the current public information requirement under Rule 144.
There can be no assurance that any selling stockholder will sell any or allguidelines of the sharesFinancial Industry Regulatory Authority, Inc., or FINRA, the aggregate maximum discount, commission or agency fees or other items constituting underwriting compensation to be received by any FINRA member or independent broker-dealer will not exceed 8% of our common stock registeredthe proceeds from any offering pursuant to the registration statement, of which this prospectus forms a part.and any applicable prospectus supplement.
Once sold under the registration statement,The specific terms of which this prospectus forms a part, the sharesany lock-up provisions in respect of common stockany given offering will be freely tradabledescribed in the handsapplicable prospectus supplement
The underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of persons other than our affiliates.business for which they receive compensation.
General
Our Amended and Restated Certificate of Incorporation, or Charter, authorizes us to issue up to 51,000,000101,000,000 shares, including 50,000,000100,000,000 shares of common stock, par value $0.001$0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.001 per share, of which 50,000 shares have been designated as shares of Series A Junior Participating Preferred Stock. As of close of business on November 3, 2015,June 1, 2018, there were 19,435,38232,955,549 shares of common stock issued and outstanding, and no shares of Series A Junior Participating Preferred Stockpreferred stock issued and outstanding.
The following descriptions are summaries of the material provisions and terms of our capital stock and are qualified by reference to our Amended and Restated Certificate of Incorporation, or Charter, and our Amended and Restated Bylaws, or Bylaws, each as amended to date.Bylaws.
Common Stock
Each share of common stock entitles its holder to one vote on all matters to be voted upon by the stockholders. Common stockholders are not entitled to cumulative voting with respect to the election of directors. Subject to the preferences of any outstanding shares of preferred stock, holders of common stock may receive ratably any dividends that our Board of Directors (our “Board”) may declare out of funds legally available for that purpose. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and liquidation preferences of any outstanding shares of preferred stock. The common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions.
Series A Junior Participating
Preferred Stock
The material terms of the Series A Junior Participating Preferred Stock are described in the section “Tax Benefit Preservation Plan (Rights Plan)” below.
Preferred Stock (Undesignated)
Under our Charter, our Board is authorized generally without stockholder approval to issue shares of preferred stock in one or more series and, in connection with the creation of each such series, to fix the number of shares of such series and designate the powers, preferences and rights of such series, including dividend rights, redemption rights, liquidation preferences, sinking fund provisions, conversion rights and voting rights, any or all of which may be greater than the rights of the common stock.
Stock Options
As of November 3, 2015, there were options to purchase 4,339,778 shares of common stock outstanding.
Warrants
2012 Investor Warrants
On February 29, 2012, we issued warrants to purchase an aggregate of 236,194 shares of common stock at an exercise price of $6.81 per share as part of an equity private placement (the “2012 Investor Warrants”). The 2012 Investor Warrants have a term of five yearsWe will fix the powers, preferences, rights and six months, became exercisable six months after issuance, and provide for weighted average anti-dilution protection. As of November 3, 2015, there were 2012 Investor Warrants to purchase 215,278 shares of common stock outstanding and the exercise pricerestrictions of the 2012 Investor Warrants was $4.59 per share.
Hotelmobi Warrants
On May 2, 2014, as partial consideration for our acquisition of Hotelmobi Inc., we issued to former Hotelmobi stockholders warrants to purchase 500,000 shares of commonpreferred stock at an exercise price of $8.00 per share and warrants to purchase 500,000 shares of common stock at an exercise price of $12.00 per share (the “Hotelmobi Warrants”). The Hotelmobi Warrants have a term of five years and vested 12.5% on the last day of each fiscal quarter beginning June 30, 2014, providedseries in the recipient was employedcertificate of designation relating to that series. We will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by us on such date or had been terminated other than for cause. Asreference, the form of November 3, 2015, there were Hotelmobi Warrants to purchase 1,000,000 sharesany certificate of common stock outstanding.
Acquisition Warrants
On September 24, 2015, as partial consideration for our acquisition of Vegas.com, we issued to certain former equity owners of Vegas.com five-year warrants to purchase a total of 8,601,410 shares of our common stock at an exercise price of $9.00 per share, which we refer to herein asdesignation that describes the Acquisition Warrants. The Acquisition Warrants also provide as follows: (i) the Acquisition Warrants are exercisable on a cashless basis only; (ii) we have the right to exercise all or any portionterms of the Acquisition Warrants if at any time following their issuance the closing priceseries of our commonpreferred stock is greater than or equal to $14.00; and (iii) the holder has the right to sell the Acquisition Warrants back to the Company on their expiration date in exchange for shares of our common stock having a value equivalent to the value of the Acquisition Warrants at closing, calculated based on a per share price equal to the volume weighted average price of our common stock during the 30 trading days ending on the expiration date, provided that this right terminates if the closing price of our common stock equals or exceeds $10.1626 for any 20 trading days during a period of 30 consecutive trading days at any time on or prior to the expiration date (the “Acquisition Put Option”).
As the Acquisition Warrants are exercisable on a cashless basis only, they effectively cannot be exercised to purchase shares of common stock unless the applicable market value of the common stock exceeds the applicable exercise price thereunder. The Acquisition Warrants also provide that, in accordance with our obligations under Nasdaq Listing Rule 5635, we are not permitted to issue any additional shares under the Acquisition Warrants to the extent thatoffering before the issuance of such shares would cause us to exceed the aggregate numberrelated series of shares of common stock that we are permitted to issue without breaching our obligations under Nasdaq Listing Rule 5635, unless we obtain preferred stock. This description will include, as applicable:
the Stockholder Approval. We intend to seek the Stockholder Approval at a special meeting of stockholders within 90 days after the closing of the Vegas.com Acquisition.title and stated value;
Financing Warrant
On September 24, 2015, in connection with the Financing Agreement, we issued to MGG Fund, an affiliate of MGG, a five-year warrant to purchase 2,580,423 shares of our common stock at an exercise price of $9.00 per share, subject to certain anti-dilution adjustments, which we refer to herein as the Financing Warrant. The Financing Warrant also provides as follows: (i) the Financing Warrant is exercisable on a cashless basis only; (ii) the number of shares authorized;
the liquidation preference per share;
the purchase price;
the dividend rate, period and payment date, and method of calculation for dividends;
whether dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate;
the procedures for any auction and remarketing, if any;
the provisions for a sinking fund, if any;
the provisions for redemption or repurchase, if applicable, and any restrictions on our ability to exercise those redemption and repurchase rights;
any listing of the preferred stock on any securities exchange or market;
whether the preferred stock will be convertible into our common stock, issuable upon exerciseand, if applicable, the conversion price, or how it will be calculated, and the conversion period;
whether the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange price, or how it will be calculated, and the exchange period;
voting rights, if any, of the Financing Warrantpreferred stock;
preemptive rights, if any;
restrictions on transfer, sale or other assignment, if any;
whether interests in the preferred stock will be represented by depositary shares;
a discussion of any material United States federal income tax considerations applicable to the preferred stock;
the relative ranking and preferences of the exercise price thereof arepreferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs;
any limitations on issuance of any class or series of preferred stock ranking senior to or on a parity with the series of preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; and
any other specific terms, preferences, rights or limitations of, or restrictions on, the preferred stock.
