Document

S-1 1 forms1-ionicresale2.htm FORM S-1 Document

As filed with the Securities and Exchange Commission on January 17, 2023

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

Registration Statement Under The Securities Act of 1933

Remark Holdings, Inc.

Delaware

4899

33-1135689

State or Other Jurisdiction of
Incorporation or Organization

Primary Standard Industrial Classification Code Number

I.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:

Honghui Yu, Esq.

Olshan Frome Wolosky LLP

1325 Avenue of the Americas

New York, NY 10019

Telephone: (212) 451-2294

Facsimile: (212) 451-2222

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 filer

☐

Accelerated filer

☐

Non-accelerated filer

☑

Smaller 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 security holder 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 January 17, 2023

Preliminary Prospectus

5,000,000 Shares of Common Stock

___________________________

This prospectus relates to the proposed resale by the selling security holder named in this prospectus or its permitted assigns of up to an aggregate of 5,000,000 shares of our common stock, with a par value of $0.001 per share, which may be issued (i) upon conversion of a subordinated convertible debenture in the original principal amount of $2,778,000 (as amended, the “Debenture”) issued to Ionic Ventures, LLC (“Ionic”), including Pre-Settlement Conversion Shares (as defined below) and any True-Up Conversion Shares (as defined below), and (ii) pursuant to a purchase agreement dated as of October 6, 2022, as amended by that certain letter agreement (the “Letter Agreement”), dated as of January 5, 2023, by and between Remark and Ionic (as amended, the “ELOC Purchase Agreement”), including (A) shares which may be issued and sold to Ionic for cash (the “Purchase Shares”), (B) additional shares (equal to 2.5% of the number of shares sold for cash) issued for no consideration (the “Commitment Shares”), (C) shares which may be issued upon termination of the ELOC Purchase Agreement under certain circumstances to satisfy the termination fee (the “Additional Commitment Shares”), (D) shares which are issuable if we fail to file a resale registration statement covering the shares issuable to Ionic upon conversion of the Debenture and pursuant to the ELOC Purchase Agreement (the “Filing Default Shares”) or have such resale registration statement declared effective by the specified deadlines (the “Effectiveness Default Shares”), and (E) shares which are issuable as partial consideration for the waiver contained in the Letter Agreement (the “Letter Agreement Shares”).

The number of shares of common stock issuable upon conversion of the Debenture is determined by dividing the outstanding balance under the Debenture (including all accrued and unpaid interest and accrued and unpaid late charges, if any) (the “Conversion Amount”) by a conversion price that is at a discount to the volume-weighted average price (“VWAP”) of our common stock over a specified measurement period following the conversion date (as further described below). The Debenture automatically converts into shares of common stock at the earlier of (i) the effective date of the registration statement of which this prospectus forms a part, and (ii) 181 days after the issuance date of the Debenture (such earlier date, the “Automatic Conversion Date”). Under the Debenture, no later than 2 trading days after the Automatic Conversion Date, we are required to cause our transfer agent to deliver to Ionic such number of shares of common stock (the “Pre-Settlement Conversion Shares”) equal to the product of (A) the quotient of (x) the Conversion Amount divided by (y) 80% of the closing price of our common stock on the date immediately preceding the Automatic Conversion Date (the “Pre-Settlement Conversion Price”) and as to which Ionic shall be the owner thereof as of the time of delivery of the Pre-Settlement Conversion Shares, multiplied by (B) 125%.

Then, no later than 2 trading days after the Variable Conversion Measuring Period (the “Conversion Settlement Date”), we are required to cause our transfer agent to deliver to Ionic such number of shares of common stock (the “Settlement Conversion Shares”) equal to the Conversion Amount divided by the conversion price;

provided, however, that the number of shares of common stock to be delivered on the Conversion Settlement Date shall be reduced by the number of Pre-Settlement Conversion Shares delivered (any such number of shares delivered on the Conversion Settlement Date, the “True-Up Conversion Shares”). If the number of Pre-Settlement Conversion Shares delivered to Ionic exceeds the number of Settlement Conversion Shares, then Ionic is required to return the excess shares. The “Variable Conversion Measuring Period” is the period starting on the trading day immediately following the receipt of Pre-Settlement Conversion Shares following the Automatic Conversion Date and ending the later of (x) 10 consecutive trading days after (and not including) the Automatic Conversion Date and (y) the trading day immediately after shares of common stock in the aggregate amount of at least $13,900,000 shall have traded on the Nasdaq Capital Market after the Automatic Conversion Date.

Our ability to sell shares under the ELOC Purchase Agreement will not commence until all shares issuable upon conversion of the Debenture are issued, including all true-up shares upon the expiration of the specified measurement period. See “The Offering” for more information.

