UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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Remark Holdings, Inc.
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PRELIMINARY PROXY STATEMENT
SUBJECT TO COMPLETION - DATED [●], 2022
800 S. Commerce St.
Las Vegas, Nevada 89106
NOTICE OF ANNUALSPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 23, 2021[●], 2022
Dear Stockholder:
We cordially invite you to the Remark Holdings, Inc. (“Remark,” “we,” “us,” or “our”) 2021 annualspecial meeting of stockholders (the “Annual“Special Meeting”), which will be held on August 23, 2021[●], 2022 at 1:00 p.m.[●] ET. Due to the ongoing precautions related to the public health impact of COVID-19, weWe will be holding our AnnualSpecial Meeting in a virtual meeting format only, via audio webcast. You may attend, vote and submit questions during the AnnualSpecial Meeting via the Internet at https://meetings.computershare.com/MGH2UJU.[●]. We have designed the format of the AnnualSpecial Meeting to ensure that you are afforded the same rights and opportunities to participate as you would at an in-person meeting, using online tools to ensure your access and participation.
We have scheduled the AnnualSpecial Meeting to:
1.elect five directorsapprove an amendment to serve untilour Amended and Restated Certificate of Incorporation to effect a reverse stock split of all of the 2022 annual meetingoutstanding shares of stockholdersour common stock at a ratio of not less than 1-for-10 and until their successors are duly elected and qualify;not more than 1-for-20, with the exact ratio to be set at a whole number within this range by our Board of Directors in its sole discretion (the “Reverse Stock Split Proposal”);
2.ratifyapprove, in accordance with Nasdaq Rule 5635(d), the appointmentpotential issuance of Weinberg & Company, P.A. as20% or more of our independent registered public accounting firm for the fiscal year ending December 31, 2021;common stock pursuant to our convertible subordinated debenture and equity line of credit with Ionic Ventures, LLC (the “Nasdaq Proposal”); and
3.transact such other business as may properly come before the AnnualSpecial Meeting or any adjournment or postponement thereof.
The accompanying proxy statement sets forth additional information regarding the AnnualSpecial Meeting, and provides you with detailed information regarding the business to be considered at the AnnualSpecial Meeting. We encourage you to read the proxy statement carefully and in its entirety.
Only persons or entities holding shares of our Common Stock,common stock, at the close of business on July 2, 2021,October 11, 2022 , the record date for the AnnualSpecial Meeting, will receive notice of the AnnualSpecial Meeting and be entitled to vote during the AnnualSpecial Meeting or any adjournments or postponements thereof.
For a period of at least ten (10) days prior to the virtual AnnualSpecial Meeting, a complete list of stockholders entitled to vote at the meeting will be available and open to the examination of any stockholder for any purpose germane to
the virtual AnnualSpecial Meeting during normal business hours at our principal executive offices located at 800 S. Commerce St., Las Vegas, Nevada 89106. If our principal executive offices are closed at that time due to COVID-19, please email ir@remarkholdings.com to make alternate arrangements to examine the stockholder list.
YOUR VOTE IS VERY IMPORTANT.IMPORTANT. Regardless of whether you plan to attend the virtual AnnualSpecial Meeting, we ask that you promptly sign, date and return the enclosed proxy card or voting instruction card in the envelope provided, or cast your vote via telephone or the Internet following the instructions provided inon the Notice of Internet Availability of Proxy Materials. We encourage you to vote via the Internet, because we believe doing so provides the most convenient option for our stockholders, lowers the cost of our annual meeting and conserves natural resources.enclosed proxy card or voting instruction card.
| | | | | |
| By order of the Board of Directors, |
| |
| Kai-Shing Tao |
| Chairman and Chief Executive Officer |
This Notice of Special Meeting of Stockholders, proxy statement and form of proxy are first being mailed to stockholders on or about [●], 2022
Important Notice Regarding the Availability of Proxy Materials for the AnnualSpecial Meeting
Our proxy statement follows, and our Annual Report on Form 10-K contains financial and other information regarding Remark. YouIn addition to the printed materials noted above, you may find the Notice of Special Meeting of Stockholders and the proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2020 at www.envisionreports.com/MARK.
TABLE OF CONTENTS
REMARK HOLDINGS, INC.
800 S. Commerce St.
Las Vegas, NV 89106
| | | | | | | | |
| PROXY STATEMENT | |
| FOR | |
| 2021 ANNUALSPECIAL MEETING OF STOCKHOLDERS | |
ANNUALSPECIAL MEETING INFORMATION
| | | | | |
| When | August 23, 2021[●], 2022
1:00 p.m.[●] ET
|
| Where | Virtual meeting at https://meetings.computershare.com/MGH2UJU[●] |
| Who May Vote | Persons or entities holding shares of our common stock, $0.001 par value per share (“Common Stock”), at the close of business on the record date (“Stockholders”) |
| Record Date | July 2, 2021October 11, 2022 |
General
Remark Holdings, Inc. (“Remark,” “we,” “us” or “our”), is making this proxy statement (this(the “Proxy Statement”) available to you on or about July 15, 2021 in connection with the solicitation of proxies by our board of directors (the “Board” or “Board of Directors”) for our 2021 AnnualSpecial Meeting of Stockholders (the “Annual“Special Meeting”). The proxy materials, which you can find at www.envisionreports.com/MARK, include theThis Proxy Statement our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”), and the accompanying notice and form of proxy. References in the Proxy Statementproxy are first being mailed to the Annual Meeting also refer to any adjournments, postponementsstockholders on or changes in location of the meeting, to the extent applicable.about [●], 2022.
Pursuant to the rules of the Securities and Exchange Commission (the “SEC”), we are providing access to our proxy materials over the Internet rather than printing and mailing them to all stockholders. We believe electronic delivery will expedite the receipt of these materials, reduce the environmental impact of our annualspecial meeting materials and will help lower our costs. Therefore, we are mailing a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) to stockholders (or e-mailing, in the case of stockholders that have previously requested to receive proxy materials electronically) starting on or about July 15, 2021.[●], 2022. The Notice of Internet Availability will provide instructions as to how stockholders may access and review the proxy materials on the website referred to in the Notice of Internet Availability or, alternatively, how to request that a copy of the proxy materials, including a proxy card, be sent to them by mail. The Notice of Internet Availability will also provide voting instructions. In addition, stockholders may request to receive the proxy materials in printed form by mail or electronically by e-mail on an ongoing basis for future stockholder meetings. Please note that, although our proxy materials are available on our website, no other information contained on the website is incorporated by reference in or considered to be a part of this Proxy Statement.
Attending and Participating at the Virtual Special Meeting
We will be holding our Special Meeting in a virtual meeting format only, via audio webcast. If you are a stockholder of record as of the close of business on October 11, 2022 , you may attend, vote, ask questions and view the list of stockholders of record as of October 11, 2022 during the meeting by logging into the meeting at [●].
Attending and Participating at the Virtual Annual Meeting
Due to the ongoing precautions related to the public health impact of COVID-19, we will be holding our Annual Meeting in a virtual meeting format only, via audio webcast. If you are a stockholder of record as of the close of business on July 2, 2021, you may attend, vote, ask questions and view the list of stockholders of record as of July 2, 2021 during the meeting by logging into the meeting at https://meetings.computershare.com/MGH2UJU.
Rationale for the Virtual Format
As a part of our precautions relating to COVID-19, we have decided to hold our Annual Meeting in a virtual meeting format only. We believe that hosting a virtual meeting under the current environment will facilitate stockholder attendance and participation by enabling stockholders to participate from any location around the world and improve our ability to communicate more effectively with our stockholders. We have designed the virtual meeting to provide substantially the same opportunities to participate as you would have at an in-person meeting. We are providing opportunities to submit questions prior to the meeting, to enable us to address appropriate questions at the Annual Meeting.
VOTING INFORMATION
The Proxy Statement summarizes the information you need to know to vote at the AnnualSpecial Meeting. You do not need to attend the AnnualSpecial Meeting to vote your shares.
Meeting Agenda and Voting Recommendations
| | | | | | | | | | | | | | |
| Proposal | | Voting Recommendation of our Board of Directors | | Page on Which You May Find More Information |
Election of five directors | | FOR each director nominee
| | |
Ratification of the appointment of Weinberg & Company, P.A. (“Weinberg”) as our independent registered public accounting firm for fiscal 2020The Reverse Stock Split Proposal | | FOR | | |
| The Nasdaq Proposal | | FOR | | |
Voting Your Shares
All Stockholders are entitled to cast one vote per share on all matters. Please follow the voting instructions provided on the Notice of Internet Availability.proxy card or voting instruction card. If you choose to vote your shares at the AnnualSpecial Meeting by proxy and you indicate your voting choices, your shares will be voted as you instructed. If you execute a proxy without indicating your vote, your shares will be voted in accordance with the Board’s recommendations noted in the table above and in accordance with the best judgment of the named proxies on any other matters properly brought before the AnnualSpecial Meeting.
If you are a registered Stockholder, we must receive your vote by proxy before the polls close at the Annual Meeting, except that votes submitted via the Internet or telephone must be received by 1:00 p.m. ET on August 23, 2021.Special Meeting.
If you are the beneficial owner of shares of our Common Stock, please follow the instructions provided by your broker or nominee regarding how to provide your voting instructions. Because a beneficial owner is not the stockholder of record, you may not vote these shares in personvirtually at the meeting unless you obtain a “legal proxy” from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting. Once you have received a legal proxy from your broker, bank or nominee, it should be emailed to legalproxy@computershare.com and should be labeled “Legal Proxy” in the subject line. Please include proof from your broker, bank or nominee of your legal proxy (e.g., a forwarded email from your broker, bank or other agent with
your legal proxy attached, or an image of your legal proxy attached to your email). Requests for registration must be received by legalproxy@computershare.com no later than 5:00 p.m.[●] ET, on August 17, 2021.[●], 2022.
