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. ("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.

On February 26, 2012, the Company entered into an agreement and plan of merger with Banks.com, Inc. ("Banks.com"), pursuant to which Banks.com becomes 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 on June 28, 2012, Remark Media issued approximately 702,267 shares of Common Stock to the shareholders of Bank.com, plus $300,000 in cash, as consideration for the merger. Also, on the effective date of the merger, the Company paid $131,250 in settlement of a promissory note in the amount of $125,000 which matured on June 28, 2012 and related unpaid interest.

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.

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 Banks.com Merger completed on June 28, 2012 provide evidence of this shift in strategy. We will also seek to grow our Content and Platform Services.

The completion of our obligation to Sharecare in addition to our strategic shift resulted in the Company reporting minimal revenue for the three and six months ended June 30, 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. The Banks.com merger was successfully completed on June 28, 2012. Banks.com's revenue included in our consolidated statements of operations for the three and six months ended June 30, 2012 was $12 thousand. Assets obtained through the Banks.com Merger will complement DimeSpring and serve to build a network of personal finance digital media businesses. We continue to invest 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 continue to invest 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 June 30, 2012, we own approximately 10.9% of Sharecare's common stock 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 proportional share in income or loss from equity-method investments. In the case of a change of interest, we record a gain or loss in our consolidated statement of operations in the period the change of interest occurs.

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 approximately $20 thousand and $24 thousand during the three months ended June 30, 2012 and 2011, respectively. 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 second quarter of 2012 as compared to the same period of 2011. Revenue generated from our operations in China was minimal during the second quarter ended June 30, 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 and six months ended June 30, 2012 and 2011:

                                         Three Months Ended June 30,        Six Months Ended June 30,
                                            2012              2011             2012             2011


Operating revenue
Brands                                $       33,003     $     29,534    $      57,114    $      66,012
Content and platform services to
affiliates                                          -       1,251,622                 -       2,761,220
     Total revenue                            33,003        1,281,156           57,114        2,827,232

Operating expenses
Sales and marketing                           83,462            5,124          107,160           17,014
Content, technology and
development                                  371,791          863,858          699,015        2,156,000
General and administrative                 1,132,322        1,280,356        2,254,176        2,661,289
Depreciation and amortization
expense                                       27,056           60,924           52,524          129,190
     Total operating expenses              1,614,631        2,210,262        3,112,875        4,963,493

Loss from operations                      (1,581,628)        (929,106)      (3,055,761)      (2,136,261)

Other income (expense)
Interest expense                              (2,441)         (37,026)         (27,125)         (49,368)
Other income                                   3,915            4,256            7,107            1,222
Total other income (expense)                   1,474          (32,770)         (20,018)         (48,146)

Loss before gain (loss) from
equity-method                             (1,580,154)        (961,876)      (3,075,779)      (2,184,407)
investments
Proportional share in loss of
equity-method investments                   (894,502)        (458,110)      (1,813,382)        (888,827)
Change of interest gain of
equity-method investments                    302,235          407,376        2,494,990          407,376

Net loss                              $   (2,172,421)    $ (1,012,610)   $  (2,394,171)   $  (2,665,858)

Segment Data

We monitor and analyze our financial results on a segment basis for reporting and management purposes, as presented in Note 5 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. This segment also includes the businesses acquired through the recent Banks.com's acquisition completed on June 28, 2012. 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 June 30, 2012 was approximately $33 thousand, a decrease of approximately $1.3 million from the same period in 2011. For the six months ended June 30, 2012 and 2011, revenue was $57 thousand, a decrease of $2.8 million as compared to the same period of 2011. All revenue generated in the three and six months ended June 30, 2012 was related to the Brands segment, while 98% of our revenue in the three and six months ended June 30, 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. Also, pursuant to closing of the Banks.com merger on June 28, 2012, we recorded $12 thousand of Banks.com revenues in our statements of operations for the three and six months ended June 30, 2012.

Sales and Marketing

We have been and will continue to invest in the sales and marketing area to support our growth initiatives. Sales and marketing expenses were $83 thousand and $5 thousand in the three months ending June 30, 2012 and 2011, respectively, and $107 thousand and $17 thousand in the six months ended June 30, 2012 and 2011, respectively.

Content, technology and development

Content, technology and development expenses include 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 of designing and developing our products as well as expenses to support our Content and Platform Services segment including labor, content and third party platform support services. These expenses were $0.4 million and $0.9 million in the three months ended June 30, 2012 and 2011 , respectively and $0.7 million and $2.2 million in the six months ended June 30, 2012 and 2011, respectively. The decrease is related to web developments costs which were capitalized during the three and six months ended June 30, 2012 of $0.2 million and $0.4 million, respectively in addition to the decrease in the services provided to customers in the content and platform services segment.

General and Administrative Expenses

Our total general and administrative expenses were approximately $1.1 million and $1.3 million in the three months ended June 30, 2012 and 2011, respectively and $2.3 million and $2.7 million in the six months ended June 30, 2012 and 2011, respectively.

Interest Expense

Interest expense for the three months ended June 30, 2012 and 2011 was $2 thousand and $37 thousand, respectively and $27 thousand and $49 thousand for the six months ended June 30, 2012 and 2011, 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. Sharecare issued additional equity in the first and second quarters of 2012. Sharecare has not completed the valuation yet of its common stock. As a result, we recorded a gain as an estimate of $0.3 million and $2.5 million in the three and six months ended June 30, 2012, respectively. This estimate is subject to change in future periods as described in Note 3 of the notes to the consolidated financial statements included herein. Additionally, we recorded a loss of $0.9 million and $0.5 million in the three months ended June 30, 2012, and 2011, respectively and $1.8 million

and $0.9 million in the six months ended June 30, 2012 and 2011, respectively. These losses represent our share in Sharecare's loss during those periods. At June 30, 2012, our percentage ownership in Sharecare was 10.9%. 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 $2.3 million at June 30, 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 operating and investing activities, including website development costs and the acquisition of Banks.com . Our cash on hand at June 30, 2011 was $3.0 million.