Becky Herrick - Investor Relations Shing Tao - Chairman and Chief Executive Officer Doug Osrow - Chief Financial Officer Michael Reichartz - Co-Founder, Roomlia.

George Kafkarkou - Private Investor.

Good day, everyone and welcome to the Remark Media Fourth Quarter and Full Year 2016 Financial Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Becky Herrick of LHA. Please go ahead..

Thank you, Dana and thank you everyone for joining us today for the Remark Media fourth quarter and full year 2016 financial results conference call. On the call today are Chairman and CEO, Shing Tao and CFO, Doug Osrow. After the prepared remarks, we will open the call to questions.

A webcast replay of today’s call will be available at www.remarkmedia.com. Some of the statements made today maybe forward-looking statements. These statements involve risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by these forward-looking statements.

Any forward-looking statements reflect Remark Media’s current views and Remark Media expressly disclaims any obligation to update or revise any forward-looking statements after the date hereof. This disclaimer is only a summary of Remark Media’s statutory forward-looking statements disclaimer which is included in its filings with the SEC.

It’s now my pleasure to turn the call over to CEO, Shing Tao. Please go ahead sir..

Thank you, Becky and thank you all for joining us today. Our fourth quarter 2016 results cap off a strong year for the company. We have successfully transformed Remark Media from a business that needed to be structured, restructured to one with tremendous growth while generating strong cash flows.

When I took over the company at the end of 2012, we set out to establish a public company that was a pure-play focused on the millennial market. Since that time we have either built or acquired the assets that enabled us to become one of the few companies to generate revenue with strong growth prospects in targeting this market.

We have gone from a company with a handful of employees in one office with 300 plus around the world in 5 offices. We have gone from a business that generated roughly $2 million in revenue several years ago to one that will be in excess of $60 million plus this year.

When we laid out our strategic plan for Remark Media at the end of 2012, we realized that to succeed with the resources we had in the most efficient way we couldn’t just be an e-commerce company. We couldn’t just be a media company.

We had to build an underlying technology platform that continues to drive innovation and scalability not just in the United States, but in the world. In our own internal review of businesses, we felt that we were either late to the game in some industries, i.e., pure e-commerce businesses that drive revenue, but sustain huge losses in achieving them.

We do not have the undisciplined spending on marketing to only hopefully create the consumer app or brand from scratch, for example, just the client downloads in app stores. So, we set our sites on what will likely power the next wave in consumer innovation over the next 5 to 10 years.

This innovation was an artificial intelligence and machine learning and how we released the big data. This is where we felt we could add the most value quickly and with the most efficient use of capital.

Back then, looking at the state of the industry we are facing one smartphone user growth except deceleration to peak in the time spend on existing digital devices in the Western markets and declining growth in other emerging markets and three, a necessity and urgency for ways to drive demand, engagement and monetization.

Our transformation into something much more than a media company is reflected in the development of KanKan, which is also why today we will announce the change of Remark Media’s name into Remark Holdings. In the digital and mobile media world, KanKan will be used to drive new user growth.

Engagement meaning time spend in repeat use and increased monetization using targeting with granularly that’s never been seen before. We are only in the second inning of where this will be and I am excited to talk more about the recent development of KanKan.

In the world of e-commerce with the huge volumes of data identifying who you are and who your friends are, obtains their purchasing data, health records, browser history, cookies and social media activity.

Through machine learning, we can help businesses increase their growth and spend of individuals through relevant creation of product recommendation. Taking a step back, actually in the digital and mobile media world content will be used to drive new user growth.

Taking a step back what makes this new era of artificial intelligence and machine learning possible. First you need the data and lots of it. You also need the ability to create the technology to make sense of it, i.e. competency and innovative ability [ph] of the team.

Just earlier this week, we are awarded the number one startup within the Alibaba ecosystem in terms of innovative technology as a testament to the team that we have put around it.

And third, you need the ability to create data models that only enhance existing businesses that create the path to new ones, generating much higher growth and EBITDA margins.

With the development and the growth of the cloud as well as the massive growth in computing capacity, a growth of over 65x over last 3 years allows the ability to train the data set at the same cost, the enormous user base of mobile users combined with the increased daily usage of the phone allows this data set to be larger and more accurate when we apply our models to this.