If you do not provide voting instructions to your broker or nominee, they can still vote your shares with respect to certain “discretionary” items, but they cannot vote your shares with respect to certain “non-discretionary” items. The proposal to ratify the appointment of Weinberg as our independent registered public accounting firm for fiscal 2021Reverse Stock Split Proposal is considered a discretionary item while the election of directors and other proposals aretherefore, your broker or nominee will be able to vote your shares at its discretion with respect to such proposal if you do not provide voting instructions on such proposal and there will not be any broker non-votes with respect to such proposal. The Nasdaq Proposal is a non-discretionary items.item. Regarding non-discretionary items, the number of shares for which you do not provide voting instructions to your broker or nominee will be counted as “broker non-votes”.non-votes.” Broker non-votes are shares which are held on behalf of a beneficial owner by a broker or nominee which indicates on its proxy that it did not have or did not exercise discretionary authority to vote on a particular matter. In tabulating the voting results for the Nasdaq Proposal, shares that constitute broker non-votes will have no effect on the outcome of the proposals,proposal, assuming that a quorum is present. You may vote your beneficially-owned shares in personvirtually at the AnnualSpecial Meeting only if at the AnnualSpecial Meeting you present a legal proxy provided to you by your broker or nominee.
Proxy instructions, ballots and voting tabulations that identify individual Stockholders are handled in a manner that protects the voting privacy of such individual Stockholders. Stockholders’ votes will not be disclosed either within Remark or to third parties, except: (1) as necessary to meet applicable legal requirements; (2) to allow for the tabulation of votes and certification of the vote; and (3) to facilitate a successful proxy solicitation.
Revoking Your Proxy
If you are a registered Stockholder, you may revoke your proxy and your voting instructions at any time before it is voted at the AnnualSpecial Meeting by:
•sending written notice of revocation to our Corporate Secretary;
•submitting a new, properly-executed proxy dated later than the date of the revoked proxy; or
•attending the AnnualSpecial Meeting and voting in person.virtually at the Special Meeting.
If you are the beneficial owner of shares of our Common Stock, you may submit new voting instructions by contacting your broker or nominee. You may also vote via the Internet at the AnnualSpecial Meeting as described in the previous section. Virtual attendance at the AnnualSpecial Meeting will not, by itself, revoke a proxy.
Vote Required
As of July 2, 2021, the record date,October 11, 2022 , there were 99,918,941106,407,769 shares of Common Stock outstanding and there were no outstanding shares of any other class of stock. Holders of at least a majority of the outstanding shares of our Common Stock, or 49,959,47153,203,885 shares, must be present at the AnnualSpecial Meeting in person or must be represented at the AnnualSpecial Meeting by proxy to constitute a quorum allowing for the transaction of business. Virtual attendance at the AnnualSpecial Meeting constitutes presence in person for purposes of quorum at the meeting. Broker non-votes and abstentionsAbstentions are counted for the purpose of determining the presence of a quorum.
InThe approval of the election of directors (Proposal 1), each director nominee receiving a plurality ofReverse Stock Split Proposal requires the affirmative (“FOR”) vote of at least a majority of the outstanding shares of Common Stock entitled to vote at the Special Meeting. Abstentions will have the same effect as votes cast will be elected (meaning that the five director nominees who receive the highest number of shares voted “for” their election are elected). You may withhold votes from any or all nominees. We“AGAINST” this proposal. A vote on this proposal is considered a discretionary item. Therefore, we do not use cumulative voting for the election of directors. Brokerexpect any broker non-votes on this proposal and a failure to instruct your broker, bank or other nominee on how to vote your shares will not affect the outcome of the election of directors.necessarily count as a vote against this proposal.
The ratificationapproval of the appointment of Weinberg as our independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal 2)Nasdaq Proposal requires the affirmative (“FOR”) vote of a majority of the votes cast on the matter (meaning the number of shares voted “for” thisthe proposal must exceed the number of shares voted “against” thisthe proposal). Abstentions and broker non-votes will have no effect on the results of the vote on this proposal.
PROPOSALS TO BE SUBMITTED FOR VOTING
Proposal 2,1: Reverse Stock Split Proposal
General and sinceBackground
On September 15, 2022, subject to stockholder approval, our Board approved an amendment to our Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to effect a reverse stock split of all of our issued and outstanding Common Stock at a ratio of not less than 1-for-10 and not more than 1-for-20 (the “Reverse Stock Split”). The exact ratio of the Reverse Stock Split will be set within this range as determined by our Board of Directors in its sole discretion and will be publicly announced by us prior to the Effective Time (as defined hereafter). The goal of the Reverse Stock Split is to increase the per share market price of our Common Stock to meet the minimum per share bid price requirement for continued listing on the Nasdaq Capital Market. The Reverse Stock Split is not intended as, and will not have the effect of, a “going private transaction” covered by Rule 13e-3 promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”). The Reverse Stock Split is not intended to modify the rights of existing stockholders in any material respect.
If our stockholders approve the Reverse Stock Split at the Special Meeting and the Reverse Stock Split is effected, up to every 20 shares of our issued and outstanding Common Stock would be combined and converted into 1 share of Common Stock. The actual timing for implementation of the Reverse Stock Split would be determined by our Board of Directors based upon its evaluation as to when such action would be most advantageous to our Company and our stockholders. Notwithstanding approval of the Reverse Stock Split Proposal 2 is a routine proposal on which a broker or other nominee is generally empowered to vote in the absence of voting instructions from the beneficial owner, broker non-votes are unlikely to result from the voting on Proposal 2.
by our stockholders, our Board of Directors will have the sole authority to elect whether, and when, to amend our Certificate of Incorporation to effect the Reverse Stock Split. If the Reverse Stock Split Proposal is approved by our stockholders, our Board of Directors will make a determination as to whether effecting the Reverse Stock Split is in the best interests of our Company and our stockholders in light of, among other things, our ability to increase the trading price of our Common Stock to meet the minimum per share bid price requirement of the Nasdaq Capital Market without effecting the Reverse Stock Split, the per share price of the Common Stock immediately prior to the Reverse Stock Split and the expected stability of the per share price of the Common Stock following the Reverse Stock Split. If our Board of Directors determines that it is in the best interests of our Company and our stockholders to effect the Reverse Stock Split, it will hold a board meeting to determine the exact ratio of the Reverse Stock Split.
PROPOSALS TO BE SUBMITTED FOR VOTING
The text of the proposed amendment to the Certificate of Incorporation to effect the Reverse Stock Split is included as Annex A to this proxy statement (the “Charter Amendment”). If the Reverse Stock Split Proposal 1: Electionis approved by our stockholders, we will have the authority to file the Charter Amendment with the Secretary of State of the State of Delaware, which will become effective upon its filing; provided, however, that the Charter Amendment is subject to revision to include such changes as may be required by the office of the Secretary of State of the State of Delaware and as our Board of Directors
There are five nominees deems necessary and advisable. Our Board of Directors has determined that the Charter Amendment is advisable and in the best interests of our company and our stockholders and has submitted the Charter Amendment for election to the Boardconsideration by our stockholders at the Annual Meeting: Theodore P. Botts, Brett Ratner, Daniel Stein, Elizabeth Xu and Kai-Shing Tao. Each of the nominees currently serves as a director.
Each director is elected annually to serve until the next annual meeting of stockholders and until his or her successor is duly elected and qualifies. Except where authority to vote for directors has been withheld, it is intended that the proxies received pursuant to this solicitation will be voted “FOR” the nominees named below. If for any reason any nominee does not stand for election, such proxies will be voted in favor of the remainder of those named and may be voted for substitute nominees in place of those who do not stand. Management has no reason to expect that any of the nominees will not stand for election. The election of directors will be determined by a plurality of the affirmative (“FOR”) votes cast.
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.
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Name | | Age | | Position |
Kai-Shing Tao | | 44 | | Chief Executive Officer and Chairman of the Board |
Theodore P. Botts | | 75 | | Director and Chairman of the Audit Committee |
Elizabeth Xu | | 56 | | Director |
Brett Ratner | | 52 | | Director and Chairman of the Compensation Committee |
Daniel Stein | | 45 | | Director and Chairman of the Nominating and Governance Committee |
Special Meeting.
Executive OfficerReasons for the Proposed Reverse Stock Split
Kai-Shing Tao has served asWe are submitting this proposal to our Chief Executive Officer since December 2012, previously serving as Co-Chief Executive Officer since October 2012, and as a memberstockholders for approval to increase the trading price of our Board since 2007Common Stock to meet the minimum per share bid price requirement and Chairmanavoid the delisting of our Common Stock from The Nasdaq Stock Market (“Nasdaq”).
On February 25, 2022, we received written notice from Nasdaq’s Listing Qualifications Department notifying us that, for a period of 30 consecutive business days, the bid price of our Common Stock had 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 are 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. Accordingly, unless we request an appeal of Nasdaq’s determination, our Common Stock is subject to delisting. We have appealed Nasdaq’s delisting determination to a Hearings Panel (the “Panel”) , which heard our presentation at a hearing held on October 6, 2022. We expect that the Panel will announce its decision within 30 days of the Board since October 2012. Mr. Tao also has served as Chairmandate of the hearing. Our Common Stock will continue to be listed and Chief Investment Officertraded on the Nasdaq Capital Market pending a decision by the Panel.
