S-1 1 forms1-ionicresale4.htm FORM S-1 Document
As filed with the Securities and Exchange Commission on February 2, 2024

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-1

Registration Statement Under The Securities Act of 1933

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Remark Holdings, Inc.

Delaware489933-1135689
State or Other Jurisdiction of
Incorporation or Organization
Primary Standard Industrial Classification Code NumberI.R.S. Employer Identification Number
800 S. Commerce St.
Las Vegas, NV 89106
702-701-9514
Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices
Kai-Shing Tao
Chairman and Chief Executive Officer
Remark Holdings, Inc.
800 S. Commerce St.
Las Vegas, NV 89106
(702) 701-9514
Name, Address Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service
With a copy to:
Leslie Marlow, Esq.
Patrick J. Egan, Esq.
Hank Gracin, Esq.
Blank Rome LLP
1271 Avenue of the Americas
New York, New York 10020
Tel: (212) 885-5000



Approximate Date of Commencement of Proposed Sale to the Public: From time to time after the effective date of this registration statement, as determined by market conditions.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a) of the Securities Act, may determine.




The information in this prospectus is not complete and may be changed. The selling stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where such offer or sale is not permitted.

Subject to Completion, Dated February 2, 2024

Preliminary Prospectus


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20,000,000 Shares of Common Stock
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This prospectus relates to the proposed resale by the selling stockholder named in this prospectus or its permitted assigns of up to an aggregate of 20,000,000 shares of our common stock, with a par value of $0.001 per share (the “common stock”), which may be issued pursuant to a purchase agreement dated as of October 6, 2022 (the “Original ELOC Purchase Agreement”), as amended by those certain letter agreements (the “Letter Agreements”) by and between Remark Holdings, Inc. (“Remark”) and Ionic Ventures LLC (“Ionic”), dated as of January 5, 2023; July 12, 2023; August 10, 2023 and September 15, 2023, and by the first amendment, dated January 9, 2024, to the purchase agreement dated as of October 6, 2022 (as amended, the “Amended ELOC Purchase Agreement”), including (A) shares of common stock which may be issued and sold to Ionic for cash (the “Purchase Shares”), (B) additional shares of common stock (equal to 2.5% of the number of Purchase Shares) issued for no consideration (the “Commitment Shares”), (C) shares of common stock which may be issued upon termination of the Amended ELOC Purchase Agreement under certain circumstances to satisfy the termination fee (the “Additional Commitment Shares”), and (D) shares of common stock which are issuable to Ionic if we fail to file a resale registration statement covering the shares issuable to Ionic pursuant to the Amended ELOC Purchase Agreement (the “Filing Default Shares”) or have such resale registration statement declared effective (the “Effectiveness Default Shares”) by the deadlines specified in a registration rights agreement, dated October 6, 2022, by and between Remark and Ionic (the “Registration Rights Agreement”).

Shares issuable under the Amended ELOC Purchase Agreement, if and when they are sold pursuant to the terms of the Amended ELOC Purchase Agreement, will be sold at a per share price equal to 80% (subject to decrease under certain circumstances) of the average of the two lowest VWAPs over a specified measurement period. See the sections of this prospectus entitled “Prospectus Summary–The Offering” and “The Ionic Transactions” for more detail regarding the sale of shares under the Amended ELOC Purchase Agreement.

On January 24, 2024, Ionic notified us that we were in default under the Amended ELOC Purchase Agreement such that the per share price under currently outstanding Purchase Notices (as defined on page 20) is 60% of the average of the two lowest VWAPs over the specified measurement period. Any additional shares sold pursuant to Purchase Notices submitted prior to the date when the registration statement of which this prospectus forms a part is declared effective will be sold at a per share price equal to 60% of the average of the two lowest VWAPs over a specified measurement period, while any shares sold pursuant to Purchase Notices submitted subsequent to the date when the registration statement of which this prospectus forms a part is declared effective will be sold at a per share price equal to 80% (subject to decrease under certain circumstances).

We are not selling any securities under this prospectus and will not receive any proceeds from the sale of securities by the selling stockholder. The selling stockholder may offer all or a portion of the shares for resale from time to time through public or private transactions, at then prevailing market prices (and not fixed prices). The



selling stockholder will bear all commissions and discounts, if any, attributable to the sale of our securities. We will bear all costs, expenses and fees in connection with the registration of the securities registered hereunder.

Ionic is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended (the “Securities Act”).

The securities being offered hereby may be sold by the selling stockholder to or through underwriters or dealers, directly to purchasers or through agents designated from time to time. For additional information regarding the methods of sale you should refer to the section of this prospectus entitled “Plan of Distribution” on page 67.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.

Our common stock is traded on the Nasdaq Capital Market under the symbol “MARK.” On December 21, 2022, we effected a 1-for-10 reverse split of our common stock (“the Reverse Split”). The last reported sales price of our common stock on the Nasdaq Capital Market on January 29, 2024 was $0.34 per share.

On April 27, 2023, we received a written notice from the Nasdaq Listing Qualifications Department notifying us that, pursuant to Nasdaq Listing Rule 5550(b)(3), we are required to maintain a minimum of $500,000 in net income from continuing operations in the most recently completed fiscal year, or two of the last three fiscal years (the “Net Income Standard”). Since our 2022 Form 10-K reported net loss from continuing operations, and as of April 25, 2023, we did not meet the alternative continued listing standards (collectively, with the Net Income Standard, the “Continued Listing Standards”) under Nasdaq Listing Rule 5550(b) of a minimum stockholders' equity of $2.5 million or minimum market value of listed securities of $35 million, we no longer comply with the Continued Listing Standards.

In accordance with Nasdaq Listing Rule 5810(c)(2)(A), on June 12, 2023 we submitted a plan to regain compliance with the Continued Listing Standards to the Nasdaq Listing Qualifications Department. On July 24, 2023, the Nasdaq Listing Qualifications Department notified us that it was granting us until October 24, 2023 (the “Extension Period”) to file a report with the SEC and Nasdaq stating that we have successfully executed our plan to regain compliance with the Continued Listing Standards and that we did in fact regain such compliance. We were not able to regain compliance with the Continued Listing Standards by October 24, 2023 and, on October 26, 2023, we received a staff determination letter from Nasdaq indicating that we did not regain compliance with the Continued Listing Standards and that, unless we request an appeal of Nasdaq’s determination, our common stock was subject to delisting.

We appealed Nasdaq’s delisting determination to a Hearings Panel (the “Panel”) and were notified by Nasdaq that we have been granted a hearing with the Panel on February 1, 2024. Our common stock will continue to be listed and traded on the Nasdaq Capital Market pending a decision by the Panel.

We are a holding company incorporated in Delaware and not a Chinese operating company. As a holding company, we conduct most of our operations through our subsidiaries, each of which is wholly owned. We have historically conducted a significant part of our operations through contractual arrangements with certain variable interest entities (“VIEs”) based in China to address challenges resulting from laws, policies and practices that may disfavor foreign-owned entities that operate within industries deemed sensitive by the Chinese government. Because our contractual arrangements with the VIEs provided us with the power to direct the activities of the VIEs, for accounting purposes we were the primary beneficiary of the VIEs and we consolidated the financial results of the VIEs in our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”).

We terminated all of the contractual arrangements with the VIEs and exercised our rights under the exclusive call option agreements such that, effective as of September 19, 2022, we obtained 100% of the equity ownership of the entities we formerly consolidated as VIEs and which we now consolidate as wholly-owned subsidiaries. For more information regarding the VIEs, see “Prospectus Summary—Corporate Structure.”




We are subject to certain legal and operational risks associated with having a significant portion of our operations in China. Chinese laws and regulations governing our current business operations are sometimes vague and uncertain, and as a result these risks could result in a material change in our operations, significant depreciation of the value of our common stock, or a complete hindrance of our ability to offer or continue to offer our securities to investors. In recent years, the Chinese government adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to the use of variable interest entities, cybersecurity, data security, export control and anti-monopoly concerns. As of the date of this prospectus, we have neither been involved in any investigations on cybersecurity review initiated by any Chinese regulatory authority, nor received any inquiry, notice or sanction. As of the date of this prospectus, no relevant laws or regulations in China explicitly require us to seek approval from the China Securities Regulatory Commission (the “CSRC”) for any securities listings. As of the date of this prospectus, we have not received any inquiry, notice, warning or sanctions from the CSRC or any other Chinese governmental authorities relating to securities listings. However, since these statements and regulatory actions are newly published, official guidance and related implementation rules have not all been issued. It is highly uncertain what potential impact such modified or new laws and regulations will have on our ability to conduct our business, accept investments or list or maintain a listing on a U.S. or foreign exchange. See “Risk Factors—Risks Relating to Doing Business in China.”

As of the date of this prospectus, none of our subsidiaries have made any dividends or distributions to our Company. Under Delaware law, a Delaware corporation’s ability to pay cash dividends on its capital stock requires the corporation to have either net profits or positive net assets (total assets less total liabilities) over its capital. If we determine to pay dividends on any of our common stock in the future, as a holding company, we will rely on dividends or distributions made from the subsidiaries to Remark, the Delaware holding company. Current Chinese regulations permit our wholly foreign-owned enterprise (“WFOE”) based in China to pay dividends to its shareholder only out of registered capital amount, if any, as determined in accordance with Chinese accounting standards and regulations, and then only after meeting the requirement regarding statutory reserve. If our WFOE incurs debt in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us. Any limitation on the ability of our WFOE to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business. In addition, any cash dividends or distributions of assets by our WFOE to its stockholder are subject to a Chinese withholding tax of as much as 10%. The Chinese government also imposes controls on the conversion of Renminbi (“RMB”) into foreign currencies and the remittance of currencies out of China. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. If we are unable to receive all of the revenues from our operations through our China-based subsidiaries, we may be unable to pay dividends on our common stock. See “Prospectus Summary—Transfer of Cash or Assets.”

The Holding Foreign Companies Accountable Act (the “HFCA Act”) was enacted on December 18, 2020. The HFCA Act states that if the Securities and Exchange Commission (the “SEC”) determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the Public Company Accounting Oversight Board (the “PCAOB”) for three consecutive years beginning in 2021, the SEC shall prohibit such shares from being traded on a national securities exchange or in the over the counter trading market in the United States. On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction. The Consolidated Appropriations Act, 2023, which was signed into law on December 29, 2022, amended the HFCA Act to reduce the number of consecutive non-inspection years required to trigger the trading prohibition under the HFCA Act from three years to two years.

On December 16, 2021, the PCAOB issued a report on its determination that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by Chinese and Hong Kong authorities in those jurisdictions.

On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, taking the first step toward opening access for the PCAOB to completely inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong.




On December 15, 2022, the PCAOB vacated its 2021 determination that the positions taken by authorities in mainland China and Hong Kong prevented it from inspecting and investigating completely registered public accounting firms headquartered in those jurisdictions. In view of the PCAOB’s decision to vacate its 2021 determination and until such time as the PCAOB issues any new adverse determination, the SEC has stated that there are no issuers at risk of having their securities subject to a trading prohibition under the HFCA Act. Each year, the PCAOB will reassess its determinations on whether it can inspect and investigate completely audit firms in China, and if, in the future, the PCAOB determines it cannot do so, or if Chinese authorities do not allow the PCAOB complete access for inspections and investigations for two consecutive years, companies engaging China-based public accounting firms would be delisted pursuant to the HFCA Act.

Our auditor, Weinberg & Company, an independent registered public accounting firm headquartered in the United States, is currently subject to PCAOB inspections and has been inspected by the PCAOB on a regular basis. However, if the PCAOB is unable to inspect the work papers of our accounting firm in the future, such lack of inspection could cause trading in our common stock to be prohibited under the HFCA Act, and as a result, an exchange may determine to delist our common stock. The delisting and the cessation of trading of our common stock, or the threat of our common stock being delisted and prohibited from being traded, may materially and adversely affect the value of your investment.

As used in this prospectus, references to “the Company,” “Remark,” “we,” “us” or “our” refer to Remark Holdings, Inc., the Delaware holding company, and its subsidiaries (including the entities which we formerly consolidated as VIEs and which we now consolidate as wholly-owned subsidiaries).

Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 10 of this prospectus before investing in our securities.
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Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is ____________________, 2024




TABLE OF CONTENTS


The registration statement containing this prospectus, including the exhibits to the registration statement, provides additional information about us and the Common Stock offered under this prospectus. The registration statement, including the exhibits, can be read on our website and the website of the Securities and Exchange Commission. See “Where You Can Find More Information.”

Information contained in, and that can be accessed through our web site, www.remarkholdings.com, shall not be deemed to be part of this prospectus or incorporated herein by reference and should not be relied upon by any prospective investors for the purposes of determining whether to purchase the Common Stock offered hereunder.

Unless the context otherwise requires, the terms “we,” “us,” “our,” “the Company,” “Remark” and “our business” refer to Remark Holdings, Inc. and “this offering” refers to the offering contemplated in this prospectus.

Neither we nor the Selling Stockholders authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares



offered hereby, but only under the circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its date, regardless of its time of delivery or any sale of shares of our Common Stock. Our business, financial condition, results of operations and prospects may have changed since that date. We are not, and the Selling Stockholders are not, making an offer of these securities in any jurisdiction where such offer is not permitted.




ABOUT THIS PROSPECTUS
This prospectus describes the general manner in which the selling stockholder identified in this prospectus may offer, from time to time, up to an aggregate of 20,000,000 shares of our common stock, which may be issued pursuant to the Amended ELOC Purchase Agreement, which includes Purchase Shares, Commitment Shares, Additional Commitment Shares (if any), Filing Default Shares (if any), and Effectiveness Default Shares (if any). We are not selling any securities under this prospectus and will not receive any proceeds from the sale of shares of securities by the selling stockholder.

This prospectus is part of a registration statement that we filed with the SEC. This prospectus provides you with general information regarding the securities being offered by the selling stockholder. You should read this prospectus as well as the additional information described under the headings “Information Incorporated by Reference” and “Where You Can Find More Information” before making an investment decision.

No person has been authorized to give any information or to make any representations other than those contained in this prospectus in connection with the offering made hereby, and if given or made, such information or representations must not be relied upon as having been authorized by us, the selling stockholder or by any other person. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that information herein is correct as of any time subsequent to the date hereof. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities covered by this prospectus, nor does it constitute an offer to or solicitation of any person in any jurisdiction in which such offer or solicitation may not lawfully be made.

This document may only be used where it is legal to sell these securities. The information contained in this prospectus (and in any supplement or amendment to this prospectus) is accurate only as of the date on the front of the document, and any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since those dates.

We urge you to read carefully this prospectus (as supplemented and amended), together with the information incorporated herein by reference as described in the section titled “Incorporation of Certain Information by Reference” before deciding whether to invest in any of the securities being offered. As used in this prospectus, references to “the Company,” “Remark,” “we,” “us” or “our” refer to Remark Holdings, Inc. and its subsidiaries (including the entities which we formerly consolidated as VIEs and which we now consolidate as wholly-owned subsidiaries).

References to “Selling Stockholder” refers to the security holder identified herein in the section titled “selling stockholder” beginning on page 33 of this prospectus, who may sell securities from time to time as described in this prospectus.


1


PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus. This summary may not contain all the information that you should consider before determining whether to invest in our securities. You should read the entire prospectus carefully, including the information included in the “Risk Factors” section, as well as our consolidated financial statements, notes to the consolidated financial statements and the other information included in this prospectus, before making an investment decision.


Business Overview

Remark Holdings, Inc. and its subsidiaries (“Remark”, “we”, “us”, or “our”) are primarily technology-focused. The proprietary data and AI software platform we developed serves as the basis for our development and deployment of computer vision products, computing devices and software-as-a-service solutions for businesses in many industries and geographies.

We were originally incorporated in Delaware in March 2006 as HSW International, Inc., we changed our name to Remark Media, Inc. in December 2011, and as our business continued to evolve, we changed our name to Remark Holdings, Inc. in April 2017.

Our common stock, par value $0.001 per share, is listed on the Nasdaq Capital Market under the ticker symbol “MARK”. Our website is www.remarkholdings.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus.


Corporate Structure

We are a holding company incorporated in Delaware and not a Chinese operating company. As a holding company, we conduct most of our operations through our subsidiaries, each of which is wholly owned. We have historically conducted a significant part of our operations through contractual arrangements between our WFOE and certain VIEs based in China to address challenges resulting from laws, policies and practices that may disfavor foreign-owned entities that operate within industries deemed sensitive by the Chinese government. We were the primary beneficiary of the VIEs because the contractual arrangements governing the relationship between the VIEs and our WFOE, which included an exclusive call option agreement, exclusive business cooperation agreement, a proxy agreement and an equity pledge agreement, enabled us to (i) exercise effective control over the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive call option to purchase, at any time, all or part of the equity interests in and/or assets of the VIEs to the extent permitted by Chinese laws. Because we were the primary beneficiary of the VIEs, we consolidated the financial results of the VIEs in our consolidated financial statements in accordance with GAAP.

We terminated all of the contractual arrangements between the WFOE and the VIEs and exercised our rights under the exclusive call option agreements between the WFOE and the VIEs such that, effective as of September 19, 2022, we obtained 100% of the equity ownership of the entities we formerly consolidated as VIEs and which we now consolidate as wholly-owned subsidiaries. The securities offered pursuant to this prospectus are securities of Remark, the Delaware holding company, not of the VIEs.

The following diagram illustrates our corporate structure, including our significant subsidiaries, as of the date of this prospectus. The diagram omits certain entities which are immaterial to our results of operations and financial condition.

remarkorgchart-oct2022novie.jpg


We are subject to certain legal and operational risks associated with having a significant portion of our operations in China. Chinese laws and regulations governing our current business operations, including the enforcement of such laws and regulations, are sometimes vague and uncertain and can change quickly with little advance notice. The Chinese government may intervene in or influence the operations of our China-based subsidiaries at any time and may exert more control over offerings conducted overseas and/or foreign investment in
China-based issuers, which could result in a material change in our operations and/or the value of our securities. In addition, any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors and cause the value of such securities to significantly decline or become worthless. In recent years, the Chinese government adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to the use of variable interest entities, cybersecurity, data security, export control and anti-monopoly concerns. As of the date of this prospectus, we have neither been involved in any investigations on cybersecurity review initiated by any Chinese regulatory authority, nor received any inquiry, notice or sanction. As of the date of this prospectus, no relevant laws or regulations in China explicitly require us to seek approval from the CSRC for any securities listing. As of the date of this prospectus, we have not received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC or any other Chinese governmental authorities relating to securities listings. However, since these statements and regulatory actions are newly published, official guidance and related implementation rules have not all been issued. It is highly uncertain what potential impact such modified or new laws and regulations will have on our ability to conduct our business, accept investments or list or maintain a listing on a U.S. or foreign exchange.

As of the date of this prospectus, we are not required to seek permissions from the CSRC, the Cyberspace Administration of China (the “CAC”), or any other entity that is required to approve our operations in China. Nevertheless, Chinese regulatory authorities may in the future promulgate laws, regulations or implement rules that require us or our subsidiaries to obtain permissions from such regulatory authorities to approve our operations or any securities listing.


Holding Foreign Companies Accountable Act

The HFCA Act was enacted on December 18, 2020. The HFCA Act states that if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such shares from being traded on a national securities exchange or in the over the counter trading market in the United States. On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction. The Consolidated Appropriations Act, 2023, which was signed into law on December 29, 2022, amended the HFCA Act to reduce the number of consecutive non-inspection years required to trigger the trading prohibition under the HFCA Act from three years to two years.

On December 16, 2021, the PCAOB issued a report on its determination that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by Chinese and Hong Kong authorities in those jurisdictions.

On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, taking the first step toward opening access for the PCAOB to completely inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong.

On December 15, 2022, the PCAOB vacated its 2021 determination that the positions taken by authorities in mainland China and Hong Kong prevented it from inspecting and investigating completely registered public accounting firms headquartered in those jurisdictions. In view of the PCAOB’s decision to vacate its 2021 determination and until such time as the PCAOB issues any new adverse determination, the SEC has stated that there are no issuers at risk of having their securities subject to a trading prohibition under the HFCA Act. Each year, the PCAOB will reassess its determinations on whether it can inspect and investigate completely audit firms in China, and if, in the future, the PCAOB determines it cannot do so, or if Chinese authorities do not allow the PCAOB complete access for inspections and investigations for two consecutive years, companies engaging China-based public accounting firms would be delisted pursuant to the HFCA Act.

Our auditor, Weinberg & Company, an independent registered public accounting firm headquartered in the United States, is currently subject to PCAOB inspections and has been inspected by the PCAOB on a regular basis. However, if the PCAOB is unable to inspect the work papers of our accounting firm in the future, such lack of inspection could cause trading in our common stock to be prohibited under the HFCA Act, and as a result, an exchange may determine to delist our common stock. The delisting and the cessation of trading of our common stock, or the threat of our common stock being delisted and prohibited from being traded, may materially and adversely affect the value of your investment. See “Risk Factors—Risks Relating to Doing Business in China—Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB determines that it cannot inspect or fully investigate our auditors, and as a result, Nasdaq may determine to delist our securities.”


Transfer of Cash or Assets

Dividend Distributions

As of the date of this prospectus, none of our subsidiaries have made any dividends or distributions to Remark.

We have never declared or paid dividends or distributions on our common equity. We currently intend to retain all available funds and any future consolidated earnings to fund our operations and continue the development and growth of our business; therefore, we do not anticipate paying any cash dividends.