If we issue shares of preferred stock under this prospectus, the shares will be fully paid and non-assessable and will not have, or be subject to, anti-dilution protection; (iii) we have the right to exercise allany preemptive or any portion of the Financing Warrant if at any time following its issuance the closing price of our common stock is greater than or equal to $14.00; and (iv) the holder has the right to sell the Financing Warrant back to Remark on its expiration date in exchange for $3.0 million in cash (reduced pro rata based on the percentage of the Financing Warrant exercised) (the “Financing Put Option”).similar rights.
As the Financing Warrant is exercisable on a cashless basis only, it effectively cannot be exercised to purchase shares of common stock unless the applicable market value of the common stock exceeds the applicable exercise price thereunder. The Financing Warrant also provides that, in accordance with our obligations under Nasdaq Listing Rule 5635, we are not permitted to issue any additional shares under the Financing Warrant to the extent that the issuance of such shares would cause us to exceed the aggregate number of shares of common stock that we are permitted to issue without breaching our obligations under Nasdaq Listing Rule 5635, unless we obtain the Stockholder Approval. We intend to seek the Stockholder Approval at a special meeting of stockholders within 90 days after the closing of the Vegas.com Acquisition.
Series A Junior Participating Preferred Stock Tax Benefit Preservation Plan (Rights Plan)
The following is a summary of the terms of our Tax Benefit Preservation Plan (the “Rights Plan”), dated as ofOn June 4, 2015, between us and Computershare Inc.,the Company designated 50,000 shares of preferred stock as rights agent. The summary does not purport to be complete and is qualified in its entirety by reference to the Rights Plan, the complete text of which has been filed with the SEC and is incorporated herein by reference.
Distribution and Transfer of Rights; Rights Certificates
Effective on June 4, 2015, our Board authorized and declared a dividend distribution of one right (a “Right”) for each outstanding share of our common stock, par value $0.001 per share (the “Common Shares”), to stockholders of record as of the close of business on June 15, 2015 (the “Rights Plan Record Date”). Each Right entitles the registered holder to purchase from us one one-thousandth of a share of our Series A Junior Participating Preferred Stock par value $0.001 per sharein connection with a Tax Benefit Preservation Plan (the “Preferred Shares”), at an exercise price of $19.00 per one one-thousandth of a Preferred Share, subject to adjustment (the “Exercise Price”“Plan”).
Prior to the Distribution Date referred to below:
· | the Rights will be evidenced by and trade with the certificates for the Common Shares (or, with respect to any uncertificated Common Shares registered in book entry form, by notation in book entry), and no separate rights certificates will be distributed; |
· | new Common Shares certificates issued after the Rights Plan Record Date will contain a legend incorporating the Rights Plan by reference (for uncertificated Common Shares registered in book entry form, this legend will be contained in a notation in book entry); and |
· | the surrender for transfer of any certificates for Common Shares (or the surrender for transfer of any uncertificated Common Shares registered in book entry form) will also constitute the transfer of the Rights associated with such Common Shares. |
Rights will accompany any new Common Shares that are issued after the Rights The Plan Record Date.
Distribution Date
Subject to certain exceptions specified in the Rights Plan, the Rights will separate from the Common Shares and become exercisable following (i) the 10th business day (or such later date as may be determined by the Board) after the public announcement that an Acquiring Person (as defined below) has acquired beneficial ownership of 4.99% or more of the Common Shares or (ii) the 10th business day (or such later date as may be determined by the Board) after a person or group announces a tender or exchange offer that would result in ownership by a person or group of 4.99% or more of the Common Shares.
The date on which the Rights separate from the Common Shares and become exercisable is referred to as the “Distribution Date.”
After the Distribution Date, we will send Rights certificates to stockholders holding Common Shares as of the close of business on the Distribution Date and the Rights will become transferable apart from the Common Shares. Thereafter, such Rights certificates alone will represent the Rights.
Preferred Shares Purchasable Upon Exercise of Rights
After the Distribution Date, each Right will entitle the holder to purchase, for the Exercise Price, one one-thousandth of a Preferred Share having economic and other terms similar to that of one Common Share. This portion of a Preferred Share is intended to give the stockholder approximately the same dividend, voting and liquidation rights as would one Common Share, and should approximate the value of one Common Share.
More specifically, each one one-thousandth of a Preferred Share, if issued, will:
· | entitle holders to quarterly dividend payments of $0.001 per share, or an amount equal to the dividend paid on one Common Share, whichever is greater; |
· | entitle holders upon liquidation either to receive $1.00 per share or an amount equal to the payment made on one Common Share, whichever is greater; |
· | have the same voting power as one Common Share; and |
· | entitle holders to a per share payment equal to the payment made on one Common Share, if the Common Shares are exchanged via merger, consolidation or a similar transaction. |
Flip-In Trigger
If a person or group of affiliated or associated persons (an “Acquiring Person”) obtains beneficial ownership of 4.99% or more of the Common Shares, except pursuant to an offer for all outstanding Common Shares that the independent members of the Board determine to be fair and not inadequate and to otherwise be in our best interest and that of our stockholders after receiving advice from one or more investment banking firms, then each Right will entitle the holder thereof to purchase, for the Exercise Price, a number of Common Shares (or, in certain circumstances, cash, property or other of our securities) having a then-current market value of twice the Exercise Price. However, the Rights are not exercisable following the occurrence of the foregoing event until such time as the Rights are no longer redeemable by us, as further described below.
Following the occurrence of an event set forth in the preceding paragraph, all Rights that are or, under certain circumstances specified in the Rights Plan, were beneficially owned by an Acquiring Person or certain of its transferees will be null and void.
Any person who, together with its affiliates and associates, beneficially owns 4.99% or more of the outstanding Common Shares as of the time of the first public announcement of the Rights Plan (an “Exempt Person”) shall not be deemed an Acquiring Person, but only for so long as such person, together with its affiliates and associates, does not become the beneficial owner of any additional Common Shares while such person is an Exempt Person. A person will cease to be an Exempt Person if such person, together with such person’s affiliates and associates, becomes the beneficial owner of less than 4.99% of the outstanding Common Shares.
Flip-Over Trigger
If, after an Acquiring Person obtains 4.99% or more of the Common Shares, (i) we merge into another entity, (ii) an acquiring entity merges into us or (iii) we sell or transfer more than 50% of our assets, cash flow or earning power, then each Right (except for Rights that have previously been voided as set forth above) will entitle the holder thereof to purchase, for the Exercise Price, a number of shares of common stock of the person engaging in the transaction having a then-current market value of twice the Exercise Price.
Redemption of the Rights
The Rights will be redeemable at our option for $0.001 per Right (payable in cash, Common Shares or other consideration deemed appropriate by the Board) at any time on or prior to the 10th business day (or such later date as may be determined by the Board) after the public announcement that an Acquiring Person has acquired beneficial ownership of 4.99% or more of the Common Shares. Immediately upon the action of the Board ordering redemption, the Rights will terminate and the only right of the holders of the Rights will be to receive the $0.001 redemption price. The redemption price will be adjusted if we undertake a stock dividend or a stock split.