We believe that if our Common Stock is delisted from Nasdaq, it would be undesirable for our stockholders and detrimental to our business. Among other things, delisting from Nasdaq could make trading our Common Stock more difficult for investors, potentially leading to further declines in our share price and liquidity. Without a Nasdaq listing, stockholders may have a difficult time getting a quote for the sale or purchase 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 headedour Common Stock, the global liquid investments outside the operating companies. Mr. Tao has been a directorsale or purchase of Paradise Entertainment Limited (SEHK: 1180), a Hong-Kong-Stock-Exchange-traded company engaged in casino servicesour Common Stock would likely be made more difficult, and the development, supplytrading volume and salesliquidity of electronic gaming systems, since April 2014. Mr. Tao previously wasour Common Stock could decline. Delisting from the Nasdaq could also result in negative publicity and could also make it more difficult for us to raise additional capital. The absence of such a directorlisting may adversely affect the acceptance of Playboy Enterprises, Inc.our Common Stock as currency or the value accorded our Common Stock by other parties. We believe that the Reverse Stock Split is our best option to meet the criteria to satisfy the Bid Price Rule for continued listing on the Nasdaq Capital Market. A decrease in the number of outstanding shares of our Common Stock resulting from May 2010 to March 2011. Mr. Tao is a graduatethe Reverse Stock Split should, absent other factors, assist in ensuring that the per share market price of our Common Stock remains above the requisite price for continued listing. However, we cannot provide any assurance that the bid price of our Common Stock would remain above the minimum bid price requirement of the New York University Stern School of Business.Nasdaq Capital Market following the Reverse Stock Split.
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 also served 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, from 2003 to 2012. Mr. Botts graduated with highest honors from Williams College and received an MBA fromPotential Consequences if the New York University Stern School of Business.Reverse Stock Split Proposal is Not Approved.
Brett Ratner has been a memberIf the Reverse Stock Split Proposal is not approved by our stockholders, our Board will not have the authority to effect the Reverse Stock Split. Any inability of our Board since March 2017. Mr. Ratner is one of Hollywood's most successful filmmakers. His films have grossed more than $2 billion atDirectors to effect 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 degreeReverse Stock Split could expose us to delisting 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 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 to multiple businesses. She was a Stanford University lecturer for six years, and she currently serves as an Innovation and Entrepreneurship Advisor at MIT and Chairman of the APAC advisory board of Women in Technology International (WITI.com). Currently, Dr. Xu is the CEO of A2C Leadership Group which offers online personalized training and boot camps for corporations, executives, working professionals, and middle/high school students, focusing on innovation and leadership. 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 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, with BMC Software, Inc. (“BMC”), 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. Before joining BMC, Dr. Xu held senior management positions at several other organizations, including Group Vice President of product engineering at LiveRamp Holdings, Inc. (formerly known as Acxiom Corporation), Global Senior Vice President of product development at Deem (formerly known as Rearden Commerce) and Global Senior Vice President of product development at Vitria Technology. She started her management career at IBM in 1996, where she developed the IBM Content Management Suite and DB2. Dr. Xu earned a B.S. degree and an M.S. degree from Peking University, as well as an M.S. in Computer Science and a Ph.D. in Atmospheric Science from the University of Nevada, Reno. She has also completed advanced executive-education programs at Stanford Business School and earned a board certificate from Harvard Business School.Nasdaq.
Director QualificationsRisks Associated with the Reverse Stock Split
The Reverse Stock Split May Not Increase the Price of our Common Stock over the Long Term.
As noted above, the principal purpose of the Reverse Stock Split is to increase the trading price of our Common Stock to comply with the Bid Price Rule. However, the effect of the Reverse Stock Split on the market price of our Common Stock cannot be predicted with any certainty, and we cannot assure you that the Reverse Stock Split will accomplish this objective for any meaningful period of time, or at all. While we expect that the reduction in the number of outstanding shares of Common Stock will proportionally increase the market price of our Common Stock, we cannot assure you that the Reverse Stock Split will increase the market price of our Common Stock by a multiple of the Reverse Stock Split ratio selected by our Board, or result in any permanent or sustained increase in the market price of our Common Stock. The market price of our Common Stock may be affected by other factors which may be unrelated to the number of shares outstanding, including our business and financial performance, general market conditions, and prospects for future success.
The Reverse Stock Split May Decrease the Liquidity of our Common Stock.
The Board comprisesReverse Stock Split may result in an increase in the market price of our Common Stock, which could lead to increased interest in our Common Stock and possibly promote greater liquidity for our stockholders. However, the Reverse Stock Split will also reduce the total number of outstanding shares of Common Stock, which may lead to reduced trading and a diverse groupsmaller number of leaders in their respective fields. Somemarket makers for our Common Stock, particularly if the price per share of our Common Stock does not increase as a result of the current directors have senior leadership experience at major domesticReverse Stock Split.
The Reverse Stock Split May Result in Some Stockholders Owning “Odd Lots” That May Be More Difficult to Sell or Require Greater Transaction Costs per Share to Sell.
If the Reverse Stock Split is implemented, it will increase the number of stockholders who own “odd lots” of less than 100 shares of Common Stock. A purchase or sale of less than 100 shares of Common Stock (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own fewer than 100 shares of Common Stock following the Reverse Stock Split may be required to pay higher transaction costs if they sell their Common Stock.
The Reverse Stock Split May Lead to a Decrease in our Overall Market Capitalization.
The Reverse Stock Split may be viewed negatively by the market and, international corporations. In these positions, they have gained experienceconsequently, could lead to a decrease in core management skills, such as strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development. Someour overall market capitalization. If the per share market price of our directors alsoCommon Stock does not increase in proportion to the Reverse Stock Split ratio, or following such increase does not maintain or exceed such price, then the value of our Company, as measured by our market capitalization, will be reduced. Additionally, any reduction in our market capitalization may be magnified as a result of the smaller number of total shares of Common Stock outstanding following the Reverse Stock Split.
Board Discretion to Effect the Reverse Stock Split
If the Reverse Stock Split is approved by our stockholders, our Board of Directors will have experience serving on boardsthe discretion to implement the Reverse Stock Split or to not effect the Reverse Stock Split at all. Our Board of directors and board committeesDirectors currently intends to effect the Reverse Stock Split. If the trading price of other public companies, and have an understandingour Common Stock increases without effecting the Reverse Stock Split, the Reverse Stock Split may not be necessary. Following the Reverse Stock Split, if implemented, there can be no assurance that the market price of corporateour Common Stock will rise in proportion to the
governance practices and trends, which provides an understandingreduction in the number of different business processes, challenges, and strategies. Other directors have experienceoutstanding shares resulting from the Reverse Stock Split or 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 believesnoted above, that the above-mentioned attributes, along with the leadership skills and other experiencesmarket price of the directors described below, provide us with a diverse range of perspectives and judgment necessary to guidepost-split Common Stock can be maintained above $1.00. There also can be no assurance that our strategies and monitor their execution.
Common Stock will not be delisted from Nasdaq for other reasons.
Kai-Shing Tao
•KnowledgeIf our stockholders approve the Reverse Stock Split at the Special Meeting, the Reverse Stock Split will be effected, if at all, only upon a determination by our Board of Directors that the Reverse Stock Split is in the best interests of our Company and experience regarding Remark from serving as our Chief Executive Officer since December 2012stockholders at that time. No further action on the part of the stockholders will be required to either effect or abandon the Reverse Stock Split. If our Board of Directors determines not to implement the Reverse Stock Split following stockholder approval of this proposal, the authority granted in this proposal to implement the Reverse Stock Split will terminate and the Charter Amendment will be abandoned.
•Global financial industryThe market price of our Common Stock is dependent upon our performance and investment experienceother factors, some of which are unrelated to the number of shares outstanding. If the Reverse Stock Split is effected and extensive knowledgethe market price of Asian marketsour Common Stock declines, the percentage decline as Chief Investment Officeran absolute number and as a percentage of Pacific Star Capital and a former memberour overall market capitalization may be greater than would occur in the absence of the U.S.-ChinaReverse Stock Split. Furthermore, the reduced number of shares that will be outstanding after the Reverse Stock Split could significantly reduce the trading volume and U.S.-Taiwan Business Councilotherwise adversely affect the liquidity of our Common Stock.
•Outside public company board experience asWe have not proposed the Reverse Stock Split in response to any effort of which we are aware to accumulate our shares of Common Stock or obtain control of our Company, nor is it a former directorplan by management to recommend a series of Playboy Enterprises, Inc.similar actions to our Board of Directors or our stockholders. Notwithstanding the decrease in the number of outstanding shares of Common Stock following the Reverse Stock Split, our Board of Directors does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.
Theodore P. Botts
•Global financial advisory experience and extensive knowledgeEffects of the technology sector as President of Kensington Gate Capital, LLCReverse Stock Split
•Outside board experience as a director and chairmanEffects of the audit committee of INTAC InternationalReverse Stock Split on Issued and Outstanding Shares
•Global financial industry experienceIf the Reverse Stock Split is effected, each stockholder will own a reduced number of shares of Common Stock. This would affect all of our stockholders uniformly and would not affect any stockholder’s percentage ownership in the Company, except to the extent that the Reverse Stock Split would result in an adjustment to a stockholder’s ownership of Common Stock due to the treatment of fractional shares in the Reverse Stock Split. Therefore, voting rights and other rights and preferences of the holders of Common Stock will not be affected by the Reverse Stock Split (other than as an executive at UBS Groupa result of the treatment of fractional shares). Common Stock issued pursuant to the Reverse Stock Split will remain fully paid and Goldman Sachsnonassessable, and the par value per share of the Common Stock will remain $0.001.
