You should read our discussion and analysis of our financial condition and
results of operations for the year ended December 31, 2022 in conjunction with
our consolidated financial statements and notes thereto set forth in Part II,
Item 8 of this Form 10-K. Such discussion and analysis includes forward-looking
statements that involve risks and uncertainties and that are not historical
facts, including statements about our beliefs and expectations. You should also
read Business, Risk Factors and Special Note Regarding Forward-Looking
Statements in this Form 10-K.


OVERVIEW

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

Corporate Structure



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

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

The following diagram illustrates our corporate structure, including our
significant subsidiaries, as of the date of this Form 10-K. The diagram omits
certain entities which are immaterial to our results of operations and financial
condition.


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           [[Image Removed: Remark Org Chart - Oct 2022 No VIE.jpg]]


We are subject to certain legal and operational risks associated with having a
significant portion of our operations in China. Chinese laws and regulations
governing our current business operations, including the enforcement of such
laws and regulations, are sometimes vague and uncertain and can change quickly
with little advance notice. The Chinese government may intervene in or influence
the operations of our China-based subsidiaries at any time and may exert more
control over offerings conducted overseas and/or foreign investment in
China-based issuers, which could result in a material change in our operations
and/or the value of our securities. In addition, any actions by the Chinese
government to exert more oversight and control over offerings that are conducted
overseas and/or foreign investment in China-based issuers could significantly
limit or completely hinder our ability to offer or continue to offer our
securities to investors and cause the value of such securities to
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significantly decline or become worthless. In recent years, the Chinese
government adopted a series of regulatory actions and issued statements to
regulate business operations in China, including those related to the use of
variable interest entities, cybersecurity, data security, export control and
anti-monopoly concerns. As of the date of this Form 10-K, we have neither been
involved in any investigations on cybersecurity review initiated by any Chinese
regulatory authority, nor received any inquiry, notice or sanction. As of the
date of this Form 10-K, no relevant laws or regulations in China explicitly
require us to seek approval from the CSRC for any securities listing. As of the
date of this Form 10-K, we have not received any inquiry, notice, warning or
sanctions regarding our planned overseas listing from the CSRC or any other
Chinese governmental authorities relating to securities listings. However, since
these statements and regulatory actions are newly published, official guidance
and related implementation rules have not all been issued. It is highly
uncertain what potential impact such modified or new laws and regulations will
have on our ability to conduct our business, accept investments or list or
maintain a listing on a U.S. or foreign exchange.

As of the date of this Form 10-K, we are not required to seek permissions from
the CSRC, the CAC, or any other entity that is required to approve our
operations in China. Nevertheless, Chinese regulatory authorities may in the
future promulgate laws, regulations or implement rules that require us or our
subsidiaries to obtain permissions from such regulatory authorities to approve
our operations or any securities listing.

Holding Foreign Companies Accountable Act



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

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

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

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

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


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Transfer of Cash or Assets

Dividend Distributions

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



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

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

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

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

AI Business



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

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

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

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




Overall Business Outlook

The innovative AI and data analytics solutions we sell continue to gain
worldwide awareness and recognition through media exposure, comparative testing,
product demonstrations and word of mouth resulting from positive customer
experiences. We intend to expand our business not only in the Asia-Pacific
region, where we believe there still are fast-growth AI market opportunities for
our solutions, but also in the United States and Europe, where we see a
tremendous number of requests for AI products and solutions in the workplace and
public safety markets. However, the COVID-19 pandemic may also present
challenges to our business, as could economic and geopolitical conditions in
some international regions, and we do not yet know what will be the ultimate
effects on our business. We continue to pursue large business opportunities, but
anticipating when, or if, we can close these opportunities is difficult. In
addition, we may face a large number of well-known competitors which would make
deploying our software solutions in the market segments we have identified
difficult.