But we are not alone, leading companies such as Google, Alibaba, Facebook, Amazon, Netflix, all moving into these areas with aggression never seen before. In 2016, Amazon acquired a machine learning team from the University of Sheffield to focus on digital and voice search.

eBay acquired SalesPredict, Expertmaker and two others to help their own effort. Salesforce has made over $4 billion in acquisitions in 2016 focusing on data acquisitions. And just last year Microsoft acquired LinkedIn for over $26 billion again presumably for its data as well.

So if all these large companies are doing it, what’s our advantage, while these companies are super smart with great resources, we have built a data intelligence platform that spans across both sides of the Pacific and across all ecosystems not just one.

As we all know, industries are becoming increasing global to compete, you must work with all forms of data, not just your own. This is what we have built with KanKan. We are well on a way to transforming KanKan from a digital footprint aggregator to a big data and artificial intelligence play.

And we are embarking upon several initiatives to begin monetizing this important aspect. For 3 years we have been creating a social media network with massive data scale and reach. KanKan was established by building technologies that connects multiple sources of media networks on to a single platform.

We have expanded this capability to include additional online businesses with vast amounts of consumer data such as TripAdvisor, Yelp, Twitter and the counterparts in China. Our technology also enables us to analyze and packages data to offer a series of data solutions and products.

For example, throughout our KanKan Data Intelligence Platform, we can access likes and preferences, friend circles, public conversation, location, buying habits and more, all of which provide us with multi-level information that enables better consumer insight and targeted advertising.

This capability provides us with several monetization opportunities. First, we launched KanKan Social Credit Service. Currently there are no reliable credit checking systems in China, which limits financing consumer spending opportunities within the country and targeted advertisers.

The vast amounts of information we capture through content enables us to use social data to confirm a person’s identity and analyze their transaction data to verify their financial status. Through KanKan Social Credit Service, we are targeting a problem unique to China with a solution unique in the market.

This positioned us well to address a large market opportunity. KanKan Social Credit model is the machine learning based prediction model, which has been trained and validated with hundreds of millions user behavioral data with over 10,000 data points per user.

There are currently approximately 300,000 micro finance credit providers in China and more than 3 billion credit checks performed each year. Due to our automotive process, we believe our profit margin is at or greater than 50%. With just 2% of the market providers we believe KanKan Social Credit Service could turn a profit.

KanKan Social Credit Service is a SaaS model and can manage 100 million checks per day. Thanks to the preparatory algorithm and infrastructure we build which can scale either more if needed. Data driven and ad based social credit model has proved efficient, low cost and fast turnaround.

With the increase of data sources and model tune ups and with the results from our customers, our social credit model and AI is getting better every day. We are also leveraging our partnerships in China to introduce new revenue opportunities. We have recently announced two partnership initiatives with Alibaba cloud.

In December Alibaba Cloud chose KanKan’s advanced facial recognition and image classification services to provide developers and Alibaba Cloud customers with a highly disruptive data modeling and automated image classification solution for the cloud computing environment.

In February, Alibaba Cloud again chose KanKan and our artificial intelligence technologies to support its new Enterprise Profile Solution which provides customers with real-time risk insight, enterprise development analysis, investor partner and customer targeting and customized data packages by leveraging publicly available business data in China on the macro level, think Bloomberg.

Our KanKan’s Open Artificial Intelligence Platform, as I noted earlier recently was awarded “best break-through technology” by Alibaba which made our Hangzhou company listed in the top 20 entrepreneurial list amongst over 400 startup companies in 20 cities.

We are about to launch another AI based product, our new deep learning based porn and terrorism filtering service, which is being tested by some large mobile and online live streaming companies with over 12 million daily active users, a twitch-like companies in China.

This product is based on our trained with billions of images in our data base, image object recognition model which was used to migration training to this specific sensitive object recognition model with small amount or training sample, i.e., porn, terrorism-related samples, which not only detect inappropriate nudity, but also detects the justice scenarios with little or no nudity.

The preliminary results show that our product has the best outcome in the terms of high precision and low false causes among competitors. As of today, we are able to monitor more than 50,000 video streaming channels per day and over 200 million checks per day. We are expecting strong revenue growth from this service starting from the second quarter.

