Cautionary Statement Regarding Forward-Looking Information

The following Management's Discussion and Analysis of our Financial Condition and Results of Operations should be read in conjunction with the condensed consolidated financial statements and notes thereto included as part of this Form 10-Q. Our disclosure and analysis in this report concerning our operations, cash flows and financial position, including, in particular, the likelihood of our success in expanding our business, the likelihood of our success in closing upon and achieving the desired benefits from the Banks.com Merger and our assumptions regarding the regulatory environment and international markets, include forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expect," "anticipate," "intend," "plan," "believe," "estimate," "may" and similar expressions are forward-looking statements. Although these statements are based upon reasonable assumptions, they are subject to risks and uncertainties that are described more fully in our Annual Report on Form 10-K for the year ended December 31, 2011. These forward-looking statements represent our estimates and assumptions only as of the date of this filing and are not intended to give any assurance as to future results. As a result, undue reliance should not be placed on any forward-looking statements. We assume no obligation to update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors, except as required by applicable securities laws.

Business Overview and Recent Events

Remark Media, Inc., formerly HSW International, Inc., ("Remark Media" or the "Company") is a global digital media company focused on developing, owning and operating next-generation digital platforms that combine traditional web publishing and social media, with the goal of revolutionizing the way people search and exchange information over the Internet. The Company also offers a suite of content and platform services that provide its clients with opportunities to build consumer awareness, promote content engagement and foster brand-customer interactions.

The Company's current leading brands, BoWenWang (bowenwang.com.cn) and ComoTudoFunciona (hsw.com.br), provide readers in China and Brazil with thousands of articles about how the world around them works, serving as destinations for credible, easy-to-understand reference information. Remark Media is the exclusive digital publisher in China and Brazil for translated content from HowStuffWorks.com, a subsidiary of Discovery Communications, and in China for certain content from World Book, Inc., publisher of World Book Encyclopedia. The Company's website services business seeks to create innovative content and platform solutions for leading media and entertainment companies as well as Fortune 500 brands and boutique businesses. The solutions the Company offers center on helping clients generate value with the objective of maximizing content utilization, enhancing online engagement and customer experience and by driving online and offline actions. Remark Media is also a founding partner and developer of the U.S.-based product Sharecare, a highly searchable social Q&A healthcare platform organizing and answering health and medical questions. The Company generates revenue primarily through service and licensing fees as well as online advertising sales on its owned and operated websites.

The Company was incorporated in Delaware in March 2006 and is headquartered in Atlanta with additional operations in New York, Beijing and São Paulo.

On February 27, 2012, the Company entered into definitive equity financing agreements with accredited and institutional investors to raise funds in the amount of $4.25 million through a private placement. In connection with the transaction, the Company issued to investors common stock priced at $4.50 per share. Investors also received warrants to acquire shares of common stock at an exercise price of $6.81 per share, in the amount of 25% of the number of shares of common stock that the investors purchased. On February 29, 2012, the Company received $4.25 million in cash and issued to the investors a total of 944,777 shares of common stock and warrants to acquire an additional 236,194 shares of common stock.

On February 26, 2012, the Company entered into an agreement and plan of merger with Banks.com, Inc. (BNNX.PK), pursuant to which Banks.com will become a wholly-owned subsidiary of Remark Media (the "Banks.com Merger"). Banks.com is a leading financial services portal operating a unique breadth and depth of financial products and services. Upon the closing of the merger, which is subject to standard conditions to closing including the approval of the Banks.com shareholders, Remark Media will issue up to 702,784 shares of Common Stock to the shareholders of Banks.com, plus $300,000 in cash, as consideration for the merger.

Our Strategy

Through 2011, we dedicated our resources mainly to the development and operations of Sharecare and our international businesses. At the start of 2012, our operating obligations to Sharecare came to an end and we made a strategic decision to shift our focus to the U.S. market which we believe holds larger near-term opportunity.

