Remark Holdings(MARK) - 2023 Q4 - Annual Report

Business Expansion - In 2023, the company began sales in the U.K. and Brazil, signing initial contracts for expansion into Colombia, Malaysia, and India, targeting fast-growth AI market opportunities[10] - The company anticipates expanding sales into the Middle East during 2024, unaffected by the current geopolitical situation in that region[10] Revenue Concentration - Two customers represented 35% and 30% of total revenue for the year ended December 31, 2023, indicating a significant concentration risk[25] - The company is focusing on diversifying its customer base to reduce reliance on a small number of customers, which poses a material risk to financial results[25] Product Development - The company has developed a Smart Safety Platform (SSP) that won numerous industry and government benchmark tests for accuracy and speed, focusing on public security and workplace safety[22] - The company owns 33 copyright registrations and nine AI-related patents, with 27 AI-related patents pending in China, the U.K., and the U.S.[28] - The company generates revenue primarily from AI-based products and services, with significant costs associated with software development and marketing[21] Regulatory Environment - The Chinese government has not established a clear regulatory framework for the artificial intelligence industry, which could adversely affect the company's business due to potential restrictions on foreign investment and capital requirements[34] Financial Performance and Dividends - The company has faced delisting from Nasdaq due to non-compliance with net income standards, with trading suspended on February 14, 2024[12] - As of the date of the report, the company has never declared or paid dividends on its common equity and intends to retain all available funds for operations and growth[35] - The ability to pay cash dividends is contingent upon having net profits or positive net assets, and any future dividends may rely on distributions from subsidiaries[36] - The company's WFOE can only pay dividends from its registered capital and must meet statutory reserve requirements, with potential restrictions from future debt instruments[37] - Cash dividends from the WFOE are subject to a Chinese withholding tax of up to 10%, which could limit the company's ability to grow and make investments[37] - The Chinese government imposes controls on the conversion of RMB into foreign currencies, which may complicate the remittance of dividends from profits[38] Employment and Corporate Structure - The company employed 46 full-time employees as of April 12, 2024[38] - The company was incorporated in Delaware in March 2006 and has undergone name changes, with the current name being Remark Holdings, Inc. since April 2017[39] Operational Structure - The company has terminated contractual arrangements with variable interest entities (VIEs) in China, consolidating them as wholly-owned subsidiaries[15] - The company utilizes third-party cloud hosting providers for its applications and backend systems, ensuring fault tolerance and enterprise-class security solutions[30]