Brett Ratner
•Extensive experienceOur Certificate of Incorporation presently authorizes the issuance of One Hundred Seventy-Six Million (176,000,000) shares, of which One Hundred Seventy-Five Million (175,000,000) shares shall be Common Stock and One Million (1,000,000) shares shall be Preferred Stock (the “Preferred Stock”). The Reverse Stock Split would not change the number of authorized shares of Common Stock or Preferred Stock. Therefore, because the number of issued and outstanding shares of Common Stock would decrease, the number of shares remaining available for issuance by us in the entertainment industry,future would increase. These additional shares would be available for issuance from time to time for corporate purposes such as issuances of Common Stock in connection with capital-raising transactions as well as for issuance upon conversion or exercise of securities such as convertible debt, warrants, or options convertible into or exercisable for Common Stock. We believe that the availability of the additional shares will provide us with flexibility to meet business needs as they arise, to take advantage of favorable opportunities, and to respond effectively in a changing corporate environment. If we issue additional shares for any of these purposes, the aggregate ownership interest of our current stockholders, and the interest of each such existing stockholder, would be diluted, possibly substantially. While we are currently not party to any agreements providing for the issuance of the additional authorized but unissued and unreserved shares of Common Stock that would be created by the Reverse Stock Split, we regularly consider our capital requirements and may conduct securities offerings, including co-founding and operating a successful film finance and media companyequity and/or equity linked offerings, in the future.
Daniel Stein
•Operational experience leading data monetization effortsThe increased number of available authorized but unissued shares as a result of the Reverse Stock Split would also give our Board and management more flexibility to resist or impede a third-party takeover bid. Although not designed or intended 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 yearssuch purposes, the effect 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
the increased available shares might be to make more difficult
Family Relationships
There are no family relationships among our executive officers and directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Under §16(a)or to discourage an attempt to take over or otherwise acquire control of the Exchange ActCompany (for example, by permitting issuances that would dilute the stock ownership of 1934, as amendeda person or entity seeking to effect a change in the composition of the board of directors or contemplating a tender offer or other change in control transaction). Any such anti-takeover effect of a reverse stock split would be in addition to existing anti-takeover provisions of the Certificate of Incorporation and the Amended and Restated Bylaws (the “Exchange Act”“Bylaws”),. Our Board is not presently aware of any attempt, or contemplated attempt, to acquire control of the Company, and the Reverse Stock Split Proposal is not part of any plan by our directors, executive officers and holdersBoard to recommend or implement a series of more than 10% of our Common Stock, must file initial reports of ownership and reports of changes in ownership with the SEC, and under SEC regulations, they must furnish us with copies of all §16(a) forms filed.anti-takeover measures.
Delinquent Section 16(a) Reports. To our knowledge, based solely upon our reviewEffects of the copies of the forms furnished to us, we believe that our directors, executive officersReverse Stock Split on Outstanding Equity Incentive Awards and holders of more than 10% of our Common Stock complied with all §16(a) filing requirements during 2020, except that on August 5, 2020, Messrs. Botts, Stein and Ratner, and Dr. Xu, directors of Remark, each filed a Statement of Changes in Beneficial Ownership on Form 4 covering one transaction that occurred on July 27, 2020.Plans
Certain RelationshipsIf the Reverse Stock Split is effected, all outstanding equity awards granted under our 2010 Equity Incentive Plan, 2014 Incentive Plan, 2017 Incentive Plan and Related Transactions2022 Incentive Plan (collectively, the “Incentive Plans”) will be proportionately reduced in accordance with the terms of the applicable Incentive Plan in the same ratio as the reduction in the number of shares of outstanding Common Stock (subject to the treatment of fractional shares as described below). The per share exercise price of any outstanding options will be correspondingly increased in direct proportion to the Reverse Stock Split ratio, such that the aggregate dollar amount payable for the purchase of shares subject to the options will remain unchanged (subject to the treatment of fractional shares as described below). In addition, the total number of shares of Common Stock available for future grants under the Incentive Plans will be proportionately reduced as a result of the Reverse Stock Split.
All related-party transactions are required to be reviewed and approved byAs of October 11, 2022 , the Audit Committee. Such policy and procedures are set forth in the Audit Committee charter.
Vote Required
Each nominee receiving a plurality of the affirmative (“FOR”) votes cast will be elected to the Board (meaning that the five director nominees who receive the highest number of shares voted “for” their election are elected). “Withhold” votes and broker non-votes are not considered votes castof Common Stock that remained available for the foregoing purpose, and will have no effect on the electionfuture issuance under each of the nominees.
Recommendation of2010 Equity Incentive Plan, 2014 Incentive Plan, the Board
The Board unanimously recommends a vote “FOR” the election of each of its nominees to the Board to serve until2017 Incentive Plan and the 2022 Annual Meeting of StockholdersIncentive Plan is: zero; 1,476,102; 1,850,143 and until their successors are duly elected and qualify.10,000,000; respectively.
Proposal 2: RatificationEffects of Appointment of Independent Registered Public Accounting Firmthe Reverse Stock Split on Outstanding Warrants
The Audit CommitteeIn addition, we have issued (i) warrants to purchase 4,237,290 shares of Common Stock at an exercise price of $1.35 per share to Armistice Capital Master Fund Ltd. (the “Armistice Warrants”), (ii) warrants to purchase an aggregate of 127,118 shares of Common Stock at an exercise price of $1.35 per share to A.G.P./Alliance Global Partners and its designees (the “Financial Advisor Warrants”), (iii) warrants as part of the Board has appointed Weinberg asconsideration for our independent registered public accounting firmacquisition of assets of China Branding Group Limited (“CBG”), providing for the fiscal year ending December 31, 2021. Although this appointment does not require ratification,right to purchase 40,000 shares of Common Stock at an exercise price of $10.00 per share (the “CBG Acquisition Warrants”), and (iv) warrants pursuant to a settlement agreement that we entered into with CBG and its joint official liquidators, providing for the Board has directed thatright to purchase 5,710,000 shares of Common Stock at an exercise price of $6.00 per share (the “CBG Settlement Warrants” and collectively with the appointment of Weinberg be submitted to stockholders for ratification due toArmistice Warrants, the significance ofFinancial Advisor Warrants and the appointment. If stockholders do not ratifyCBG Acquisition Warrants, the appointment of Weinberg, the Audit Committee will consider the appointment of another independent registered public accounting firm.
Weinberg has served as our independent registered public accounting firm since 2020. We do not expect a representative of Weinberg to be present at the Annual Meeting.
“Outstanding Warrants”).
Audit Committee PoliciesIf the Reverse Stock Split is effected, the number of shares of Common Stock issuable upon exercise of each of the Warrants will be proportionately decreased in the same ratio as the reduction in the number of shares of outstanding Common Stock and Proceduresthe per share exercise price applicable for each of the Warrants will be correspondingly increased such that the aggregate exercise price payable upon exercise of the Warrants shall remain unchanged (subject to the treatment of fractional shares as described below).
Effects of the Reverse Stock Split on Outstanding Convertible Debenture
We also have outstanding a convertible subordinated debenture (the “Debenture”) in the original principal amount of $2,778,000 that we issued to Ionic Ventures, LLC. The Audit Committee must pre-approve all auditing services and permitted non-audit services (includingterms of the fees and terms thereof) toDebenture are described in more detail in Proposal 2. If the Reverse Stock Split is effected, the per share conversion price of the Debenture will be performed for usproportionately increased in the same ratio as the reduction in the number of shares of outstanding Common Stock from the Reverse Stock Split.
Effective Time of the Reverse Stock Split
If the proposed Reverse Stock Split is approved by our independent auditors, subjectstockholders and our Board elects to proceed with the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) ofReverse Stock Split, the Exchange Act, which should nonetheless be approved by the Board prior to the completion of the audit. Each year, the Audit Committee approves the independent auditor’s retention to audit our financial statements, including the associated fee, beforeReverse Stock Split would become effective upon the filing of the Charter Amendment with
previous year’s Annual Report on Form 10-K. At the beginningoffice of the fiscal year, the Audit Committee will evaluate other known potential engagementsSecretary of State of the independent auditor, including the scopeState of work proposed to be performed and the proposed fees, and approve or reject each service, taking into account whether the services are permissible under applicable law and the possible impact of each non-audit service on the independent auditor’s independence from management. At each such subsequent meeting, the auditor and management may present subsequent services for approval. Typically, these would be services, such as due diligence for an acquisition, that would not have been known at the beginningDelaware (the “Effective Time”). However, notwithstanding approval of the year.
Each new engagementReverse Stock Split by our stockholders, our Board of WeinbergDirectors will have the sole authority to elect whether, and Cherry Bekaert LLP (“Cherry Bekaert”) has been approved in advance bywhen, to amend our Certificate of Incorporation to effect the Board, and none of those engagements made use of the de minimus exception to the pre-approval contained in Section 10A(i)(1)(B) of the Exchange Act.Reverse Stock Split.
Fees BilledTreatment of Fractional Shares in the Reverse Stock Split
We do not intend to issue fractional shares in the event that a stockholder owns a number of shares of Common Stock that is not evenly divisible by the Reverse Stock Split ratio. Instead, if the Reverse Stock Split is effected, any holder of a fractional share of Common Stock will be entitled to receive cash for such fractional share based upon the closing sales price of the Common Stock as reported on the Nasdaq Capital Market, as of the date the Charter Amendment is filed with the Secretary of State of the State of Delaware.
The terms of our Incentive Plans do not allow for the 2020issuance of fractional shares. With respect to the 2010 Equity Incentive Plan, any holder of an equity award issued under such plan will be entitled to receive cash in lieu of fractional shares in an amount equal to the fair market value of such fractional shares, as determined by our Board or Compensation Committee. With respect to the other Incentive Plans, our Compensation Committee will have the discretion to determine whether cash, additional shares or other property will be issued or paid in lieu of fraction shares. Additionally, the terms of our Outstanding Warrants do not permit the issuance of fractional shares upon the exercise of the Warrants. With respect to the Armistice Warrants and 2019 Fiscal YearsFinancial Advisor Warrants, we may elect to either pay the warrant holder a cash adjustment in respect to any fractional share in an amount equal to such fraction multiplied by the then applicable exercise price or round up to the next whole share. With respect to the CBG Acquisition Warrants or CBG Settlement Warrants, we will pay to the warrant holder an amount in cash equal to the fraction (calculated to the nearest 1/100th of a share) multiplied by the then effective exercise price on the date the exercise notice is received by the Company. The terms of the Debenture also do not permit the issuance of any fractional share upon conversion of the Debenture. If a conversion would result in the issuance of a fraction of a share, we will round such fraction of a share up to the nearest whole share.