We are not selling any securities under this prospectus and will not receive any proceeds from the sale of securities by the selling security holder. The selling security holder 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 security holder 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 security holder 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 37.

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 last reported sales price of our common stock on the Nasdaq Capital Market on January 12, 2023 was $1.52 per share.

On February 25, 2022, we received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, for a period of 30 consecutive business days, the bid price of our common stock closed below the minimum of $1.00 per share required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we had 180 calendar days, or until August 24, 2022, to regain compliance with the Bid Price Rule.

On August 30, 2022, we received a staff determination letter from Nasdaq stating that we did not regain compliance with the Bid Price Rule and we were not eligible for a second 180-day grace period because we did not comply with the minimum $5,000,000 Stockholders’ Equity initial listing requirement for the Nasdaq Capital Market. We appealed Nasdaq’s delisting determination to a Hearings Panel (the “Panel”), which heard our presentation at a hearing held on October 6, 2022.

On October 17, 2022, we received a written decision from the Panel granting our request for continued listing on Nasdaq, subject to the conditions that, on January 11, 2023, we will have demonstrated compliance with the Bid Price Rule by evidencing a closing price of $1.00 or more per share for a minimum of 10 consecutive trading sessions, and that we provide prompt notification of any significant events that occur during the period ending on January 11, 2023 that may affect our compliance with Nasdaq rules.

On January 11, 2023, we received a written notification from Nasdaq confirming that we have regained compliance with the Bid Price Rule and accordingly, the Panel has determined to continue the listing of our common stock on Nasdaq.

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 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 June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. 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. 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 China and in Hong Kong because of positions taken by Chinese and Hong Kong authorities in those jurisdictions. The PCAOB has made such determination as mandated under the HFCA Act. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future.

Our auditor, Weinberg & Company, an independent registered public accounting firm headquartered in the United States, is not subject to the determinations announced by the PCAOB on December 16, 2021. Our auditor 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 19 of this prospectus and “Risk Factors” in our most recent Annual Report on Form 10-K, which is incorporated by reference herein, as well as in any other subsequently filed annual, quarterly or current reports and the applicable prospectus supplement, before investing in our securities.

___________________________

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 ____________________, 2023

TABLE OF CONTENTS


ABOUT THIS PROSPECTUS			1
PROSPECTUS SUMMARY			2
RISK FACTORS			19
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			28
USE OF PROCEEDS			29
THE OFFERING			29
SELLING SECURITY HOLDER			36
PLAN OF DISTRIBUTION			37
DESCRIPTION OF SECURITIES			38
LEGAL MATTERS			39
EXPERTS			39
INFORMATION INCORPORATED BY REFERENCE			39
WHERE YOU CAN FIND MORE INFORMATION			40

ABOUT THIS PROSPECTUS

This prospectus describes the general manner in which the selling security holder identified in this prospectus may offer, from time to time, up to an aggregate of 5,000,000 shares of our common stock, which may be issued (i) upon conversion of the Debenture issued to Ionic, including Pre-Settlement Conversion Shares and True-Up Conversion Shares, and (ii) pursuant to the ELOC Purchase Agreement, which includes Purchase Shares, Commitment Shares, Additional Commitment Shares (if any), Filing Default Shares (if any), Effectiveness Default Shares (if any) and Letter Agreement Shares. 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 security holder.

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 security holder. 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 the Company, the selling security holder 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 security holder” refers to the security holder identified herein in the section titled “Selling Security Holder” beginning on page 36 of this prospectus, who may sell securities from time to time as described in this prospectus.

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 incorporated by reference into this prospectus, before making an investment decision.

Business Overview

Remark Holdings, Inc. and subsidiaries (“Remark”, “we”, “us”, or “our”), and its consolidated variable-interest entities, are primarily technology-focused. The KanKan data intelligence platform that we and the VIEs have developed serves as the basis for our development and deployment of artificial-intelligence-based solutions for businesses in many industries and geographies. We also own and operate an e-commerce digital media property focused on a luxury beach lifestyle.

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.

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 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 June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. 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. 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 China and in Hong Kong because of positions taken by Chinese and Hong Kong authorities in those jurisdictions. The PCAOB has made such determination as mandated under the HFCA Act. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future.

On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol (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. Pursuant to the Protocol, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. However, uncertainties still exist as to compliance with the Protocol. Depending on the implementation of the Protocol, if the PCAOB continues to be prohibited from conducting complete inspections and investigations of PCAOB-registered public accounting firms in China, then China-based companies will be delisted pursuant to the HFCA Act despite the Protocol. Therefore, there is no assurance that the Protocol could give relief to China-based companies against the delisting risk from the application of the HFCA Act.