Under Delaware law, a Delaware corporation’s ability to pay cash dividends on its capital stock requires the corporation to have either net profits or positive net assets (total assets less total liabilities) over its capital. If we determine to pay dividends on any of our common stock in the future, as a holding company, we may rely on dividends and other distributions on equity from our subsidiaries for cash requirements, including the funds necessary to pay dividends and other cash contributions to our stockholders.

Our WFOE’s ability to distribute dividends is based upon its distributable earnings. Current Chinese regulations permit our WFOE to pay dividends to its shareholder only out of its registered capital amount, if any, as determined in accordance with Chinese accounting standards and regulations, and then only after meeting the requirement regarding statutory reserve. If our WFOE incurs debt in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us. Any limitation on the ability of our WFOE to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business. In addition, any cash dividends or distributions of assets by our WFOE to its stockholder are subject to a Chinese withholding tax of as much as 10%.

The Chinese government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of China. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. If we are unable to receive all of the revenues from our operations through our China-based subsidiaries, we may be unable to pay dividends on our common stock.


Summary of Risk Factors

Investing in our securities involves a high degree of risk. You should review carefully all of the information contained in this prospectus before making an investment in our securities. The following list summarizes some, but
not all, of these risks. Please read the information in the section titled “Risk Factors” for a more thorough description of these and other risks.


Risks Relating to This Offering

The issuance and sale of shares of common stock to Ionic under the Amended ELOC Purchase Agreement will likely cause substantial dilution and the price of our common stock to decline.
We may not have access to the full amount available under the Amended ELOC Purchase Agreement with Ionic.
Ionic will pay less than the then-prevailing market price for our common stock, which could cause the price of our common stock to decline.
It is not possible to predict the actual number of shares we will sell under the Amended ELOC Purchase Agreement to the selling stockholder, or the actual gross proceeds resulting from those sales.
Investors who buy shares in this offering at different times will likely pay different prices.
Our need for future financing may result in the issuance of additional securities, which will cause investors to experience dilution.


Risks Relating to Our Corporate Structure

We have historically relied on contractual arrangements with the VIEs and their shareholders for a significant portion of our business operations which are regulated by the Chinese government. If the Chinese government determines that such contractual arrangements did not comply with Chinese regulations, or if these regulations change or are interpreted differently in the future, we could be subject to penalties, and our common stock may decline in value or even become worthless.
Our contractual arrangements with the former VIEs may be subject to scrutiny by China’s tax authorities. Any adjustment of related party transaction pricing could lead to additional taxes, and therefore substantially reduce our consolidated net income and the value of your investment.


Risks Relating to Doing Business in China

Changes in China’s economic, political, social or geopolitical conditions or in U.S.-China relations, as well as possible interventions and influences of any government policies and actions, could have a material adverse effect on our business and operations and the value of our common stock.
Uncertainties with respect to the Chinese legal system could adversely affect us.
We may be liable for improper use or appropriation of personal information provided by our customers and any failure to comply with Chinese laws and regulations over data security could result in materially adverse impact on our business, results of operations and the value of our common stock.
Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB determines that it cannot inspect or fully investigate our auditors, and as a result, Nasdaq may determine to delist our securities.

Risks Relating to Our Business and Industry

The continuing impacts of COVID-19 are highly unpredictable and could be significant, and may have an adverse effect on our business and financial results.
Laws and regulations concerning data privacy are continually evolving. Failure to comply with these laws and regulations could harm our business.
Our continuous access to publicly-available data and to data from partners may be restricted, disrupted or terminated, which would restrict our ability to develop new products and services, or to improve existing products and services, which are based upon our AI platform.
Our AI software and our application software are highly technical and run on very sophisticated third-party hardware platforms. If such software or hardware contains undetected errors, our AI solutions may not perform properly and our business could be adversely affected.
The successful operation of our AI platform will depend upon the performance and reliability of the Internet infrastructure in China.
Our outstanding senior secured loan agreements contain certain covenants that restrict our ability to engage in certain transactions and may impair our ability to respond to changing business and economic conditions.
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 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 face intense competition from larger, more established companies, and we may not be able to compete effectively, which could reduce demand for our services.
If we do not effectively manage our growth, our operating performance will suffer and our financial condition could be adversely affected.

Risks Relating to our Company

We have a history of operating losses and we may not generate sufficient revenue to support our operations.
We may not have sufficient cash to repay our outstanding senior secured indebtedness.
Our independent registered public accounting firm’s reports for the fiscal years ended December 31, 2022 and 2021 have raised substantial doubt regarding our ability to continue as a “going concern.”
We continue to evolve our business strategy and develop new brands, products and services, and our future prospects are difficult to evaluate.

Risks Relating to Our Common Stock

Our failure to meet the continued listing requirements of the Nasdaq Stock Market could result in a delisting of 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.
Holders of our warrants will have no rights as a common stockholder until they exercise their warrants and acquire our common stock.
A significant number of additional shares of our common stock may be issued under the terms of existing securities, which issuances would substantially dilute existing stockholders and may depress the market price of our common stock.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of Remark more difficult, which acquisition may be beneficial to stockholders.


Consolidating Financial Schedules

The following tables depict the financial position, results of operations and cash flows on a consolidated basis of the Company and its subsidiaries (including the former VIEs) as of and for the nine months ended September 30, 2023, as of and for the year ended December 31, 2022, and the financial position, results of operations and cash flows on a consolidated basis for Company, the WFOE, other owned operating subsidiaries and the consolidated former VIEs, with any eliminating adjustments listed separately, as of and for the year ended December 31, 2021. On December 21, 2022, we effected the 1-for-10 Reverse Split of our common stock. The amounts of common stock and additional paid-in capital in the stockholders’ equity (deficit) section of the balance
sheet as of the year ended December 31, 2021 have been retroactively adjusted to reflect the effects of the Reverse Split.

Prior to our acquisition of 100% of the equity ownership of the entities we formerly consolidated as VIEs, we funded the registered capital and operating expenses of the VIEs on behalf of the shareholders of the VIEs by making advances to, or on behalf of, the VIEs. The contractual arrangements governing the relationship between the VIEs and our WFOE, which included an exclusive call option agreement, exclusive business cooperation agreement, a proxy agreement and an equity pledge agreement, enabled us to (i) exercise effective control over the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive call option to purchase, at any time, all or part of the equity interests in and/or assets of the VIEs to the extent permitted by Chinese laws. Specifically, the exclusive business cooperation agreement allowed the WFOE to charge a fee to the VIEs equal to as much as 95% of their net income. Accordingly, we determined that our interests, both directly and indirectly from the VIEs, represented rights to returns that could potentially be significant to such VIEs.

Since the exclusive business cooperation agreement gave us discretion regarding when to charge a fee to the VIEs, and since the VIEs had a significant accumulated deficit, we never charged fees to the VIEs. We, therefore, did not record intercompany revenue or expense related to the exclusive business cooperation agreement.

Historically, the VIEs have used all of their cash for operations and did not have cash reserves equal to 50% of their registered capital. Therefore, the VIEs were not able to pay amounts due to us or to the WFOE. Due to the inability of the VIEs to pay amounts due to us or to the WFOE and the uncertainty regarding the timing of when they might have gained the ability to pay, any cash that we or the WFOE advance to or on behalf of the VIEs was recorded as an increase to the investment in VIEs rather than as intercompany loans or intercompany accounts receivable/accounts payable. The following tables do not, therefore, reflect any intercompany balances other than the investments themselves and the liability for VIE losses in excess of investment (as described after the tables below). Additionally, cash currently only flowed from us, the WFOE or our other owned operating subsidiaries to the VIEs; it did not flow in the opposite direction.

REMARK HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
As of September 30, 2023
($ in thousands)
Consolidated Total
(Unaudited)
Assets
Cash$270 
Trade accounts receivable, net3,043 
Inventory, net455 
Deferred cost of revenue5,899 
Prepaid expense and other current assets801 
Total current assets10,468 
Property and equipment, net1,106 
Operating lease assets678 
Other long-term assets146 
Total assets$12,398 
Liabilities
Accounts payable$8,578 
Advances from related parties1,030 
Obligations to issue common stock9,184 
Accrued expense and other current liabilities9,353 
Contract liability363 
Notes payable (past due)16,472 
Total current liabilities44,980 
Operating lease liabilities, long-term336 
Total liabilities45,316 
Stockholders’ Deficit
Preferred stock— 
Common stock20 
Additional paid-in-capital378,022 
Accumulated other comprehensive loss(1,229)
Accumulated deficit(409,731)
Total stockholders’ deficit(32,918)
Total liabilities and stockholders’ deficit$12,398 
REMARK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
As of December 31, 2022
($ in thousands)
Consolidated Total
Assets
Cash$52 
Trade accounts receivable, net3,091 
Inventory, net308 
Deferred cost of revenue7,463 
Prepaid expense and other current assets1,374 
Total current assets12,288 
Property and equipment, net1,699 
Operating lease assets180 
Other long-term assets269 
Total assets$14,436 
Liabilities and Stockholders’ Deficit
Accounts payable$9,602 
Advances from related parties1,174 
Liability related to convertible debenture1,892 
Accrued expense and other current liabilities7,222 
Contract liability308 
Notes payable, net14,607 
Total current liabilities34,805 
Operating lease liabilities, long-term56 
Total liabilities34,861 
Common stock12 
Additional paid-in-capital368,945 
Accumulated other comprehensive loss(859)
Accumulated deficit(388,523)
Total stockholders’ deficit(20,425)
Total liabilities and stockholders’ deficit$14,436 
REMARK HOLDINGS, INC. AND SUBSIDIARIES
Consolidating Balance Sheets (Unaudited)
As of December 31, 2021
($ in thousands)
CorporateWFOEOther Owned Operating SubsidiariesVIEsEliminating EntriesConsolidated Total
Assets
Cash$13,239 $26 $682 $240 $— $14,187 
Trade accounts receivable17 14 10,234 — 10,267 
Inventory, net1,288 — — 58 — 1,346 
Investment in marketable securities42,349 — — — — 42,349 
Prepaid expense and other current assets1,710 111 17 4,525 — 6,363 
   Total current assets58,603 139 713 15,057 — 74,512 
Property and equipment, net328 — 29 — — 357 
Operating lease assets113 — — 81 — 194 
Investment in WFOE— — 3,089 — (3,089)— 
Investment in other owned operating subsidiaries4,437 — — — (4,437)— 
Investment in VIEs8,801 — 1,644 — (10,445)— 
Other long-term assets416 — — 24 — 440 
Total Assets$72,698 $139 $5,475 $15,162 $(17,971)$75,503 
Liabilities and Stockholders' Equity (Deficit)
Accounts payable$3,169 $— $450 $6,475 $— 10,094 
Accrued expense and other current liabilities2,665 127 588 2,583 — 5,963 
Contract liability80 331 — 165 — 576 
Notes payable, net27,811 — — — — 27,811 
WFOE losses in excess of investment7,914 — — — (7,914)— 
VIE losses in excess of investment— 4,506 — — (4,506)— 
   Total current liabilities41,639 4,964 1,038 9,223 (12,420)44,444 
Operating lease liabilities - long term25 — — — — 25 
Total Liabilities41,664 4,964 1,038 9,223 (12,420)44,469 
Common stock11 — — 163 (163)11 
Additional paid-in capital364,333 19,899 42,627 28,310 (90,836)364,333 
Accumulated other comprehensive income (loss)(270)(318)160 (1,268)1,426 (270)
Accumulated deficit(333,040)(24,406)(38,350)(21,266)84,022 (333,040)
Total stockholders' equity (deficit)31,034 (4,825)4,437 5,939 (5,551)31,034 
Total liabilities and stockholders' equity (deficit)$72,698 $139 $5,475 $15,162 $(17,971)$75,503 

REMARK HOLDINGS, INC. & SUBSIDIARIES
Condensed Consolidated Statement of Operations and Comprehensive Loss
Nine Months Ended September 30, 2023
($ in thousands)
Consolidated Total
Revenue$4,176 
Cost and expense
Cost of revenue (excluding depreciation and amortization)3,220 
Sales and marketing1,093 
Technology and development1,504 
General and administrative8,920 
Depreciation and amortization178 
Impairments392 
Total cost and expense15,307 
Operating loss(11,131)
Other income (expense)
Interest expense(3,351)
Finance cost related to obligations to issue common stock(6,712)
Other gain, net(14)
Total other expense, net(10,077)
Loss before income taxes(21,208)
Provision for income taxes— 
Net loss$(21,208)
Other comprehensive income
Foreign currency translation adjustments(370)
Comprehensive loss$(21,578)

REMARK HOLDINGS, INC. & SUBSIDIARIES
Consolidated Statement of Operations and Comprehensive Loss
Year Ended December 31, 2022
($ in thousands)
Consolidated Total
Revenue$11,666 
Cost and expense
Cost of revenue (excluding depreciation and amortization)11,331 
Sales and marketing971 
Technology and development2,101 
General and administrative18,399 
Depreciation and amortization166 
Total cost and expense32,968 
Operating loss(21,302)
Other expense
Interest expense(6,073)
Finance cost on liability related to convertible debenture(1,422)
Loss on investment(26,356)
Other loss, net(339)
Total other expense, net(34,190)
Income loss from before income taxes(55,492)
Benefit from income taxes
Net loss$(55,483)
Other comprehensive loss
Foreign currency translation adjustments(589)
Comprehensive loss$(56,072)


REMARK HOLDINGS, INC. & SUBSIDIARIES
Consolidating Statement of Operations and Comprehensive Income (Loss) (Unaudited)
Year Ended December 31, 2021
($ in thousands)
CorporateWFOEOther Owned Operating SubsidiariesVIEsEliminating EntriesConsolidated Total
Revenue$3,387 $268 $385 $11,950 $— $15,990 
Cost and expense
Cost of revenue (excluding depreciation and amortization)1,786 314 85 9,270 — 11,455 
Sales and marketing264 152 274 281 — 971 
Marketing expense (recovery)— — — (1,530)— (1,530)
Technology and development1,630 — 1,288 1,774 — 4,692 
General and administrative12,667 165 491 797 — 14,120 
Depreciation and amortization133 — 10 48 — 191 
Total cost and expense16,480 631 2,148 10,640 — 29,899 
Operating income (loss)(13,093)(363)(1,763)1,310 — (13,909)
Other income (expense)
Interest expense(2,298)— — (10)— (2,308)
Other income (expense), net(601)— — (592)
Change in fair value of warrant liability123 — — — — 123 
Gain on investment revaluation43,642 — — — — 43,642 
Gain on debt extinguishment425 — — — — 425 
Other gain90 — — 10 — 100 
Share in net income of WFOE947 — — — (947)— 
Share in net loss of other owned operating subsidiaries(1,763)— — — 1,763 — 
Share in net income of VIEs— 1,307 — — (1,307)— 
Total other income (expense), net40,565 1,310 — (491)41,390 
Income (loss) from operations$27,472 $947 $(1,763)$1,316 $(491)$27,481 
Provision for income taxes— — — (9)— (9)
Net income (loss)$27,472 $947 $(1,763)$1,307 $(491)$27,472 
Other comprehensive loss
Foreign currency translation adjustments— 260 (313)(44)
Comprehensive income (loss)$27,472 $1,207 $(1,759)$994 $(486)$27,428 






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REMARK HOLDINGS, INC. & SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
Nine Months Ended September 30, 2023
($ in thousands)
Consolidated Total
Cash flows from operating activities:
Net loss
$(21,208)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
178 
Share-based compensation
149 
Cost of extending note payable750 
Finance cost related to obligations to issue common stock6,712 
Accrued interest included in note payable1,139 
Impairment of assets392 
Provision for doubtful accounts138 
Other
224 
Changes in operating assets and liabilities:
Accounts receivable
(593)
Inventory83 
Deferred cost of revenue1,564 
Prepaid expense and other assets
85 
Operating lease assets
(503)
Accounts payable, accrued expense and other liabilities
1,437 
Contract liability
90 
Operating lease liabilities
280 
Net cash used in operating activities
(9,083)
Cash flows from investing activities:
Purchases of property, equipment and software
(32)
Net cash used in investing activities
(32)
Cash flows from financing activities:
Proceeds from obligations to issue common stock - ELOC7,000 
Proceeds from obligations to issue common stock - Debentures2,500 
Advances from related parties1,002 
Repayments of advances from related parties(1,145)
Repayments of debt
(24)
Net cash provided by (used in) financing activities
9,333 
Net change in cash
218 
Cash:
Beginning of period
52 
End of period
$270 
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REMARK HOLDINGS, INC. & SUBSIDIARIES
Consolidated Statement of Cash Flows
Year Ended December 31, 2022
($ in thousands)
Consolidated Total
Cash flows from operating activities:
Net loss
$(55,483)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and impairments
166 
Share-based compensation
1,697 
Amortization of debt issuance costs and discount
2,189 
Cost of extending note payable283 
Finance cost on liability related to convertible debenture1,422 
Stock issuances for services performed500 
Loss on investment
26,356 
Provision for doubtful accounts2,882 
Other
(182)
Changes in operating assets and liabilities:
Accounts receivable
3,650 
Inventory1,033 
Deferred cost of revenue(6,874)
Prepaid expense and other assets
4,213 
Operating lease assets
Accounts payable, accrued expense and other liabilities
1,745 
Contract liability
(251)
Operating lease liabilities
37 
Net cash used in operating activities
(16,616)
Cash flows from investing activities:
Proceeds from sale of investment6,332 
Purchases of property, equipment and software
(448)
Payment of amounts capitalized to software in progress(1,063)
Net cash provided by investing activities
4,821 
Cash flows from financing activities:
Proceeds from debt issuance
2,703 
Advances from related parties3,256 
Repayments of debt
(6,217)
Repayment of advances from related parties(2,082)
Net cash used in financing activities
(2,340)
Net change in cash
(14,135)
Cash:
Beginning of period
14,187 
End of period
$52 
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REMARK HOLDINGS, INC. & SUBSIDIARIES
Consolidating Statement of Cash Flows (Unaudited)
Year Ended December 31, 2021
($ in thousands)
CorporateWFOEOther Owned Operating SubsidiariesVIEsEliminating EntriesConsolidated Total
Cash flows from operating activities:
Net income (loss)
$27,472 $947 $(1,763)$1,307 $(491)$27,472 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Change in fair value of warrant liability
(123)— — — — (123)
Depreciation, amortization and impairments
133 — 10 48 — 191 
Share-based compensation
4,060 — — — — 4,060 
Amortization of debt issuance costs and discount880 — — — — 880 
Gain on investment in marketable securities
(43,642)— — — — (43,642)
Gain on debt extinguishment
(425)— — — — (425)
Share in net income of WFOE(947)— — — 947 — 
Share in net loss of other owned operating subsidiaries1,763 — — — (1,763)— 
Share in net income of VIEs— (1,307)— — 1,307 — 
Financing cost of converting note payable to common stock44 — — — — 44 
Provision for doubtful accounts— — — 297 — 297 
Other
41 258 17 (286)— 30 
Changes in operating assets and liabilities:
— 
Accounts receivable
156 — (12)(5,877)— (5,733)
Inventory(526)— (1)54 — (473)
Prepaid expenses and other current assets
260 (107)(13)(4,260)— (4,120)
Operating lease assets
91 — 195 — 293 
Accounts payable, accrued expense and other liabilities(1,086)(114)335 1,832 — 967 
Contract liability
(69)325 — 21 — 277 
Operating lease liabilities
(90)— — (79)— (169)
Net cash provided by (used in) operating activities
(12,008)(1,427)(6,748)— (20,174)
Cash flows from investing activities:
Proceeds from investment2,322 — — — — 2,322 
Purchases of property, equipment and software
(183)— (40)— — (223)
Other cash outflows resulting from transactions with WFOE, net(754)— — — 754 — 
Other cash outflows resulting from transactions with other owned operating subsidiaries, net(2,140)— — — 2,140 — 
Other cash outflows resulting from transactions with VIEs, net(5,956)(754)— — 6,710 — 
Net cash used in investing activities
(6,711)(754)(40)— 9,604 2,099 
Cash flows from financing activities:
Proceeds from issuance of common stock, net
5,692 — — — — 5,692 
Proceeds from debt issuance
32,216 — — — — 32,216 
Repayments of debt
(6,500)— — — — (6,500)
Other cash inflows resulting from transactions with corporate, net— 754 2,140 5,956 (8,850)— 
Other cash inflows resulting from transactions with WFOE, net— — — 754 (754)— 
Net cash provided by financing activities
31,408 754 2,140 6,710 (9,604)31,408 
Net change in cash
12,689 673 (38)— 13,333 
Cash:
Beginning of period
550 17 278 — 854 
End of period
$13,239 $26 $682 $240 $— $14,187 


Investment in VIEs/VIE Losses in Excess of Investment

As we have been building our artificial intelligence business, the VIEs have incurred net losses from operations in excess of the amounts we have advanced to the VIEs. Since we committed to funding the VIEs to continue growing the business, we showed as a liability the amount by which the accumulated net losses of the VIEs exceed our investment in the VIEs. The following table rolls forward the balance of VIE losses in excess of investment:

CorporateWFOEOther Owned Operating Subsidiaries
Investment in VIEs/(VIE losses in excess of investment), December 31, 2020$2,814 $(6,251)$1,654 
Cash provided to VIEs5,956 754 — 
Share in net income of VIEs— 1,307 — 
Share in accumulated other comprehensive income of VIEs— (313)— 
Other31 (3)(10)
Investment in VIEs/(VIE losses in excess of investment), December 31, 2021$8,801 $(4,506)$1,644 


Our Address

Our principal executive offices are located at 800 S. Commerce Street, Las Vegas, NV 89106, and our telephone number is (702) 701-9514.