Inflation and Supply Chain

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

We have not experienced any supply chain disruptions that have had a material
effect on our operations to date. However, as we work to increase our sales of
the SSP in the U.S. and thereby expand our business, we could be subjected to
the risk of supply chain disruptions with regard to high-technology products
such as servers and related equipment that we use to train our AI software
algorithms and which we plan to sell to customers to support operation of the
SSP.

Business Developments During 2022



The COVID-19 pandemic caused renewed lockdowns in China, which made it difficult
for us to interact with our customers and vendors. While we were able to
complete several larger projects during the first half of 2022, primarily during
the first quarter, including construction projects obtained through an entity in
China with whom we work to obtain business (our "China Business Partner") and
projects related to school campuses, ongoing lockdowns throughout the second,
third and fourth quarters prevented us from being able to complete as many
projects as we otherwise had planned to complete during the year ended December
31, 2022.

The following table presents our revenue categories as a percentage of total consolidated revenue during the years ended December 31, 2022 and 2021.



                                                      Year Ended December 31,
                                                                              2022      2021
          AI-based products and services                                      94  %     93  %
          Advertising and other                                                6  %      7  %




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CRITICAL ACCOUNTING POLICIES



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

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

Use of Estimates



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

Accounting for Share-Based Compensation



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

The BSM Model requires the following inputs:



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

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

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

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



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



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

Recently Issued Accounting Pronouncements



Please refer to   Note 2   in the Notes to Consolidated Financial Statements
included in this report for a discussion regarding recently issued accounting
pronouncements which may affect us.

RESULTS OF OPERATIONS



The following tables summarize our operating results for the year ended December
31, 2022, and the discussion following the table explains material changes in
such operating results compared to the year ended December 31, 2021.


(dollars in thousands)                     Year Ended December 31,                                Change
                                          2022                  2021               Dollars                 Percentage
Revenue, including amounts from
China Business Partner (See   Note
19  )                               $      11,666          $    15,990          $    (4,324)                         (27) %

Cost of revenue                            11,331               11,455                 (124)                          (1) %
Sales and marketing                           971                  971                    -                            -  %
Recovery of marketing expense -
China Business Partner activity                 -               (1,530)               1,530                         (100) %
Technology and development                  2,101                4,692               (2,591)                         (55) %
General and administrative                 18,399               14,120                4,279                           30  %
Depreciation and amortization                 166                  191                  (25)                         (13) %

Interest expense                           (6,073)              (2,308)              (3,765)                         163  %
Finance cost on liability related
to convertible debenture                   (1,422)                   -

(1,422)



Change in fair value of warrant
liability                                       -                  123                 (123)                        (100) %
Gain (loss) on investment in
marketable securities                     (26,356)              43,642              (69,998)                        (160) %
Gain on debt extinguishment                     -                  425                 (425)                        (100) %
Other gain (loss)                            (339)                (492)                 153                          (31) %




Revenue. During the year ended December 31, 2022, our U.S. revenue decreased,
with approximately $2.8 million of the decrease happening because we did not
repeat the same or similar AI data intelligence services and advertising related
to a daily fantasy sports project that we completed during the year ended
December 31, 2021. Our U.S. revenue also decreased by approximately $0.4 million
due to a decline in demand for our biosafety business. Our revenue from China
decreased by approximately $0.8 million, primarily due to the lengthy lockdowns
and other restrictive measures under China's Zero COVID
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policy that were implemented and continued in many cities across China well into
the fourth quarter of 2022. Such lockdowns and restrictive measures prevented us
from completing as many projects as we had expected to complete.

Recovery of marketing expense - China Business Partner activity. We advanced
approximately $1.5 million to our China Business Partner during the year ended
December 31, 2020 which we recorded as marketing expense because our ability to
collect the amounts advanced was uncertain. Because our China Business Partner
repaid, during the year ended December 31, 2021, all of the approximately $1.5
million we advanced to it during the year ended December 31, 2020, we recorded
such amount as a recovery of marketing expense during 2021. No similar activity
occurred during the year ended December 31, 2022.