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

•Issuances of our common stock to Ionic upon conversion of the Debenture will cause substantial dilution to our existing stockholders and the issuance and sale of shares of common stock to Ionic under the 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 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.

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.

•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 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.

•The concentration of our stock ownership may limit individual stockholder ability to influence corporate matters.

•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.

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.

Condensed Consolidating Financial Schedule

The following tables depict the financial position, results of operations and cash flows for the Delaware parent, Remark Holdings, Inc., the WFOE, the other owned operating subsidiaries, the consolidated VIEs and any eliminating adjustments separately, as of the same dates and for the same periods noted in the following tables.

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
Consolidating Balance Sheets (Unaudited)
As of December 31, 2021
($ in thousands)

	Corporate		WFOE		Other Owned Operating Subsidiaries		VIEs		Eliminating Entries		Consolidated Total
Assets
Cash	$	13,239	$	26	$	682	$	240	$	—	$	14,187
Trade accounts receivable	17		2		14		10,234		—		10,267
Inventory, net	1,288		—		—		58		—		1,346
Investment in marketable securities	42,349		—		—		—		—		42,349
Prepaid expense and other current assets	1,710		111		17		4,525		—		6,363
Total current assets	58,603		139		713		15,057		—		74,512
Property and equipment, net	328		—		29		—		—		357
Operating lease assets	113		—		—		81		—		194
Investment in WFOE	—		—		3,089		—		(3,089)		—
Investment in other owned operating subsidiaries	4,437		—		—		—		(4,437)		—
Investment in VIEs	8,801		—		1,644		—		(10,445)		—
Other long-term assets	416		—		—		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 liabilities	2,665		127		588		2,583		—		5,963
Contract liability	80		331		—		165		—		576
Notes payable, net	27,811		—		—		—		—		27,811
WFOE losses in excess of investment	7,914		—		—		—		(7,914)		—
VIE losses in excess of investment	—		4,506		—		—		(4,506)		—
Total current liabilities	41,639		4,964		1,038		9,223		(12,420)		44,444
Operating lease liabilities - long term	25		—		—		—		—		25
Total Liabilities	41,664		4,964		1,038		9,223		(12,420)		44,469

Common stock	105		—		—		163		(163)		105
Additional paid-in-capital	364,239		19,899		42,627		28,310		(90,836)		364,239
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. AND SUBSIDIARIES
Consolidating Balance Sheets (Unaudited)
As of December 31, 2020
($ in thousands)

	Corporate		WFOE		Other Owned Operating Subsidiaries		VIEs		Eliminating Entries		Consolidated Total
Assets
Cash	$	550	$	17	$	9	$	278	$	—	$	854
Trade accounts receivable	175		2		—		4,850		—		5,027
Inventory, net	762		—		—		112		—		874
Prepaid expense and other current assets	1,792		(2)		5		248		—		2,043
Total current assets	3,279		17		14		5,488		—		8,798
Property and equipment, net	278		—		—		43		—		321
Operating lease assets	204		7		—		281		—		492
Investment in WFOE	—		—		3,089		—		(3,089)		—
Investment in other owned operating subsidiaries	4,069		—		—		—		(4,069)		—
Investment in VIEs	2,814		—		1,654		—		(4,468)		—
Investment in unconsolidated affiliate	1,030		—		—		—		—		1,030
Other long-term assets	587		—		15		68		—		670
Total Assets	$	12,261	$	24	$	4,772	$	5,880	$	(11,626)	$	11,311

Liabilities and Stockholders' Equity (Deficit)
Accounts payable	$	4,275	$	—	$	659	$	3,655	$	—	$	8,589
Accrued expense and other current liabilities	2,586		248		44		3,782		—		6,660
Contract liability	163		—		—		147		—		310
Notes payable, net	1,500		—		—		—		—		1,500
WFOE losses in excess of investment	9,564		—		—		—		(9,564)		—
VIE losses in excess of investment	—		6,251		—		—		(6,251)		—
Total current liabilities	18,088		6,499		703		7,584		(15,815)		17,059
Operating lease liabilities - long term	115		—		—		79		—		194
Warrant liability	1,725		—		—		—		—		1,725
Long- term debt, net	1,425		—		—		—		—		1,425
Total Liabilities	21,353		6,499		703		7,663		(15,815)		20,403