Exchange Provision
At any time after the date on which an Acquiring Person beneficially owns 4.99% or more of the Common Shares and prior to the acquisition by the Acquiring Person of 50% of the Common Shares, the Board may exchange the Rights (except for Rights that have previously been voided as set forth above), in whole or in part, for Common Shares at an exchange ratio of one Common Share per Right (subject to adjustment). In certain circumstances, we may elect to exchange the Rights for cash or other of our securities having a value approximately equal to one Common Share.
Expiration of the Rights
The Rights expire on the earliest of (i) 5:00 p.m., New York time, on the date that the votes of our stockholders, with respect to our 2015 Annual Meeting of Stockholders, are certified, unless the continuation of the Rights Plan is approved by the affirmative vote of the majority of the votes cast at the meeting (or any adjournment or postponement thereof) duly heldexpired in accordance with our Bylaws and applicable law; (ii) 5:00 p.m., New York time,its terms on June 4, 2018; (iii) the time at which the Rights are redeemed or exchanged under the Rights Plan; (iv) the repeal of §382 or any successor statute and the Board’s determination that the Rights Plan is no longer necessary for preservation of our Tax Benefits; or (v) the beginning of one of our taxable years to which the Board determines that no Tax Benefits may be carried forward. The continuation of the Rights Plan was approved by the affirmative vote of the majority of the votes cast at our 2015 Annual Meeting of Stockholders.2018.
Amendment of Terms of Rights Plan and Rights
The terms of the Rights and the Rights Plan may be amended in any respect without the consent of the holders of the Rights on or prior to the Distribution Date. Thereafter, the terms of the Rights and the Rights Plan may be amended without the consent of the holders of Rights to (i) cure any ambiguities, (ii) shorten or lengthen any time period pursuant to the Rights Plan or (iii) make changes that do not adversely affect the interests of holders of the Rights.
Voting Rights; Other Stockholder Rights
The Rights will not have any voting rights. Until a Right is exercised, the holder thereof, as such, will have no separate rights as one of our stockholders.
Anti-Dilution Provisions
Our Board may adjust the Exercise Price, the number of Preferred Shares issuable and the number of outstanding Rights to prevent dilution that may occur from a stock dividend, a stock split or a reclassification of the Preferred Shares or Common Shares.
With certain exceptions, no adjustments to the Exercise Price will be made until the cumulative adjustments sum to at least 1% of the Exercise Price. No fractional Preferred Shares will be issued and, in lieu thereof, an adjustment in cash will be made based on the current market price of the Preferred Shares.
Taxes
The distribution of Rights should not be taxable for federal income tax purposes. However, following an event that renders the Rights exercisable or upon redemption of the Rights, stockholders may recognize taxable income.
Registration Rights
We entered into a registration rights agreement, dated as of February 29, 2012 (the “2012 Registration Rights Agreement”), with accredited investors who purchased an aggregate of 944,777 shares of our common stock and 2012 Investor Warrants to purchase 236,194 shares of our common stock in a private placement on February 29, 2012. The 2012 Registration Rights Agreement provides that promptly following the closing of the private placement, but no later than 30 days thereafter, the Company would prepare and file with the SEC a registration statement on Form S-3 covering the resale of the shares of common stock and the shares underlying the 2012 Investor Warrants sold. The 2012 Registration Rights Agreement also provides for certain piggyback registration rights, among other things. The Company filed a registration statement on Form S-3 covering these shares with the SEC on March 23, 2012, which was declared effective on March 30, 2012.
We entered into stock purchase agreements, dated June 16, 2014, with accredited investors who purchased an aggregate of 470,000 shares of our common stock in a private placement. Under these purchase agreements, we agreed that promptly following the closing of the private placement, but no later than 15 business days thereafter, the Company would prepare and file with the SEC a registration statement on Form S-1 covering the resale of the shares of common stock sold, and the investors agreed to a 180-day lockup with respect to such shares. We filed with the SEC a registration statement on Form S-1 covering the resale of 220,833 shares of our common stock issuable upon exercise of the 2012 Investor Warrants issued in the February 2012 private placement, 470,000 shares of our common stock issued in the June 2014 private placement and 1,420,497shares of our common stock issuable upon conversion of the January 2014 Note and the November 2013 Note, which registration statement was declared effective on August 26, 2014.
In connection with the Vegas.com Acquisition and related financing, we entered into the Investors’ Rights Agreement providing that we will file with the SEC a registration statement covering the resale by former equity owners of Vegas.com of the shares of our common stock issued under the Purchase Agreement at the closing of the Vegas.com Acquisition and the shares issuable upon exercise of the Acquisition Warrants, and we entered into the MGG Registration Rights Agreement providing that we will file with the SEC a registration statement covering the resale by the holder of the Financing Warrant of 130% of the shares of our common stock issuable under the Financing Warrant. This prospectus covers the resale of such shares. We also agreed that we will file with the SEC a registration statement or amend an existing registration statement to cover the resale of any shares of our common stock issued upon an Equity Payment Anti-Dilution Adjustment and upon exercise of the Acquisition Put Option and the Financing Put Option. In each case, we agreed to maintain the effectiveness of the applicable registration statement until the earlier of such time that all of the shares of common stock covered by the registration statement (x) have been sold by the selling stockholders or (y) are permitted to be sold by each selling stockholder without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144.
Anti-Takeover Provisions
Provisions in our Charter and Bylaws, as well as provisions of the DGCL, which may discourage, delay or prevent a merger, with, acquisition of or other change in control of Remark, even if such a change in control would be beneficial to our stockholders,stockholders. These provisions include the following:
· | only our Board may call special meetings of our stockholders; |
· | our stockholders may take action only at a meeting of our stockholders and not by written consent; |
· | we have authorized undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval. |
our stockholders may take action only at a meeting of our stockholders and not by written consent;
we have authorized undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval.
Additionally, Section 203 of the DGCL prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. We have not opted out of the restriction under Section 203, as permitted under the DGCL.
Further, we adopted the Rights Plan, which generally is designed to deter any person from acquiring shares of our common stock if the acquisition would result in such person beneficially owning 4.99% or more of our common stock without the approval of our Board.
Listing
Our common stock is currently quoted on the NASDAQ Capital Market under the symbol “MARK”.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is Computershare LLC.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of Contentsshares of our common stock, preferred stock or of debt securities. Any of these warrants may be issued independently or together with any other securities offered by this prospectus and may be attached to or separate from those securities.
We will evidence each series of warrants by warrant certificates that we will issue under a separate warrant agreement. We will enter into the warrant agreement with a warrant agent. We will indicate the name and address of the warrant agent in the applicable prospectus supplement relating to a particular series of warrants.