Exchange of Stock Certificates
If the Reverse Stock Split is effected, each certificate representing pre-Reverse Stock Split shares of Common Stock will be deemed for all corporate purposes to evidence ownership of post-Reverse Stock Split Common Stock at the Effective Time. As soon as practicable after the Effective Time of the Reverse Stock Split, the Transfer Agent will mail a letter of transmittal to our stockholders containing instructions on how a stockholder should surrender its, his or her certificate(s) representing pre-Reverse Stock Split shares of Common Stock to the Transfer Agent in exchange for certificate(s) representing post-Reverse Stock Split shares of Common Stock. No certificate(s) representing post-Reverse Stock Split shares of Common Stock will be issued to a stockholder until such stockholder has surrendered all certificate(s) representing pre-Reverse Stock Split shares of Common Stock, together with a properly completed and executed letter of transmittal, to the Transfer Agent. No stockholder will be required to pay a transfer or other fee to exchange its, his or her certificate(s) representing pre-Reverse Stock Split shares of Common Stock for certificate(s) representing post-Reverse Stock Split shares of Common Stock registered in the same name.
Stockholders who hold uncertificated shares of Common Stock electronically in “book-entry” form will have their holdings electronically adjusted by the Transfer Agent (and, for beneficial owners, by their brokers or banks that hold in “street name” for their benefit, as the case may be) to give effect to the Reverse Stock Split. If any certificate(s) or book-entry statement(s) representing pre-Reverse Stock Split shares of Common Stock to be exchanged contain a restrictive legend or notation, as applicable, the certificate(s) or book-entry statement(s) representing post-Reverse Stock Split shares of Common Stock will contain the same restrictive legend or notation.
Any stockholder whose share certificate(s) representing pre-Reverse Stock Split shares of Common Stock has been lost, stolen or destroyed will only be issued post-Reverse Stock Split Common Stock after complying with the requirements that we and the Transfer Agent customarily apply in connection with lost, stolen or destroyed certificates. STOCKHOLDERS SHOULD NOT DESTROY STOCK CERTIFICATES REPRESENTING PRE-REVERSE STOCK SPLIT SHARES OF COMMON STOCK AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATES REPRESENTING PRE-REVERSE STOCK SPLIT SHARES OF COMMON STOCK UNTIL THEY ARE REQUESTED TO DO SO.
Appraisal Rights
Under the DGCL, our stockholders do not have a right to dissent and are not entitled to appraisal rights with respect to the proposed Charter Amendment to effect the Reverse Stock Split, and we will not independently provide our stockholders with any such rights
Certain Material U.S. Federal Income Tax Consequences
The following table presentssummary describes certain material U.S. federal income tax consequences of the aggregate fees billed,Reverse Stock Split to holders of our Common Stock, but is not intended to be a complete analysis of all potential federal, state, local and non-U.S. tax consequences relevant to a holder’s particular circumstances, including the impact of the Medicare contribution tax. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”) in effect as of the date of this Proxy Statement. Any of these authorities may change or be subject to differing interpretations, and any such change may be applicable retroactively in a manner that could adversely affect a holder of our Common Stock. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance that the IRS or a court will not take a contrary position regarding the tax consequences of the Reverse Stock Split.
This discussion is limited to holders that hold our Common Stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). In addition, it does not address consequences relevant to holders subject to special rules, including tax considerations that arise from rules of general application to all taxpayers or to certain classes of taxpayers or that are generally assumed to be known by typestockholders, and it does not address the tax consequences to (i) persons that may be subject to special treatment under U.S. federal income tax law, such as banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, U.S. expatriates, persons subject to the alternative minimum tax, traders in securities that elect to mark to market and dealers in securities or currencies, (ii) persons that hold our Common Stock as part of fee,a position in relationa “straddle” or as part of a “hedging,” “conversion” or other integrated investment transaction for federal income tax purposes, or (iii) persons that do not hold our Common Stock as capital assets or acquired our Common Stock through the exercise of employee stock options or otherwise as compensation.
EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT.
For purposes of this discussion, a “U.S. holder” is a beneficial owner of our Common Stock who is for U.S. federal income tax purposes: (i) an individual who is a citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia; (iii) an estate, the income of which is subject to services providedU.S. federal income taxation regardless of its source; or (iv) a trust, (A) if a court within the United States is able to us by Weinbergexercise primary supervision over the administration of such trust and one or more “United States Persons” (within the meaning of the Code) have the authority to control all substantial decisions of such trust or (B) that has a valid election in 2020 or Cherry Bekaerteffect to be treated as “United States Persons” for U.S. federal income tax purposes.
If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our Common Stock, the U.S. federal income tax treatment of a partner in 2019 (in thousands):the partnership will generally depend on the status of the partner and the activities of the partnership. Partnerships that hold our Common Stock, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal income tax consequences of the Reverse Stock Split.
| | | | | | | | | | | |
| Year Ended December 31, |
| 2020 | | 2019 |
| Audit | $ | 305 | | | $ | 301 | |
| All other | 15 | | | 30 | |
| Total | $ | 320 | | | $ | 331 | |
Tax Consequences to U.S. Holders
The fees billedReverse Stock Split is intended to be treated as a “recapitalization” for U.S. federal income tax purposes. Subject to the discussion below with respect to cash received in lieu of fractional shares, a U.S. holder generally will not recognize gain or loss upon a transaction that qualifies as recapitalization for U.S. federal income tax purposes. In such case, a U.S. holder’s aggregate tax basis in the allshares of our Common Stock received pursuant to the
Reverse Stock Split should equal the U.S. holder’s aggregate tax basis of the old shares of our Common Stock exchanged therefor (excluding the portion of the tax basis that is allocable to any fractional share), and the U.S. holder’s holding period for the new shares should include the holding period for the old shares. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of shares of Common Stock surrendered in a recapitalization to shares received in the recapitalization. U.S. holders who have acquired shares of our Common Stock on different dates or at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A U.S. holder who receives cash in lieu of a fractional share of our Common Stock pursuant to the Reverse Stock Split generally should recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the portion of the U.S. holder’s tax basis in the old shares that is allocated to such fractional share of our Common Stock. Such capital gain or loss will be long-term capital gain or loss if the U.S. holder has held the old shares for more than one year as of the effective date of the Reverse Stock Split. The deductibility of capital losses is subject to limitations.
Under certain circumstances, cash received by a U.S. holder in lieu of fractional shares could be treated as a dividend for U.S. federal income tax purposes instead of capital gain. We recommend that U.S. holders of our Common Stock consult their own tax advisors to determine the extent to which their receipts of cash in lieu of fractional shares could be treated as dividends.
U.S. Information Reporting and Backup Withholding
Payments of cash made to a U.S holder in lieu of a fractional share of our Common Stock may be subject to information reporting. In addition, U.S. holders may be subject to backup withholding at the rate specified in the Code on the payment of such cash if they do not provide their taxpayer identification numbers in the manner required, or otherwise fail to comply with applicable backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or allowed as a credit against the U.S. holder’s federal income tax liability, if any, provided the required information is timely furnished to the IRS.
Tax Consequences to Non-U.S. Holders
Generally, a beneficial owner of our Common Stock that is neither a U.S. holder nor a partnership (or an entity treated as a partnership for U.S. federal income tax purposes) (a “non-U.S. holder”) should not recognize any gain or loss upon the Reverse Stock Split. Any gain or loss with respect to cash received in lieu of a fractional share of our Common Stock should also generally not be subject to U.S. federal income or withholding tax unless (a) such gain or loss is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment maintained by the non-U.S. holder), (b) the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the Reverse Stock Split and certain other categoryconditions are met, or (c) our Common Stock constitutes a U.S. real property interest by reason of our status as U.S. real property holding corporation (“USRPHC”) for 2020 primarily represent work relatedU.S. federal income tax purposes at any time within the shorter of the five-year period preceding the Reverse Stock Split and the non-U.S. holder’s holding period for our Common Stock. We believe that we are not currently, and were not at any time during the five-year period preceding the Reverse Stock Split, a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our United States real property interests relative to preparationthe fair market value of our other business assets, there can be no assurance that we are not or were not at any time a USRPHC.
Gain described in clause (a) above generally will be subject to U.S. federal income tax on a net income basis in the same manner as if the non-U.S. holder were a U.S. holder. A non-U.S. holder that is a foreign corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items. A non-U.S. holder described in clause (b) above will be subject to U.S. federal income tax at a rate of 30% (or, if applicable, a lower treaty rate) on the gain realized with respect to cash received in lieu of a fractional share, which may be offset by certain U.S. source capital losses, even though the non-U.S. holder is not considered a resident of the United States. With respect to clause (c) above, if we are a USRPHC, a Non-U.S. holder may qualify for an exemption if our Common Stock is regularly traded on an established securities market and the non-U.S. holder does not actually or constructively hold more
than 5% of such regularly traded Common Stock at any time within the shorter of the five-year period preceding the Reverse Stock Split and the non-U.S. holder’s holding period for our Common Stock. If no exemption is available and we are a USRPHC, a Non-U.S. holder’s cash received in lieu of a fractional share will generally be subject to withholding at a rate of 15% and such Non-U.S. holder will generally be taxed on any gain in the same manner as gain that is effectively connected with the conduct of a U.S. trade or business, except that the branch profits tax generally should not apply to such gain. Non-U.S. holders should consult with their tax advisors on the availability of any exemption in the event of we become a USRPHC.