Going forward, we intend to develop, wholly-own and operate U.S.-based digital properties leveraging our past investment in the Sharecare platform, for which we maintain rights of use, as well as leveraging new platforms currently in development. The beta launch of our personal finance site DimeSpring and the expected Banks.com Merger provide evidence of this shift in strategy. We will also seek to grow our Content and Platform Services as resources allow.

The completion of our obligation to Sharecare in addition to our strategic shift resulted in the Company reporting minimal revenue for the three months ended March 31, 2012, derived from our Brands segment. During the course of 2012, we expect to offset the loss in revenue through the growth of our new assets. We do continue to maintain an equity stake in Sharecare which we account for under the equity method of accounting.

Our Operations

Domestic

Brands. In the first quarter of 2012, we launched the beta version of DimeSpring.com, a U.S.-focused personal finance website that intends to utilize rich content and advice from a wide array of professionals to build a community of people interested in managing life's financial hurdles and opportunities. DimeSpring is part of a larger product strategy to leverage our experience and expertise to create leading destination websites that offer a dynamic online experience around a given topic with access to relevant content and subject matter experts. Assets obtained through the expected Banks.com Merger will complement DimeSpring and serve to build a network of personal finance digital media businesses. We are investing in technology, editorial staff, sales and marketing to support this initiative. It is our goal to expand into more vertical categories through both the in-house development of new websites and acquisitions of websites and digital products.

Content and Platform Services. Our agreements with Sharecare and Discovery expired in December 2011, and no new revenue from these clients is expected in 2012. We will not have revenues related to the Content and Platforms Services segment unless we enter into new revenue agreements to provide content and platform services. Accordingly, we intend to expand our services business to new clients in 2012. We are investing in sales and marketing to support our growth initiative, and are continuing to evolve our technology platforms to ensure we incorporate the latest in social media and content trends.

Sharecare Investment. Although Remark Media is no longer providing services for Sharecare, the Company maintains equity ownership in the venture. As of March 31, 2012, we own approximately 11.3% of Sharecare and have representation on Sharecare's board of directors. We account for our investment in Sharecare under the equity method of accounting for investments and we record our proportionate share of Sharecare's net income or loss in our consolidated statements of operations under gain or loss from equity-method investments.

International

During 2011, we implemented certain cost-savings measures in our Brazil and China operations in connection with a strategic shift towards operations in the United States. We believe that the value of our international assets will be recognized over a longer term horizon, as online advertising markets develop for Brazil and China and the websites' traffic fundamentals improve.

ComoTudoFunciona (http://hsw.com.br) is Brazil's online source for credible, unbiased and easy-to-understand explanations of how the world actually works. The Portuguese-language site is the exclusive digital publisher in Brazil of translated and localized content from the leading Discovery Communications brand HowStuffWorks, and is published from Remark Media's São Paulo operations. Revenue generated from our operations in Brazil was flat at approximately $0.02 million during the three months ended March 31, 2012 and 2011. Brazil revenues and operating results are included in the Brands reporting segment. We do not expect to see major growth in our Brazil operations in the near term unless we increase investment in the brand.

BoWenWang (http://www.bowenwang.com.cn) is an information and reference website that provides China with encyclopedic knowledge and easy-to-understand explanations of how the world works. The website is published from Beijing in the Chinese language. Launched in June 2008, BoWenWang features a combination of original content authored by the Company, translated and localized articles from the leading Discovery Communications brand HowStuffWorks, and content from World Book, Inc. As a result of our cost cutting measures implemented in China in September 2011, we experienced a decline in revenues in the first quarter of 2012 as compared to the first quarter of 2011. Revenue generated from our operations in China was minimal during the first quarter ended March 31 2012. China revenues and operating results are included in the Brands reporting segment. We do not expect to see major growth in our China operations in the near term unless we increase investment in the brand.