We will describe in the applicable prospectus supplement the terms of the series of warrants, including:
the offering price and aggregate number of warrants offered;
the currency for which the warrants may be purchased;
if applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such security;
if applicable, the date on and after which the warrants and the related securities will be separately transferable;
in the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant and the price at, and currency in which, this principal amount of debt securities may be purchased upon such exercise;
in the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as the case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon such exercise;
the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreement and the warrants;
the terms of any rights to redeem or call the warrants;
any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
the periods during which, and places at which, the warrants are exercisable;
the manner of exercise;
the dates on which the right to exercise the warrants will commence and expire;
the manner in which the warrant agreement and warrants may be modified;
federal income tax consequences of holding or exercising the warrants;
the terms of the securities issuable upon exercise of the warrants; and
any other specific terms, preferences, rights or limitations of or restrictions on the warrants.
DESCRIPTION OF DEBT SECURITIES
We may issue debt securities from time to time, in one or more series, as either senior or subordinated debt or as senior or subordinated convertible debt. Unless otherwise specified in the applicable prospectus supplement, we will issue the debt securities under an indenture that we will enter into with the trustee named in the indenture. The indenture will be qualified under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). We have filed the form of indenture as an exhibit to the registration statement of which this prospectus is a part, and supplemental indentures and forms of debt securities specifying the terms of the debt securities being offered will be filed as exhibits to the registration statement of which this prospectus is a part or will be incorporated by reference from reports that we file with the SEC. Unless the context requires otherwise, whenever we refer to the indenture, we also are referring to any supplemental indentures that specify the terms of the debt securities being offered.
The following summary of material provisions of the debt securities and the indenture is subject to, and qualified in its entirety by reference to, all of the provisions of the indenture applicable to a particular series of debt securities. We urge you to read the applicable prospectus supplements and any related free writing prospectuses related to the debt securities that we may offer under this prospectus, as well as the complete indenture that contains the terms of the debt securities.
General
The indenture does not limit the amount of debt securities that we may issue. It provides that we may issue debt securities up to the principal amount that we may authorize and may be in any currency or currency unit that we may designate. Except for the limitations on consolidation, merger and sale of all or substantially all of our assets contained in the indenture, the terms of the indenture do not contain any covenants or other provisions designed to give holders of any debt securities protection against changes in our operations, financial condition or transactions involving us.
We may issue the debt securities issued under the indenture as “discount securities,” which means they may be sold at a discount below their stated principal amount. These debt securities, as well as other debt securities that are not issued at a discount, may be issued with “original issue discount,” or OID, for U.S. federal income tax purposes because of interest payment and other characteristics or terms of the debt securities. Material U.S. federal income tax considerations applicable to debt securities issued with OID will be described in more detail in the applicable prospectus supplement.
We also may issue indexed debt securities. Payments of principal of, and premium and interest on, indexed debt securities are determined with reference to the rate of exchange between the currency or currency unit in which the debt security is denominated and any other currency or currency unit specified by us, to the relationship between two or more currencies or currency units or by other similar methods or formulas specified in the applicable prospectus supplement.
We will describe in the applicable prospectus supplement the terms of the series of debt securities being offered, including:
the title of the series of debt securities;
any limit upon the aggregate principal amount that may be issued;
the maturity date or dates;
the form of the debt securities of the series;
the applicability of any guarantees;
whether or not the debt securities will be secured or unsecured, and the terms of any secured debt;
whether the debt securities rank as senior debt, senior subordinated debt, subordinated debt or any combination thereof, and the terms of any subordination;
if the price (expressed as a percentage of the aggregate principal amount thereof) at which such debt securities will be issued is a price other than the principal amount thereof, the portion of the principal amount thereof payable upon declaration of acceleration of the maturity thereof, or if applicable, the portion of the principal amount of such debt securities that is convertible into another security or the method by which any such portion shall be determined;
the interest rate or rates, which may be fixed or variable, or the method for determining the rate and the date interest will begin to accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for determining such dates;
our right, if any, to defer payment of interest and the maximum length of any such deferral period;
if applicable, the date or dates after which, or the period or periods during which, and the price or prices at which, we may, at our option, redeem the series of debt securities pursuant to any optional or provisional redemption provisions and the terms of those redemption provisions;
the date or dates, if any, on which, and the price or prices at which we are obligated, pursuant to any mandatory sinking fund or analogous fund provisions or otherwise, to redeem, or at the holder’s option to purchase, the series of debt securities and the currency or currency unit in which the debt securities are payable;
the denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral multiple thereof;
any and all terms, if applicable, relating to any auction or remarketing of the debt securities of that series and any security for our obligations with respect to such debt securities and any other terms which may be advisable in connection with the marketing of debt securities of that series;
whether the debt securities of the series shall be issued in whole or in part in the form of a global security or securities; the terms and conditions, if any, upon which such global security or securities may be exchanged in whole or in part for other individual securities; and the depositary for such global security or securities;
if applicable, the provisions relating to conversion or exchange of any debt securities of the series and the terms and conditions upon which such debt securities will be so convertible or exchangeable, including the conversion or exchange price, as applicable, or how it will be calculated and may be adjusted, any mandatory or optional (at our option or the holders’ option) conversion or exchange features, the applicable conversion or exchange period and the manner of settlement for any conversion or exchange;
if other than the full principal amount thereof, the portion of the principal amount of debt securities of the series which shall be payable upon declaration of acceleration of the maturity thereof;
additions to or changes in the covenants applicable to the particular debt securities being issued, including, among others, the consolidation, merger or sale covenant;
additions to or changes in the events of default with respect to the securities and any change in the right of the trustee or the holders to declare the principal, premium, if any, and interest, if any, with respect to such securities to be due and payable;
additions to or changes in or deletions of the provisions relating to covenant defeasance and legal defeasance;
additions to or changes in the provisions relating to satisfaction and discharge of the indenture;
additions to or changes in the provisions relating to the modification of the indenture both with and without the consent of holders of debt securities issued under the indenture;
the currency of payment of debt securities if other than U.S. dollars and the manner of determining the equivalent amount in U.S. dollars;
whether interest will be payable in cash or additional debt securities at our or the holders’ option and the terms and conditions upon which the election may be made;
the terms and conditions, if any, upon which we will pay amounts in addition to the stated interest, premium, if any and principal amounts of the debt securities of the series to any holder that is not a “United States person” for federal tax purposes;
any restrictions on transfer, sale or assignment of the debt securities of the series; and
any other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, any other additions or changes in the provisions of the indenture, and any terms that may be required by us or advisable under applicable laws or regulations.
Conversion or Exchange Rights
We will set forth in the applicable prospectus supplement the terms on which a series of debt securities may be convertible into or exchangeable for our common stock or our other securities. We will include provisions as to settlement upon conversion or exchange and whether conversion or exchange is mandatory, at the option of the holder or at our option. We may include provisions pursuant to which the number of shares of our common stock or our other securities that the holders of the series of debt securities receive would be subject to adjustment.
Consolidation, Merger or Sale
Unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the indenture will not contain any covenant that restricts our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of our assets as an entirety or substantially as an entirety. However, any successor to or acquirer of such assets (other than a subsidiary of ours) must assume all of our obligations under the indenture or the debt securities, as appropriate.