Under certain circumstances the cash received by a non-U.S. holder in lieu of fractional shares could be treated as a dividend for U.S. federal income tax purposes (which could be subject to U.S. federal income or withholding tax) instead of capital gain. Non-U.S. holders of our Common Stock should consult their own tax advisors to determine the extent to which their receipts of cash in lieu of fractional shares could be treated as dividends.
U.S. Information Reporting and Backup Withholding Tax
In general, backup withholding and information reporting will not apply to payments of cash in lieu of a fractional share of our Common Stock to a non-U.S. holder pursuant to the Reverse Stock Split if the non-U.S. holder certifies under penalties of perjury that it is a non-U.S. holder and the applicable withholding agent does not have actual knowledge to the contrary. Under certain circumstances the amount of cash paid to a non-U.S. holder in lieu of a fractional share of our Common Stock, the name and address of the beneficial owner and the amount, if any, of tax withheld may be reported to the IRS.
Vote Required
The affirmative (“FOR”) vote of the holders of at least a majority of the outstanding shares of Common Stock entitled to vote at the Special Meeting is required to approve the Reverse Stock Split Proposal. Abstentions will have the same effect as votes “AGAINST” this proposal. A vote on this proposal is considered a discretionary item. Therefore, we do not expect any broker non-votes on this proposal and a failure to instruct your broker, bank or other nominee on how to vote your shares will not necessarily count as a vote against this proposal.
Recommendation of the Board
The Board unanimously recommends a vote “FOR” the approval of the Reverse Stock Split Proposal
Proposal 2: Approval, in accordance with Nasdaq Rule 5635(d), of the potential issuance of 20% or more of our Common Stock pursuant to our convertible subordinated debenture and equity line of credit with Ionic Ventures, LLC
Background
On October 6, 2022, we entered into a debenture purchase agreement (the “Debenture Purchase Agreement”) with Ionic Ventures, LLC (“Ionic”), pursuant to which we issued a convertible subordinated debenture in the original principal amount of $2,778,000 (the “Debenture”) to Ionic for a purchase price of $2,500,000.
The Debenture accrues interest at a rate of 8% per annum. The interest rate on the Debenture increases to a rate of 15% per annum if the Debenture is not fully paid or converted by February 6, 2023 (the “Trigger Date”) or upon the occurrence of certain trigger events (the “Trigger Events”), including, without limitation, the suspension from trading or the delisting of our Common Stock from Nasdaq and the occurrence of any material adverse effect. In addition, if the Debenture is not fully paid or converted by the Trigger Date, the original principal amount of the Debenture will be deemed to have been $3,334,000 from the issuance date. The Debenture matures on June 6, 2023.
The Debenture automatically converts into shares of Common Stock at the earlier of (i) the effectiveness of a registration statement while for 2019registering the resale of certain Registrable Securities as such fees primarily represent compensation for additional work relatedterm is defined in the Registration Rights Agreement (as defined below), including, without limitation, the shares issuable upon conversion
of the Debenture (such registration statement, the “Resale Registration Statement”), and (ii) 181 days after the issuance date of the Debenture. The number of shares of Common Stock issuable upon conversion of the Debenture shall be determined by dividing the outstanding balance under the Debenture (including all accrued and unpaid interest and accrued and unpaid late charges, if any) by a conversion price that is the lower of (x) 80% (or 70% if our Common Stock is not then trading on Nasdaq) of the average of the 10 lowest volume-weighted average prices (“VWAPs”) over a specified measurement period following the conversion date, and (y) $0.50 (the “Fixed Conversion Price”), subject to full ratchet anti-dilution protection in the event we issue certain equity securities at a price below the then Fixed Conversion Price. The Debenture further provides that we will not effect the conversion of any portion of the Debenture, and the holder thereof will not have the right to a conversion of any portion of the Debenture, to the extent that after giving effect to such conversion, the holder together with its affiliates would beneficially own more than 4.99% of the outstanding shares of our sale of Vegas.com and our adoption of new accounting pronouncements.Common Stock immediately after giving effect to such conversion (the “Beneficial Ownership Limitation”).
Also, on October 6, 2022, we entered into a purchase agreement (the “ELOC Purchase Agreement”) with Ionic, 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 $50,000,000 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, including, without limitation, the effectiveness of the Resale Registration Statement and that the Debenture shall have been fully converted into shares of Common Stock or shall otherwise have been fully redeemed and settled in all respects in accordance with the terms of the Debenture, 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 (the “Purchase Price”) equal to 90% (or 80% if our Common Stock is not then trading on Nasdaq) of the average of the 5 lowest VWAPs 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. The number of shares that we can issue to Ionic from time to time under the 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. 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 ELOC Purchase Agreement. The 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 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. Stockholder approval of this proposal would constitute such approval under Nasdaq rules.
Concurrently with entering into the Debenture Purchase Agreement and the ELOC Purchase Agreement, we also entered into a registration rights agreement with Ionic (the “Registration Rights Agreement”) to provide Ionic with resale registration rights for the shares of Common Stock issuable under the Debenture, the ELOC Purchase Agreement and the Registration Rights Agreement. If we fail to file or have the Resale Registration Statement declared effective by the specified deadlines set forth therein, then in each instance, we will issue to Ionic 150,000 shares of our Common Stock within 2 trading days after such failure.
Why We Need Stockholder Approval
Our Common Stock is listed on the Nasdaq Capital Market and, as such, we are subject to the Nasdaq Listing Rules. Nasdaq Listing Rule 5635(d) requires us to obtain stockholder approval for a transaction, other than a public offering, involving an issuance of 20% or more of our Common Stock or 20% or more of the voting power outstanding before the issuance (the “Exchange Cap”) at a price less than the minimum price (as defined in Nasdaq Listing Rule 5635(d)(1)(A)). We had 106,407,769 shares of Common Stock outstanding immediately prior to the transactions described above, 20% of which is 21,281,552 shares.
Our Board has determined that our ability to issue the shares in connection with the transactions described above in excess of the Exchange Cap is in the best interests of the Company and its stockholders because our ability to issue and sell shares to Ionic provides us with a reliable source of capital for working capital and general corporate purposes. If stockholders do not approve this proposal, our issuance of shares of Common Stock under
the ELOC Purchase Agreement, together with any shares we are required to issue upon conversion of the Debenture, will remain subject to limitation under the Exchange Cap, and we will not be able to sell the full $50,000,000 available under the ELOC Purchase Agreement. Our ability to successfully implement our business plans and ultimately generate value for our stockholders is dependent on our ability to maximize capital raising opportunities. If we were unsuccessful in raising additional capital, we would be required to curtail our current business plans and instead reduce operating expenses, dispose of assets, as well as seek extended terms on our obligations, the effect of which would adversely impact future operating results.
Effect on Current Stockholders
If stockholder approve this proposal, we will be able to issue shares upon conversion of the Debenture and under the ELOC Purchase Agreement without regard to the Exchange Cap. The issuance of such shares may result in significant dilution to our stockholders and afford our stockholders a smaller percentage interest in the voting power, liquidation value and aggregate book value of Remark. Because the number of shares that may be issued to Ionic pursuant to the Debenture and the ELOC Purchase Agreement is determined based on the market price at the time of issuance, the exact magnitude of the dilutive effect cannot be conclusively determined. Additionally, the issuance and subsequent resale of shares sold under the Debenture and the ELOC Purchase Agreement may cause the market price of our Common Stock to decline.
Vote Required
The affirmative (“FOR”) vote of a majority of the votes cast on the matter is required to ratify the appointment of Weinberg as our independent registered public accounting firm for the fiscal year ending December 31, 2021approve this proposal (meaning the number of shares voted “for” this proposal must exceed the number of shares voted “against” this proposal). Abstentions and broker non-votes will have no effect on the results of the vote on this proposal, and since this proposal is a routine proposal on which a broker or other nominee is generally empowered to vote in the absence of voting instructions from the beneficial owner, broker non-votes are unlikely to result from the voting.proposal.
Recommendation of the Board
The Board unanimously recommends a vote “FOR”“FOR” the ratificationapproval of the appointment of Weinberg as our independent registered public accounting firm for the fiscal year ending December 31, 2021.Nasdaq Proposal.
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 July 2, 2021,October 11, 2022 , 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 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 99,918,941106,407,769 shares of Common Stock outstanding as of July 2, 2021.October 11, 2022 .
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
| | | | Number of Common Stock Shares | | Percentage of Outstanding Common Stock Shares | | | Number of Common Stock Shares | | Percentage of Outstanding Common Stock Shares | |
| Persons known to beneficially own more than 5% | Persons known to beneficially own more than 5% | | | | | Persons known to beneficially own more than 5% | | | | |
Lawrence Rosen 1 | Lawrence Rosen 1 | 5,418,616 | | | 5.4 | % | | Lawrence Rosen 1 | 6,104,893 | | | 5.7 | % | |
Digipac LLC 2 | Digipac LLC 2 | 5,246,314 | | | 5.3 | % | | Digipac LLC 2 | 5,246,314 | | | 4.9 | % | |
| Directors and NEOs | Directors and NEOs | | | Directors and NEOs | | |
Kai-Shing Tao 3 | Kai-Shing Tao 3 | 10,200,634 | | | 9.8 | % | | Kai-Shing Tao 3 | 10,200,634 | | | 9.2 | % | |
Theodore Botts 4 | Theodore Botts 4 | 519,184 | | | * | | Theodore Botts 4 | 519,184 | | | * | |
Brett Ratner 5 | Brett Ratner 5 | 350,000 | | | * | | Brett Ratner 5 | 350,000 | | | * | |
Daniel Stein 5 | Daniel Stein 5 | 300,000 | | | * | | Daniel Stein 5 | 300,000 | | | * | |
Elizabeth Xu 5 | Elizabeth Xu 5 | 150,000 | | | * | | Elizabeth Xu 5 | 150,000 | | | * | |
All executive officers and directors as a group (5 persons) 6 | All executive officers and directors as a group (5 persons) 6 | 11,519,818 | | | 10.9 | % | | All executive officers and directors as a group (5 persons) 6 | 11,519,818 | | | 10.3 | % | |
|
* Represents holdings of less than 1% of shares outstanding.