Before you invest in any of the securities offered hereby, you should carefully consider all the information in this prospectus, including matters set forth under the heading “Risk Factors.”


The Offering

Pursuant to the Amended ELOC Purchase Agreement, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Ionic to purchase up to an aggregate of $50,000,000 of shares
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of our common stock, which shall include the Purchase Shares, the Commitment Shares, the Additional Commitment Shares, the Filing Default Shares (if any) and the Effectiveness Default Shares (if any) over the 36-month term of the Amended ELOC Purchase Agreement. We currently have reserved 20,000,000 shares of our authorized and unissued shares of common stock solely for the purpose of effecting purchases of the shares under the Amended ELOC Purchase Agreement. Under the Amended ELOC Purchase Agreement, we have the right to present Ionic with a purchase notice (each, a “Purchase Notice”) directing Ionic to purchase any amount up to $3,000,000 of our common stock per trading day, at a per share price equal to 80% (subject to decrease under certain circumstances) of the average of the two lowest VWAPs over a specified measurement period. With each purchase under the Amended ELOC Purchase Agreement, we are required to deliver to Ionic an additional number of shares equal to 2.5% of the number of Purchase Shares deliverable upon such purchase. The number of shares that we can issue to Ionic from time to time under the Amended ELOC Purchase Agreement shall be subject to the Beneficial Ownership Limitation. Though the Amended ELOC Purchase Agreement generally only permits us to issue a Purchase Notice when any previous measurement periods have completed, such limitation does not apply (i.e., we can issue Purchase Notices during ongoing measurement periods) as long as the dollar amount of outstanding Purchase Notices for which we have not been able to issue all shares of our common stock related to such Purchase Notices as a result of the Beneficial Ownership Limitation is less than $7,000,000.

In addition, Ionic will not be required to buy any shares of our common stock pursuant to a Purchase Notice on any trading day on which the closing trade price of our common stock is below $0.25, as amended by a January 5, 2023 Letter Agreement (the “January Letter Agreement”). We will control the timing and amount of sales of our common stock to Ionic. Ionic has no right to require any sales by us, and is obligated to make purchases from us as directed solely by us in accordance with the Amended ELOC Purchase Agreement. The Amended ELOC Purchase Agreement provides that we will not be required or permitted to issue, and Ionic will not be required to purchase, any shares under the Amended ELOC Purchase Agreement if such issuance would violate Nasdaq rules, and we may, in our sole discretion, determine whether to obtain stockholder approval to issue shares in excess of 19.99% of our outstanding shares of common stock if such issuance would require stockholder approval under Nasdaq rules. On December 6, 2022, we received stockholder approval to issue in excess of 19.99% of our outstanding shares of common stock pursuant to the Original ELOC Purchase Agreement. Ionic has agreed that neither it nor any of its agents, representatives and affiliates will engage in any direct or indirect short-selling or hedging our common stock during any time prior to the termination of the Amended ELOC Purchase Agreement.

While the Original ELOC Purchase Agreement could have been terminated by us if certain conditions to commence had not been satisfied by December 31, 2022, we and Ionic agreed that all conditions for commencement under the Amended ELOC Purchase Agreement were satisfied and the parties have commenced transacting under the Amended ELOC Purchase Agreement. The Amended ELOC Purchase Agreement may also be terminated by us at any time after commencement, at our discretion; provided, however, that if we sell less than $25,000,000 to Ionic (other than as a result of our inability to sell shares to Ionic as a result of the Beneficial Ownership Limitation, our failure to have sufficient shares authorized or our failure to obtain stockholder approval to issue more than 19.99% of our outstanding shares), we will pay to Ionic a termination fee of $3,750,000, which is payable, at our option, in cash or in shares of common stock, as Additional Commitment Shares, at a price equal to the closing price on the day immediately preceding the date of receipt of the termination notice. Further, the Amended ELOC Purchase Agreement will automatically terminate on the date that we sell, and Ionic purchases, the full $50,000,000 amount under the agreement or, if the full amount has not been purchased, on the expiration of the 36-month term of the Amended ELOC Purchase Agreement.

Concurrently with entering into the Original ELOC Purchase Agreement, we also entered into registration rights agreement with Ionic (the “Registration Rights Agreement”) dated October 6, 2022, in which we agreed to file one or more registration statements, as necessary, to register under the Securities Act of 1933 (the “Securities Act”) the resale of the shares of our common stock issuable to Ionic under the Amended ELOC Purchase Agreement and the shares of common stock that may be issued to Ionic if we fail to comply with our obligations in the Registration Rights Agreement. The SEC has already declared the initial registration statement effective but, pursuant to the Registration Rights Agreement, we must file any additional registration statements within 14 days of the need to register additional shares arising and use commercially reasonable efforts to have such resale registration statements declared effective by the SEC on or before the earlier of (i) 30 days after filing (or 90 days if such registration statement is subject to full review by the SEC) and (ii) the 2nd business day after we are notified we will not be subject to further SEC review. The Registration Rights Agreement also requires us to use our commercially
6


reasonable efforts to keep such registration statements continuously effective under the Securities Act until such time as Ionic has resold all Registrable Securities (as defined in the Registration Rights Agreement) covered by such registration statements and no amount of the $50,000,000 remains available to Remark under the Amended ELOC Purchase Agreement.

If we fail to timely file such registration statements, then we will be required to issue to Ionic as Filing Default Shares 150,000 shares of common stock within two trading days after such failure. If we fail to have such registration statement declared effective by the specified deadline, then we will be required to issue to Ionic as Effectiveness Default Shares 150,000 shares of common stock within two trading days after such failure. We have already had to issue 150,000 Filing Default Shares and 150,000 Effectiveness Default Shares for failing to meet specified deadlines.


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OFFERING SUMMARY

Common stock being offered by the selling stockholder
Up to 20,000,000 shares of our common stock, which may be issued pursuant to the Amended ELOC Agreement, including the Purchase Shares, the Commitment Shares, the Additional Commitment Shares (if any), the Filing Default Shares (if any), and the Effectiveness Default Shares (if any).
Nasdaq Capital Market symbol“MARK”
Risk Factors
Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 10 of this prospectus.
Use of Proceeds
All of the securities offered by this prospectus are being registered for the account of the selling stockholder. We will not receive any of the proceeds from the sale of these securities. We have agreed to pay all costs, expenses and fees relating to the registration of the securities covered by this prospectus. The selling stockholder will bear all commissions and discounts, if any, attributable to the sale of the securities. However, we have received $9,350,000 in gross proceeds from Purchase Notices executed under the Amended ELOC Purchase Agreement, and we may receive additional gross proceeds of up to $40,650,000 under the Amended ELOC Purchase Agreement to Ionic. We intend to use the net proceeds from any sale of shares to Ionic under the Amended ELOC Purchase Agreement for general corporate purposes, which may include working capital, and repayment of outstanding indebtedness.


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 principally in the sections entitled “Prospectus Summary” and “Risk Factors”. These forward-looking statements are identifiable by words or phrases indicating that we or our management “expects,” “anticipates,” “plans,” “believes,” or “estimates,” or that a particular occurrence or event “will,” “may,” “could,” “should,” or “will likely” result, occur or be pursued or “continue” in the future, that the “outlook” or “trend” is toward a particular result or occurrence, that a development is an “opportunity,” “priority,” “strategy,” “focus,” that we are “positioned” for a particular result, or similarly stated expectations. 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 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.

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This should not be construed as a complete list of all of the economic, competitive, governmental, technological and other factors that could adversely affect our expected consolidated financial position, results of operations or liquidity. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, operations, liquidity, financial condition and prospects. We undertake no obligation to update or revise our forward-looking statements to reflect developments that occur or information that we obtain after the date of this prospectus.


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RISK FACTORS

Investing in our securities 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, subsequent Quarterly Reports on Form 10-Q and subsequent Current Reports on Form 8-K 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, before deciding whether to invest in our securities. 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 This Offering

Issuances of our common stock to Ionic has caused and will continue to cause substantial dilution to our existing stockholders and the price of our common stock to decline.

We are registering for resale up to an aggregate of 20,000,000 shares of common stock that may be issued to Ionic from time to time under the Amended ELOC Purchase Agreement.

We anticipate that shares issued to Ionic under the Amended ELOC Purchase Agreement will be issued and sold over a period of as long as the approximately 20 months remaining under the Amended ELOC Purchase Agreement. The number of shares ultimately sold to Ionic under this prospectus is dependent upon the number of shares we elect to sell to Ionic under the Amended ELOC Purchase Agreement. Depending on a variety of factors, including market liquidity of our common stock, the issuance and sale of shares under the Amended ELOC Purchase Agreement may cause the trading price of our common stock to decline.

We may ultimately issue and sell to Ionic all, some or none of the 20,000,000 shares of common stock available under the Amended ELOC Purchase Agreement that we are registering. Ionic may sell all, some or none of our shares that it holds or comes to hold pursuant to sales under the Amended ELOC Purchase Agreement. The issuance and sale of shares by us to Ionic pursuant to the Amended ELOC Purchase Agreement will 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 by Ionic in this offering, 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.


We may not have access to the full amount available under the Amended ELOC Purchase Agreement with Ionic.

Under the Amended ELOC Purchase Agreement, we will have the right to direct Ionic to purchase shares of our common stock from time to time by presenting Ionic with a purchase notice directing Ionic to purchase any amount up to $3,000,000 of our common stock per trading day, at a per share price equal to 80% (subject to decrease under certain circumstances) of the average of the two lowest VWAPs over a specified measurement period.

Although the Amended ELOC Purchase Agreement provides that we may sell up to $50,000,000 of our common stock to Ionic, depending on the market prices of our common stock, we may not be able to nor desire to sell all of the shares contemplated by the Amended ELOC Purchase Agreement. In addition, if the number of shares registered hereby is insufficient to cover all of the shares we elect to sell to Ionic under the Amended ELOC Purchase Agreement, we will be required to file one or more additional registration statements to register such additional shares.

The extent to which we rely on Ionic as a source of funding will depend on a number of factors, including the prevailing market price of our common stock and the extent to which we are able to secure working capital from other sources. Even if we sell a significant amount of shares under the Amended ELOC Purchase Agreement to Ionic, we may still need additional capital to fully implement our business, operating and development plans. Should
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the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects.


Ionic will pay less than the then-prevailing market price for our common stock, which could cause the price of our common stock to decline.

The purchase price of common stock sold to Ionic under the Amended ELOC Purchase Agreement is derived from the market price of our common stock. The shares to be sold to Ionic pursuant to the Amended ELOC Purchase Agreement will be purchased at a discounted price as described above. As a result of this pricing structure, Ionic may sell the shares it receives immediately after receipt of the shares, which could cause the price of our common stock to decrease. These sales may have a further impact on the price of our common stock.


It is not possible to predict the actual number of shares we will sell under the Amended ELOC Purchase Agreement to the selling stockholder, or the actual gross proceeds resulting from those sales.

Subject to certain limitations in the Amended ELOC Purchase Agreement and compliance with applicable law, we have the discretion to deliver notices to the selling stockholder at any time throughout the term of the Amended ELOC Purchase Agreement. The actual number of shares of common stock that are sold to the selling stockholder may depend upon a number of factors, including the market price of the common stock during the sales period. Because the price per share of each share sold to the selling stockholder will fluctuate during the sales period, it is not currently possible to predict the number of shares that will be sold or the actual gross proceeds to be raised in connection with those sales.


Investors who buy shares of our common stock at different times will likely pay different prices.

Investors who purchase shares of common stock in this offering at different times will likely pay different prices, and so may experience different levels of dilution and different outcomes in their investment results. Similarly, Ionic may sell such shares at different times and at different prices. Investors may experience a decline in the value of the shares they purchase from the selling stockholder in this offering as a result of sales made by us in future transactions to Ionic at prices lower than the prices they paid.


Risks Relating to Our Corporate Structure

We have historically relied on contractual arrangements with the VIEs and their shareholders for a significant portion of our business operations. If the Chinese government determines that such contractual arrangements did not comply with Chinese regulations, or if these regulations change or are interpreted differently in the future, we could be subject to penalties, and our common stock may decline in value or even become worthless.

Prior to the termination of our contractual arrangements with the VIEs, we relied on such contractual arrangements with the former VIEs to operate our business in China. The revenues contributed by the former VIEs constituted a majority of our total revenues for the fiscal years ended December 31, 2022 and 2021.

In recent years, the Chinese government adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to variable interest entities. These recent statements indicate an intent by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. As of the date of this prospectus, there are no relevant laws or regulations in China that prohibit our Company or any of our subsidiaries from listing or offering securities in the United States. However, official guidance and related implementation rules have not been issued. Future
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action taken by the Chinese government could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our common stock to significantly depreciate or become worthless. In addition, although we believe that our historical contractual arrangements with the former VIEs complied with applicable Chinese laws and regulations, the Chinese government may determine at any time that such contractual arrangements with the former VIEs did not apply with Chinese regulations, or such regulations may change or be interpreted differently in the future. If the Chinese government determines that our contractual arrangements with the former VIEs did not comply with Chinese regulations or if these regulations change or are interpreted differently in the future, we may be subject to penalties imposed by the Chinese government, and our common stock may decline in value or become worthless.


Our contractual arrangements with the former VIEs may be subject to scrutiny by China’s tax authorities. Any adjustment of related party transaction pricing could lead to additional taxes, and therefore substantially reduce our consolidated net income and the value of your investment.

The tax regime in China is rapidly evolving and there is significant uncertainty for Chinese taxpayers as Chinese tax laws may be interpreted in significantly different ways. China’s tax authorities may assert that we or the former VIEs or their shareholders are required to pay additional taxes on previous or future revenue or income. In particular, under applicable Chinese laws, rules and regulations, arrangements and transactions among related parties, such as the contractual arrangements with the former VIEs, may be subject to audit or challenge by China’s tax authorities. If China’s tax authorities determine that any contractual arrangements were not entered into on an arm’s length basis and therefore constitute a favorable transfer pricing, the China tax liabilities of the relevant subsidiaries, the former VIEs or the shareholders of the former VIEs could be increased, which could increase our overall tax liabilities. In addition, China’s tax authorities may impose interest on late payments. Our net income may be materially reduced if our tax liabilities increase. It is uncertain whether any new China laws, rules or regulations relating to VIE structures will be adopted or, if adopted, what they would provide.

If we or any of the former VIEs are found to be in violation of any existing or future China laws, rules or regulations, or if we fail to obtain or maintain any of the required permits or approvals, the relevant China regulatory authorities would have broad discretion to take action in dealing with these violations or failures, including revoking the business and operating licenses of the former VIEs, requiring us to discontinue or restrict our operations, restricting our right to collect revenue, blocking one or more of our websites, requiring us to restructure our operations or taking other regulatory or enforcement actions against us. The imposition of any of these measures could result in a material adverse effect on our ability to conduct all or any portion of our business operations. In addition, it is unclear what impact Chinese government actions would have on us and on our ability to consolidate the financial results of any of the former VIEs in our consolidated financial statements, if Chinese governmental authorities were to find our former corporate structure and historical contractual arrangements to be in violation of Chinese laws, rules and regulations. If the imposition of any governmental actions causes us to lose our right to direct the activities of any of the former VIEs or otherwise separate from any of these entities, and if we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of the former VIEs in our consolidated financial statements. Any of these events would have a material adverse effect on our business, financial condition and results of operations.


Risks Relating to Doing Business in China

Changes in China’s economic, political, social or geopolitical conditions or in U.S.-China relations, as well as possible interventions and influences of any government policies and actions, could have a material adverse effect on our business and operations and the value of our common stock.

A significant portion of our operations are conducted through our China-based subsidiaries. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic, social conditions and government policies in China generally. The Chinese economy differs
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from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to reduction in demand for our services and adversely affect our competitive position. The COVID-19 pandemic has had a severe and negative impact on the Chinese and global economy. In particular, the preventative measures in China as a result of the Chinese government’s “Zero-COVID” policy have significantly limited the operational capabilities of our China-based subsidiaries, caused a material adverse impact on our business and, though the preventative measures have been eased somewhat, may continue to have an adverse impact on our operations in China.

The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. In addition, in the past the Chinese government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in China, which may adversely affect our business and operating results.

Furthermore, we and our investors may face uncertainty about future actions by the government of China that could significantly affect the financial performance and operations of our China-based subsidiaries. Chinese laws and regulations, including the enforcement of such laws and regulations, can change quickly with little advance notice. The Chinese government may intervene or influence our operations at any time and may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our securities. As of the date of this prospectus, neither Remark nor any of its subsidiaries has received or was denied permission from Chinese authorities to list on U.S. exchanges or conduct U.S. securities offerings. However, there is no guarantee that we will receive or not be denied permission from Chinese authorities to list on U.S. exchanges or conduct U.S. securities offerings in the future. China’s economic, political and social conditions, as well as interventions and influences of any government policies, laws and regulations are uncertain and could have a material adverse effect on our business.


Uncertainties with respect to the Chinese legal system could adversely affect us.

The Chinese legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. Since these laws and regulations are relatively new and the Chinese legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and the enforcement of these laws, regulations and rules involves uncertainties.

In 1979, the Chinese government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since Chinese administrative and court authorities have significant discretion in
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interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.

Furthermore, the Chinese legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

In addition, we are subject to risks and uncertainties of the interpretations and applications of Chinese laws and regulations, and any such interpretations and applications could lead to future actions of the Chinese government that are detrimental to us and/or our China-based subsidiaries, which would likely result in material adverse changes in our operations and cause the value of our common stock to potentially depreciate significantly or become worthless.


We may be liable for improper use or appropriation of personal information provided by our customers and any failure to comply with Chinese laws and regulations over data security could result in materially adverse impact on our business, results of operations and the value of our common stock.

Our business involves collecting and retaining certain internal and external data and information including that of our customers and suppliers. The integrity and protection of such information and data are crucial to us and our business. Owners of such data and information expect that we will adequately protect their personal information. We are required by applicable laws to keep strictly confidential the personal information that we collect, and to take adequate security measures to safeguard such information.

The PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), prohibits institutions, companies and their employees from selling or otherwise illegally disclosing a citizen’s personal information obtained in performing duties or providing services or obtaining such information through theft or other illegal ways. On November 7, 2016, the Standing Committee of the PRC National People’s Congress issued the Cyber Security Law of the PRC (the “Cyber Security Law”), which became effective on June 1, 2017. Pursuant to the Cyber Security Law, network operators must not, without users’ consent, collect their personal information, and may only collect users’ personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations.

The Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from January 1, 2021) provides legal basis for privacy and personal information infringement claims under the Chinese civil laws. Chinese regulators, including the CAC, the Ministry of Industry and Information Technology, and the Ministry of Public Security, have been increasingly focused on regulation in data security and data protection.

On August 20, 2021, the Standing Committee of the 13th National People's Congress of China issued the final version of the Personal Information Protection Law (the “PIPL”), which became effective on November 1, 2021. The PIPL imposes on China-based data processers (such as our China-based subsidiaries) significant obligations with respect to, among other things, obtaining, processing and cross-border transferring personal information. The PIPL may subject a data processor to a penalty of as much as RMB50 million or 5% of the preceding year’s turnover.
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The Chinese regulatory requirements regarding cybersecurity are evolving. For instance, various regulatory bodies in China, including the CAC, the Ministry of Public Security and the State Administration for Market Regulation, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations.

In November 2021, the CAC and other related authorities released the amended Cybersecurity Review Measures which became effective on February 15, 2022. Under the amended Cybersecurity Review Measures:

companies who are engaged in data processing are also subject to the regulatory scope;

the CSRC is included as one of the regulatory authorities for purposes of jointly establishing the state cybersecurity review working mechanism;

the operators (including both operators of critical information infrastructure and relevant parties who are engaged in data processing) holding more than one million users/users’ (which are to be further specified) individual information and seeking a listing outside China shall file for cybersecurity review with the Cybersecurity Review Office; and

the risks of core data, material data or large amounts of personal information being stolen, leaked, destroyed, damaged, illegally used or transmitted to overseas parties and the risks of critical information infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used maliciously shall be collectively taken into consideration during the cybersecurity review process.

As a result of the promulgation of the amended Cybersecurity Review Measures, we may become subject to enhanced cybersecurity review. Certain internet platforms in China have been reportedly subject to heightened regulatory scrutiny in relation to cybersecurity matters. As of the date of this prospectus, we have neither been subject to heightened regulatory scrutiny with respect to cybersecurity matters nor been informed by any Chinese governmental authority of any requirement that we file for a cybersecurity review. However, if we are deemed to be a critical information infrastructure operator or a company that is engaged in data processing and holds personal information of more than one million users, we could be subject to Chinese cybersecurity review.

As there remains significant uncertainty in the interpretation and enforcement of relevant Chinese cybersecurity laws and regulations, we could be subject to cybersecurity review, and if so, we may not be able to pass such review. In addition, we could become subject to enhanced cybersecurity review or investigations launched by Chinese regulators in the future. Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website closure, removal of our app from the relevant app stores, and revocation of prerequisite licenses, as well as reputational damage or legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations. As of the date of this prospectus, we have neither been involved in any investigations on cybersecurity review initiated by the CAC or any other Chinese regulatory authority nor have we received any inquiry, notice or sanction in such respect. We believe that we are in compliance with the aforementioned regulations and policies that have been issued by the CAC.