Technology and development. During the year ended December 31, 2022, consulting
fees decreased $1.2 million because we no longer needed certain third-party
services after our immaterial acquisition of our U.K. subsidiary in mid-2021.
Additionally during 2022, we recorded a $0.5 million refundable tax credit we
received from the government of the United Kingdom resulting from our research
and development activities in its jurisdiction as a reduction of expense, and
share-based compensation expense decreased $0.6 million during the same period.

General and administrative. During the year ended December 31, 2022, as a result
of the ongoing lockdowns related to China's Zero-COVID policy, we have had to
re-evaluate the amounts receivable from customers based on recent information
and, as a result, we increased our reserve for doubtful accounts by $2.9
million, causing an increase in provision for doubtful accounts of $2.6 million.
Additionally, we experienced an increase of $0.6 million in legal and other
professional fees primarily in connection with financings and the filing of
amendments to registration statements, and an increase of $1.5 million in
certain business development expenses as we work to expand our customer base.
Also during the year ended December 31, 2022, our payroll and benefits increased
$0.9 million. The increases were partially offset by a decrease of $1.7 million
in share-based compensation expense.

Interest expense. We executed the Original Mudrick Loan Agreements in December
2021, pursuant to which we obtained the Original Mudrick Loans in the aggregate
principal amount of $30.0 million. The Original Mudrick Loans initially bore
interest at 16.5% per annum until its maturity date in July 2022 and, following
an amendment, bore interest at 18.5% per annum. The interest on the Original
Mudrick Loans were the primary cause of the increase in interest expense during
the year ended December 31, 2022. The same period of the prior year included
significantly less debt principal outstanding, with such principal bearing lower
interest rates in comparison to the interest rates on the Original Mudrick
Loans. Included as part of interest expense during the year ended December 31,
2022 was $2.2 million of amortization of debt discount and debt issuance cost
related to the Original Mudrick Loans, as well as a $0.3 million amendment and
extension fee.

Finance cost on liability related to convertible debenture. We incurred finance
cost on a liability related to a convertible debenture we issued to Ionic on
October 6, 2022. We did not incur such finance cost during 2021.

Gain on investment in marketable securities. On July 1, 2021, as the result of a
business combination involving Sharecare, Inc. and a special purpose acquisition
company, our equity in Sharecare, Inc. converted into cash and shares of
publicly traded common stock. As a result of the common stock of Sharecare being
traded on a national securities exchange, we were able to remeasure our
investment at fair value. Since July 1, 2021, the value of Sharecare's common
stock has declined significantly, which caused the decrease from a large gain on
investment during the prior year, to the loss of $26.4 million during the year
ended December 31, 2022.

Gain on debt extinguishment. During the year ended December 31, 2021, we received notification during the third quarter of 2021 that our previously-outstanding loan under the Paycheck Protection Program had been forgiven, resulting in a gain of approximately $0.4 million. No similar activity occurred during 2022.

LIQUIDITY AND CAPITAL RESOURCES

Overview

During the year ended December 31, 2022, and in each fiscal year since our inception, we have incurred net losses which have resulted in an accumulated deficit of $(388.5) million within stockholders' deficit as of December 31, 2022. Additionally,


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our operations have historically used more cash than they have provided. Net cash used in operating activities was $16.6 million during the year ended December 31, 2022. As of December 31, 2022, our cash balance was $0.1 million.




Mudrick Loans

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

On March 14, 2023, we entered into the New Mudrick Loan Agreement pursuant to
which all of the Original Mudrick Loans were cancelled in exchange for the New
Mudrick Notes in the aggregate principal amount of $16.2 million. The New
Mudrick Notes bear interest at a rate of 20.5% per annum, which shall be payable
on the last business day of each month commencing on May 31, 2023. The interest
rate will increase by 2% and the principal amount outstanding under the New
Mudrick Notes and any unpaid interest thereon may become immediately due and
payable upon the occurrence of any event of default under the New Mudrick Loan
Agreement. All amounts outstanding under the New Mudrick Notes, including all
accrued and unpaid interest, will be due and payable in full on October 31,
2023. See   Note 20   in the Notes to Consolidated Financial Statements included
in this Form 10-K for additional information regarding the New Mudrick Notes.