1.Consists of shares of Common Stock. The address of Mr. Rosen is 1578 Sussex Turnpike (Bldg. 5), Randolph, NJ 07869. This disclosure is based on information contained in a Schedule 13G/A filed by Mr. Rosen with the SEC on February 22, 2021.14, 2022.
2.Consists of shares of Common Stock. Mr. Tao, as the manager and a member of Digipac, LLC (“Digipac”), may be deemed to beneficially own the shares of Common Stock beneficially owned by Digipac. Mr. Tao disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein. The address of Digipac is One Hughes Center Drive, Unit 1601, Las Vegas, Nevada 89169.
3.Consists of (i) 234,749 shares of Common Stock held by Mr. Tao, (ii) 4,422,750 shares of Common Stock issuable upon exercise of options held by Mr. Tao, (iii) 5,246,314 shares of Common Stock held by Digipac, (iv) 275,000 shares of Common Stock held by Pacific Star Capital and (v) 21,821 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.
4.Includes 477,857 shares of Common Stock issuable upon exercise of options.
5.Consists of shares of Common Stock issuable upon exercise of options.
6.Consists of 5,819,211 shares of Common Stock and 5,700,607 shares of Common Stock issuable upon exercise of options.
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 and Committee Meetings
During the fiscal year ended December 31, 2020:
•the Board held five meetings;
•the Audit Committee held four meetings;
•the Compensation Committee held four meetings; and
•the Nominating and Governance Committee held four meetings.
Each of the directors attended at least 75% of the aggregate of (i) the total number of meetings of the Board held during the period in which such individual served as a director, and (ii) the total number of meetings held by all committees of the Board on which such director served, during the period in which such individual served as a director. We have no written policy regarding director attendance at annual meetings of stockholders. Of our directors, only the Chairman of the Board attended last year’s annual meeting of stockholders.
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 http://ir.remarkholdings.com/corporate-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;
•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. Mr. Botts serves as Chairman of the Audit Committee.
The Board determined that Mr. Botts is the committee’s financial expert, as defined under the Exchange Act. The Board made a qualitative assessment of Mr. Botts’ 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. Mr. Ratner serves as Chairman of the Compensation Committee.
Nominatingand 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. 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.
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.
Board Leadership Structure
Kai-Shing Tao, our Chairman of the Board and CEO, leads the Board. Our governing documents provide the Board with flexibility to determine the appropriate leadership structure for the Board and for Remark, including but not limited to whether it is appropriate to separate the roles of Chairman of the Board and Chief Executive Officer. In making these determinations, the Board considers numerous factors, including our specific needs and our strategic direction and the size and membership of the Board at the time. The Board has determined that having one person serve as both the Chairman of the Board and the Chief Executive Officer is presently in the best interest of Remark and its stockholders given our transformational and growth needs. At present, the Board believes that its current structure effectively maintains independent oversight of management and that having a lead independent director is unnecessary. The Board has the ability to quickly adjust its leadership structure should business or managerial conditions change.
Board Role in Risk Oversight
Senior management is responsible for assessing and managing our various exposures to risk on a day-to-day basis, including the creation of appropriate risk management programs and policies. The Board is responsible for overseeing management in the execution of its responsibilities and for assessing our approach to risk management. The Board exercises these responsibilities periodically as part of its meetings and also through the Board’s three committees, each of which examines various components of enterprise risk as part of its responsibilities. Members of each committee report to the full Board at the next Board meeting regarding risks discussed by such committee. In addition, an overall review of risk is inherent in the Board’s consideration of our long-term strategies and in the transactions and other matters presented to the Board, including capital expenditures, acquisitions and divestitures, and financial matters.
Hedging and Pledging Policies
Remark maintains a policy on insider trading that prohibits Remark directors, officers and employees from directly or indirectly entering into any hedging or monetization transactions with respect to Remark securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. The insider trading policy does allow directors, officers and employees to place Remark securities in a margin account as collateral for a margin loan or pledge Remark securities as collateral for a loan, provided, however, that they submit a request for pre-approval to the Company's compliance officer at least 3 business days prior to the proposed execution of documents evidencing such pledge or placement in a margin account. Pre-approval may be granted by the compliance officer where the director, officer, or employee clearly demonstrates the financial capacity to repay the loan without resort to the Remark securities being pledged or held in the margin account..
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to all of our employees, officers and directors. A copy of the Code of Ethics is publicly available on our website at http://ir.remarkholdings.com/corporate-governance. Amendments to the Code of Ethics or any grant of a waiver from a provision of the Code of Ethics requiring disclosure under applicable SEC rules will also be disclosed on our website.
Stockholder Communications with the Board
Stockholders who wish to do so may communicate directly with the Board or specified individual directors by writing to:
Board of Directors (or name of individual director)
c/o Corporate Secretary
Remark Holdings, Inc.
800 S. Commerce St.
Las Vegas, Nevada 89106
We will forward all communications from security holders and interested parties to the full Board, to non-management directors, to an individual director or to the chairperson of the Board committee that is most closely related to the subject matter of the communication, except for the following types of communications: (i) communications that advocate that we engage in illegal activity; (ii) communications that, under community standards, contain offensive or abusive content; (iii) communications that have no relevance to our business or operations; and (iv) mass mailings, solicitations and advertisements. The Corporate Secretary will determine when a communication is not to be forwarded. Our acceptance and forwarding of communications to directors does not imply that directors owe or assume any fiduciary duties to persons submitting the communications.
Additionally, the Audit Committee has established procedures for the receipt, retention and confidential treatment of complaints received by Remark regarding accounting, internal accounting controls or auditing matters, including procedures for confidential, anonymous submissions by employees with respect to such matters. Employees and stockholders may raise a question or concern to the Audit Committee regarding accounting, internal accounting controls or auditing matters by writing to:
Chairman, Audit Committee
c/o Corporate Secretary
Remark Holdings, Inc.
800 S. Commerce St.
Las Vegas, Nevada 89106
AUDIT COMMITTEE REPORT
The Audit Committee reviews Remark’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements, the public reporting process and establishing and maintaining an effective system of internal control over financial reporting. Remark’s independent registered public accounting firm is engaged to audit and express opinions on the conformity of Remark’s financial statements to generally accepted accounting principles and applicable rules and regulations, and the effectiveness of Remark’s internal control over financial reporting.
In this context, the Audit Committee has reviewed and discussed the consolidated financial statements and related footnotes for the fiscal year ended December 31, 2020, together with the results of the assessment of the internal control over financial reporting with management and with Weinberg, Remark’s independent registered public accounting firm. In its discussion, management has represented to the Audit Committee that Remark’s consolidated financial statements and related footnotes for the fiscal year ended December 31, 2020 were prepared in accordance with generally accepted accounting principles.
The Audit Committee meets with Weinberg, with and without management present, to discuss the results of their examinations, their evaluations of Remark’s internal controls over financial reporting and the overall quality of Remark’s financial reporting. The Audit Committee has discussed with Weinberg the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees,” issued by the Public Company Accounting Oversight Board. Weinberg reported to the Audit Committee regarding the critical accounting estimates and practices and the estimates and assumptions used by management in the preparation of the audited consolidated financial statements as of December 31, 2020 and for the fiscal year then ended, all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, the ramifications of use of such alternative treatments and the treatment preferred by Weinberg.
Weinberg provided a report to the Audit Committee describing Weinberg’s internal quality-control procedures and related matters. Weinberg also provided to the Audit Committee the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding Weinberg’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with Weinberg its independence. When considering Weinberg’s independence, the Audit Committee considered, among other matters, whether Weinberg’s provision of non-audit services to Remark is compatible with maintaining the independence of Weinberg. All audit and permissible non-audit services in 2020 and 2019 were pre-approved pursuant to these procedures.
Based on the reviews and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements and related footnotes be included in Remark’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Audit Committee
Theodore P. Botts (Chairman)
Daniel Stein
Elizabeth Xu
EXECUTIVE 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 NEOs:
| | | | | | | | | | | | | | | | | | | | | |
| Kai-Shing Tao | | Alison Davidson 1 | | | | | | | | | | |
| Year ended December 31, 2020 | $ | 350,000 | | | $ | — | | | | | | | | | | | |
| Year ended December 31, 2019 | 350,000 | | | 190,385 | | | | | | | | | | | |
1.Ms. Davidson resigned from her position as our Interim Chief Financial Officer effective August 2, 2019.
Employment Agreements
Mr. Tao is an “at will” employee and we do not have employment agreements with any of our NEOs.
Outstanding Equity Awards at Fiscal Year-End
The following table presents information regarding our NEOs’ unexercised options to purchase our Common Stock as of December 31, 2020 (all stock awards to our NEOs had vested as of December 31, 2020):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | |
| Name | | Number of Securities Underlying Unexercised Options Exercisable | | | | Option Exercise Price | | Option Expiration Date | | | | |
| Kai-Shing Tao | | 1,300,000 | | | | | $ | 7.81 | | | 01/19/2028 | | | | |
| | 180,000 | | | | | 1.99 | | | 06/20/2027 | | | | |
| | 1,500,000 | | | | | 4.04 | | | 11/09/2026 | | | | |
| | 350,000 | | | | | 4.10 | | | 08/18/2025 | | | | |
| | 650,000 | | | | | 4.29 | | | 07/28/2025 | | | | |
| | 442,750 | | | | | 6.30 | | | 02/17/2024 | | | | |
Equity Incentive Plans
We have granted stock options and restricted stock under our 2010 Equity Incentive Plan adopted June 15, 2010, our 2014 Incentive Plan adopted on February 17, 2014 and amended on December 23, 2014 and January 11, 2016, and our 2017 Incentive Plan adopted on January 19, 2018. The amount of stock options or shares of stock we grant to recipients generally depends upon their particular position with Remark and their achievement of certain performance metrics established by the Board. The Compensation Committee must approve all grants.