Events of Default
Unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the following are events of default under the indenture with respect to any series of debt securities that we may issue:
if we fail to pay any installment of interest on any series of debt securities, as and when the same shall become due and payable, and such default continues for a period of 90 days; provided, however, that a valid extension of an interest payment period by us in accordance with the terms of any indenture supplemental thereto shall not constitute a default in the payment of interest for this purpose;
if we fail to pay the principal of, or premium, if any, on any series of debt securities as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise, or in any payment required by any sinking or analogous fund established with respect to such series; provided, however, that a valid extension of the maturity of such debt securities in accordance with the terms of any indenture supplemental thereto shall not constitute a default in the payment of principal or premium, if any;
if we fail to observe or perform any other covenant or agreement contained in the debt securities or the indenture, other than a covenant specifically relating to another series of debt securities, and our failure continues for 90 days after we receive written notice of such failure, requiring the same to be remedied and stating that such is a notice of default thereunder, from the trustee or holders of at least 25% in aggregate principal amount of the outstanding debt securities of the applicable series; and
if specified events of bankruptcy, insolvency or reorganization occur.
If an event of default with respect to debt securities of any series occurs and is continuing, other than an event of default specified in the last bullet point above, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series, by notice to us in writing, and to the trustee if notice is given by such holders, may declare the unpaid principal of, premium, if any, and accrued interest, if any, due and payable immediately. If an event of default specified in the last bullet point above occurs with respect to us, the principal amount of and accrued interest, if any, of each issue of debt securities then outstanding shall be due and payable without any notice or other action on the part of the trustee or any holder.
The holders of a majority in principal amount of the outstanding debt securities of an affected series may waive any default or event of default with respect to the series and its consequences, except defaults or events of default regarding payment of principal, premium, if any, or interest, unless we have cured the default or event of default in accordance with the indenture. Any waiver shall cure the default or event of default.
Subject to the terms of the indenture, if an event of default under an indenture shall occur and be continuing, the trustee will be under no obligation to exercise any of its rights or powers under such indenture at the request or direction of any of the holders of the applicable series of debt securities, unless such holders have offered the trustee reasonable indemnity. The holders of a majority in principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series, provided that:
the direction so given by the holder is not in conflict with any law or the applicable indenture; and
subject to its duties under the Trust Indenture Act, the trustee need not take any action that might involve it in personal liability or might be unduly prejudicial to the holders not involved in the proceeding.
A holder of the debt securities of any series will have the right to institute a proceeding under the indenture or to appoint a receiver or trustee, or to seek other remedies only if:
the holder has given written notice to the trustee of a continuing event of default with respect to that series;
the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made written request, such holders have offered to the trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred by the trustee in compliance with the request; and
the trustee does not institute the proceeding, and does not receive from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series other conflicting directions within 90 days after the notice, request and offer.
These limitations do not apply to a suit instituted by a holder of debt securities if we default in the payment of the principal, premium, if any, or interest on, the debt securities.
We will periodically file statements with the trustee regarding our compliance with specified covenants in the indenture.
Modification of Indenture; Waiver
We and the trustee may change an indenture without the consent of any holders with respect to specific matters:
to cure any ambiguity, defect or inconsistency in the indenture or in the debt securities of any series;
to comply with the provisions described above under “Description of Debt Securities-Consolidation, Merger or Sale;”
to provide for uncertificated debt securities in addition to or in place of certificated debt securities;
to add to our covenants, restrictions, conditions or provisions such new covenants, restrictions, conditions or provisions for the benefit of the holders of all or any series of debt securities, to make the occurrence, or the occurrence and the continuance, of a default in any such additional covenants, restrictions, conditions or provisions an event of default or to surrender any right or power conferred upon us in the indenture;
to add to, delete from or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of issue, authentication and delivery of debt securities, as set forth in the indenture;
to make any change that does not adversely affect the interests of any holder of debt securities of any series in any material respect;
to provide for the issuance of and establish the form and terms and conditions of the debt securities of any series as provided above under “Description of Debt Securities-General” to establish the form of any certifications required to be furnished pursuant to the terms of the indenture or any series of debt securities, or to add to the rights of the holders of any series of debt securities;
to evidence and provide for the acceptance of appointment under any indenture by a successor trustee; or
to comply with any requirements of the SEC in connection with the qualification of any indenture under the Trust Indenture Act.
In addition, under the indenture, the rights of holders of a series of debt securities may be changed by us and the trustee with the written consent of the holders of at least a majority in aggregate principal amount of the outstanding debt securities of each series that is affected. However, unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, we and the trustee may make the following changes only with the consent of each holder of any outstanding debt securities affected:
extending the fixed maturity of any debt securities of any series;
reducing the principal amount, reducing the rate of or extending the time of payment of interest, or reducing any premium payable upon the redemption of any series of any debt securities; or
reducing the percentage of debt securities, the holders of which are required to consent to any amendment, supplement, modification or waiver.
Discharge
Each indenture provides that we can elect to be discharged from our obligations with respect to one or more series of debt securities, except for specified obligations, including obligations to:
provide for payment;
register the transfer or exchange of debt securities of the series;
replace stolen, lost or mutilated debt securities of the series;
pay principal of and premium and interest on any debt securities of the series;
maintain paying agencies;
hold monies for payment in trust;
recover excess money held by the trustee;
compensate and indemnify the trustee; and
appoint any successor trustee.
To exercise our rights to be discharged, we must deposit with the trustee money or government obligations sufficient to pay all the principal of, any premium, if any, and interest on, the debt securities of the series on the dates payments are due.
Form, Exchange and Transfer
We will issue the debt securities of each series only in fully registered form without coupons and, unless we provide otherwise in the applicable prospectus supplement, in denominations of $1,000 and any integral multiple thereof. The indenture provides that we may issue debt securities of a series in temporary or permanent global form and as book-entry securities that will be deposited with, or on behalf of, The Depository Trust Company, or DTC, or another depositary named by us and identified in the applicable prospectus supplement with respect to that series. To the extent the debt securities of a series are issued in global form and as book-entry, a description of terms relating to any book-entry securities will be set forth in the applicable prospectus supplement.
At the option of the holder, subject to the terms of the indenture and the limitations applicable to global securities described in the applicable prospectus supplement, the holder of the debt securities of any series can exchange the debt securities for other debt securities of the same series, in any authorized denomination and of like tenor and aggregate principal amount.
Subject to the terms of the indenture and the limitations applicable to global securities set forth in the applicable prospectus supplement, holders of the debt securities may present the debt securities for exchange or for registration of transfer, duly endorsed or with the form of transfer endorsed thereon duly executed if so required by us or the security registrar, at the office of the security registrar or at the office of any transfer agent designated by us for this purpose. Unless otherwise provided in the debt securities that the holder presents for transfer or exchange, we will impose no service charge for any registration of transfer or exchange, but we may require payment of any taxes or other governmental charges.
We will name in the applicable prospectus supplement the security registrar, and any transfer agent in addition to the security registrar, that we initially designate for any debt securities. We may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts, except that we will be required to maintain a transfer agent in each place of payment for the debt securities of each series.
If we elect to redeem the debt securities of any series, we will not be required to:
issue, register the transfer of, or exchange any debt securities of that series during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any debt securities that may be selected for redemption and ending at the close of business on the day of the mailing; or
register the transfer of or exchange any debt securities so selected for redemption, in whole or in part, except the unredeemed portion of any debt securities we are redeeming in part.