On June 10, 2021, the Standing Committee of the National People’s Congress of China (the “SCNPC”) promulgated the PRC Data Security Law, which took effect on September 1, 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data an information.
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As of the date of this prospectus, we do not expect that the current Chinese laws on cybersecurity or data security or the PIPL would have a material adverse impact on our business operations. However, as uncertainties remain regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we will comply with such regulations in all respects and we may be ordered to rectify or terminate any actions that are deemed illegal by regulatory authorities. We may also become subject to fines and/or other sanctions which may have material adverse effect on our business, operations and financial condition.


Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB determines that it cannot inspect or fully investigate our auditors, and as a result, Nasdaq may determine to delist our securities.

The HFCA Act was enacted on December 18, 2020. The HFCA Act states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such shares from being traded on a national securities exchange or in the over the counter trading market in the United States.

On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction. The Consolidated Appropriations Act, 2023, which was signed into law on December 29, 2022, amended the HFCA Act to reduce the number of consecutive non-inspection years required to trigger the trading prohibition under the HFCA Act from three years to two years.

On December 16, 2021, the PCAOB issued a report on its determination that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by Chinese and Hong Kong authorities in those jurisdictions.

On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, taking the first step toward opening access for the PCAOB to completely inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong.

On December 15, 2022, the PCAOB vacated its 2021 determination that the positions taken by authorities in mainland China and Hong Kong prevented it from inspecting and investigating completely registered public accounting firms headquartered in those jurisdictions. In view of the PCAOB’s decision to vacate its 2021 determination and until such time as the PCAOB issues any new adverse determination, the SEC has stated that there are no issuers at risk of having their securities subject to a trading prohibition under the HFCA Act. Each year, the PCAOB will reassess its determinations on whether it can inspect and investigate completely audit firms in China, and if, in the future, the PCAOB determines it cannot do so, or if Chinese authorities do not allow the PCAOB complete access for inspections and investigations for two consecutive years, companies engaging China-based public accounting firms would be delisted pursuant to the HFCA Act.

Our auditor, Weinberg & Company, an independent registered public accounting firm headquartered in the United States, is currently subject to PCAOB inspections and has been inspected by the PCAOB on a regular basis. However, if the PCAOB is unable to inspect the work papers of our accounting firm in the future, such lack of inspection could cause trading in our common stock to be prohibited under the HFCA Act, and as a result, an exchange may determine to delist our common stock. The delisting and the cessation of trading of our common stock, or the threat of our common stock being delisted and prohibited from being traded, may materially and adversely affect the value of your investment.

These recent developments may result in prohibitions on the trading of our common stock on the Nasdaq Capital Market, if our auditors fail to meet the PCAOB inspection requirement in time.

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Risks Relating to Our Business and Industry

The continuing impacts of COVID-19 are highly unpredictable and could be significant, and may have an adverse effect on our business and financial results.

The global outbreak of COVID-19 has impacted our business and could continue to have a significant impact on our business. The impact of COVID-19 on our business and future financial results could include, but may not be limited to:

lack of revenue growth or decreases in revenue due to a lack of, or at least a decline in, customer demand and (or) deterioration in the credit quality of our customers;

a significant increase in our need for external financing to maintain operations as a result of decreased revenue;

significant decline in the debt and equity markets, thus impacting our ability to conduct financings on terms acceptable to us; and

the rapid and broad-based shift to a remote working environment creates inherent productivity, connectivity, and oversight challenges. Preventative measures implemented by governmental authorities in China, such as travel restrictions, shelter-in-place orders and business closures, could significantly impact the ability of our employees and vendors to work productively. In addition, the changed environment under which we are operating could have an impact on our internal controls over financial reporting as well as our ability to meet a number of our compliance requirements in a timely or quality manner.

The extent of any ongoing impact of the pandemic on our business and financial results will depend largely on future developments, including the duration and severity of any outbreaks related to new variants of COVID-19, the length of the travel restrictions and business closures imposed by domestic and foreign governments, all of which can be highly uncertain and cannot be predicted. Though improving somewhat, the situation continues to evolve and additional impacts may arise that we are not aware of currently.


Laws and regulations concerning data privacy are continually evolving. Failure to comply with these laws and regulations could harm our business.

Our business involves collecting and retaining certain internal and external data and information including that of our customers and suppliers and third parties. The integrity and protection of such information and data are crucial to us and our business. Owners of such data and information expect that we will adequately protect their personal information. We are required by applicable privacy and data protection laws in the U.S. and internationally to keep strictly confidential the personal information that we collect, and to take adequate security measures to safeguard such information.

Our failure to comply with existing privacy or data protection laws and regulations could increase our costs, force us to change or limit the features of our AI solutions or result in proceedings or litigation against us by governmental authorities or others, any or all of which could result in significant fines or judgments against us, result in damage to our reputation, and result in negative effects on our financial condition and results of operations. Even if concerns raised by regulators, the media, or consumers about our privacy and data protection or consumer protection practices are unfounded, we could suffer damage to our reputation that causes significant negative effects on our financial condition and results of operations.
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Privacy and data protection laws are rapidly changing and likely will continue to do so for the foreseeable future, which could have an impact on how we develop and customize our AI products and software. The growth and development of AI may prompt calls for more stringent consumer privacy protection laws that may impose additional burdens on companies such as ours. Any such changes would require us to devote legal and other resources to address such regulation.

For example, in the U.S., the California Consumer Privacy Act ("CCPA") became effective on January 1, 2020 and applies to processing of personal information of California residents. Other states, including Nevada, have enacted or are considering similar privacy or data protection laws that may apply to us. The U.S. government, including the Federal Trade Commission and the Department of Commerce, also continue to review the need for greater or different regulation over the collection of personal information and information about consumer behavior on the Internet and on mobile devices, and the U.S. Congress is considering a number of legislative proposals to regulate in this area. Various government and consumer agencies worldwide have also called for new regulation and changes in industry practices. For example, the GDPR became effective on May 25, 2018. GDPR would apply to us should we expand our AI business into member countries of the EU. Violations of the GDPR may result in significant penalties, and countries in the EU are still enacting national laws that correspond to certain portions of the GDPR.


Our continuous access to publicly-available data and to data from partners may be restricted, disrupted or terminated, which would restrict our ability to develop new products and services, or to improve existing products and services, which are based upon our AI platform.

The success of our AI-based solutions depends substantially on our ability to continuously ingest and process large amounts of data available in the public domain and provided by our partners, and any interruption to our free access to such publicly-available data or to the data we obtain from our partners will restrict our ability to develop new products and services, or to improve existing products and services. While we have not encountered any significant disruption of such access to date, there is no guarantee that this trend will continue without costs. Public data sources may change their policies to restrict access or implement procedures to make it more difficult or costly for us to maintain access, and partners could decide to terminate our existing agreements with them. If we no longer have free access to public data, or access to data from our partners, our ability to maintain or improve existing products, or to develop new AI-based solutions may be severely limited. Furthermore, we may be forced to pay significant fees to public data sources or to partners to maintain access, which would adversely affect our financial condition and results of operations.


Our AI software and our application software are highly technical and run on very sophisticated third-party hardware platforms. If such software or hardware contains undetected errors, our AI solutions may not perform properly and our business could be adversely affected.

Our AI-based solutions and internal systems rely on software, including software developed or maintained internally or by third parties, that is highly technical and complex. In addition, our AI-based solutions 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 AI-based solution or application software 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 our customers, delay product introductions or enhancements, result in measurement or billing errors, or compromise our ability to protect our customers’ data 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.


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The successful operation of our AI platform 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.


Our outstanding senior secured loan agreements contain certain covenants that restrict our ability to engage in certain transactions and may impair our ability to respond to changing business and economic conditions.

On December 3, 2021, we entered into senior secured loan agreements (the “Original Mudrick Loan Agreements”) with certain of our subsidiaries as guarantors (the “Guarantors”) and certain institutional lenders affiliated with Mudrick Capital Management, LP (collectively, “Mudrick”), pursuant to which the Mudrick extended credit to us consisting of term loans in the principal amount of $30.0 million (the “Original Mudrick Loans”). On March 14, 2023, we entered into a Note Purchase Agreement with Mudrick (the “New Mudrick Loan Agreement”) pursuant to which all of the Original Mudrick Loans were cancelled in exchange for new notes payable to Mudrick (the “New Mudrick Notes”). The New Mudrick Notes require us to satisfy various covenants, including restrictions on our ability to engage in certain transactions without Mudrick’s consent, and may limit our ability to respond to changing business and economic conditions. The restrictions include, among other things, limitations on our ability and the ability of our subsidiaries to:

change its name or corporate form or jurisdiction of organization;

merge with another entity (other than an affiliate of Mudrick), consolidate, or sell or dispose of any material portion of our assets;

sell, lease, license, convey, assign (by operation of law or otherwise), exchange or otherwise voluntarily or involuntarily transfer or dispose of any interest in any of its assets (other than upon receipt of fair consideration for obsolete assets, trade-ins and disposition, sales or licenses in the ordinary course of business) or any portion thereof or encumber, or hypothecate, or create, incur or permit to exist any pledge, mortgage, lien, security interest, charge, encumbrance or adverse claim upon or other interest in or with respect to any of its assets (other than permitted liens); and

directly or indirectly enter into or permit to exist any transaction with any of our affiliates (other than a wholly-owned subsidiary).


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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 are uncertain or 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.


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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 travel and 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 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 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 year ended December 31, 2022, 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 $(388.5) million as of December 31, 2022 and an accumulated deficit of $(409.7) million as of September 30, 2023. In addition, for the nine months ended September 30, 2023, we had a net loss of $(21.2) million.

We cannot provide assurance that revenue generated from our businesses will be sufficient to sustain our operations in the long term. We have implemented measures to reduce operating costs, and we continuously evaluate other opportunities to reduce costs further. Additionally, we are working with our advisors to evaluate strategic alternatives, including the potential sale of certain non-core assets, investment assets and operating businesses. We
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may also need to obtain additional capital through equity financing or debt financing. 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.

Conditions in the debt and equity markets, as well as the volatility of investor sentiment regarding macroeconomic and microeconomic conditions (in particular, as a result of the COVID-19 pandemic, global supply chain disruptions, inflation and other cost increases, and the geopolitical conflict in Ukraine) will play primary roles in determining whether we can successfully obtain additional capital. We cannot be certain that we will be successful at raising capital, whether in an equity financing, debt financing, or by divesting of certain assets or businesses, on commercially reasonable terms, if at all. In addition, if we obtain capital by issuing equity, such transaction(s) may dilute existing stockholders.


We may not have sufficient cash to repay our outstanding senior secured indebtedness.

As of September 30, 2023, the entire aggregate principal amount of $16.3 million remained outstanding under the New Mudrick Notes, which became due and payable in full on October 31, 2023. Our available cash and other liquid assets are currently not sufficient to pay such obligations in full. If we do not pay the New Mudrick Notes in full on the scheduled maturity date, Mudrick will have available to them all rights under the New Mudrick Loan Agreements and applicable law, which include, without limitation, foreclosing on the collateral securing the New Mudrick Notes. Mudrick’s exercise of any such rights could have a material adverse effect on our financial condition.


We are dependent on a small number of customers for a large percentage of our revenue.

We have a concentration in the volume of business we transacted with customers, as during the nine months ended September 30, 2023, two of our customers represented about 28% and 24% of our revenue, respectively, while during nine months ended September 30, 2022, two customers represented about 55% and 23%, respectively, of our revenue. At September 30, 2023, accounts receivable from two of our customers represented about 12% and 12%, respectively, of our gross accounts receivable, while at December 31, 2022, accounts receivable from our three largest customers represented about 23%, 16% and 10%, respectively, of our gross accounts receivable. The loss of any of these large customers would have a material adverse impact on our financial results.


Our independent registered public accounting firm’s reports for the fiscal years ended December 31, 2022 and 2021 have raised substantial doubt regarding our ability to continue as a “going concern.”

Our independent registered public accounting firm indicated in its report on our audited consolidated financial statements as of and for the years ended December 31, 2022 and 2021 that there is substantial doubt about our ability to continue as a going concern. A “going concern” opinion indicates that the financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result if we do not continue as a going concern. Therefore, you should not rely on our consolidated balance sheet as an indication of the amount of proceeds that would be available to satisfy claims of creditors, and potentially be available for distribution to stockholders, in the event of liquidation. The presence of the going concern note to our financial statements may have an adverse impact on the relationships we are developing and plan to develop with third parties as we continue the commercialization of our products and could make it difficult for us to raise additional financing, all of which could have a material adverse impact on our business and prospects and result in a significant or complete loss of your investment.


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We continue to evolve our business strategy and develop new brands, products and services, and our future prospects are difficult to evaluate.

We are in varying stages of development with regard to our business, including our artificial intelligence business driven by our AI platform, so our prospects must be considered in light of the many risks, uncertainties, expenses, delays, and difficulties frequently encountered by companies in the early stages of development of business models and products. Some of such risks and difficulties include our ability to, among other things:

manage and implement new business strategies;

successfully commercialize and monetize our assets;

continue to raise additional working capital;

manage operating expenses;

establish and take advantage of strategic relationships;

successfully avoid diversion of management’s attention or of other resources from our existing business

successfully avoid impairment of goodwill or other intangible assets such as trademarks or other intellectual property arising from acquisitions;

prevent, or successfully temper, adverse market reaction to acquisitions;

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 fail to manage our growth, we may need to improve our operational, financial and management systems and processes which may require significant capital expenditures and allocation of valuable management and employee resources. As we continue to grow, we must effectively integrate, develop and motivate new employees, including employees in international markets, while maintaining the beneficial aspects of our company culture. If we do not manage the growth of our business and operations effectively, the quality of our platform and efficiency of our operations could suffer, which could harm our brand, results of operations and business.

We cannot assure you that these investments will be successful or that such endeavors will result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that may be possible or that we will achieve these benefits within a reasonable period of time.


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Risks Relating to Our Common Stock

Our failure to meet the continued listing requirements of the Nasdaq Stock Market could result in a delisting of our common stock.

On April 27, 2023, we received a written notice from the Nasdaq Listing Qualifications Department notifying us that, pursuant to Nasdaq Listing Rule 5550(b)(3), we are required to maintain a minimum of $500,000 in net income from continuing operations in the most recently completed fiscal year, or two of the last three fiscal years (the “Net Income Standard”). Since our 2022 Form 10-K reported net loss from continuing operations, and as of April 25, 2023, we did not meet the alternative continued listing standards (collectively, with the Net Income Standard, the “Continued Listing Standards”) under Nasdaq Listing Rule 5550(b) of a minimum stockholders' equity of $2.5 million or minimum market value of listed securities of $35 million, we no longer comply with the Continued Listing Standards.

In accordance with Nasdaq Listing Rule 5810(c)(2)(A), on June 12, 2023 we submitted a plan to regain compliance with the Continued Listing Standards to the Nasdaq Listing Qualifications Department. On July 24, 2023, the Nasdaq Listing Qualifications Department notified us that it was granting us until October 24, 2023 (the “Extension Period”) to file a report with the SEC and Nasdaq stating that we have successfully executed our plan to regain compliance with the Continued Listing Standards and that we did in fact regain such compliance. We were not able to regain compliance with the Continued Listing Standards by October 24, 2023 and, on October 26, 2023, we received a staff determination letter from Nasdaq indicating that we did not regain compliance with the Continued Listing Standards and that, unless we request an appeal of Nasdaq’s determination, our common stock was subject to delisting.

We appealed Nasdaq’s delisting determination to a Hearings Panel (the “Panel”) and were notified by Nasdaq that we have been granted a hearing with the Panel on February 1, 2024. On January 16, 2024, we received an additional delisting determination from Nasdaq because we were unable to hold an annual meeting of stockholders within 12 months of the end of our 2022 fiscal year pursuant to Nasdaq rule 5620(a). The determination letter stated that the failure to comply with Nasdaq rule 5620(a) will be considered as part of our hearing with the Panel on February 1, 2024. Our common stock will continue to be listed and traded on the Nasdaq Capital Market pending a decision by the Panel.

Our failure to meet the continued listing requirements as described above or in the future could result in a delisting of our common stock. A delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, customers and employees and potential loss of business development opportunities. A delisting from Nasdaq could adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly impact the ability of investors to trade our securities and would negatively impact the value and liquidity of 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, 2020 through January 29, 2024, the high and low sales prices for our common stock were $67.00 and $0.32, respectively (as adjusted for the Reverse Split). The 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; and

minimal third-party research regarding Remark.


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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. Such broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance.


Holders of our warrants will have no rights as a common stockholder until they exercise their warrants and acquire our common stock.

Until a holder of our warrants acquires shares of our common stock upon exercise of such warrants, such holder will have no rights with respect to shares of our common stock issuable upon exercise of the warrants. Upon exercise of warrants by, the holder shall become entitled to exercise the rights of a common stockholder only as to matters for which the record date occurs after the exercise date.


A significant number of additional shares of our common stock may be issued under the terms of existing securities, which issuances would substantially dilute existing stockholders and may depress the market price of our common stock.

As of January 29, 2024, we had outstanding stock options allowing for the purchase of as many as approximately 1.6 million shares of common stock. Also outstanding were (i) an obligation to issue common stock related to the debentures we issued to Ionic in March 2023 and April 2023 (the “Debentures”) and related to draws we have made under a common stock purchase agreement with Ionic, (ii) shares of common stock issuable upon exercise of a warrant we issued to Armistice Capital Master Fund Ltd. in a private placement (the “Investor Warrant”), which is exercisable for up to 423,729 shares of common stock, (iii) warrants to purchase up to an aggregate of 12,712 shares of our common stock issued to A.G.P./Alliance Global Partners and its designees (the “Financial Advisor Warrants”), which are exercisable for up to an aggregate of 12,712 shares of common stock, (iv) warrants we issued as part of the consideration for our acquisition of assets of China Branding Group Limited (“CBG”), providing for the right to purchase 4,000 shares of common stock at a per share exercise price of $100.00 (the “CBG Acquisition Warrants”), and (v) warrants we issued pursuant to a settlement agreement that we entered into with CBG and its joint official liquidators, providing for the right to purchase 571,000 shares of common stock at a per share exercise price of $60.00 (the “CBG Settlement Warrants”).

The Investor Warrant is immediately exercisable and will expire on October 31, 2027. However, we are prohibited from effecting an exercise of the Investor Warrant, and the holder thereof will not have the right to exercise any portion of its Investor Warrant, to the extent that, as a result of such exercise, the warrant holder would beneficially own more than 4.99% of the outstanding shares of our common stock immediately after giving effect to the issuance of shares of issuable upon exercise of the Investor Warrant. The Financial Advisor Warrants are immediately exercisable and will expire on the five-year anniversary of the date of issuance.

The CBG Acquisition Warrants and the CBG Settlement Warrants are exercisable on a cashless basis only, such that they cannot be exercised for the entire amount of shares purchasable under such warrants, and 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 under the terms thereof.

The issuance of common stock pursuant to the warrants and the Debentures 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.


Provisions in our corporate charter documents and under Delaware law could make an acquisition of Remark 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 (the “DGCL”), which may
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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 (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.

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.
 

THE IONIC TRANSACTIONS

General

Pursuant to the Amended ELOC Purchase Agreement, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Ionic to purchase up to an aggregate of $50,000,000 of shares of our common stock over the 36-month term of the Amended ELOC Purchase Agreement.


Purchase of Shares under the Amended ELOC Purchase Agreement

We have the right to present Ionic with additional Purchase Notices, each one directing Ionic to purchase any amount up to $3,000,000 of our common stock per trading day, at a per share price equal to 80% (subject to decrease under certain circumstances) of the average of the two lowest VWAPs over a specified measurement period (as described below).

Under the Amended ELOC Purchase Agreement, no later than two trading days after Ionic receives a valid Purchase Notice (the “Regular Purchase Notice Date”), we are required to cause our transfer agent to deliver to Ionic such number of shares of common stock (the “Pre-Settlement Regular Purchase Shares”) equal to the product of (A) the quotient of (y) the purchase amount divided by (z) 80% of the closing price of our common stock on the date immediately preceding the Regular Purchase Notice Date (the “Pre-Settlement Regular Purchase Price”) and as to which Ionic shall be the owner thereof as of such time of delivery of such Pre-Settlement Regular Purchase Shares, multiplied by (B) 125%.

Then, no later than two trading days after the Regular Purchase Measurement Period, as defined below (the “Regular Purchase Settlement Date”), we are required to cause our transfer agent to deliver to Ionic such number of shares of common stock (the “Settlement Regular Purchase Shares”) equal to the purchase amount divided by the Regular Purchase Price, which is equal to 80% (the “RPP Percentage”) of the arithmetic average of the two lowest daily VWAPs during the Regular Purchase Measurement Period; provided, however, that the number of shares of common stock to be delivered on the Regular Purchase Settlement Date shall be reduced by the number of Pre-Settlement Regular Purchase Shares delivered. If the number of Pre-Settlement Regular Purchase Shares delivered to Ionic exceeds the number of Settlement Regular Purchase Shares, then Ionic is required to return the excess shares. The “Regular Purchase Measurement Period” is the period starting on the trading day immediately following the receipt of Pre-Settlement Regular Purchase Shares and ending on the trading day immediately following the date upon which the aggregate dollar volume of our common stock traded on the Nasdaq Capital Market equals five times the purchase amount, in the aggregate, subject to a five trading day minimum. Though the Amended ELOC Purchase Agreement generally only permits us to issue a Purchase Notice when any previous measurement periods have completed, such limitation does not apply (i.e., we can issue Purchase Notices during ongoing measurement
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periods) as long as the dollar amount of outstanding Purchase Notices for which we have not been able to issue all shares of our common stock related to such Purchase Notices as a result of the Beneficial Ownership Limitation is less than $7,000,000.