With our KanKan data products and these key partnerships in China, we have started to see revenue coming from our KanKan data products. And we expect much stronger contribution from KanKan data products to revenue in the second quarter of this year. I also want to add other additions to KanKan.

KanKan has now set up over 100 different content channels on Weibo, which has over 313 million active users to Toutiao which is 150 monthly active users. WeChat, Tieba and Tania [ph], in the first quarter of 2017 to distribute Western content, this includes news articles, social posts, videos and music to China.

The Toutiao sites are reached to consumer, Chinese consumers can exceed over 500 million monthly users. We have achieved over 15 million unique content used in the first quarter of 2017, KanKan own content and we are well on the path of building our traffic to reach Chinese consumers directly through these channels and others.

We are continued to be pleased with the improving performance of Vegas.com, which is the leading travel and ticketing platform for Las Vegas. Vegas.com enables consumers to research, plan and book their complete Las Vegas experience.

When we acquired this asset in the fourth quarter of 2015, the business was not growing, in just a year and a half we have made multiple technical and marketing adjustments that returned the business to growth and established improved profitability.

Furthermore, we have expanded Vegas.com from a transaction revenue model to include a media based platform. Overall conversion for the fourth quarter was up 17% on Vegas.com reflecting our best quarterly improvement rate in 2016.

Desktop conversion improved 23% in the fourth quarter and 11% for the year, while mobile conversion improved 27% and 26% respectively. Desktop transactions improved 20% in the fourth quarter and 20% for the year, while mobile transactions improved 38% in the fourth quarter and 44% for the year.

Our overall show ticket volume grew 17% in the fourth quarter, while specifically on Vegas.com unit volume grew 23% year-over-year. To underscore the improvements we have made within this business of the top 20 show ticket sales based in Vegas.com’s history, 18 have occurred since Christmas date 2016.

And all 20 have occurred since our acquisition in September 2015. Currently, Vegas.com represents more than 10% of the Vegas show ticket market. However, we expect to expand this by investing in additional features to grow our share of the ticketing market. Next, I will review our newest asset, FansTang.

In September 2016, we completed the acquisition of FansTang, which was the main operating asset that we acquired from China branding group. This acquisition provides us with many synergies and benefits.

First as the top provider of western digital video content, with the social media community of more than 145 million followers in China, it enhances our exposure in the pelt of a millennial demographic.

Second, it’s growing portfolio of innovative celebrity, sports and entertainment content expands the breadth and depth of our digital media content portfolio.

Third, it’s proven distribution strategies and cross platform sales capabilities enabled us to realize synergies with our own existing assets in travel and entertainment, social media and lifestyle to generate traffic and grow revenue.

The integration of FansTang into our portfolio is fully complete and has gone smoothly from an operating perspective. FansTang team is now working with numbers of Vegas.com in KanKan teams to implement synergistic initiatives drawing upon each company’s unique capabilities.

We expect to have more to share on these initiatives in the weeks and months ahead. FansTang’s LA-based [indiscernible] creative team continued to produce strongly engaging digital content for the Chinese millennials.

Distribute on Sohu TV their weekly editorial show this week in Hollywood features news, movie previews, funny banters and exclusive celebrity interviews.

And it’s become the most watched Hollywood entertainment show in China reaching over 2 million viewers every week for a total of 200 million in total, attracting major brand sponsors such Hard Rock Cafe, Vita Coco and FLS Hotel. In 2016, riding on the popularity of the NBA, FansTang launches basketball show, we know ball on less sports.

The show covered came news, locker room gossip, fan interaction sessions and star player interviews. It reached 1.5 million views the first week upon its release and continued to grow to the point that they had to add an extra episode per week by the video portals demand.

With its fast growing fan base, the biweekly show is viewed 3.5 million times per week on average resulting in high ROI and satisfaction from its sponsor, the LA Tourism Board. Immediately following the acquisition, FansTang completed 70’s branded content program for AB InBev, the world’s largest brewing company.

The camping kicked off in November with video featuring two Chinese stars as well as two Hollywood stars, Matthew Moy and Beth Behrs from the hit TV show, 2 Broke Girls.

Distributing on multiple video channels and promoted with over 20 of the celebrity Weibo accounts under FansTang’s management, the content was well-received by millions of fans nationwide has become strong contestant for several upcoming marketing awards.