Results of Operations

The following table sets forth our operations for the three months ended March
31, 2012 and 2011:

                                                              Three Months Ending March 31,
                                                                  2012                2011

Operating revenue
Brands                                                      $         24,111      $     36,477
Content and platform services to affiliates                                -         1,509,597
     Total revenue                                                    24,111         1,546,074

Cost of services                                                           -         1,075,874

Gross margin                                                          24,111           470,200

Operating expenses
   Selling, general and administrative expenses                    1,472,774         1,609,087
   Depreciation and amortization expense                              25,467            68,267
     Total operating expenses                                      1,498,241         1,677,354

Loss from operations                                              (1,474,130 )      (1,207,154 )

Other income (expense)
   Interest expense                                                  (24,684 )         (11,195 )
   Other income (expense)                                              3,191            (4,182 )
     Total other expense                                             (21,493 )         (15,377 )

Loss before income taxes and gain (loss) in equity-method
     investments                                                  (1,495,623 )      (1,222,531 )
Proportional share in loss of equity-method investments,
net of taxes                                                        (918,880 )        (430,717 )
Change of interest gain of equity-method investments, net
of taxes                                                           2,192,755                 -

Net loss                                                    $       (221,748 )    $ (1,653,248 )

Net loss per share
Net loss per share, basic and diluted                       $          (0.04 )    $      (0.31 )

Basic and diluted weighted average shares outstanding              5,775,289         5,388,289

Segment Data
We monitor and analyze our financial results on a segment basis for reporting and management purposes, as presented in Note 4 to the accompanying condensed consolidated financial statements. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and assess performance.

Our Brands segment consists of our websites in Brazil and China and generates revenues from advertisers based in the respective countries. The operating results for services performed under the Sharecare and Discovery services agreements are included in the Content and Platform Services segment.

Revenue
Total revenue for the three months ended March 31, 2012 was approximately $24 thousand, a decrease of approximately $1.5 million from the same period in 2011. All revenue generated in the first quarter 2012 was related to the Brands segment, while 98% of our revenue in the first quarter of 2011 was generated from the Content and Platform Services segment. The major decrease was due to the fact that all of our content and platform service agreements expired in December 2011 and we did not renew or enter into new service agreements with our customers under the Content and Platform Services segment.

Cost of Services
Cost of services includes the ongoing third-party costs to acquire original content, translate and localize content for our Brands segment from English to Portuguese and Chinese, as well as costs incurred to support our Content and Platform Services segment including labor, content and third party platform support services. As we did not generate revenues from the Content and Platform Services segment, we did not have any cost of sales charges during the first quarter of 2012. Cost of services for the three months ended March 31, 2011 was $1.1 million.

Operations - Selling, General and Administrative Expenses Our total selling, general and administrative expenses in the first quarter of 2012 were approximately $1.5 million, compared to approximately $1.6 million in the same period of 2011. The decrease is related to the impact of cost cutting measures implemented in our domestic and international operations.

Interest Expense
Interest expense for the three months ended March 31, 2012 and 2011 was $0.02 million and 0.01 million, respectively. These amounts reflect the amortization of debt issuance costs in connection with our revolving credit facility entered into in March 2011 which expired in March 2012. The debt issuance costs were fully amortized in the first quarter of 2012.

Loss from Equity-Method Investments and Change of Interest Gain We account for our investment in Sharecare under the equity method of accounting. During the three months ended March 31, 2012, we recorded a gain of $2.2 million as a result of the change in interest ownership in Sharecare. Additionally, we recorded a loss of $0.9 million which represents our share in Sharecare's loss in the first quarter of 2012. For the three months ended March 31, 2011, our loss in Sharecare was 0.4 million. We continually evaluate the facts and circumstances related to our investment in Sharecare to assess the need for change in our accounting method in future periods.

Recent Accounting Pronouncements
Recent accounting pronouncements are summarized in Note 2 to the accompanying notes to the condensed consolidated financial statements.

Liquidity and Capital Resources

Cash and cash equivalents was $4.2 million at March 31, 2012, compared to $1.5 million at December 31, 2011. The increase in cash is primarily due to the proceeds provided through the equity funding completed in February 2012 partially offset by use of cash to fund our operations. Our cash on hand at March 31, 2011 was $3.9 million.