With each purchase under the Amended ELOC Purchase Agreement, we are also required to deliver to Ionic the Commitment Shares, which is equal to 2.5% of the number of shares of common stock deliverable upon such purchase. The Commitment Shares shall be issued to Ionic on the Regular Purchase Settlement Date. The number of shares that we can issue to Ionic from time to time under the Amended ELOC Purchase Agreement shall be subject to the Beneficial Ownership Limitation.

In addition, Ionic will not be required to buy any shares of our common stock pursuant to a Purchase Notice on any trading day on which the closing trade price of our common stock is below $0.25 (as amended by the January Letter Agreement). We will control the timing and amount of sales of our common stock to Ionic. Ionic has no right to require any sales by us, and is obligated to make purchases from us as directed solely by us in accordance with the Amended ELOC Purchase Agreement. The Amended ELOC Purchase Agreement provides that we will not be required or permitted to issue, and Ionic will not be required to purchase, any shares under the Amended ELOC Purchase Agreement if such issuance would violate Nasdaq rules, and we may, in our sole discretion, determine whether to obtain stockholder approval to issue shares in excess of 19.99% of our outstanding shares of common stock if such issuance would require stockholder approval under Nasdaq rules.

Pursuant to a letter agreement dated January 5, 2023, the parties agreed, among other things, to waive certain requirements in the Original ELOC Purchase Agreement to allow for a one-time $500,000 purchase under the Original ELOC Purchase Agreement. As partial consideration for the waiver to allow for the $500,000 purchase by Ionic, we issued to Ionic 200,715 shares of our common stock.

Actual sales of Purchase Shares under the Amended ELOC Purchase Agreement to Ionic will depend on a variety of factors to be determined by us from time to time, including, among others, satisfaction of certain conditions including, without limitation, the effectiveness of this and other resale registration statements, market conditions, the trading price of our common stock and determinations by us as to the appropriate sources of funding for us and our operations. We expect to use the net proceeds from any sale of shares to Ionic under the Amended ELOC Purchase Agreement for general corporate purposes, which may include working capital, and repayment of our senior debt as described under “Use of Proceeds.”

The purchase price of the Purchase Shares purchased by Ionic under the Amended ELOC Purchase Agreement will be derived from the market prices of our common stock. We will control the timing and amount of future sales, if any, of Purchase Shares to Ionic. Ionic has no right to require us to sell any Purchase Shares to Ionic, but Ionic is obligated to make purchases as we direct, subject to certain conditions.

As of the date of this prospectus, 20,000,000 shares are being registered on the registration statement of which this prospectus forms a part, all of which will be issuable under the Amended ELOC Purchase Agreement. Shares issuable under the Amended ELOC Purchase Agreement, if and when they are sold pursuant to the terms of the Amended ELOC Purchase Agreement, will be sold at a per share price equal to 80% (subject to decrease under certain circumstances) of the average of the two lowest VWAPs over a specified measurement period as described above.

The Amended ELOC Purchase Agreement and the Registration Rights Agreement each contain representations, warranties, covenants, closing conditions and indemnification and termination provisions by, between and for the benefit of the parties which are customary of transactions of this nature. Additionally, sales to Ionic under the Amended ELOC Purchase Agreement may be limited, to the extent applicable, by Nasdaq and SEC rules.

Ionic may not assign or transfer its rights and obligations under the Amended ELOC Purchase Agreement.


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Our Termination Rights

While the Original ELOC Purchase Agreement could have been terminated by us if certain conditions to commence had not been satisfied by December 31, 2022, we and Ionic agreed that all conditions for commencement under the Amended ELOC Purchase Agreement were satisfied and the parties have commenced transacting under the Amended ELOC Purchase Agreement. The Amended ELOC Purchase Agreement may also be terminated by us at any time after commencement, at our discretion; provided, however, that if we sold less than $25,000,000 to Ionic (other than as a result of our inability to sell shares to Ionic as a result of the Beneficial Ownership Limitation, our failure to have sufficient shares authorized or our failure to obtain stockholder approval to issue more than 19.99% of our outstanding shares), we will pay to Ionic a termination fee of $500,000, which is payable, at our option, in cash or in shares of common stock, as Additional Commitment Shares, at a price equal to the closing price on the day immediately preceding the date of receipt of the termination notice. Further, the Amended ELOC Purchase Agreement will automatically terminate on the date that we sell, and Ionic purchases, the full $50,000,000 amount under the agreement or, if the full amount has not been purchased, on the expiration of the 36-month term of the Amended ELOC Purchase Agreement.


Events of Default under Amended ELOC Purchase Agreement

Events of default under the Amended ELOC Purchase Agreement include the following:

the effectiveness of a registration statement registering the resale of the shares of common stock issued to Ionic pursuant to the Amended ELOC Purchase Agreement or Debentures lapses for any reason (including, without limitation, the issuance of a stop order or similar order) or any such registration statement (or the prospectus forming a part thereof) is unavailable to Ionic for resale of any or all of the shares of common stock issuable under the Amended ELOC Purchase Agreement or the Debentures, and such lapse or unavailability continues for a period of ten (10) consecutive business days or for more than an aggregate of thirty (30) business days in any 365-day period;
         
the suspension of our common stock from trading on the Nasdaq Capital Market for a period of one (1) business day, provided that we may not direct Ionic to purchase any of our common stock during any such suspension;
         
the failure for any reason by us or our transfer agent to deliver the Pre-Settlement Regular Purchase Shares to Ionic within two (2) trading days after the Regular Purchase Notice Date, (ii) the Settlement Regular Purchase Shares to Ionic within two (2) trading days after the Regular Purchase Measurement Period, or (iii) the Commitment Shares to which Ionic is entitled under the Amended ELOC Purchase Agreement in connection with a regular purchase within two (2) trading days after the Regular Purchase Measurement Period;

we breach any representation or warranty in any material respect, or breach any covenant or other term or condition under the Debenture, Debenture Purchase Agreement or Registration Rights Agreement, and except in the case of a breach of a covenant which is reasonably curable, only if such breach continues for a period of at least three (3) consecutive business days;
         
if any person commences a proceeding against us pursuant to or within the meaning of any bankruptcy law for so long as such proceeding is not dismissed;
         
if we are at any time insolvent, or, pursuant to or within the meaning of any bankruptcy law, (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors or (v) we are generally unable to pay its debts as the same become due;
         
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a court of competent jurisdiction enters an order or decree under any bankruptcy law that (i) is for relief against us in an involuntary case, (ii) appoints a custodian of the Company for all or substantially all of its property, or (iii) orders the liquidation of the Company or any subsidiary for so long as such order, decree or similar action remains in effect; or
         
if at any time we are not eligible to transfer our common stock as DWAC shares.
If an Event of Default occurs between the Regular Purchase Notice Date and any time through the Regular Purchase Settlement Date, then (i) the RPP Percentage shall be automatically adjusted to 60% for so long as such Event of Default remains uncured and (ii) Ionic shall be entitled to all the rights under the Amended ELOC Purchase Agreement as if such Event of Default occurred immediately prior to such Regular Purchase Notice Date.

In addition to any other rights and remedies under applicable law and the Amended ELOC Purchase Agreement, so long as an Event of Default has occurred and is continuing, or if any event which, after notice and/or lapse of time, would become an Event of Default, has occurred and is continuing, the Company shall not deliver to Ionic any Purchase Notice. There is no guarantee that we will not default on our obligations under the ELOC Purchase Agreement or under the Registration Rights Agreement, as defined below, which would require us to pay damages as partial relief to Ionic in either shares or cash or negatively impact our ability to utilize the ELOC.

On January 24, 2024, Ionic notified us that we were in default under the Amended ELOC Purchase Agreement such that the per share price under currently outstanding Purchase Notices (as defined on page 20) is 60% of the average of the two lowest VWAPs over the specified measurement period. Any additional shares sold pursuant to Purchase Notices submitted prior to the date when the registration statement of which this prospectus forms a part is declared effective will be sold at a per share price equal to 60% of the average of the two lowest VWAPs over a specified measurement period, while any shares sold pursuant to Purchase Notices submitted subsequent to the date when the registration statement of which this prospectus forms a part is declared effective will be sold at a per share price equal to 80% (subject to decrease under certain circumstances).
Registration Rights Agreement

Concurrently with entering into the Original ELOC Purchase Agreement, we also entered into registration rights agreement with Ionic (the “Registration Rights Agreement”), in which we agreed to file one or more registration statements, as necessary, to register under the Securities Act of 1933 (the “Securities Act”) the resale of the shares of our common stock issuable to Ionic under the Amended ELOC Purchase Agreement and the shares of common stock that may be issued to Ionic if we fail to comply with our obligations in the Registration Rights Agreement. The SEC has already declared the initial registration statement effective, but we must file any additional registration statements within 14 days of the need to register additional shares arising and use commercially reasonable efforts to have such resale registration statements declared effective by the SEC on or before the earlier of (i) 30 days after filing (or 90 days if such registration statement is subject to full review by the SEC) and (ii) the 2nd business day after we are notified we will not be subject to further SEC review.

If we fail to timely file such registration statements, then we will be required to issue to Ionic, as partial relief for damages to Ionic, 150,000 shares of common stock (the “Filing Default Shares”) within two trading days after such failure. If we fail to have such registration statement declared effective by the specified deadline, then we will be required to issue to Ionic as 150,000 shares of common stock (the “Effectiveness Default Shares”) within two trading days after such failure.


No Short-Selling or Hedging by Ionic

Ionic has agreed that neither it nor any of its agents, representatives and affiliates will engage in any direct or indirect short-selling or hedging of our common stock during any time before termination of the Amended ELOC Purchase Agreement.

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Prohibition on Variable Rate Transactions

Until the earlier of the date of termination of the Amended ELOC Purchase Agreement or the 36-month maturity date of the commencement date of the Amended ELOC Purchase Agreement subject to the satisfaction of certain conditions, we are prohibited from effecting or entering into any “Variable Rate Transaction.” For purposes of this prohibition, a “Variable Rate Transaction” is a transaction in which we (i) issue or sell convertible securities, where the conversion, exercise or exchange price is based upon or varies with the trading price of our common stock after the initial issuance of such securities, or the conversion, exercise or exchange price is subject to being reset at some future date or upon the occurrence of specified or contingent events related to our business or the market for our common stock, (ii) issue or sell any securities either at a price that is subject to being reset at some future date or upon the occurrence of specified or contingent events relating to our business or the market for our common stock or that is subject to or contain any put, call, redemption, buy-back, price-reset or other similar provision or mechanism that provides for the issuance of additional equity securities or payment of cash by us, or (iii) enter into any agreement, including without limitation an equity line or at-the-market offering (subject to certain limited exceptions), whereby we may sell shares at a future determined price.


Dilutive Effect on Our Stockholders

All 20,000,000 shares of our common stock registered in this offering which may be issued or sold by us to Ionic under the Amended ELOC Purchase Agreement and Registration Rights Agreement are expected to be freely tradable. It is anticipated that the common stock registered in this offering will be sold by us to Ionic from time to time until the date that is approximately 36 months following the satisfaction of the commencement conditions under the Amended ELOC Purchase Agreement. The sale by Ionic of a significant amount of our common stock registered in this offering at any given time could cause the market price of our common stock to decline and to be highly volatile. Sales of our common stock to Ionic, if any, will depend upon market conditions and other factors to be determined by us. We may ultimately issue or sell to Ionic all, some or none of the shares of common stock available under the Amended ELOC Purchase Agreement. The Purchase Shares that we may sell under the Amended ELOC Purchase Agreement are sold with a forward pricing mechanism and as of the date of this registration statement, the conversion price and the purchase price have yet to be calculated.

Issuances of our common stock in this offering will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted as a result of any such issuance. Although the number of our common stock that our existing stockholders own will not decrease, the shares owned by our existing stockholders will represent a smaller percentage of our total outstanding shares after any such issuance to Ionic. If and when we do sell our common stock to Ionic under the Amended ELOC Purchase Agreement, after Ionic has acquired those shares, Ionic may resell all, some or none of such shares at any time or from time to time in its discretion. Therefore, issuances to Ionic by us under the Amended ELOC Purchase Agreement may result in substantial dilution to the interests of other holders of our common stock. In addition, if we sell a substantial number of our common stock to Ionic under the Amended ELOC Purchase Agreement, or if investors expect that we will do so, the actual sales of our common stock or the mere existence of our arrangement with Ionic may 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 wish to effect such sales. However, we have the right to control the timing and amount of any additional sales of Purchase Shares to Ionic and the Amended ELOC Purchase Agreement may be terminated by us at any time at our discretion (see subsection entitled “Our Termination Rights” above).

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The following table sets forth the amount of gross proceeds we would receive from Ionic from our issuance and sale of 19,512,195 shares to Ionic under the Amended ELOC Purchase Agreement registered hereunder (assuming 487,805 are issuable as Commitment Shares) at varying purchase prices:

Assumed Purchase Price Per Purchase Share (3)Number of Shares to be Issued if Full Purchase (1)Percentage of Outstanding Common Stock After Giving Effect to the Issuance to Ionic (2)Proceeds from the Sale of Common Stock to Ionic Under the Amended ELOC Purchase Agreement
$0.5019,512,195 28.6 %$9,756,098
$0.7519,512,195 28.6 %$14,634,146
$1.0019,512,195 28.6 %$19,512,195
$1.2519,512,195 28.6 %$24,390,244
$1.5019,512,195 28.6 %$29,268,293
$1.7519,512,195 28.6 %$34,146,341
$2.0819,512,195 28.6 %$40,585,366


(1)We are registering up to 20,000,000 shares of our common stock which would be issuable to Ionic pursuant to the Amended ELOC Purchase Agreement. Of such 20,000,000 shares, 19,512,195 shares would be issuable as Purchase Shares and 487,805 shares would be issuable as Commitment Shares. The above table assumes that sales are made to Ionic without regard for the 4.99% Beneficial Ownership Limitation.

(2)The denominator is based on 28,722,820 shares outstanding as of January 29, 2024, adjusted to include the issuance of the number of our common stock set forth in the adjacent column which we would have issued to Ionic under the Amended ELOC Purchase Agreement based on the applicable assumed purchase price per Purchase Share.

(3)For the avoidance of any doubt, this price would reflect the purchase price after calculation (i.e., after discounts to the market price of our shares) in accordance with the terms of the Amended ELOC Purchase Agreement.


USE OF PROCEEDS

All of the securities offered by this prospectus are being registered for the account of the selling stockholder. We will not receive any of the proceeds from the sale of these securities. We have agreed to pay all costs, expenses and fees relating to the registration of the securities covered by this prospectus. The selling stockholder will bear all commissions and discounts, if any, attributable to the sale of the securities. The prices at which the shares of common stock covered by this prospectus may actually be sold will be determined by the prevailing public market price for shares of our common stock, by negotiations between the selling stockholder and buyers of our common stock in private transactions or as otherwise described in “Plan of Distribution.”

However, we have received $9,350,000 in gross proceeds pursuant to prior sales under the Amended ELOC Purchase Agreement and we may receive additional gross proceeds of as much as $40,650,000 from the sale of shares under the Amended ELOC Purchase Agreement to Ionic. We intend to use the net proceeds from any sale of shares to Ionic under the Amended ELOC Purchase Agreement for general corporate purposes, which may include working capital, and repayment of our senior secured loans payable to certain institutional lenders affiliated with Mudrick Capital Management, LP (collectively, “Mudrick”). Such outstanding loans matured on October 31, 2023 and currently bear interest at 22.5% per annum due to continuing events of default. We are actively engaged in discussions with Mudrick regarding a resolution of the events of default and have made progress in such discussion such that we believe we are close to a resolution. This anticipated use of net proceeds from the sale of our common stock to Ionic under the Amended ELOC Purchase Agreement represents our intentions based upon our current plans and business conditions.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table presents information with respect to the beneficial ownership of our Common Stock as of January 29, 2024, by:
 
each person, or group of affiliated persons, known to us to beneficially own more than 5% of the outstanding Common Stock;

each of our directors and named executive officers (“NEOs”); and

all of our current directors and executive officers as a group.
 

The amounts and percentages of beneficially-owned Common Stock are reported based upon SEC rules governing the determination of beneficial ownership of securities. The SEC rules:

deem a person 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 if that person has or shares investment power, which includes the power to dispose of or to direct the disposition of a security;

deem a person a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days, and 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 ownership percentage; and

may deem more than one person a beneficial owner of the same securities, and may deem a person a beneficial owner of securities as to which such person has no economic interest.


Except as otherwise indicated in these footnotes, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the indicated shares of Common Stock. The information relating to our 5% beneficial owners is based on information we received from such holders. The percentage of beneficial ownership is based on 28,722,820 shares of Common Stock outstanding as of January 29, 2024.

Except as otherwise noted below, the address of persons listed in the following table is:

c/o Remark Holdings, Inc.
800 S. Commerce St.
Las Vegas, Nevada 89106


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 Number of Common Stock SharesPercentage of Outstanding Common Stock Shares
Persons known to beneficially own more than 5%
None
Directors and NEOs
Kai-Shing Tao 1
1,020,062 3.5 %
Theodore Botts 2
69,767 *
Brett Ratner 3
35,000 *
Daniel Stein 3
30,000 *
Elizabeth Xu 3
15,000 *
All executive officers and directors as a group (5 persons)1,169,829 4.0 %

* Represents holdings of less than 1% of shares outstanding.

1.Consists of (i) 23,474 shares of Common Stock held by Mr. Tao, (ii) 442,275 shares of Common Stock issuable upon exercise of options held by Mr. Tao which are currently exercisable, (iii) 524,631 shares of Common Stock held by Digipac, (iv) 27,500 shares of Common Stock held by Pacific Star Capital and (v) 2,182 shares of Common Stock held by Pacific Star HSW LLC (“Pacific Star HSW”). Mr. Tao, as the manager and a member of Digipac, the Chief Investment Officer and sole owner of Pacific Star Capital, and the control person of Pacific Star HSW, may be deemed to beneficially own the shares of Common Stock beneficially owned by Digipac, Pacific Star Capital and Pacific Star HSW. Mr. Tao disclaims beneficial ownership of the shares of Common Stock beneficially owned by Digipac and Pacific Star HSW, except to the extent of his pecuniary interest therein.

2.Consists of 21,982 shares of Common Stock held by Mr. Botts and 47,785 shares of Common Stock issuable upon exercise of options held by Mr. Botts which are currently exercisable.

3.Consists of shares of Common Stock issuable upon exercise of options which are currently exercisable.


SELLING STOCKHOLDER

The securities offered under this prospectus may be offered from time to time by the selling stockholder named below or by any of their respective pledgees, donees, transferees or other successors-in-interest. As used in this prospectus, the term “selling stockholder” includes the selling stockholder identified below and any donees, pledgees, transferees or other successors-in-interest selling shares received after the date of this prospectus from the selling stockholder as a gift, pledge or other non-sale related transfer. The selling stockholder named below acquired the shares of our common stock being offered under this prospectus directly from us. We issued the securities to the selling stockholder in reliance on an exemption from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder.

The following table sets forth as of January 29, 2024: (1) the name of the selling stockholder for whom we are registering shares of our common stock under the registration statement of which this prospectus is a part, (2) the number of shares of our common stock beneficially owned by the selling stockholder prior to the offering, determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (3) the number of shares of our common stock that may be offered by the selling stockholder under this prospectus and (4) the number of shares of our common stock to be owned by the selling stockholder after completion of this offering. We will not receive any of the proceeds from the sale of the shares of our common stock offered under this prospectus. The amounts and information set forth below are based upon information provided to us by the selling stockholder or its representatives, or on our records, as of January 29, 2024. The percentage of

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beneficial ownership for the following table is based on 28,722,820 shares of our common stock outstanding as of January 29, 2024.

To our knowledge, except as indicated in the footnotes to this table, the security holder named in the table has sole voting and investment power with respect to all securities shown in the table to be beneficially owned by the security holder. Except for the convertible subordinated debenture that we issued to Ionic on October 6, 2022 in the original principal amount of $2,778,000, the convertible debenture that we issued on March 14,2023 to Ionic in the original principal amount of $1,667,000 for a purchase price of $1,500,000, which was issued on March 14, 2023, and the convertible debenture issued in April 12, 2023 in the original principal amount of $1,111,000, the selling stockholder has not had any position, office or other material relationship with us or any of our predecessors or affiliates within the past three years. In addition, based on information provided to us, the selling stockholder, if an affiliate of broker-dealer, has not purchased the securities outside the ordinary course of business or, at the time of their acquisition of such securities, had any agreements, understandings or arrangements with any other persons, directly or indirectly, to dispose of the securities. Information concerning the selling stockholder may change from time to time, and any changed information will be set forth in supplements to this prospectus to the extent required.

Name of Selling StockholderShares of Common Stock Beneficially Owned Prior to the OfferingNumber of Shares Being Offered
Shares of Common Stock Beneficially Owned After Completion of the Offering (1)
NumberPercentageNumberPercentage
Ionic Ventures, LLC (2)
820,864 (3)2.86%20,000,000 2,431,269 (3)4.99%
_______________


(1)Assumes all securities being offered under this prospectus are sold. The percentage of beneficial ownership after completion of the offering is based on 48,722,820 shares of common stock, consisting of 28,722,820 shares of common stock outstanding as of January 29, 2024 and the 20,000,000 shares of common stock being offered under this prospectus.