Common stock	100		—		—		163		(163)		100
Additional paid-in-capital	351,546		19,137		40,497		21,586		(81,220)		351,546
Accumulated other comprehensive income (loss)	(226)		(259)		159		(959)		1,059		(226)
Accumulated deficit	(360,512)		(25,353)		(36,587)		(22,573)		84,513		(360,512)
Total stockholders' equity (deficit)	(9,092)		(6,475)		4,069		(1,783)		4,189		(9,092)
Total liabilities and stockholders' equity (deficit)	$	12,261	$	24	$	4,772	$	5,880	$	(11,626)	$	11,311


REMARK HOLDINGS, INC. & SUBSIDIARIES
Consolidating Statement of Operations and Comprehensive Income (Loss) (Unaudited)
Year Ended December 31, 2021
($ in thousands)

	Corporate		WFOE		Other Owned Operating Subsidiaries		VIEs		Eliminating Entries		Consolidated 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 marketing	264		152		274		281		—		971
Marketing expense (recovery)	—		—		—		(1,530)		—		(1,530)
Technology and development	1,630		—		1,288		1,774		—		4,692
General and administrative	12,667		165		491		797		—		14,120
Depreciation and amortization	133		—		10		48		—		191
Total cost and expense	16,480		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)		3		—		6		—		(592)
Change in fair value of warrant liability	123		—		—		—		—		123
Gain on investment revaluation	43,642		—		—		—		—		43,642
Gain on debt extinguishment	425		—		—		—		—		425
Other gain	90		—		—		10		—		100
Share in net income of WFOE	947		—		—		—		(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), net	40,565		1,310		—		6		(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		4		(313)		5		(44)
Comprehensive income (loss)	$	27,472	$	1,207	$	(1,759)	$	994	$	(486)	$	27,428


REMARK HOLDINGS, INC. & SUBSIDIARIES
Consolidating Statement of Operations and Comprehensive Loss (Unaudited)
Year Ended December 31, 2020
($ in thousands)

	Corporate		WFOE		Other Owned Operating Subsidiaries		VIEs		Eliminating Entries		Consolidated Total
Revenue	$	1,731	$	25	$	513	$	7,876	$	—	$	10,145
Cost and expense
Cost of revenue (excluding depreciation and amortization)	1,068		—		22		5,332		—		6,422
Sales and marketing	327		130		1,002		1,919		—		3,378
Technology and development	2,475		—		59		1,608		—		4,142
General and administrative	8,282		245		379		462		—		9,368
Depreciation and amortization	80		1		82		145		—		308
Impairments	100		—		309		363		—		772
Total cost and expense	12,332		376		1,853		9,829		—		24,390
Operating loss	(10,601)		(351)		(1,340)		(1,953)		—		(14,245)
Other income (expense)
Interest expense	(1,306)		—		—		(36)		—		(1,342)
Other income (expense), net	(2)		7		—		(5)		—		—
Change in fair value of warrant liability	(1,610)		—		—		—		—		(1,610)
Gain on lease termination	3,582		—		—		—		—		3,582
Other loss	(8)		(57)		(5)		—		—		(70)
Share in net loss of WFOE	(2,395)		—		—		—		2,395		—
Share in net loss of other owned operating subsidiaries	(1,345)		—		—		—		1,345		—
Share in net loss of VIEs	—		(1,994)		—		—		1,994		—
Total other income (expense), net	(3,084)		(2,044)		(5)		(41)		5,734		560
Loss from operations	$	(13,685)	$	(2,395)	$	(1,345)	$	(1,994)	$	5,734	$	(13,685)
Provision for income taxes	—		—		—		—		—		—
Net loss	$	(13,685)	$	(2,395)	$	(1,345)	$	(1,994)	$	5,734	$	(13,685)
Other comprehensive loss
Foreign currency translation adjustments	—		637		5		(660)		19		1
Comprehensive loss	$	(13,685)	$	(1,758)	$	(1,340)	$	(2,654)	$	5,753	$	(13,684)


REMARK HOLDINGS, INC. & SUBSIDIARIES
Consolidating Statement of Cash Flows (Unaudited)
Year Ended December 31, 2021
($ in thousands)

	Corporate		WFOE		Other Owned Operating Subsidiaries		VIEs		Eliminating Entries		Consolidated 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 discount	880		—		—		—		—		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 subsidiaries	1,763		—		—		—		(1,763)		—
Share in net income of VIEs	—		(1,307)		—		—		1,307		—
Financing cost of converting note payable to common stock	44		—		—		—		—		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		7		—		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)		9		(1,427)		(6,748)		—		(20,174)
Cash flows from investing activities:
Proceeds from investment	2,322		—		—		—		—		2,322

SEC Form S-1 filed by Remark Holdings Inc.