Director Compensation
The Compensation Committee periodically awards our non-employee directors with equity-based compensation. The following table presents a summary of the compensation earned by each non-employee director who served on the Board during the fiscal year ended December 31, 2020:
| | | | | | | | | | | | | | | | | | | | |
| Name | | Cash Compensation | | Option Awards 1 | | Total |
Theodore Botts 2 | | $ | 50,000 | | | $ | 208,418 | | | $ | 258,418 | |
| Brett Ratner | | — | | | 208,418 | | | 208,418 | |
| Daniel Stein | | — | | | 208,418 | | | 208,418 | |
| Elizabeth Xu | | — | | | 138,945 | | | 138,945 | |
Note: The Option Awards column in the table above reflects the aggregate grant date fair value of the respective awards granted. For a discussion of the assumptions and methodologies used to calculate these amounts, please see Note 2 and Note 14 in the Notes to Consolidated Financial Statements included in Item 8 in our 2020 Form 10-K.
1.On July 27, 2020, under the 2017 Incentive Plan, we granted to each non-employee director serving on our Board options to purchase 75,000 shares of our Common Stock at an exercise price of $1.37 in compensation for their service on our Board. Each of Messrs. Botts, Stein and Ratner received an option to purchase 225,000 shares of our Common Stock, and Dr. Xu received an option to purchase 150,000 shares of our Common Stock. Half of the awards vested on June 30, 2020, and one-fourth vested on each of September 30, 2020 and December 31, 2020.
2.For serving as the Chairman of the Audit Committee of our Board, we paid cash of $50,000 to Mr. Botts.
STOCKHOLDER PROPOSALS
We must receive proposals of stockholders intended to be presented at the 20222023 Annual Meeting of Stockholders (the “2022“2023 Annual Meeting”) no later than March 17,December 30, 2022, so we may include such proposals in our proxy statement and form of proxy relating to the 20222023 Annual Meeting.
Under SEC rules, if we do not receive notice of a stockholder proposal at least 45 days prior to the first anniversary of the date of mailing of the prior year’s proxy statement, then we will be permitted to use our discretionary voting authority when the proposal is raised at the annual meeting, without any discussion of the matter in the proxy statement. In connection with the 20222023 Annual Meeting, if we do not receive notice of a stockholder proposal on or before May 31, 2022,March 15, 2023, we will be permitted to use our discretionary voting authority as outlined above.
Our Bylaws provide that, in order for stockholder nominations related to director elections or other business proposed by a stockholder to be properly brought before any annual or special meeting of our stockholders, written notice generally must be delivered to our Corporate Secretary not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year’s annual meeting. Our Bylaws also contain certain procedures that must be followed relating to a stockholder director nomination and other proposals of stockholders.
In addition to the requirements contained in our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 16, 2023 (the 60th day prior to the first anniversary of the annual meeting for the preceding year’s annual meeting).
PROXY SOLICITATION
We are making thishave engaged InvestorCom, Inc. (“InvestorCom”), an independent proxy solicitation offirm, to assist in soliciting proxies on behalfour behalf. We have agreed to pay InvestorCom a fee of the Board$10,000 plus $2,500 per adjournment, if necessary, plus costs and expenses, for soliciting proxies on our behalf. In addition, we will bear the cost of soliciting proxies. Proxies may be solicited through the mailhave agreed to indemnify InvestorCom and through telephonic or telegraphic communicationscertain related persons against certain liabilities relating to or by meetings with, stockholders or their representatives by directors, officers and otherarising out of our employees who will receive no additional compensation therefor.engagement of InvestorCom.
We request persons such as brokers, nominees and fiduciaries holding stock in their names for others, or holding stock for others who have the right to give voting instructions, to forward proxy material to their principals and to request authority for the execution of the proxy. We will reimburse such persons for their reasonable expenses.
Your vote matters - here’s how to vote! You may vote online or by phone instead of mailing this card.
OnlineGo to www.envisionreports.com/MARK or scan the QR code — login details are located in the shaded bar below.Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. www.envisionreports.com/MARK 2021 Annual Meeting of Stockholders 2021 Annual Meeting of Stockholders IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proposals — The Board recommends a vote FOR all nominees and FOR Proposal 2. 1. Election of Directors: For Withhold 01 - Theodore P. Botts 02 - Elizabeth Xu 03 - Brett Ratner 04 - Daniel Stein 05 - Kai-Shing Tao For Against Abstain 2. Ratify the appointment of Weinberg & Company, P.A. as our independent public accounting firm for 2021. Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
REMARK HOLDINGS, INC.
SPECIAL MEETING OF STOCKHOLDERS – [●], 2022
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The 2021 Annual Meeting of Stockholders of Remark Holdings, Inc. will be held on Monday, August 23, 2021, 1:00 P.M. ET, virtually via the internet at https://meetings.computershare.com/MGH2UJU. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/MARK IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proxy — Remark Holdings, Inc. Notice of 2021 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting - August 23, 2021 We are very pleased to virtually host this year’s Annual Meeting online, which will be conducted solely via live audio webcast. You will be able to attend and participate in the Annual Meeting online, vote your shares electronically and submit your questions prior to and during the meeting by visiting: https://meetings.computershare.com/MGH2UJU at the meeting date and time described in the accompanying proxy statement. There is no physical location for the Annual Meeting. The undersigned stockholder of Remark Holdings, Inc., a Delaware corporation hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated July 15, 2021, and(the “Company”), hereby appoints Kai-Shing Tao as proxy and attorney-in-fact, with full power of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 2021 Annual Meeting of Stockholders of Remark Holdings, Inc., to be held on August 23, 2021 at 1:00 p.m., ET, via the Internet at https://meetings.computershare.com/MGH2UJU and any adjournment(s) thereof, andas proxy, to vote all commoncapital stock whichof the undersignedCompany that the stockholder would be entitled to vote if thenon all matters that may properly come before the Company’s Special Meeting of Stockholders to be held at [●], local time, on [●], 2022 (the “Special Meeting”) via the Internet at [●] and there personally present, on the matters set forth on the reverse side.any adjournments or postponements thereof. The undersigned stockholder hereby revokes any proxy or proxies heretofore given by the undersigned for the 2021 Annual Meeting of Stockholders. Shares representedSpecial Meeting.
This proxy when properly executed and returned will be voted in the manner directed by the undersigned stockholder. If no direction is made, this proxy will be voted byin accordance with the stockholder. If no such directionsrecommendations of the Board. The proxies are indicated, the Proxies will have authority to vote FOR all nominees and FOR Proposal 2. In their discretion, the Proxies arealso authorized to vote upon such other businessmatters as may properly come before the meeting. (ItemsSpecial Meeting in accordance with their discretion.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☑
The Board recommends a vote FORthe Reverse Stock Split Proposal and the Nasdaq Proposal.
1. To approve an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of all of the outstanding shares of our common stock at a ratio of not less than 1-for-10 and not more than 1-for-20, with the exact ratio to be set at a whole number within this range by our Board of Directors in its sole discretion (the “Reverse Stock Split Proposal”).
FOR ☐ AGAINST ☐ ABSTAIN ☐
2. To approve, in accordance with Nasdaq Rule 5635(d), the potential issuance of 20% or more of our common stock pursuant to our convertible subordinated debenture and equity line of credit with Ionic Ventures, LLC (the “Nasdaq Proposal”).
FOR ☐ AGAINST ☐ ABSTAIN ☐
This proxy may be revoked prior to the time it is voted appearby delivering to the Secretary of the Company either a written revocation or a proxy bearing a later date, or by appearing at the Special Meeting and voting virtually.
PROPOSED
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
REMARK HOLDINGS, INC.
REMARK HOLDINGS, INC. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), hereby certifies as follows:
1. The name of the Corporation is Remark Holdings, Inc. The Amended and Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on reverse side.) Non-Voting Items ChangeDecember 23, 2014 and amended on January 12, 2016, June 7, 2016, April 6, 2017 and July 9, 2021 (as amended, the “Certificate of Address — Please printIncorporation”).
2. Article IV of the Certificate of Incorporation is hereby amended by adding the following new address below. Comments — Please print your comments below.Section:
Section 3. Reverse Stock Split. Upon the effectiveness of the filing of this Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Corporation (the “Effective Time”), each [ten (10) to twenty (20)]1 shares of Common Stock issued and outstanding immediately prior to the Effective Time shall, automatically and without any action on the part of the respective holders thereof, be combined and converted into one (1) share of Common Stock (the “Reverse Stock Split”). No fractional shares shall be issued and, in lieu thereof, any holder of less than one (1) share of Common Stock shall be entitled to receive cash for such holder’s fractional share based upon the closing sales price of the Common Stock as reported on the Nasdaq Capital Market, as of the date this Certificate of Amendment is filed with the Secretary of State of the State of Delaware.
3. This Certificate of Amendment was duly adopted in accordance with the provisions of Section 242 of the DGCL by the directors and stockholders of the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment this ___ day of ___________________, 2022.
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| REMARK HOLDINGS, INC. |
| |
| By: | |
| | Name: | Kai-Shing Tao |
| | Title: | Chief Executive Officer |
1 Exact number to be fixed at the discretion of the board of directors.