Information Concerning the Trustee
The trustee, other than during the occurrence and continuance of an event of default under an indenture, undertakes to perform only those duties as are specifically set forth in the applicable indenture. Upon an event of default under an indenture, the trustee must use the same degree of care as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the trustee is under no obligation to exercise any of the powers given it by the indenture at the request of any holder of debt securities unless it is offered reasonable security and indemnity against the costs, expenses and liabilities that it might incur.
Payment and Paying Agents
Unless we otherwise indicate in the applicable prospectus supplement, we will make payment of the interest on any debt securities on any interest payment date to the person in whose name the debt securities, or one or more predecessor securities, are registered at the close of business on the regular record date for the interest.
We will pay principal of and any premium and interest on the debt securities of a particular series at the office of the paying agents designated by us, except that unless we otherwise indicate in the applicable prospectus supplement, we will make interest payments by check that we will mail to the holder or by wire transfer to certain holders. Unless we otherwise indicate in the applicable prospectus supplement, we will designate the corporate trust office of the trustee as our sole paying agent for payments with respect to debt securities of each series. We will name in the applicable prospectus supplement any other paying agents that we initially designate for the debt securities of a particular series. We will maintain a paying agent in each place of payment for the debt securities of a particular series.
All money we pay to a paying agent or the trustee for the payment of the principal of or any premium or interest on any debt securities that remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid to us, and the holder of the debt security thereafter may look only to us for payment thereof.
Global Securities
The debt securities of a series may be issued in whole or in part in the form of one or more global securities that will be deposited with, or on behalf of, a depositary identified in the applicable prospectus supplement. Global securities will be issued in registered form and in either temporary or definitive form. Unless and until it is exchanged in whole or in part for the individual debt securities, a global security may not be transferred except as a whole by the depositary for such global security to a nominee of such depositary or by a nominee of such depositary to such depositary or another nominee of such depositary or by such depositary or any such nominee to a successor of such depositary or a nominee of such successor. The specific terms of the depositary arrangement with respect to any debt securities of a series and the rights of and limitations upon owners of beneficial interests in a global security will be described in the applicable prospectus supplement.
Governing Law
The indenture and the debt securities will be governed by and construed in accordance with the laws of the State of New York, except to the extent that the Trust Indenture Act is applicable.
DESCRIPTION OF UNITS
We may issue units consisting of common stock, preferred stock, warrants and debt securities in any combination. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time, or at any time before a specified date.
We will describe in the applicable prospectus supplement the terms of the series of units, including the following:
the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
any provisions of the governing unit agreement;
the price or prices at which such units will be issued;
the applicable United States federal income tax considerations relating to the units;
any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and
any other terms of the units and of the securities comprising the units.
The provisions described in this section, as well as those described under “Description of Capital Stock,” “Description of Warrants,” and “Description of Debt Securities,” will apply to each unit and to any common stock, preferred stock, warrant or debt security included in each unit, respectively.
LEGAL MATTERS
The validity of the common stocksecurities offered hereby will be passed upon by Olshan Frome Wolosky LLP, New York, New York. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that we will name in the applicable prospectus supplement.
EXPERTS
Cherry Bekaert LLP, our independent registered public accounting firm, has audited our consolidated financial statements as of December 31, 20142017 and 20132016, and for the years then ended, contained in our Annual Report on Form 10-K as amended on April 30, 2015, for the year ended December 31, 2014, and RSM US LLP (f/k/a McGladrey LLP), Vegas.com’s independent accounting firm, has audited the consolidated financial statements of Vegas.com and its subsidiaries as of and for the years ended December 31, 2014 and 2013 contained in our Current Report on Form 8-K/A filed with the SEC on November 6, 2015.2017. These financial statements are incorporated by reference in this prospectus and elsewhere in this registration statement. Such financial statements are incorporated by reference in reliance on thetheir reports given by such independent accounting firms upon their authority as experts in auditing and accounting.
INFORMATION INCORPORATED BY REFERENCE
We have filed with the SEC a registration statement on Form S-3, including exhibits and schedules, under the Securities Act with respect to the shares of our common stock to be sold pursuant to this prospectus. This prospectus does not contain all the information contained in the registration statement. For additional information with respect to the Company and the shares that may be sold pursuant to this prospectus, we refer you to the registration statement and the exhibits and schedules attached to the registration statement. Statements contained in this prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete. When we make such statements, we refer you to the copies of the contracts or documents that are filed as exhibits to the registration statement because those statements are qualified in all respects by reference to those exhibits.
The SEC allows us to incorporate by reference information contained in documents we file with it, which means that we can disclose important information to you by referring you to those documents already on file with the SEC that contain that information. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future information filed (rather than furnished) with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this prospectus and the termination of the offering of the securities covered by this prospectus, provided, however, that we are not incorporating any information furnished under any of Item 2.02 or Item 7.01 of any Current Report on Form 8-K (and exhibits filed on such form that are related to such items):
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| 1. | Our Annual Report on Form 10-K for the fiscal year ended December 31, 2014,2017, filed with the SEC on March 31, 2015 and amended on April 30, 2015;2, 2018; |
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| 2. | Our Quarterly ReportsReport on Form 10-Q for the fiscal quarter ended March 31, 2015,2018, filed with the SEC on May 15, 2015 and for the fiscal quarter ended June 30, 2015, filed with the SEC on August 14, 2015;2018; |
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| 3. | Our Current Reports on Form 8-K filed with the SEC on January 6, 2015, February 6, 2015, February 13, 2015, March 3, 2015, March 31, 2015, April 1, 2015,24, 2018, May 2, 2018, May 18, 2018 and June 4, 2015, July 13, 2015, July 30, 2015, August 5, 2015, August 20, 2015 and September 28, 2015 (as amended on November 6, 2015);2018; and |
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| 4. | The description of our common stock contained in our Registration Statement on Form 8-A (Registration No. 001-33720) filed with the SEC on October 3, 2007, including any amendments or reports filed for the purpose of updating such description. |
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act. In accordance with the Exchange Act, we file periodic reports, proxy and information statements and other information with the SEC. You may read and copy any document we file at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. You may also request copies of such documents, upon payment of a duplicating fee, by writing to the SEC at the same address. You may obtain further information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. Our filings with the SEC are also available to the public over the Internet at the SEC’s website at www.sec.gov. You may also find documents we filed on our website at www.remarkmedia.com.www.remarkholdings.com. Information contained in or accessible through our website does not constitute a part of this prospectus.
Upon written or oral request, we will provide at no cost to the requester a copy of all of the information that has been incorporated by reference in this prospectus but not delivered with this prospectus. You may obtain copies of these documents from us, excluding the exhibits to such filings which we have not specifically incorporated by reference in such filings, at no cost, by requesting them in writing or by telephone at the following address:
Remark Media,Holdings, Inc.