To cap off the 2016 year, FansTang delivered Dick Clark's New Year's Rockin' Eve 2017 to millions of Chinese viewers. The broadcast took place in New York, Los Angeles and for the first time, New Orleans and Las Vegas.

This was the final event in FansTang’s 2016 live events portfolio, which included the People’s Choice Awards in Los Angeles, the Golden Globe Awards in Beverly Hills, the Billboard Music awards in Las Vegas, the Rock in Rio Music Festival in Lisbon, Portugal, the Emmy Awards in Los Angeles, and the American Music Awards in Los Angeles.

In each of these events, FansTang exclusively aired the main broadcast supplemented with self-produced Chinese language Red Carpet, Backstage and additional programming.

It also promoted each event to over 145 million Chinese social followers and across programming including this week in Hollywood one of the most watched Hollywood editorial programs in China.

We expect 2017 to be a strong year for FansTang as the company continues to expand its live events partnerships, self-produced programming and content offerings and celebrity event activations in China as well as introduced its survey-based tracking product focused on Chinese customers.

As we entered the second quarter, our sales pipeline with major brands in advertising and media agencies are rapidly growing in both in the U.S. and Asia.

FansTang will continue to be the exclusive licensee for China for the awards show broadcast in 2017 and are nearing completion of a large scale live music festival broadcast partnership that will double our annual live events output and increase the continuity package we can sell to sponsors and over-the-top distribution partners.

We remained focused on diversifying our self-produced programming offerings including series formed weekly shows, virtual reality content and branded content campaigns in partnership with sponsors and brands.

In addition, we will be reactivating our ticketed and sponsored celebrity live events in China, which function as branding and opportunities for the company as well as revenue generators.

Finally, we are working on deal and partnership with the leading entertainment industry marketing research firm, in which we plan to launch a survey-based tracking product focusing on the behavior of mass Chinese consumers and their attitudes toward upcoming Hollywood movie titles.

Analysis data will provide guidance to film studios to better distribute and promote movies in China.

Before I turn the call over to Doug, I would like to announce the Remark Media Board of Directors has authorized a share buyback program for the purchase of up to 15% of the outstanding shares of the company’s stock, which we intend to do opportunistically in the months ahead.

We are pleased to undertake this initiative to return value to our shareholders. With that, I would like to turn the call over to Doug..

Thank you, Shing and apologize for little background noise. It’s quite windy in Vegas today. So, if you didn’t hear anything, please feel free to ask during the Q&A session. As a reminder, our fourth quarter 2016 results reflect the acquisition of FansTang, which occurred in September 2016 whereas prior year financials do not.

In addition, the financial results for the full year 2016 reflect the full year’s contribution from the operating results of Vegas.com which was acquired in September of 2015. For the fourth quarter of 2016 compared to the fourth quarter of 2015, net revenue was $15 million compared to $11.8 million.

Total cost and expense was $23.5 million compared to $19 million. Operating loss was $8.6 million compared to $7.2 million. Net loss was $8.6 million or $0.40 per diluted share compared to $14.1 million or $0.72 per diluted share. For the full year 2016 compared to 2015, net revenue was $59.3 million compared to $14.2 million.

Total cost and expense was $80.8 million compared to 36.8 million. Operating loss was $21.4 million compared to $22.6 million and net loss was $31.7 million or $1.54 per diluted share compared to $31.4 million or $2.06 per diluted share. Cash at December 31, 2016 was $6.9 million compared to $5.4 million at December 31, 2015.

Restricted cash at both December 31 of this year and the end of last year was $11.7 million. As such, our combined cash position at December 31, 2016 was $18.5 million compared to $17.1 million at December 31, 2015. During the fourth quarter, we signed a $20 million stock purchase agreement with Aspire Capital at favorable terms to the company.

The financing provides us with a stronger, more flexible balance sheet further supporting the execution of our growth strategy. Now, I will provide some details on our financial projections for 2017. We expect to grow KanKan revenues to more than $5 million in this year. We expect to increase Vegas.com revenue and EBITDA by 15% to 20%.

Now with that, I would like to turn the call back to Shing..