To secure the payment and performance of the obligations under the Original
Mudrick Loan Agreements and the New Mudrick Loan Agreement, we, together with
the Guarantors, have granted to TMI Trust Company, as the collateral agent for
the benefit of Mudrick, a first priority lien on, and security interest in, all
assets of Remark and the Guarantors, subject to certain customary exceptions.

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

As of the date of this Form 10-K, the principal amount outstanding, together
with interest on the unpaid principal balance of the New Mudrick Notes, is $16.2
million.


Ionic Transactions

On October 6, 2022, we entered into a debenture purchase agreement (the "2022
Debenture Purchase Agreement") with Ionic, pursuant to which we issued a
convertible subordinated debenture in the original principal amount of $2.8
million (the "2022 Debenture") to Ionic for a purchase price of $2.5 million
(See   Note 15   in the Notes to Consolidated Financial Statements included in
this report for additional detail).

In connection with the 2022 Debenture, on October 6, 2022, we also entered into
a purchase agreement with Ionic (the "ELOC Purchase Agreement"), which provides
that, upon the terms and subject to the conditions and limitations set forth
therein, we have the right to direct Ionic to purchase up to an aggregate of
$50.0 million of shares of our common stock over the 36-month term of the ELOC
Purchase Agreement. Under the ELOC Purchase Agreement, after the satisfaction of
certain commencement conditions, we have the right to present Ionic with a
purchase notice directing Ionic to purchase any amount up to $3.0 million of our
common stock per trading day, at the purchase price equal to 90% (or 80% if our
common stock is not then trading on Nasdaq) of the average of the five lowest
volume-weighted average prices ("VWAPs") of our common stock over a specified
measurement period. With each purchase under the ELOC Purchase Agreement, we are
required to deliver to Ionic an additional number of shares equal to 2.5% of the
number of shares of common stock deliverable upon such purchase (See   Note 15
in the Notes to Consolidated Financial Statements included in this report for
additional detail).

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

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

On March 14, 2023, we entered into another debenture purchase agreement (the
"2023 Debenture Purchase Agreement") with Ionic pursuant to which we authorized
the issuance and sale of two convertible subordinated debentures in the
aggregate principal amount of $2.8 million for an aggregate purchase price of
$2.5 million. The first debenture is in the original principal amount of $1.7
million for a purchase price of $1.5 million (the "First Debenture"), which was
issued on March 14, 2023, and the second debenture is in the original principal
amount of $1.1 million for a purchase price of $1.0 million (the "Second
Debenture" and collectively with the First Debenture, the "2023 Debentures").
The terms of the 2023 Debentures are further described in   Note 20   in the
Notes to Consolidated Financial Statements included in this report.

General

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



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

Conditions in the debt and equity markets, as well as the volatility of investor
sentiment regarding macroeconomic and microeconomic conditions (in particular,
as a result of the COVID-19 pandemic, global supply chain disruptions, inflation
and other cost increases, and the geopolitical conflict in Ukraine), will play
primary roles in determining whether we can successfully obtain additional
capital. We cannot be certain that we will be successful at raising additional
capital.

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

•develop and grow new product line(s)

•monetize existing assets

•obtain additional capital through equity issuances.



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However, projections are inherently uncertain and the success of our plans is
largely outside of our control. As a result, there is substantial doubt
regarding our ability to continue as a going concern, and we may fully utilize
our cash resources prior to June 30, 2023.

Cash Flows - Operating Activities



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

Cash Flows - Investing Activities



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

Cash Flows - Financing Activities



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

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Recently Issued Accounting Pronouncements



Please refer to   Note 2   in the Notes to Consolidated Financial Statements
included in this report for a discussion regarding recently issued accounting
pronouncements which may affect us.


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