39303960 Howard Hughes Parkway, Suite 400900
Las Vegas, Nevada 89169
Attention: Chief FinancialExecutive Officer
(702) 701-9514
dosrow@remarkmedia.com
$50,000,000
2,271,126 Shares of Common Stock and
11,955,960 Shares of CommonPreferred Stock Issuable Upon Exercise of
Warrants
Debt Securities
, 2015
2018
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
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| Item 14. | Other Expenses of Issuance and Distribution. |
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the fees and expenses payable by the registrant in connection with the offeringissuance and distribution of the securities being registered (other than brokerage commissions, discounts or other expenses relating to the sale of the securities by the selling stockholders), all of which will be paid by the Company.registered. All of the amounts shown are estimates, except for the SEC registration fee:
| | | SEC registration fee | | $ | 6,061 | | | $ | 6,225 |
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Legal fees and expenses | | $ | 20,000 | | | * |
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Accounting fees and expenses | | $ | 15,000 | | | * |
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| Transfer agent fees and expenses | | | * |
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| Printing expenses | | | * |
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Miscellaneous fees and expenses | | $ | 5,000 | | | * |
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Total | | $ | 46,061 | | | $ | 6,225 |
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| * | Information regarding offering expenses is not currently known. The foregoing sets forth the general categories of expenses (other than underwriting compensation) that we anticipate we will incur in connection with the offering of securities under this registration statement. An estimate of our expenses in connection with the sale and distribution of the securities being offered will be included in the applicable prospectus supplement. |
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| Item 15. | Indemnification of Directors and Officers. |
Item 15. Indemnification of Directors and Officers.
Our Charter provides that, to the fullest extent permitted by the DGCL, our directors shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Each of our Charter and Bylaws also provide as follows:
(a) | |
| (a) | The Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that the person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.(b) The Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.
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| (b) | The Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with |
the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
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| (c) | To the extent that a present or former director or officer of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in sections (a) and (b) above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith. |
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| (d) | Any indemnification under sections (a) and (b) above (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in sections (a) and (b) above. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iv) by the stockholders of the Company. |
(c) To the extent that a present or former director or officer of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in sections (a) and (b) above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
(d) Any indemnification under sections (a) and (b) above (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in sections (a) and (b) above. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iv) by the stockholders of the Company.
We have obtained liability insurance covering our directors and executive officers for claims asserted against them or incurred by them in such capacity.
Item 16. Exhibits.
| | | | | | | | | | |
| 2.1 | | Unit Purchase Agreement, dated August 18, 2015, by and among Remark Media, Inc., Vegas.com, LLC and the sellers listed on the signature page thereto | | 8-K | | 8/20/2015 | | 2.1 | | |
| | | | | | | | | | | |
| 3.1 | | Amended and Restated Certificate of Incorporation | | 8-K | | 12/30/2014 | | 3.1 | | |
| | | | | | | | | | | |
| 3.2 | | Amended and Restated Bylaws | | 8-K | | 2/13/2015 | | 3.1 | | |
| | | | | | | | | | | |
| 4.1 | | Form of specimen certificate of common stock of Remark Media, Inc. | | 10-K | | 3/23/2012 | | 4.1 | | |
| | | | | | | | | | | |
| 4.2 | | Form of Acquisition Warrant, dated September 24, 2015 | | 8-K | | 9/28/2015 | | 4.1 | | |
| | | | | | | | | | | |
| 4.3 | | Form of Financing Warrant, dated September 24, 2015 | | 8-K | | 9/28/2015 | | 4.2 | | |
| | | | | | | | | | | |
| 5.1 | | Opinion of Olshan Frome Wolosky LLP | | | | | | | | X |
| | | | | | | | | | | |
| 10.1 | | Financing Agreement dated as of September 24, 2015 by and among Remark Media, Inc. and certain of its subsidiaries named as Borrowers and Guarantors, the Lenders and MGG Investment Group LP, as Collateral Agent and Administrative Agent for the Lenders | | 8-K | | 9/28/2015 | | 10.2 | | |
| | | | | | | | | | | |
| 10.2 | | Registration Rights Agreement dated as of September 24, 2015 by and between Remark Media, Inc. and the Subscribers listed on the signature page thereto | | 8-K | | 9/28/2015 | | 10.4 | | |
| | | | | | | | | | | |
| 23.1 | | Consent of Cherry Bekaert LLP | | | | | | | | X |
| | | | | | | | | | | |
| 23.2 | | Consent of RSM US LLP (f/k/a McGladrey LLP) | | | | | | | | X |
| | | | | | | | | | | |
| 23.3 | | Consent of Olshan Frome Wolosky LLP (included in Exhibit 5.1) | | | | | | | | X |
| | | | | | | | | | | |
| 24.1 | | Power of Attorney (included on the signature page hereto) | | | | | | | | X |
II-2 |
| | | | | | | | |
| | | | | Incorporated Herein By Reference To |
| Exhibit Number | | Description | | Document | | Filed On | | Exhibit Number |
| 1.1 | | Form of Underwriting Agreement | | | | | | (1) |
| 3.1 | | Amended and Restated Certificate of Incorporation | | 8-K | | 12/30/14 | | 3.1 |
| 3.2 | | Certificate of Amendment to Amended and Restated Certificate of Incorporation | | 8-K | | 01/12/16 | | 3.1 |
| 3.3 | | Certificate of Amendment to Amended and Restated Certificate of Incorporation | | 8-K | | 06/08/16 | | 3.1 |
| 3.4 | | Certificate of Amendment to Amended and Restated Certificate of Incorporation | | 8-K | | 04/11/17 | | 3.1 |
| 3.5 | | Certificate of Designation of Series A Junior Participating Preferred Stock of Remark Media, Inc. (n/k/a Remark Holdings, Inc.) | | 8-K | | 06/04/15 | | 3.1 |
| 3.6 | | Amended and Restated Bylaws | | 8-K | | 02/13/15 | | 3.1 |
| 4.1 | | Form of specimen certificate of common stock of Remark Holdings, Inc. | | 10-K | | 03/23/12 | | 4.1 |
| 4.2 | | Form of Certificate of Designation of Preferred Stock | | | | | | (1) |
| 4.3 | | Form of Certificate for Preferred Stock | | | | | | (1) |
| 4.4 | | Form of Warrant Agreement | | | | | | (1) |
| 4.5 | | Form of Warrant Certificate | | | | | | (1) |
| 4.6 | | Form of Indenture | | | | | | X |
| 4.7 | | Form of Debt Security | | | | | | (1) |
| 4.8 | | Form of Unit Agreement | | | | | | (1) |
| 4.9 | | Form of Unit Certificate | | | | | | (1) |
| 5.1 | | Opinion of Olshan Frome Wolosky LLP | | | | | | X |
| 23.1 | | Consent of Cherry Bekaert LLP | | | | | | X |
| 23.2 | | Consent of Olshan Frome Wolosky LLP (included in Exhibit 5.1) | | | | | | X |
| 24.1 | | Power of Attorney (included on the signature page hereto) | | | | | | X |
| 25.1 | | Form T-1 Statement of Eligibility of Trustee for Indenture under the Trust Indenture Act of 1939 | | | | | | (1) |
| |
| (1) | If applicable, to be filed by amendment or as an exhibit to a report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and incorporated herein by reference. |
Item 17. Undertakings.
