“Normally, we wouldn't go after a sub-$200 million market cap company, even though it does trade like water and it's being pumped,” David told the Contrarian Investor Virtual Conference. “But in this case, we've made an exception. This is a holding of DDTG, Davey Day Trader Global and his legion of the doomed.”
Portnoy, who dubbed himself Davey Day Trader Global while trading stocks as he shelters at home during COVID-19, was quick to dismiss David's claims.
The highlight of David's career, he says, "is when I spoke him into existence." The two have a combative history on social media.
Remark has long touted its 5% stake in Sharecare -- a health app made popular by Dr. Mehmet Oz, who won his own TV show after gaining renown as a health expert on Oprah Winfrey's long-running broadcast -- using it to help raise $425 million in private markets.
David said that while Remark’s assets, along with its Sharecare stake, were seized in January 2020 after the company failed to pay $1 million it owed to the former owners of Vegas.com, the company continued to tout its stake in an August filing. Remark did not immediately respond to FOX Business' request for comment.
“Given that Remark has not even responded to this case, we see no chance that Remark is going to continue to own a stake in Sharecare going forward,” David said.
He also doesn’t believe Remark’s claim that it owns the Chinese data platform CanCan through a Variable Interest Entity structure, and thinks the way the agreement is set up, Remark will never get its money back.
The company didn’t attach the contracts as exhibits to its U.S. Securities and Exchange Commission filing, leading him to question whether they exist.
David was scheduled to discuss the matter with Remark’s director of investor relations, who canceled the call the morning on which it was scheduled because the documents had never been released publicly.
He was told anything publicly released would be in the 10K annual filing with the Securities and Exchange Commission, which also didn’t include the agreements as such filings for other companies typically do.
State Administration of Industry and Commerce filings from China showed the Variable Interest Entities aren't consolidated and that they had more cash on their balance sheets than Remark did on its consolidated balance sheet, according to David.
It’s not possible for an entity to have more cash than its parent company, and Remark's variable interest entities also reported more revenue than the parent company, yet Remark reported a bigger loss.
David believes Remark was set to file for bankruptcy before the pandemic hit and CEO Kai Shing Tao pivoted the company to thermal-imaging technology, which David calls an "elaborate stock pump that will result in little to no actual revenue or shareholder value.”
Remark diluted shareholders by 100 percent in the first quarter of this year, selling 50 million shares to Aspire Capital to raise money to pay off a term loan it has defaulted on multiple times.
Should Remark shares reach $1.93 apiece, MGG Capital could exercise warrants on 6.6 million shares, which Remark can’t cover, meaning it would likely have to pay out $13 million in cash, an amount David thinks would render the company insolvent.