Form 8-K - Current report

0001368365FALSE00013683652024-04-152024-04-15

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 15, 2024

Remark Holdings, Inc.

Delaware

001-33720

33-1135689

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

800 S. Commerce Street Las Vegas, NV

89106

702-701-9514

(Address of principal executive offices)

(Zip Code)

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class

Trading Symbol

Name of each exchange on which registered

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐ 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 13(a) of the Exchange

Act. ☐

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Item 2.02    Results of Operations and Financial Condition.

On April 15, 2024, we issued a press release announcing our financial results for the year ended December 31, 2023. A copy of such release is furnished herewith as Exhibit 99.1.

The information hereunder shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01     Financial Statements and Exhibits.

(d)    Exhibits

Exhibit Number						Description
99.1						Press release dated April 15, 2024.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

    

Remark Holdings, Inc.

Date:

April 15, 2024

By:

/s/ Kai-Shing Tao

Name:

Kai-Shing Tao

Title:

Chief Executive Officer

EXHIBIT 99.1

Remark Holdings Announces Fiscal Year 2023 Financial Results

LAS VEGAS, NV - April 15, 2024 - Remark Holdings, Inc. (OTCQX: MARK), a diversified global technology company with leading artificial intelligence (“AI”) powered computer vision solutions, today announced its financial results for the fiscal year ended December 31, 2023. For complete details of the consolidated financial statements and accompanying management’s discussion and analysis, please see Remark’s filings with the SEC (www.sec.gov).

Management Commentary

“We spent much time and effort during 2023 on building a global sales network to help our Remark AI platform to more rapidly expand. We previously relied on our staff to sell directly to customers, but with partnerships like ours with Microsoft—and soon to be with others—we expect our sales will grow rapidly,” said Kai-Shing Tao, Chairman and Chief Executive Officer of Remark Holdings. “We have spent the last month planning and will soon launch our go-to market with Microsoft, which excites us for what is to come. We are finding significant interest in our respective security, construction, and infrastructure AI solutions.”

Mr. Tao continued, “We also recently began our first proof of concept with one of the largest construction developments in the world, which is located in Saudi Arabia. We expect this will lead to many other significant opportunities in the region given our experience in deploying our smart construction platform.”

“Finally, we expect that our recent success with the Clark County School District will, given that such school district is one of the top five school districts in the U.S., lead to our ability to expand our solutions into many other school districts throughout the U.S.,” concluded Mr. Tao.

Fiscal Year 2023 Business Highlights

•The company’s Remark AI subsidiary, with its AI-powered Smart Safety Platform (“SSP”), won the first phase of a rollout by the Rio De Janeiro police department to equip their existing police car fleet with license plate and facial recognition capabilities. The value of the contract is $6.0 million, which Remark will recognize as revenue over a 30-month period once deployment can begin.

•Remark AI has joined the NVIDIA Metropolis program to increase the sale and delivery of Remark AI’s smart city AI solutions. The program nurtures a rich ecosystem and offers powerful developer tools to supercharge vision AI applications that are designed to make the world’s most important spaces and operations safer and more efficient. Remark also joined NVIDIA as part of PNY Technologies’s booth at the Smart City Expo World Congress in Barcelona held in November 2023.

•During 2023, Remark AI released its natural-language smart chat agent to investigate, file, and fulfill real-time 311 service requests, alleviating the backlog that arises from the lack of human agent support during busy and critical times.

•Remark AI also released version 1.0 of its Aero-engine Inspection Kit (the “AIK”, which was originally called the Airline Engine Safety Inspection System). The AIK is intended for use by airlines, airline maintenance teams, engine manufacturers, airplane manufacturers, aircraft leasing companies, insurance companies, and regulators, among others. In early 2024, the AIK became a part of Remark AI’s aviation

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suite of products known as the Aviation Safety Platform, which uses a large multimodal model to provide several functionalities included in three essential components: the AIK; an aircraft towing anti-collision system, and a large multimodal model for business intelligence and reporting.

•The company’s business was affected during 2023 initially by a slow economic recovery in China and then by rising political tensions between the U.S. and China, which led the company to reduce staffing levels in China to save on operating costs until political tensions ease and the business environment becomes more conducive for American companies in the AI space.