(2)Brendan O’Neil and Keith Coulston are the managers of Ionic Ventures, LLC and in such capacity have joint voting and dispositive power over shares held by Ionic Ventures, LLC. Mr. O’Neil and Mr. Coulston each disclaim beneficial ownership of the reported securities except to the extent of their pecuniary interest therein. Ionic Ventures, LLC is not a licensed broker dealer or an affiliate of a licensed broker dealer. The address of Ionic Ventures, LLC is 3053 Fillmore Street, Ste. 256, San Francisco, CA 94123.

(3)The number of shares held by the selling stockholder prior to and after this offering is limited by the restriction on its ability to beneficially own more than 4.99% of our outstanding common stock pursuant to the Amended ELOC Purchase Agreement and the Debentures.


MARKET INFORMATION FOR SECURITIES AND DIVIDEND POLICY

Our common stock is currently listed on the Nasdaq Capital Market under the symbol “MARK.” The last reported sale price of our common stock on Nasdaq on January 29, 2024 was $0.34 per share.


Holders of Record

As of January 29, 2024, we had approximately 73 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, this number is not indicative of the total number of stockholders.



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Dividends

We have not declared or paid cash dividends to stockholders since inception. We currently intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination to pay cash dividends on our common stock will be made at the discretion of our Board of Directors and will depend on various factors, including applicable laws, our results of operations, financial condition, future prospects, the terms of our outstanding indebtedness, and any other factors deemed relevant by our Board of Directors.


Issuer Purchases of Equity Securities

None.


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the accompanying “Index to Consolidated Financial Statements” included in this prospectus. Data as of and for the periods ended December 31, 2022 and 2021 has been derived from our audited financial statements included in this prospectus. Data as of and for the three and nine months ended September 30, 2023 and 2022 has been derived from our unaudited condensed financial statements included in this prospectus. Results for any interim period should not be construed as an inference of what our results would be for any full fiscal year or future period. This discussion and other parts of this prospectus contain forward-looking statements, such as those relating to our plans, objectives, expectations, intentions, and beliefs, which involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this prospectus.


Overview

We are a diversified global technology business with leading AI and data-analytics, as well as a portfolio of digital media properties.


Our Business

Corporate Structure

We are a holding company incorporated in Delaware and not a Chinese operating company. As a holding company, we conduct most of our operations through our subsidiaries, each of which is wholly owned. Until September 2022, we had historically conducted a significant part of our operations through contractual arrangements between our WFOE and certain VIEs based in China to address challenges resulting from laws, policies and practices that may disfavor foreign-owned entities that operate within industries deemed sensitive by the Chinese government. We were the primary beneficiary of the VIEs because the contractual arrangements governing the relationship between the VIEs and our WFOE, which included an exclusive call option agreement, exclusive business cooperation agreement, a proxy agreement and an equity pledge agreement, enabled us to (i) exercise effective control over the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive call option to purchase, at any time, all or part of the equity interests in and/or assets of the VIEs to the extent permitted by Chinese laws. Because we were the primary beneficiary of the VIEs, we consolidated the financial results of the VIEs in our consolidated financial statements in accordance with GAAP.


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We terminated all of the contractual arrangements between the WFOE and the VIEs and exercised our rights under the exclusive call option agreements between the WFOE and the VIEs such that, effective as of September 19, 2022, we obtained 100% of the equity ownership of the entities we formerly consolidated as VIEs and which we now consolidate as wholly-owned subsidiaries.

The following diagram illustrates our corporate structure, including our significant subsidiaries, as of the date of this prospectus. The diagram omits certain entities which are immaterial to our results of operations and financial condition.



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remarkorgchart-oct2022novie.jpg


We are subject to certain legal and operational risks associated with having a significant portion of our operations in China. Chinese laws and regulations governing our current business operations, including the enforcement of such laws and regulations, are sometimes vague and uncertain and can change quickly with little advance notice. The Chinese government may intervene in or influence the operations of our China-based subsidiaries at any time and may exert more control over offerings conducted overseas and/or foreign investment in

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China-based issuers, which could result in a material change in our operations and/or the value of our securities. In addition, any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors and cause the value of such securities to significantly decline or become worthless. In recent years, the Chinese government adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to the use of variable interest entities, cybersecurity, data security, export control and anti-monopoly concerns. As of the date of this prospectus, we have neither been involved in any investigations on cybersecurity review initiated by any Chinese regulatory authority, nor received any inquiry, notice or sanction. As of the date of this prospectus, no relevant laws or regulations in China explicitly require us to seek approval from the CSRC for any securities listing. As of the date of this prospectus, we have not received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC or any other Chinese governmental authorities relating to securities listings. However, since these statements and regulatory actions are newly published, official guidance and related implementation rules have not all been issued. It is highly uncertain what potential impact such modified or new laws and regulations will have on our ability to conduct our business, accept investments or list or maintain a listing on a U.S. or foreign exchange.

As of the date of this prospectus, we are not required to seek permissions from the CSRC, the CAC or any other entity that is required to approve our operations in China. Nevertheless, Chinese regulatory authorities may in the future promulgate laws, regulations or implement rules that require us or our subsidiaries to obtain permissions from such regulatory authorities to approve our operations or any securities listing.


Holding Foreign Companies Accountable Act

The HFCA Act was enacted on December 18, 2020. The HFCA Act states that if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such shares from being traded on a national securities exchange or in the over the counter trading market in the United States. On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction. The Consolidated Appropriations Act, 2023, which was signed into law on December 29, 2022, amended the HFCA Act to reduce the number of consecutive non-inspection years required to trigger the trading prohibition under the HFCA Act from three years to two years.

On December 16, 2021, the PCAOB issued a report on its determination that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by Chinese and Hong Kong authorities in those jurisdictions.

On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed the Protocol, taking the first step toward opening access for the PCAOB to completely inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong.

On December 15, 2022, the PCAOB vacated its 2021 determination that the positions taken by authorities in mainland China and Hong Kong prevented it from inspecting and investigating completely registered public accounting firms headquartered in those jurisdictions. In view of the PCAOB’s decision to vacate its 2021 determination and until such time as the PCAOB issues any new adverse determination, the SEC has stated that there are no issuers at risk of having their securities subject to a trading prohibition under the HFCA Act. Each year, the PCAOB will reassess its determinations on whether it can inspect and investigate completely audit firms in China, and if, in the future, the PCAOB determines it cannot do so, or if Chinese authorities do not allow the PCAOB complete access for inspections and investigations for two consecutive years, companies engaging China-based public accounting firms would be delisted pursuant to the HFCA Act.


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Our auditor, Weinberg & Company, an independent registered public accounting firm headquartered in the United States is currently subject to PCAOB inspections and has been inspected by the PCAOB on a regular basis. However, if the PCAOB is unable to inspect the work papers of our accounting firm in the future, such lack of inspection could cause trading in our common stock to be prohibited under the HFCA Act, and as a result, an exchange may determine to delist our common stock. The delisting and the cessation of trading of our common stock, or the threat of our common stock being delisted and prohibited from being traded, may materially and adversely affect the value of our common stock.


Transfer of Cash or Assets

Dividend Distributions

As of the date of this prospectus, none of our subsidiaries have made any dividends or distributions to Remark.

We have never declared or paid dividends or distributions on our common equity. We currently intend to retain all available funds and any future consolidated earnings to fund our operations and continue the development and growth of our business; therefore, we do not anticipate paying any cash dividends.

Under Delaware law, a Delaware corporation’s ability to pay cash dividends on its capital stock requires the corporation to have either net profits or positive net assets (total assets less total liabilities) over its capital. If we determine to pay dividends on any of our common stock in the future, as a holding company, we may rely on dividends and other distributions on equity from our subsidiaries for cash requirements, including the funds necessary to pay dividends and other cash contributions to our stockholders.

Our WFOE’s ability to distribute dividends is based upon its distributable earnings. Current Chinese regulations permit our WFOE to pay dividends to its shareholder only out of its registered capital amount, if any, as determined in accordance with Chinese accounting standards and regulations, and then only after meeting the requirement regarding statutory reserve. If our WFOE incurs debt in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us. Any limitation on the ability of our WFOE to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business. In addition, any cash dividends or distributions of assets by our WFOE to its stockholder are subject to a Chinese withholding tax of as much as 10%.

The Chinese government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of China. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. If we are unable to receive all of the revenues from our operations through our China-based subsidiaries, we may be unable to pay dividends on our common stock.


AI Business

We generate revenue by using the proprietary data and AI software platform we developed to deliver AI-based computer vision products, computing devices and software-as-a-service solutions for businesses in many industries. We continue to partner with top universities on research projects targeting algorithm, artificial neural network and computing architectures which we believe will keep us among the leaders in technology development.

The primary focus of our business is promoting and facilitating the safety of our customers and their customers through our Smart Safety Platform (the “SSP”). The SSP, having won numerous industry and government benchmark tests for accuracy and speed, is a leading software solution for using computer vision to detect persons,

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objects and behavior in video feeds. Real-time alerts from the SSP allow operations staff to respond rapidly to prevent any events or activities that can endanger public security or workplace safety.

We deploy the SSP to integrate with each customer’s IT infrastructure, including, in many cases, cameras already in place at the customer’s location(s). When necessary, we also sell and deploy hardware to create or supplement the customer’s monitoring capabilities. Such hardware includes, among other items, cameras, edge computing devices and/or our Smart Sentry units. The Smart Sentry is a large mobile camera unit with a telescoping mast on which a high-quality camera is mounted. Based upon customer needs, the camera may have either standard vision and/or thermal vision capability. The camera works in conjunction with an edge computing device that is also mounted to the unit. The Smart Sentry is an example of how we incorporate the SSP in modern IT architectural concepts, including edge computing and micro-service architectures. Edge computing, for example, allows the SSP to conduct expensive computing tasks at distributed locations without requiring large data transmission over the internet, thereby dramatically reducing costs while integrating numerous and varied sensors at distributed locations.

We customize and sell our innovative AI-based computer vision products and solutions, including the SSP, to customers in the retail, construction, public safety, workplace safety and public sector markets. We have also developed versions of our solutions for application in the transportation and energy markets.


Overall Business Outlook
 
Two primary factors have been affecting our business in recent quarters and occupying our focus as we plan for the future. While we have been dealing with a slow economic recovery in China as municipalities and businesses there try to return to fully-normalized operations following strict preventative measures related to the COVID-19 pandemic, political tensions between the U.S. and China have continued to increase over recent months to a point that such tensions have also impacted our ability to complete projects in China as quickly as we have in the past and as quickly as we had planned during 2023. Management is optimistic that tensions between the U.S. and China will begin to relax after the most-recent summit between such countries’ leaders, but we expect that we may continue to face difficult-to-predict operating results in China for approximately the next 12 months.

While we will continue to work with customers in China, we have been responding to the pandemic-related challenges and political tensions by looking for opportunities to expand our business in the Asia-Pacific region outside of China, where we believe there still are fast-growth AI market opportunities for our solutions, as well as by spending increasing amounts of effort over the past several quarters developing business opportunities in the United States, the U.K., and in Central and South America, where we see demand for AI products and solutions in the workplace, government and public safety markets. During the nine months ended September 30, 2023, we began sales in the U.K. and Brazil, while during the three months ended September 30, 2023, we successfully signed initial contracts to expand our sales into Colombia, Malaysia, and India. Given the lack in those three respective countries and in Brazil of AI companies specializing in computer vision, we believe we have a first-mover advantage with regard to targeting the same industries that we have successfully targeted in China and which we have targeted in the U.S. and U.K. In addition, we anticipate expanding sales into the Middle East during the first quarter of 2024.

In conjunction with the geographic diversification of our business, we believe we can more rapidly and more efficiently develop and increase our market presence in the various industries that we have identified as being most important by establishing business relationships with channel partners. To that end, we have been discussing such relationship possibilities with large, established players in the information technology and burgeoning AI space which could provide us with access to their respective online marketplaces and other sales channels as well.

Despite our efforts, the COVID-19 pandemic, as well as economic and geopolitical conditions in some international regions, could continue to affect our business and we cannot be sure what the ultimate effects will be. We will continue to pursue geographic diversification, but anticipating when, or if, we can close on the opportunities in front of us is difficult. In addition, we may face a large number of well-known competitors which would make deploying our software solutions in the market segments we have identified difficult.

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Inflation and Supply Chain

Other than the impact of inflation on the general economy, we do not believe that inflation has had a material effect on our operations to date. However, there is a risk that our operating costs could be subject to inflationary pressures in the future, which would have the effect of increasing our operating costs and cause additional stress on our working capital resources.

The high level of political tension described above has affected our ability to work with certain vendors in a timely manner. Though we have been able to complete contracts with our customers in China, such political tension has caused delays in the speed at which we can work with certain vendors to deploy our services and complete contracts in China. Also, as we work to increase our sales of computer-vision products and services in the U.S., Europe and South America and thereby geographically diversify our business, we could be subjected to the risk of supply chain disruptions with regard to high-technology products such as servers and related equipment that we use to train our AI software algorithms and which we plan to sell to customers to support operation of our computer-vision products and services.


Critical Accounting Policies

Management’s discussion and analysis of our results of operations and liquidity and capital resources is based upon our financial statements. We prepare our financial statements in conformity with U.S. GAAP. Certain of our accounting policies require that we apply significant judgment in determining the estimates and assumptions for calculating estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. We use, in part, our historical experience, terms of existing contracts, observance of trends in the industry and information obtained from independent valuation experts or other outside sources to make our judgments. We cannot assure you that our actual results will conform to our estimates. We regularly evaluate these estimates and assumptions, particularly in areas we consider to be critical accounting estimates, where changes in estimates and assumptions could have a material impact on our results of operations, financial position and, generally to a lesser extent, cash flows.

Senior management and the Audit Committee of the Board of Directors have reviewed the disclosures included herein about our critical accounting estimates, and have reviewed the processes to determine those estimates.


Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the period. Estimates incorporated into our consolidated financial statements include the reserve for bad debt, inventory reserve, the fair value of stock options issued under our equity incentive plans, and the estimated cash flows we use in assessing the recoverability of long-lived assets. Actual results could differ from those estimates.


Accounting for Share-Based Compensation

For grants of restricted stock or restricted stock units, we measure fair value using the closing price of our stock on the measurement date, while we use the Black-Scholes-Merton option pricing model (the “BSM Model”) to estimate the fair value of stock options and similar instruments awarded.


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The BSM Model requires the following inputs:

Expected volatility of our stock price. We analyze the historical volatility of our stock price utilizing daily stock price returns, and we also review the stock price volatility of certain peers. Using the information developed from such analysis and our judgment, we estimate how volatile our stock price will be over the period we expect the stock options will remain outstanding.

Risk-free interest rate. We estimate the risk-free interest rate using data from the Federal Reserve Treasury Constant Maturity Instruments H.15 Release (a table of rates downloaded from the Federal Reserve website) as of the valuation date for a security with a remaining term that approximates the period over which we expect the stock options will remain outstanding.

Stock price, exercise price and expected term. We use an estimate of the fair value of our common stock on the measurement date, the exercise price of the option, and the period over which we expect the stock options will remain outstanding.

We do not currently issue dividends, but if we did so, then we would also include an estimated dividend rate as an input to the BSM model. Generally speaking, the BSM model tends to be most sensitive to changes in stock price, volatility or expected term.

We measure compensation expense as of the grant date for granted equity-classified instruments and as of the settlement date for granted liability-classified instruments (meaning that we re-measure compensation expense at each balance sheet date until the settlement date occurs).

Once we measure compensation expense, we recognize it over the requisite service period (generally the vesting period) of the grant, net of forfeitures as they occur.


Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06 (“ASU 2020-06”), Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The ASU also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. With regard to our financial reporting, ASU 2020-06 will be effective January 1, 2024, and early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. We are currently evaluating what effect(s) the adoption of ASU 2020-06 may have on our consolidated financial statements, but we do not believe the impact of the ASU will be material to our financial position, results of operations and cash flows. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption.

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Results of Operations

Business Developments During 2023

China’s response to the COVID-19 pandemic, known as the Zero-COVID policy, included lockdowns and/or other severe restrictions on business and daily life in China, which made it difficult for us to interact with our clients and vendors through at least December 2022. As described above, such preventative measures, in addition to a high level of political tension between the U.S. and China, have had lingering economic and operational effects which have made it difficult for us to complete as many projects in China during the nine months ended September 30, 2023 as compared to the same period of the previous year. Our customers have only slowly been able to restart stalled projects or begin new ones. The majority of our completed work was related to a large telecommunications provider in China and concrete producers. We completed certain projects in China during the three months ended September 30, 2023 worth approximately $1.4 million, but the agreement has not yet met the criteria for revenue recognition. Cost associated with the projects for which the agreement has not yet met the criteria for revenue recognition was approximately $1.2 million.

Also, during the three months ended September 30, 2023, we successfully signed initial contracts to expand our sales into Colombia, Malaysia, and India. We have not yet recognized any revenue from such new contracts, and we recognize that these are just the first steps into new markets.

The following table presents our revenue categories as a percentage of total consolidated revenue during the three and nine months ended September 30, 2023 and 2022.
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
AI-based products and services95 %95 %96 %97 %
Advertising and other%%%%


The following tables summarize our operating results for the nine months ended September 30, 2023, and the discussion following the table explains material changes in such operating results compared to the nine months ended September 30, 2022.


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(dollars in thousands)Three Months Ended September 30,Change
20232022DollarsPercentage
Revenue, including amounts from China Business Partner$183 $2,812 $(2,629)(93)%
Cost of revenue254 2,459 (2,205)(90)%
Sales and marketing340 270 70 26 %
Technology and development768 41 727 1,773 %
General and administrative2,843 6,726 (3,883)(58)%
Depreciation and amortization107 43 64 149 %
Total cost and expense4,312 9,539 
Interest expense(949)(1,365)416 (30)%
Finance cost related to obligations to issue common stock(2,086)— (2,086)
Loss on investment— (348)348 (100)%
Other gain (loss), net(8)(493)485 (98)%
Provision for income taxes— (9)(100)%
Net loss(7,172)(8,924)1,752 (20)%


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(dollars in thousands)Nine Months Ended September 30,Change
20232022DollarsPercentage
Revenue, including amounts from China Business Partner$4,176 $10,037 $(5,861)(58)%
Cost of revenue3,220 8,576 (5,356)(62)%
Sales and marketing1,093 606 487 80 %
Technology and development1,504 1,004 500 50 %
General and administrative8,920 14,598 (5,678)(39)%
Depreciation and amortization178 121 57 47 %
Impairments392 — 392 
Total cost and expense15,307 24,905 
Interest expense(3,351)(5,325)1,974 (37)%
Finance cost related to obligations to issue common stock(6,712)— (6,712)
Loss on investment— (26,356)26,356 (100)%
Other gain (loss), net(14)(342)328 (96)%
Provision for income taxes— (9)(100)%
Net loss(21,208)(46,882)25,674 (55)%


Revenue and Cost of Revenue. During the three months ended September 30, 2023, our project completions slowed in China as business and economic recovery efforts that began after China lifted most of its onerous COVID-19 related restrictions at the end of 2022, as well as the noted political tensions between the U.S. and China, continued to make it more difficult than expected for us to complete projects on a steadily increasing pace. As a result of completing fewer projects than expected, revenue lagged behind our performance in the same period of the prior year, which period included projects associated with our work with an unrelated entity (our China Business Partner).

During the nine months ended September 30, 2023, we were unable to complete as many projects in China as we did in the same period of the prior year, primarily due to the slow and methodical business and economic recovery efforts that are ongoing after China lifted most of its onerous COVID-19 related restrictions at the end of 2022.

Cost of revenue during the three and nine months ended September 30, 2023 decreased, in conjunction with the decreases in project completions described above.

Sales and marketing. The addition in late 2022 of three new personnel, including two executive positions, on our sales team caused an increase of $0.3 million in payroll and related expense during the nine months ended September 30, 2023.

Technology and Development. During the three months ended September 30, 2022, we reclassified a refundable tax credit we received from the government of the United Kingdom resulting from our research and development activities in its jurisdiction from Other gain to technology and development expense. The current-year

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tax credit was recorded in a previous quarter during 2023. A modest increase in consulting related to our research and development activities also contributed to the increase in technology and development expense.

During the three months ended September 30, 2023, an increase in consulting related to our research and development activities caused the increase in technology and development expense.

General and administrative. During the three months ended September 30, 2023, we did not have to record any reserve for doubtful accounts, while during the comparable period of the prior year we had to re-evaluate the amounts receivable from customers based on what was then recent information and, as a result, we increased our reserve for doubtful accounts by $2.3 million. We experienced a decrease of approximately $0.8 million in legal and other professional fees primarily because the three months ended September 30, 2022 included expense related to financings and the filing of amendments to registration statements whereas we did not have similar activity during the three months ended September 30, 2023. Also contributing to the overall decrease in general and administrative expense was a decrease of $0.3 million in certain expenses related to business development, including short-term work space rentals. Finally, our share-based compensation expense decreased by $0.5 million due to a large batch of stock options with a grant date of July 8, 2021 becoming fully expensed in January 2023, in comparison to having three months of expense recognition during the three months ended September 30, 2022 and due to the decrease in the number of outstanding China Cash Bonuses.