| |
| (a) | The undersigned registrant hereby undertakes: |
(a) The undersigned registrant hereby undertakes:
(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2)That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(5)That, for the purpose of determining liability under the Securities Act to any purchaser:
(A)Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B)Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(6)That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
II-3(i)Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
Table(iii)The portion of Contentsany other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(b) (iv)Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
| |
| (b) | The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| |
| (c) | The undersigned registrant hereby undertakes to supplement the prospectus, after the expiration of the subscription period, to set forth the results of the subscription offer, the transactions by the underwriters during the subscription period, the amount of unsubscribed securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof. If any public offering by the underwriters is to be made on terms differing from those set forth on the cover page of the prospectus, a post-effective amendment will be filed to set forth the terms of such offering. |
| |
| (h) | Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
| |
| (i) | The undersigned registrant hereby undertakes that: |
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification(j) The undersigned registrant hereby undertakes to file an application for liabilities arising under the Securities Act may be permitted to directors, officers and controlling personspurpose of determining the eligibility of the registrant pursuanttrustee to act under subsection (a) of Section 310 of the foregoing provisions, or otherwise,Trust Indenture Act in accordance with the registrant has been advised that in the opinion ofrules and regulations prescribed by the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling personunder Section 305(b)(2) of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.Trust Indenture Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Las Vegas, State of Nevada, on the 6th5th day of November, 2015.June, 2018.
|
| | | | |
| | | | REMARK MEDIA,HOLDINGS, INC. |
| | | | |
| | | By: | | /s/ Kai-Shing Tao |
| | | Name: | | Kai-Shing Tao |
| | | Title: | | Chief Executive Officer and Chairman of the Board |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kai-Shing Tao and Douglas M. Osrow as his true and lawful attorney-in-fact, each acting alone, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments to this registration statement, and any registration statement and amendments thereto for the same offering pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-factattorney-in-fact or theirhis substitutes, each acting along,alone, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.Signature |
| | | | |
| Name | | Title | | Date |
| | | | | |
| | | | |
| Kai-Shing Tao | | Chief Executive Officer and Chairman of the Board (Principal Executive Officer) (principal executive, financial and accounting officer) | November 6, 2015 |
Kai-Shing TaoJune 5, 2018 |
| | | |
| | Chief Financial Officer (Principal Financial and Accounting Officer) | November 6, 2015 |
Douglas M. Osrow
|
| | | | | |
| | Director and Chairman of the Audit Committee | November 6, 2015 | |
| Theodore P. Botts | | Director | | June 5, 2018 |
| | | |
| | Director and Chairman of the Compensation Committee | |
Robert G. Goldstein |
| | | | | |
| | | | |
| William Grounds | | Director and Chairman of the Nominating and Governance Committee | |
William W. GroundsJune 5, 2018 |
| | | | | |
| | | | |
/s/ Jason E. StraussBrett Ratner | | | | |
| Brett Ratner | | Director | November 6, 2015 | June 5, 2018 |
Jason E. Strauss | | | |
| | | | |
| /s/ Daniel Stein | | | | |
| Daniel Stein | | Director | | June 5, 2018 |
EXHIBIT INDEX
| | | | | | | | | | |
| 2.1 | | Unit Purchase Agreement, dated August 18, 2015, by and among Remark Media, Inc., Vegas.com, LLC and the sellers listed on the signature page thereto | | 8-K | | 8/20/2015 | | 2.1 | | |
| | | | | | | | | | | |
| 3.1 | | Amended and Restated Certificate of Incorporation | | 8-K | | 12/30/2014 | | 3.1 | | |
| | | | | | | | | | | |
| 3.2 | | Amended and Restated Bylaws | | 8-K | | 2/13/2015 | | 3.1 | | |
| | | | | | | | | | | |
| 4.1 | | Form of specimen certificate of common stock of Remark Media, Inc. | | 10-K | | 3/23/2012 | | 4.1 | | |
| | | | | | | | | | | |
| 4.2 | | Form of Acquisition Warrant, dated September 24, 2015 | | 8-K | | 9/28/2015 | | 4.1 | | |
| | | | | | | | | | | |
| 4.3 | | Form of Financing Warrant, dated September 24, 2015 | | 8-K | | 9/28/2015 | | 4.2 | | |
| | | | | | | | | | | |
| 5.1 | | Opinion of Olshan Frome Wolosky LLP | | | | | | | | X |
| | | | | | | | | | | |
| 10.1 | | Financing Agreement dated as of September 24, 2015 by and among Remark Media, Inc. and certain of its subsidiaries named as Borrowers and Guarantors, the Lenders and MGG Investment Group LP, as Collateral Agent and Administrative Agent for the Lenders | | 8-K | | 9/28/2015 | | 10.2 | | |
| | | | | | | | | | | |
| 10.2 | | Registration Rights Agreement dated as of September 24, 2015 by and between Remark Media, Inc. and the Subscribers listed on the signature page thereto | | 8-K | | 9/28/2015 | | 10.4 | | |
| | | | | | | | | | | |
| 23.1 | | Consent of Cherry Bekaert LLP | | | | | | | | X |
| | | | | | | | | | | |
| 23.2 | | Consent of RSM US LLP (f/k/a McGladrey LLP) | | | | | | | | X |
| | | | | | | | | | | |
| 23.3 | | Consent of Olshan Frome Wolosky LLP (included in Exhibit 5.1) | | | | | | | | X |
| | | | | | | | | | | |
| 24.1 | | Power of Attorney (included on the signature page hereto) | | | | | | | | X |
|
| | | | | | | | |
| | | | | Incorporated Herein By Reference To |
| Exhibit Number | | Description | | Document | | Filed On | | Exhibit Number |
| 1.1 | | Form of Underwriting Agreement | | | | | | (1) |
| 3.1 | | | | 8-K | | 12/30/14 | | 3.1 |
| 3.2 | | | | 8-K | | 01/12/16 | | 3.1 |
| 3.3 | | | | 8-K | | 06/08/16 | | 3.1 |
| 3.4 | | | | 8-K | | 04/11/17 | | 3.1 |
| 3.5 | | | | 8-K | | 06/04/15 | | 3.1 |
| 3.6 | | | | 8-K | | 02/13/15 | | 3.1 |
| 4.1 | | | | 10-K | | 03/23/12 | | 4.1 |
| 4.2 | | Form of Certificate of Designation of Preferred Stock | | | | | | (1) |
| 4.3 | | Form of Certificate for Preferred Stock | | | | | | (1) |
| 4.4 | | Form of Warrant Agreement | | | | | | (1) |
| 4.5 | | Form of Warrant Certificate | | | | | | (1) |
| | | | | | | | X |
| 4.7 | | Form of Debt Security | | | | | | (1) |
| 4.8 | | Form of Unit Agreement | | | | | | (1) |
| 4.9 | | Form of Unit Certificate | | | | | | (1) |
| | | | | | | | X |
| | | | | | | | X |
| 23.2 | | | | | | | | X |
| 24.1 | | | | | | | | X |
| 25.1 | | Form T-1 Statement of Eligibility of Trustee for Indenture under the Trust Indenture Act of 1939 | | | | | | (1) |
| |
| (1) | If applicable, to be filed by amendment or as an exhibit to a report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and incorporated herein by reference. |
II - 8