Fiscal Year 2023 Financial Results

•Revenue for fiscal year 2023 totaled $4.4 million, reflecting a 62% decrease from $11.7 million during fiscal year 2022.

◦Revenue contributed by Remark’s U.S. businesses remained unchanged at $0.3 million during the fiscal year 2023 when compared to the fiscal year 2022.

◦Revenue from China decreased to $4.1 million in fiscal year 2023 from $11.4 million in fiscal year 2022, primarily due to project completions slowing significantly in China, first as business and economic recovery efforts that began after China lifted most of its onerous COVID-19 related restrictions at the end of 2022 continued to be sluggish, and then as increased political tensions between the U.S. and China continued to make it more difficult than expected for us to complete projects.

◦We completed certain projects in China during the year ended December 31, 2023 worth approximately $1.4 million, but the agreement did not meet the criteria for revenue recognition on an accrual basis. We will recognize the revenue from such agreement as we receive the cash, but we have not yet recorded a material amount from this agreement as revenue.

•The company’s operating loss of $17.2 million during the fiscal year 2023 reflected a decrease of $4.1 million from an operating loss of $21.3 million during the fiscal year 2023. In addition to recording less revenue during 2023, Remark’s cost of revenue decreased $8.0 million in conjunction with the decrease in project completions in China and because the prior year’s cost of revenue included $1.3 million of inventory obsolescence that did not recur materially during 2023. General and administrative expense decreased by $5.0 million as bad debt expense, legal and professional fees, certain business development costs and stock-based compensation all declined during 2023. Partially offsetting the decreases in cost of revenue and general and administrative expense were increases of $1.3 million and $0.4 million, respectively, in asset impairments and sales and marketing expense.

•Remark reported a net loss of $29.1 million, or $1.74 per diluted share, during the fiscal year ended December 31, 2023, compared to a net loss of $55.5 million, or $5.22 per diluted share, during the fiscal year ended December 31, 2022. The company’s net loss decreased primarily because the company reported a $26.4 million loss on investment during the year ended December 31, 2022, whereas no investment gain or loss was reported in 2023. The decrease in Remark’s operating loss described above was offset by the net effect of a $1.8 million decrease in interest expense, which resulted from less debt principal outstanding and a decrease in debt fee and debt discount amortization, and a $6.3 million increase in finance cost, which increased due to the company’s issuance of additional convertible debentures and draws on an equity line of credit pursuant to agreements with Ionic Ventures, LLC.

•On December 31, 2023, the cash balance totaled $0.1 million, compared to a cash balance of less than $0.1 million on December 31, 2022. Net cash used in operating activities was $10.5 million during fiscal year 2023.

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Conference Call Information

Management will hold a conference call this afternoon at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss the Company’s financial results and provide an update on recent business developments. A question and answer session will follow management’s presentation.

The live conference may be accessed via telephone or online webcast.

Toll-Free Number: 844.826.3033

International Number: 412.317.5185

Conference ID: 10186735

Online Webcast:

https://viavid.webcasts.com/starthere.jsp?ei=1658690&tp_key=0f2b4324ec

Participants are advised to log in for the live webcast 10 minutes prior to the scheduled start time.

A call replay will be available after 7:30 p.m. Eastern time on the same day through April 29, 2024, at 11:59 p.m. Eastern time.

Toll-Free Replay Number: 844.512.2921

International Replay Number: 412.317.6671

Replay PIN: 10186735

About Remark Holdings, Inc.

Remark Holdings, Inc. (OTCQX: MARK) is the AI-powered analytics platform that brings valuable insights to the video feeds provided by current cameras and computer vision solutions through its integrated suite of AI tools that help organizations understand their customer behavior and demographics while providing real-time alerts to predetermined inspection and security parameters. Remark’s international team of sector-experienced professionals has created award-winning GDPR-compliant and CCPA-compliant video analytics solutions that service the government agencies, hospitality, public safety, retail, and transportation sectors. The company’s headquarters are in Las Vegas, Nevada, USA, with operational offices in New York and international offices in London, England. For more information, please visit our home page at www.remarkholdings.com.