During the nine months ended September 30, 2023, we did not have to record any reserve for doubtful accounts, while during the comparable period of the prior year we had to re-evaluate the amounts receivable from customers based on what was then recent information and, as a result, we increased our reserve for doubtful accounts by $2.3 million. We experienced a decrease of approximately $0.8 million in legal and other professional fees primarily because the nine months ended September 30, 2022 included expense related to financings and the filing of amendments to registration statements whereas we did not have similar activity during the three months ended September 30, 2023. Also contributing to the overall decrease in general and administrative expense was a decrease of $1.5 million in certain expenses related to business development, including short-term work space rentals. Finally, our share-based compensation expense decreased by $1.3 million due to a large batch of stock options with a grant date of July 8, 2021 becoming fully expensed in January 2023, in comparison to having nine months of expense recognition during the nine months ended September 30, 2022 and due to the decrease in the number of outstanding China Cash Bonuses.

Impairments. During the nine months ended September 30, 2023, we determined that certain costs that we had capitalized to software development in progress would no longer be recoverable and we recorded an impairment of approximately $0.2 million. Also, we recorded an impairment of approximately $0.2 million related to certain prepaid expense amounts which were deemed unrecoverable.

Interest expense. We executed the Original Mudrick Loan Agreements in December 2021, pursuant to which we obtained the Original Mudrick Loans in the aggregate principal amount of $30.0 million. During the nine months ended September 30, 2022, we recorded in interest expense approximately $2.2 million of amortization of debt discount and debt issuance cost related to the Original Mudrick Loans, but did not have any such amortization during the nine months ended September 30, 2023 because the debt discount and debt issuance cost were fully amortized during 2022. Interest expense also decreased because significantly less debt principal was outstanding on the Original Mudrick Loans during the three and nine months ended September 30, 2023 than during the same period of the prior year, even though the interest rate had increased from 16.5% to 20.5%. Partially offsetting the decreases in interest expense was the amendment and extension fee of approximately $0.8 million we recorded in relation to our entry on March 14, 2023 into the New Mudrick Loan Agreement described, along with the Original Mudrick Loan Agreements, in Note 10 in the Notes to Unaudited Condensed Consolidated Financial Statements included in the registration statement of which this prospectus is a part.

Finance Cost Related to Obligations to Issue Common Stock. The finance cost during the three and nine months ended September 30, 2023 resulted from the establishment and remeasurement of obligations to issue our common stock that we incurred in relation to the debentures we issued to Ionic in 2022 and 2023, as well as the ELOC Advances we received from Ionic, all of which is described in Note 11 in the Notes to Unaudited Condensed

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Consolidated Financial Statements included in the registration statement of which this prospectus is a part. We had no similar transactions during the three and nine months ended September 30, 2022.

Loss on investment. On July 1, 2021, as the result of a business combination involving a U.S.-based venture, Sharecare, Inc. (“Legacy Sharecare”) and Falcon Capital Acquisition Corp., a special purpose acquisition company, the common stock of the surviving entity of such business combination (“New Sharecare”) became listed on the Nasdaq Stock Market LLC and our equity in Legacy Sharecare converted into cash and shares of publicly traded common stock of New Sharecare. As a result of the common stock of New Sharecare being traded on a national securities exchange, we were able to remeasure our investment at fair value. Since July 1, 2021, the value of the New Sharecare stock steadily declined, which caused the losses on investment during the three and nine months ended September 30, 2022. On July 11, 2022, we delivered our remaining 6,250,000 shares of New Sharecare to our lender at their request and, as a result, we did not maintain investments during the nine months ended September 30, 2023.

Other gain (loss), net. During the nine months ended September 30, 2022, we accrued $0.4 million of liquidated damages during the second quarter of 2022 related to the Armistice Resale Registration Statement which became effective after the time frame during which we were required to ensure it became effective. We had no similar activity during the nine months ended September 30, 2023.


Liquidity and Capital Resources
 
Overview
 
During the nine months ended September 30, 2023, and in each fiscal year since our inception, we have incurred net losses which have resulted in a stockholders’ deficit of $32.9 million as of September 30, 2023. Additionally, our operations have historically used more cash than they have provided. Net cash used in operating activities was $9.1 million during the nine months ended September 30, 2023. As of September 30, 2023, our cash balance was $0.3 million. Our history of recurring operating losses, working capital deficiencies and negative cash flows from operating activities give rise to, and management has concluded that there is, substantial doubt regarding our ability to continue as a going concern.


Mudrick Loans

On December 3, 2021, we entered into the Original Mudrick Loan Agreements pursuant to which we incurred the Original Mudrick Loans in the aggregate principal amount of $30.0 million. The Original Mudrick Loans initially bore interest at 16.5% per annum until the original maturity date of July 31, 2022 and, following an amendment we entered into with Mudrick in August 2022, bore interest at 18.5% per annum. The amendment also extended the maturity date of the Original Mudrick Loans from July 31, 2022 to October 31, 2022. However, we did not make the required repayment of the Original Mudrick Loans by October 31, 2022, which constituted an event of default under the Original Mudrick Loans and triggered an increase in the interest rate under the Original Mudrick Loans to 20.5%.

On March 14, 2023, we entered into the New Mudrick Loan Agreement pursuant to which all of the Original Mudrick Loans were cancelled in exchange for the New Mudrick Notes in the aggregate principal amount of approximately $16.3 million. The New Mudrick Notes bear interest at a rate of 20.5% per annum, which shall be payable on the last business day of each month commencing on May 31, 2023. The interest rate will increase by 2% and the principal amount outstanding under the New Mudrick Notes and any unpaid interest thereon may become immediately due and payable upon the occurrence of any event of default under the New Mudrick Loan Agreement. All amounts outstanding under the New Mudrick Notes, including all accrued and unpaid interest, will be due and payable in full on October 31, 2023. See Note 10 in the Notes to Unaudited Condensed Consolidated Financial Statements included in the registration statement of which this prospectus is a part for additional information regarding the New Mudrick Notes.

To secure the payment and performance of the obligations under the Original Mudrick Loan Agreements and the New Mudrick Loan Agreement, we, together with the Guarantors, have granted to TMI Trust Company, as

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the collateral agent for the benefit of Mudrick, a first priority lien on, and security interest in, all assets of Remark and the Guarantors, subject to certain customary exceptions.

In connection with our entry into the Original Mudrick Loan Agreements, we paid to Mudrick an upfront fee equal to 5.0% of the amount of the Original Mudrick Loans, which amount was netted against the drawdown of the Original Mudrick Loans. We recorded the upfront fee as a debt discount of $1.5 million, and recorded debt issuance cost totaling $1.1 million. We amortized the discount on the Original Mudrick Loans and the debt issuance cost over the life of the Original Mudrick Loans and, during the year ended December 31, 2022, we amortized $2.2 million of such discount and debt issuance cost. In consideration for the amendment we entered into with Mudrick in August 2022, we paid Mudrick an amendment and extension fee in the amount of 2.0% of the then unpaid principal balance of the Original Mudrick Loans, which was approximately $0.3 million, by adding such amount to the principal balance of the Original Mudrick Loans.

As of the date of this prospectus, the principal amount outstanding, together with interest on the unpaid principal balance of the New Mudrick Notes, is approximately $17.4 million.


Ionic Transactions

On October 6, 2022, we entered into the 2022 Debenture Purchase Agreement with Ionic, pursuant to which we issued the 2022 Debenture to Ionic for a purchase price of $2.5 million.

In connection with the 2022 Debenture, on October 6, 2022, we also entered into the ELOC Purchase Agreement, which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Ionic to purchase up to an aggregate of $50.0 million of shares of our common stock over the 36-month term of the ELOC Purchase Agreement. Under the ELOC Purchase Agreement, after the satisfaction of certain commencement conditions, we have the right to present Ionic with a purchase notice directing Ionic to purchase any amount up to $3.0 million of our common stock per trading day, at the purchase price equal to 90% (or 80% if our common stock is not then trading on Nasdaq) of the average of the five lowest VWAPs of our common stock over a specified measurement period. With each purchase under the ELOC Purchase Agreement, we are required to deliver to Ionic an additional number of shares equal to 2.5% of the number of shares of common stock deliverable upon such purchase.

On November 7, 2022, we entered into an amendment to the 2022 Debenture Purchase Agreement with Ionic, pursuant to which we and Ionic agreed to amend and restate the 2022 Debenture to provide that (i) in no event will the conversion price under the 2022 Debenture be below a floor price of $0.10 (such price, as may be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction, the “Floor Price”), and (ii) in the event the actual conversion price is less than the Floor Price, (A) Ionic will be entitled to that number of settlement conversion shares issuable with an assumed conversion price equal to the Floor Price, and (B) we will be required to make a cash payment to Ionic on or prior to the maturity date of an amount that is calculated by subtracting the number of shares of common stock issuable at an assumed conversion price equal to the Floor Price from the number of shares of common stock issuable at the actual conversion price, multiplied by a price equal to the average of the ten lowest VWAPs during the specified measurement period.

On January 5, 2023, we and Ionic entered the Letter Agreement which amended the ELOC Purchase Agreement. Under the Letter Agreement, the parties agreed, among other things, to (i) amend the floor price below which Ionic will not be required to buy any shares of our common stock under the ELOC Purchase Agreement from $0.25 to $0.20, determined on a post-reverse split basis, (ii) amend the per share purchase price for purchases under the ELOC Purchase Agreement to 90% of the average of the two lowest daily VWAPs over a specified measurement period, which will commence at the conclusion of the applicable measurement period related to the 2022 Debenture and (iii) waive certain requirements in the ELOC Purchase Agreement to allow for a one-time $0.5 million purchase under the ELOC Purchase Agreement.

On March 14, 2023, we entered into the 2023 Debenture Purchase Agreement with Ionic pursuant to which we authorized the issuance and sale of two convertible subordinated debentures in the aggregate principal amount of approximately $2.8 million for an aggregate purchase price of $2.5 million. The first debenture is in the original principal amount of approximately $1.7 million for a purchase price of $1.5 million, which was issued on March 14,

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2023, and the second debenture is in the original principal amount of approximately $1.1 million for a purchase price of $1.0 million, which was issued on April 12, 2023.

On September 15, 2023, we and Ionic entered into a letter agreement (the “September 2023 Letter Agreement”) which amends the Purchase Agreement, dated as of October 6, 2022, by and between Remark and Ionic, and as previously amended on January 5, 2023 (the “ELOC Purchase Agreement”). The September 2023 Letter Agreement superceded two previous letter agreements we entered into with Ionic, one in July 2023 and another in August 2023.

Under the September 2023 Letter Agreement, the parties agreed, among other things, to (i) allow Remark to deliver one or more irrevocable written notices (“Exemption Purchase Notices”) to Ionic in a total aggregate amount not to exceed $20.0 million, which total aggregate amount shall be reduced by the aggregate amount of previous Exemption Purchase Notices, (ii) amend the per share purchase price for purchases under an Exemption Purchase Notice to 80% of the average of the two lowest daily volume-weighted average prices (“VWAPs”) over a specified measurement period, (iii) amend the definition of the specified measurement period to stipulate that, for purposes of calculating the final purchase price, such measurement period begins the trading day after Ionic pays Remark the amount requested in the purchase notice, while the calculation of the dollar volume of Remark common stock traded on the principal market to determine the length of the measurement period shall begin on the trading day after the previous measurement period ends, iv) that any additional Exemption Purchase Notices that are not in accordance with the terms and provisions of the Purchase Agreement shall be subject to Ionic’s approval, v) to amend section 11(c) of the ELOC Purchase Agreement to increase the Additional Commitment Fee from $0.5 million to $3.0 million and vi) that by September 29, 2023, the parties will amend the Debenture Transaction Documents to include a so-called Most Favored Nation provision that will provide Ionic with necessary protection against any future financing, settlement, exchange or other transaction whether with an existing or new lender, investor or counterparty, and that, if such amendment is not made by September 29, 2023, the Additional Commitment Fee shall be further increased to approximately $3.8 million.

See Note 11 in the Notes to Unaudited Condensed Consolidated Financial Statements included in the registration statement of which this prospectus is a part for additional detail on the Ionic transactions.


General

Our history of recurring operating losses, working capital deficiencies and negative cash flows from operating activities give rise to substantial doubt regarding our ability to continue as a going concern.

We intend to fund our future operations and meet our financial obligations through revenue growth from our AI offerings, as well as through sales of our thermal-imaging products. We cannot, however, provide assurance that revenue, income and cash flows generated from our businesses will be sufficient to sustain our operations in the twelve months following the filing of this prospectus. As a result, we are actively evaluating strategic alternatives including debt and equity financings.

Conditions in the debt and equity markets, as well as the volatility of investor sentiment regarding macroeconomic and microeconomic conditions (in particular, as a result of the COVID-19 pandemic, global supply chain disruptions, inflation and other cost increases, and the geopolitical conflict in Ukraine), will play primary roles in determining whether we can successfully obtain additional capital.

A variety of factors, many of which are outside of our control, affect our cash flow; those factors include the effects of the COVID-19 pandemic, regulatory issues, competition, financial markets and other general business conditions. Based on financial projections, we believe that we will be able to meet our ongoing requirements for at least the next 12 months with existing cash and based on the probable success of one or more of the following plans:

develop and grow new product line(s)

obtain additional capital through equity issuances.

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However, projections are inherently uncertain and the success of our plans is largely outside of our control. As a result, there is substantial doubt regarding our ability to continue as a going concern, and we may fully utilize our cash resources prior to December 31, 2023.


Cash Flows - Operating Activities
 
During the nine months ended September 30, 2023, we used $4.6 million less cash in operating activities than we did during the same period of the prior year. The decrease in cash used in operating activities is primarily the result of the timing of payments related to elements of working capital.

During the year ended December 31, 2022, we used $3.6 million less cash in operating activities than we did during the same period of the prior year. The decrease in cash used in operating activities is primarily the result of the timing of payments related to elements of working capital.


Cash Flows - Investing Activities
 
Investing activities during the nine months ended September 30, 2023 were de minimis, while the same period during 2022 provided $6.3 million in proceeds from the sale of a portion of our marketable securities.

Investing activities during the year ended December 31, 2022 provided $6.3 million in proceeds from the sale of a portion of our marketable securities, compared to $2.3 million received in the same period during year ended December 31, 2021 from the business combination of Sharecare, Inc. and a special purpose acquisition company, as a result of which the common stock of Sharecare, Inc. became publicly traded.


Cash Flows - Financing Activities

During the nine months ended September 30, 2023, we received $2.5 million from Ionic in exchange for the issuance of convertible debentures, and Ionic also advanced us an aggregate of $7.0 million under the ELOC Purchase Agreement for which we issued 2,641,173 shares of our common stock and for which we expect to issue another estimated 978,168 shares of our common stock. Also during the nine months ended September 30, 2023, we received $1.0 million of advances from senior management representing various operating expense payments and repaid $1.1 million of advances from senior management. During the same period of 2022, we repaid $6.2 million of the Original Mudrick Loans and received $2.4 million of advances from senior management and repaid $1.5 million of advances from senior management representing various operating expense payments made on our behalf.

During the year ended December 31, 2022, we received $2.7 million of proceeds from financings, repaid $6.2 million of the Original Mudrick Loans, and received $3.3 million of advances from senior management representing various operating expense payments made on our behalf while we repaid $2.1 million of advances from senior management. The prior year period’s financing activity included $32.2 million of net debt proceeds plus $5.7 million of proceeds from issuances of our common stock shares. We also repaid $6.5 million of debt in the prior year.


Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.



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Recently Issued Accounting Pronouncements
 
Please refer to Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements included in the registration statement of which this prospectus is a part for a discussion regarding recently issued accounting pronouncements which may affect us.



BUSINESS

Outlook

We are a diversified global technology business with leading artificial intelligence (“AI”) and data-analytics, as well as a portfolio of digital media properties.

Our innovative artificial intelligence (“AI”) and data analytics solutions continue to gain worldwide awareness and recognition through comparative testing, product demonstrations, media exposure, and word of mouth. We continue to see positive responses and increased acceptance of our software and applications in a growing number of industries. We intend to expand our business in three major regions, Asia-Pacific, North America, and Europe. The Asia-Pacific region has a fast-growth AI market with significant opportunities for our solutions. In North America, primarily in the United States, and in Europe, we see robust demand for AI products and solutions in a growing number of industries, including potential growth opportunities particularly in the workplace, schools, transportation and public safety markets. Despite such opportunities, the economic and geopolitical conditions, particularly in international markets, could adversely affect our business. We continue to pursue large business opportunities where we can quickly deploy our software solutions in the market segments we have identified, in which we may face a number of large, well-known competitors.

Our corporate headquarters and U.S. operations are based in Las Vegas, Nevada, and we also maintain operations in London, England and Chengdu, China. Our common stock, par value $0.001 per share, is listed on the Nasdaq Capital Market under the ticker symbol MARK.

On December 21, 2022, we effected a 1-for-10 reverse split of our common stock (the “Reverse Split”). All references made to share or per share amounts in this prospectus have been retroactively adjusted to reflect the effects of the Reverse Split.


Our Business

Corporate Structure

We are a holding company incorporated in Delaware and not a Chinese operating company. As a holding company, we conduct most of our operations through our subsidiaries, each of which is wholly owned. We have historically conducted a significant part of our operations through contractual arrangements between our WFOE and certain VIEs based in China to address challenges resulting from laws, policies and practices that may disfavor foreign-owned entities that operate within industries deemed sensitive by the Chinese government. We were the primary beneficiary of the VIEs because the contractual arrangements governing the relationship between the VIEs and our WFOE, which included an exclusive call option agreement, exclusive business cooperation agreement, a proxy agreement and an equity pledge agreement, enabled us to (i) exercise effective control over the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive call option to purchase, at any time, all or part of the equity interests in and/or assets of the VIEs to the extent permitted by Chinese laws. Because we were the primary beneficiary of the VIEs, we consolidated the financial results of the VIEs in our consolidated financial statements in accordance with GAAP.

We terminated all of the contractual arrangements between the WFOE and the VIEs and exercised our rights under the exclusive call option agreements between the WFOE and the VIEs such that, effective as of September 19, 2022, we obtained 100% of the equity ownership of the entities we formerly consolidated as VIEs

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and which we now consolidate as wholly-owned subsidiaries. The securities offered pursuant to this prospectus are securities of Remark, the Delaware holding company, not of the VIEs.

The following diagram illustrates our corporate structure, including our significant subsidiaries, as of the date of this prospectus. The diagram omits certain entities which are immaterial to our results of operations and financial condition.

remarkorgchart-oct2022novie.jpg

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We are subject to certain legal and operational risks associated with having a significant portion of our operations in China. Chinese laws and regulations governing our current business operations, including the enforcement of such laws and regulations, are sometimes vague and uncertain and can change quickly with little advance notice. The Chinese government may intervene in or influence the operations of our China-based subsidiaries at any time and may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our securities. In addition, any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors and cause the value of such securities to significantly decline or become worthless. In recent years, the Chinese government adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to the use of variable interest entities, cybersecurity, data security, export control and anti-monopoly concerns. As of the date of this prospectus, we have neither been involved in any investigations on cybersecurity review initiated by any Chinese regulatory authority, nor received any inquiry, notice or sanction. As of the date of this prospectus, no relevant laws or regulations in China explicitly require us to seek approval from the CSRC for any securities listing. As of the date of this prospectus, we have not received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC or any other Chinese governmental authorities relating to securities listings. However, since these statements and regulatory actions are newly published, official guidance and related implementation rules have not all been issued. It is highly uncertain what potential impact such modified or new laws and regulations will have on our ability to conduct our business, accept investments or list or maintain a listing on a U.S. or foreign exchange.

As of the date of this prospectus, we are not required to seek permissions from the CSRC, the Cyberspace Administration of China (the “CAC”), or any other entity that is required to approve our operations in China. Nevertheless, Chinese regulatory authorities may in the future promulgate laws, regulations or implement rules that require us or our subsidiaries to obtain permissions from such regulatory authorities to approve our operations or any securities listing.


Holding Foreign Companies Accountable Act

The HFCA Act was enacted on December 18, 2020. The HFCA Act states that if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such shares from being traded on a national securities exchange or in the over the counter trading market in the United States. On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction. The Consolidated Appropriations Act, 2023, which was signed into law on December 29, 2022, amended the HFCA Act to reduce the number of consecutive non-inspection years required to trigger the trading prohibition under the HFCA Act from three years to two years.

On December 16, 2021, the PCAOB issued a report on its determination that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by Chinese and Hong Kong authorities in those jurisdictions.

On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, taking the first step toward opening access for the PCAOB to completely inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong.

On December 15, 2022, the PCAOB vacated its 2021 determination that the positions taken by authorities in mainland China and Hong Kong prevented it from inspecting and investigating completely registered public

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accounting firms headquartered in those jurisdictions. In view of the PCAOB’s decision to vacate its 2021 determination and until such time as the PCAOB issues any new adverse determination, the SEC has stated that there are no issuers at risk of having their securities subject to a trading prohibition under the HFCA Act. Each year, the PCAOB will reassess its determinations on whether it can inspect and investigate completely audit firms in China, and if, in the future, the PCAOB determines it cannot do so, or if Chinese authorities do not allow the PCAOB complete access for inspections and investigations for two consecutive years, companies engaging China-based public accounting firms would be delisted pursuant to the HFCA Act.

Our auditor, Weinberg & Company, an independent registered public accounting firm headquartered in the United States, is currently subject to PCAOB inspections and has been inspected by the PCAOB on a regular basis. However, if the PCAOB is unable to inspect the work papers of our accounting firm in the future, such lack of inspection could cause trading in our common stock to be prohibited under the HFCA Act, and as a result, an exchange may determine to delist our common stock. The delisting and the cessation of trading of our common stock, or the threat of our common stock being delisted and prohibited from being traded, may materially and adversely affect the value of your investment. See “Risk Factors—Risks Relating to Doing Business in China—Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB determines that it cannot inspect or fully investigate our auditors, and as a result, Nasdaq may determine to delist our securities.”


Business Model

We currently earn the majority of our revenue from sales of AI-based products and services. Excluding general and administrative expense, the primary costs we incur to earn the revenue described below include:

software development costs, including licensing costs for third-party software

cost of equipment related to customized AI products

costs associated with marketing our brands

AI Business

We generate revenue by using the proprietary data and AI software platform we developed to deliver AI-based computer vision products, computing devices and software-as-a-service solutions for businesses in many industries. We continue to partner with top universities on research projects targeting algorithm, artificial neural network and computing architectures which we believe will keep us among the leaders in technology development.

The primary focus of our business is promoting and facilitating the safety of our customers and their customers through our Smart Safety Platform (the “SSP”). The SSP, having won numerous industry and government benchmark tests for accuracy and speed, is a leading software solution for using computer vision to detect persons, objects and behavior in video feeds. Real-time alerts from the SSP allow operations staff to respond rapidly to prevent any events or activities that can endanger public security or workplace safety.

We deploy the SSP to integrate with each customer’s IT infrastructure, including, in many cases, cameras already in place at the customer’s location(s). When necessary, we also sell and deploy hardware to create or supplement the customer’s monitoring capabilities. Such hardware includes, among other items, cameras, edge computing devices and/or our Smart Sentry units. The Smart Sentry is a large mobile camera unit with a telescoping mast on which a high-quality camera is mounted. Based upon customer needs, the camera may have either standard vision and/or thermal vision capability. The camera works in conjunction with an edge computing device that is also mounted to the unit. The Smart Sentry is an example of how we incorporate the SSP in modern IT architectural concepts, including edge computing and micro-service architectures. Edge computing, for example, allows the SSP

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to conduct expensive computing tasks at distributed locations without requiring large data transmission over the internet, thereby dramatically reducing costs while integrating numerous and varied sensors at distributed locations.

We customize and sell our innovative AI-based computer vision products and solutions, including the SSP, to customers in the retail, construction, public safety, workplace safety and public sector markets. We have also developed versions of our solutions for application in the transportation and energy markets.


Competition

We compete for business primarily on the basis of the quality and reliability of our products and services, and primarily in the AI marketplace, which is intensely competitive and rapidly evolving.

Our AI-based products and services represent a significant opportunity for us in the future. We offer AI products and we also build and deploy custom AI solutions. Our AI products compete with companies such as SenseTime, Face++, Google, GoGoVan, WeLab and others, while we compete with companies such as PricewaterhouseCoopers, Hewlett Packard, Baidu and others for business in the AI solutions market space.

Some of the companies we compete against, or may compete against in the future, may have greater brand recognition and may have significantly greater financial, marketing and other resources than we have. As a result of the potentially greater brand recognition and resources, some of our competitors may bring new products and services to market more quickly, and they may be able to adopt more aggressive pricing policies than we could adopt.


Intellectual Property
 
We rely upon trademark, copyright and trade secret laws in various jurisdictions, as well as confidentiality procedures and contractual provisions to protect our proprietary assets and brands. We own 33 copyright registrations and nine AI-related patents, with 27 AI-related patents pending in China.


Technology

Our technologies include software applications built to run on third-party cloud hosting providers including Amazon Web Services and Alibaba located in North America and Asia. We make substantial use of off-the-shelf available open-source technologies such as Linux, PHP, MySQL, Drupal, mongoDB, Memcache, Apache, Nginx, CouchBase, Hadoop, HBase, ElasticSearch, Lua, Java, Redis, Akka and Wordpress, in addition to commercial platforms such as Microsoft, including Windows Operating Systems, SQL Server, and .NET. Such systems are connected to the Internet via load balancers, firewalls, and routers installed in multiple redundant pairs. We also utilize third-party services to geographically deliver data using major content distribution network providers. We rely heavily on virtualization throughout our technology architecture, which enables the scaling of dozens of digital media properties in an efficient and cost-effective manner.

We use third-party cloud hosting providers to host most of our public-facing websites and applications, as well as many of our back-end business intelligence and financial systems. Each of our significant websites is designed to be fault-tolerant, with collections of application servers, typically configured in a load-balanced state, to provide additional resiliency. The infrastructure is equipped with enterprise-class security solutions to combat events such as large-scale distributed denial of service attacks. Our environment is staffed and equipped with a full-scale monitoring solution.



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Governmental Regulation

The services we provide are subject to various laws and regulations. We are subject to a number of U.S. federal and state and foreign laws and regulations that affect companies conducting business on the Internet. These laws and regulations may involve privacy, rights of publicity, data protection, content regulation, intellectual property, competition, protection of minors, consumer protection, taxation or other subjects. Many of these laws and regulations are still evolving and being tested in courts and could be interpreted in ways that could harm our business. In addition, the application and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which we operate. There are a number of legislative proposals pending before federal, state, and foreign legislative and regulatory bodies concerning data protection that may affect us. We incorporated the principles of the European Union (“EU”) General Data Protection Regulation (“GDPR”) into our internal data protection policy for our product development and solution implementation. In addition, we voluntarily hired an independent, authorized third party in Germany to conduct a GDPR audit of our privacy practices. The audit found that we are compliant with the GDPR principles.

We post our privacy policy and practices concerning the use and disclosure of any user data on our web properties and our distribution applications. Any failure by us to comply with posted privacy policies, federal and state regulatory requirements or foreign privacy-related laws and regulations could result in proceedings by governmental or regulatory bodies that could potentially harm our businesses, results of operations and financial condition.

Foreign data protection, privacy, and other laws and regulations can be more restrictive than those in the United States. The Chinese government has at times taken measures to restrict digital platforms, publishers or specific content themes from consumption by its citizens. We invest significant efforts into ensuring that our published content in China is consistent with our most current understanding of prevailing Chinese laws, regulations, and policies; and to date our published content in China has been met with successful distribution and no action or inquiry from the Chinese government. However, unforeseen regulatory restrictions or policy changes in China regarding digital content could have a material adverse effect on our business.

The Chinese government has not yet adopted a clear regulatory framework governing the new and rapidly-evolving artificial intelligence industry in which we operate. The Chinese government’s adoption of more stringent laws or enforcement protocols affecting participants in such industries (including, without limitation, restrictions on foreign investment, capital requirements and licensing requirements) could have a material adverse effect on our business.


Transfer of Cash or Assets

Dividend Distributions

As of the date of this Form 10-K, none of our subsidiaries have made any dividends or distributions to the parent company.

We have never declared or paid dividends or distributions on our common equity. We currently intend to retain all available funds and any future consolidated earnings to fund our operations and continue the development and growth of our business; therefore, we do not anticipate paying any cash dividends.

Under Delaware law, a Delaware corporation’s ability to pay cash dividends on its capital stock requires the corporation to have either net profits or positive net assets (total assets less total liabilities) over its capital. If we determine to pay dividends on any of our common stock in the future, as a holding company, we may rely on dividends and other distributions on equity from our subsidiaries for cash requirements, including the funds necessary to pay dividends and other cash contributions to our stockholders.


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Our WFOE’s ability to distribute dividends is based upon its distributable earnings. Current Chinese regulations permit our WFOE to pay dividends to its shareholder only out of its registered capital amount, if any, as determined in accordance with Chinese accounting standards and regulations, and then only after meeting the requirement regarding statutory reserve. If our WFOE incurs debt in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us. Any limitation on the ability of our WFOE to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business. In addition, any cash dividends or distributions of assets by our WFOE to its stockholder are subject to a Chinese withholding tax of as much as 10%.

The Chinese government also imposes controls on the conversion of Chinese Renminbi (“RMB”) into foreign currencies and the remittance of currencies out of China. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. If we are unable to receive all of the revenues from our operations through our China-based subsidiaries, we may be unable to pay dividends on our common stock.


Employees

We employed 88 people as of February 2, 2024, all of whom are full-time employees.


MANAGEMENT

The following table and paragraphs set forth information regarding our executive officers and directors, including the business experience for the past five years (and, in some instances, for prior years) of each such executive officer and director.
 
NameAgePosition
Kai-Shing Tao47Chief Executive Officer, Principal Financial Officer and Chairman of the Board
Theodore P. Botts78Director and Chairman of the Audit Committee
Elizabeth Xu58Director
Brett Ratner54Director and Chairman of the Compensation Committee
Daniel Stein48Director and Chairman of the Nominating and Governance Committee


Executive Officer
 
Kai-Shing Tao has served as our Chief Executive Officer since December 2012, previously serving as Co-Chief Executive Officer since October 2012, and has served as the principal financial officer since August 2019. He has also served as a member of our Board since 2007 and Chairman of the Board since October 2012. Mr. Tao also has served as Chairman and Chief Investment Officer of Pacific Star Capital Management, L.P. (“Pacific Star Capital”), a private investment group, since January 2004. Prior to founding Pacific Star Capital, Mr. Tao was a Partner at FALA Capital Group, a single-family investment office, where he headed the global liquid investments outside the operating companies. Mr. Tao has been a director of Paradise Entertainment Limited (SEHK: 1180), a Hong-Kong-Stock-Exchange-traded company engaged in casino services and the development, supply and sales of electronic gaming systems, since April 2014. Mr. Tao previously was a director of Playboy Enterprises, Inc. from May 2010 to March 2011. Mr. Tao is a graduate of the New York University Stern School of Business.


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Non-Employee Directors

Theodore P. Botts has served as a member of our Board since 2007. Mr. Botts has been the President of Kensington Gate Capital, LLC, a private corporate finance advisory firm, since April 2001. Previously, Mr. Botts served as Chief Financial Officer of StereoVision Entertainment, Inc., a film entertainment company, from July 2007 until September 2008. Prior to 2000, Mr. Botts served in executive capacities at UBS Group and Goldman Sachs in London and New York. Mr. Botts also served on the board of directors and as chairman of the audit committee of INTAC International, Inc. from 2002 until its merger with a predecessor of Remark in 2006. Mr. Botts served as a member of the board and chairman of both the compensation and audit committees of Crystal Peak Minerals (CPMMF) from 2012 to 2018. Mr. Botts is currently a member of the board of Essentia Analytics, a privately held English company which develops and provides behavioral analytics to active portfolio managers. He served from 2003 to 2012 as a member of the Board of Trustees and head of development for REACH Prep, a non-profit organization serving the educational needs of underprivileged African-American and Latino children in Fairfield and Westchester counties. Mr. Botts graduated with highest honors from Williams College and received an MBA from the New York University Stern School of Business.

Brett Ratner has been a member of our Board since March 2017. Mr. Ratner is one of Hollywood's most successful filmmakers. His films have grossed more than $2 billion at the global box office. He has served as an executive producer on films such as the Golden-Globe-winning and Oscar-winning The Revenant, starring Leonardo DiCaprio, executive producer and director of the Golden Globe-nominated FOX series Prison Break, and executive producer of the television series Rush Hour, based on his hit films. Mr. Ratner, along with his business partner James Packer, formed RatPac Entertainment, a film finance and media company, in 2013. Since inception, RatPac Entertainment has co-financed 63 theatrically-released motion pictures exceeding $11.6 billion in worldwide box office receipts. In 2017, he received a coveted star on the Hollywood Walk of Fame. Mr. Ratner received a Bachelor in Fine Arts degree from New York University’s Tisch School of the Arts. He is currently attending Harvard University’s Business School Graduate Program.

Daniel Stein has served as a member of our Board since March 2017. Daniel Stein is currently Senior Vice President of Partnerships, Crossix Analytics (which is part of Veeva Systems) where he oversees all media, enablement and product partnerships. He previously served since 2012 as Senior Vice President of Analytics Services & Product Strategy at Crossix Solutions, Inc., a healthcare and analytics and data company, where he was responsible for driving innovation across the Crossix product suite, including digital and TV-based solutions. Prior to joining Crossix, Mr. Stein spent eight years at Digitas and Digitas Health, an advertising agency, where he led the Strategy and Analysis group in New York. At Digitas Health, he built a team focused on leveraging analytics to help pharmaceutical and health-focused clients optimize their marketing plans and partnerships. Mr. Stein brings over 20 years of media, marketing, healthcare and agency experience focusing on products, marketing and innovation. Previously, he worked at Scholastic, where he developed interactive and direct marketing plans to support teachers and parents, and he gained additional healthcare experience at PricewaterhouseCoopers, where he designed and built comprehensive health & welfare systems for large companies. Mr. Stein graduated from the University of Pennsylvania with a B.A. in Economics. He has not served on any other boards or committees in the last five years.

Dr. Elizabeth Xu has served as a member of our Board since 2020. She is the Chief Executive Officer of A2C Leadership Group, Inc., a private leadership education firm, and chairperson of Be the Change Foundation, a public non-profit organization that has been helping K-12 students and working professionals establish their leadership skills. Dr. Xu was named as one of the top 50 diversity leaders in 2020, as one of the Silicon Valley Women of Influence in 2015, as a Female of Executive Year, and has received more than 10 other awards from various organizations. Dr. Xu is an international transformational technology leader and senior business executive with more than 20 years of experience that includes digital transformation through the application of artificial intelligence, Internet-of-Things, and other enterprise technology in multiple businesses. She was a Stanford University lecturer for several years, and she currently serves as an Innovation and Entrepreneurship Advisor at the MIT Sloan School of Management and she sits on the advisory board of Women in Technology International. From 2018 to 2019, Dr. Xu served as the Group CTO at Thailand-based Charoen Pokphand Group (CP Group), one of the world's largest conglomerates, where she drove the company's technology strategy and advancement and oversaw

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workforce re-training for more than 200 of the company's subsidiaries in various industries. During that time period, she also served as CEO of the CP Group subsidiaries in Thailand and the United States that conducted CP Group's research and development. From 2014 to 2017, Dr. Xu held several leadership roles, including serving as CTO of BMC Software, Inc., a global leader in information technology service management. At BMC, she was responsible for the company's Central Technology Organization and Digital Service Management BU Engineering Organization.


Director Qualifications
 
The Board comprises a diverse group of leaders in their respective fields. Some of the current directors have senior leadership experience at major domestic and international corporations. In these positions, they have gained experience in core management skills, such as strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development. Some of our directors also have experience serving on boards of directors and board committees of other public companies, and have an understanding of corporate governance practices and trends, which provides an understanding of different business processes, challenges, and strategies. Other directors have experience as principals in private investment and advisory firms, which brings financial expertise and unique perspectives to the Board. Our directors also have other experience that makes them valuable members, such as experience managing technology and media companies, or developing and pursuing investment or business opportunities in international markets, which provides insight into strategic and operational issues faced by Remark.
 
The Nominating and Governance Committee believes that the above-mentioned attributes, along with the leadership skills and other experiences of the directors described below, provide us with a diverse range of perspectives and judgment necessary to guide our strategies and monitor their execution.
 

Kai-Shing Tao
 
Knowledge and experience regarding Remark from serving as our Chief Executive Officer since December 2012

Global financial industry and investment experience and extensive knowledge of Asian markets as Chief Investment Officer of Pacific Star Capital and a former member of the U.S.-China and U.S.-Taiwan Business Council

U.S. public company board experience as a former director of Playboy Enterprises, Inc.


Theodore P. Botts
 
Global financial advisory experience and extensive knowledge of the technology sector as President of Kensington Gate Capital, LLC

Outside board experience as a director and chairman of the audit committee of INTAC International

Global financial industry experience as an executive at UBS Group and Goldman Sachs


Brett Ratner
 
Extensive experience in the entertainment industry, including co-founding and operating a successful film finance and media company



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Daniel Stein
 
Operational experience leading data monetization efforts for analytics companies, leveraging partnerships with top digital, television and media companies

Oversees all product strategy for Crossix, a leading technology company currently focused in healthcare

More than 20 years of media, marketing and agency experience focusing on innovation


Elizabeth Xu

Senior executive experience as former Group CTO of CP Group and CEO of CP R&D Thailand and USA companies

Global business experience in operational and governance roles for technology businesses

Harvard Business School certified board member


Family Relationships
 
There are no family relationships among our executive officers and directors.


CORPORATE GOVERNANCE


Director Independence

The Board has determined that all of our current non-employee directors are independent within the meaning of SEC and Nasdaq rules. The Board has also determined that all directors serving on the Audit Committee, Nominating and Governance Committee and Compensation Committee are independent within the meaning of SEC and Nasdaq rules.


Board Committees

Our Board has three standing committees to assist it with its responsibilities. We describe the three committees, the charters of which are available on our website at https://remarkholdings.com/ir.html#governance, below.


Audit Committee. The Audit Committee is comprised of directors who satisfy the SEC and Nasdaq audit committee membership requirements, and is governed by a Board-approved charter that contains, among other things, the committee’s membership requirements and responsibilities. The committee’s responsibilities include, but are not limited to:

appointing, overseeing the work of, determining compensation for, and terminating or retaining the independent registered public accounting firm which audits our financial statements, including assessing such firm’s qualifications and independence;


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establishing the scope of the annual audit, and approving any other services provided by public accounting firms;

providing assistance to the Board in fulfilling the Board’s oversight responsibility to the stockholders, the investment community and others relating to the integrity of our financial statements and our compliance with legal and regulatory requirements;

overseeing our system of disclosure controls and procedures, and our system of internal controls regarding financial accounting, legal compliance and ethics, which management and our Board established; and

maintaining free and open communication with our independent auditors, our internal accounting function and our management.


Our Audit Committee is comprised of Messrs. Botts and Stein and Dr. Xu, each of whom is independent under applicable Nasdaq listing standards and Rule 10A-3 under the Exchange Act. Mr. Botts serves as Chairman of the Audit Committee.
 
The Board determined that Mr. Botts is an audit committee financial expert, as defined under the Exchange Act. The Board made a qualitative assessment of Mr. Botts’s level of knowledge and experience based on a number of factors, including his experience as a financial professional.
 

Compensation Committee. The Compensation Committee’s responsibilities include, but are not limited to:

determining all compensation for our CEO;

reviewing and approving corporate goals relevant to the compensation of our CEO, and evaluating the CEO’s performance in light of those goals and objectives;

reviewing and approving the compensation of other executive officers;

reviewing and approving objectives relevant to the compensation of other executive officers, and the executive officers’ performance in light of those objectives;

administering our equity incentive plans;

approving severance arrangements and other applicable agreements for executive officers, and consulting generally with management on matters concerning executive compensation and on pension, savings and welfare benefit plans where Board or stockholder action is contemplated with respect to the adoption of or amendments to such plans; and

making recommendations on organization, succession, the election of officers, use of consultants and similar matters where Board approval is required.


Our Compensation Committee is comprised of Mr. Ratner and Dr. Xu, each of whom is independent under applicable Nasdaq listing standards and are “non-employee directors” as defined in rule 16b-3 promulgated under the Exchange Act. Mr. Ratner serves as Chairman of the Compensation Committee.



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Nominating and Governance Committee. The Nominating and Governance Committee considers and makes recommendations on matters related to the practices, policies and procedures of the Board and takes a leadership role in shaping our corporate governance. The committee’s responsibilities include, but are not limited to:

assessing the size, structure and composition of the Board and its committees;

coordinating evaluation of the Board’s performance and reviewing the Board’s compensation; and

screening candidates considered for election to the Board.


When screening candidates for Board membership, the committee concerns itself with the composition of the Board with regard to depth of experience, balance of professional interests, required expertise and other factors. The committee evaluates prospective nominees that it identifies or which are referred to it by other Board members, management, stockholders or external sources, as well as evaluating all self-nominated candidates. 

The committee has not formally established any specific, minimum qualifications that each candidate for the Board must meet, or specific qualities or skills that one or more directors must possess or a diversity policy. However, the committee, when considering a candidate, will factor into its determination the following qualities of a candidate:

educational background

diversity of professional experience, including whether the person is a current or former CEO or CFO of a public company or the head of a division of a large international organization

knowledge of our business

integrity

professional reputation

strength of character

mature judgment

relevant technical experience

diversity

independence

wisdom

ability to represent the best interests of our stockholders


The committee may also consider such other factors as it may deem to be in the best interests of Remark and its stockholders.
 
The committee uses the same criteria for evaluating candidates nominated by stockholders and self-nominated candidates as it does for those proposed by other Board members, management and search companies. For more information on how stockholders can nominate candidates for election as directors, see “Stockholder Proposals” below.

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The committee identifies nominees by first evaluating incumbent directors, with skills and experience that are relevant to our business and who are willing to continue in service. Such a practice balances the value of continuity of service with that of obtaining a new perspective. If an incumbent director up for re-election at an upcoming annual meeting of stockholders does not wish to continue in service, the committee identifies the skills and experience desired of a new nominee in light of the criteria above. Current members of the committee and Board will be polled for suggested candidates. Research may also be performed to identify qualified individuals. If the committee believes that the Board requires additional candidates for nomination, it may explore alternative sources for identifying additional candidates, including, if appropriate, a third-party search firm.

Our Nominating and Governance Committee is comprised of Messrs. Ratner and Stein and Dr. Xu, each of whom is independent under applicable Nasdaq listing standards. Mr. Stein serves as Chairman of the Nominating and Governance Committee.



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EXECUTIVE AND DIRECTOR COMPENSATION

Summary Compensation Table

The following table presents the dollar amounts of salary (the only form of compensation during the years noted) earned by our named executive officer (“NEO”):
Name and Principal PositionYearSalary