Forward-Looking Statements

This press release may contain forward-looking statements, including information relating to future events, future financial performance, strategies, expectations, competitive environment, and regulations. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in the future tense, identify forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors, including those discussed in Part I, Item 1A. Risk Factors in Remark Holdings’ Annual Report on Form 10-K and Remark Holdings’ other filings with the SEC. Any forward-looking statements reflect Remark Holdings’ current views concerning future events, are based on assumptions, and are subject to risks and uncertainties. Given such uncertainties, you should not rely on any forward-looking statements, which represent Remark Holdings’ estimates and assumptions only as of the date hereof. Except as required by law, Remark Holdings undertakes no obligation to update or revise publicly any forward-looking statements after the date hereof, whether as a result of new information, future events, or otherwise.

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Company Contacts

Fay Tian

Vice President of Investor Relations

[e-mail]

([phone]

([phone]

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REMARK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(dollars in thousands, except share and per share amounts)

			December 31,
			2023						2022
Assets
Cash			$	145					$	52
Trade accounts receivable, net			1,287						3,091
Inventory, net			750						308
Deferred cost of revenue			6,644						7,463
Prepaid expense and other current assets			614						1,374
Total current assets			9,440						12,288
Property and equipment, net			189						1,699
Operating lease assets			517						180
Other long-term assets			90						269
Total assets			$	10,236					$	14,436
Liabilities
Accounts payable			$	9,348					$	9,602
Advances from related parties			1,205						1,174
Obligations to issue common stock			10,033						1,892
Accrued expense and other current liabilities (including $495 of delinquent payroll taxes)			11,921						7,222
Contract liability			570						308
Notes payable (past due)			16,463						14,607
Total current liabilities			49,540						34,805
Operating lease liabilities, long-term			286						56
Total liabilities			49,826						34,861
Commitments and contingencies
Stockholders’ Deficit
Preferred stock, $0.001 par value; 1,000,000 shares authorized; zero issued			—						—
Common stock, $0.001 par value; 175,000,000 shares authorized; 22,038,855 and 11,539,564 shares issued and outstanding at December 31, 2023 and 2022, respectively			22						12
Additional paid-in-capital			379,244						368,945
Accumulated other comprehensive loss			(1,186)						(859)
Accumulated deficit			(417,670)						(388,523)
Total stockholders’ deficit			(39,590)						(20,425)
Total liabilities and stockholders’ deficit			$	10,236					$	14,436

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REMARK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Loss

(dollars in thousands, except per share amounts)

									Year Ended December 31,
															2023						2022
Revenue, including amounts from China Business Partner															$	4,402					$	11,666
Cost and expense
Cost of revenue (excluding depreciation and amortization)															3,323						11,331
Sales and marketing1															1,408						971
Technology and development1															1,893						2,101
General and administrative1															13,374						18,399
Depreciation and amortization															285						166
Impairments															1,280						—
Total cost and expense															21,563						32,968
Operating loss															(17,161)						(21,302)
Other expense
Interest expense															(4,294)						(6,073)
Finance cost related to obligations to issue common stock															(7,672)						(1,422)
Loss on investment															—						(26,356)
Other loss, net															(20)						(339)
Total other expense, net															(11,986)						(34,190)
Loss from before income taxes															(29,147)						(55,492)
Benefit from income taxes															—						9
Net loss															$	(29,147)					$	(55,483)
Other comprehensive loss
Foreign currency translation adjustments															(327)						(589)
Comprehensive loss															$	(29,474)					$	(56,072)
Weighted-average shares outstanding, basic and diluted															16,741,677						10,630,771
Net loss per share, basic and diluted															$	(1.74)					$	(5.22)
1 Includes share-based compensation as follows:
Sales and marketing															$	3					$	3
Technology and development															(3)						(267)
General and administrative															157						1,961

Cover Page	Apr. 15, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Apr. 15, 2024
Entity Registrant Name	Remark Holdings, Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-33720
Entity Tax Identification Number	33-1135689
Entity Address, Address Line One	800 S. Commerce Street
Entity Address, City or Town	Las Vegas
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89106
City Area Code	702
Local Phone Number	701-9514
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security
Trading Symbol
Security Exchange Name
Entity Emerging Growth Company	false
Entity Central Index Key	0001368365
Amendment Flag	false

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