Thanks, Doug. We have achieved some significant milestones in 2016 as we focused on building our leadership position in the digital media technology market. We established the valuable set of digital lifestyle brands built around the highly desirable millennial demographic.

We created a large scale opportunity in the big data marquee with the development and the deployment of our KanKan data intelligence platform and the establishment of the significant strategic partnership with companies such as Alibaba and Tencent. And we diversify the revenue streams accelerating our path to profitability.

As we look forward, we remain committed to the following strategic initiative. First, we will continue to leverage KanKan’s growing data intelligence platform to establish new revenue streams and increase its revenue contribution.

Second, we are continuing to enhance Vegas.com to technology upgrades, feature additions and improving conversion making it the ultimate destination for all things, Las Vegas. Third, we will continue to build our offerings within FansTang growing our new campaigns reflecting the synergies and then our businesses.

Fourth, we will continue to explore opportunities to enhance our lifestyle vertical to increase brand awareness and review strategic alternatives for the finance vertical. And fifth, we will continue to monitor the market for acquisition candidates that fit within core focus on the millennial demographic and accelerate our revenue growth.

Before I open the call for questions, I would like to welcome our new board members Dan Stein and Brett Ratner to the company. Dan is a seasoned digital marketing executive with significant experience in developing and deploying data analytics solutions. Brett is one of the Hollywood’s most well-known and successful filmmakers.

His extensive experience in the entertainment industry in diverse network of content brings the multitude of opportunities to the company. I also like to thank Robert Goldstein and Jason Strauss, both of whom have resigned from the board for their contributions to the company. Operator, we are now ready to begin the Q&A session..

Thank you. [Operator Instructions] And we will take our question from Darren Aftahi with ROTH Capital Partners..

Hi, this is [indiscernible] in for Darren. Thanks for taking my call..

Thank you..

On KanKan, obviously with the goals to grow at revenue at over $5 million, could you explain a little bit as to how it’s being monetized and how much progress you have made on capturing that 2% market share?.

So the two products which were out in the market, I will address both of them and then certainly feel free to ask any questions regarding that.

We have already signed, I’d say, between 5 to 8 clients depending on the way we have that as a range depending on when they actually turn it on their system to their own customers, but that transactional model basically is doing its every credit check that they do we charge them a fee, typically it would be anywhere from a $1.75 to $2 per credit check.

Our cost as we said before with something like this, we expect very high growth in EBITDA margins off of it. And our goal is to get to what the average number of checks is per month right now out of the 3,000 companies that are in this business just say over 50% of them are doing on average 1 million credit checks a month.

We would like to get to that number where they are doing million credit checks a month with using our service. Our service with them is nearly helping them in their decision-making to figure out whether to extend a loan or not.

So, if we are able to help them improve their results and lower their default rate by 5% or 10%, it’s certainly a win for both sides.

The second part I wanted to add to it is the service that we are starting to them is not just the service to help them decide whether to extend a loan or not, but it’s helped them to monitor the person who borrowed the money during the length of that loan.

And then number three, in case that there is a default on the loan to be able to go through their digital footprint to find out where they are to ultimately recollect. So, it allows us the just say that $2 number could be higher, if this allows us to upsell additional services.

The second part regarding the porn and the terrorism filter, as you know, here in U.S. Twitch, a company that was acquired for $1 billion several years ago by Amazon as that the whole live streaming business has exploded. You see Facebook Live, you see Instagram Live.

And in China, there are similar companies just with either more traffic and where pornography is legal, a lot of these live streaming companies or content companies have no way of monitoring all this data and all this content that’s being produced everyday.

So the way that our technology allows them to do is to accurately figure out the difference between hardcore porn, soft porn and what people can consider as art and to make that differentiation and allowing to these type of checks real-time.

So something like that is a service that we will provide per a thousand – almost like the way people look at the impressions over here in the U.S. We will be doing similar in China.

Does that help?.

Yes. Thank you.

And if I just have a few more if that’s okay?.

Sure..

Just on the first, I think I have missed this, on that porn and terrorism, what was the daily active users number did you say 12 million or…?.

Which one?.

As part of the porn and terrorism, you just mentioned the online daily active users in your prepared remarks?.

Yes. I think I have said it’s more than 12 million. I have to get the – it’s about 100 million per day..

Great. Thank you.

And then one more, sort of on the Vegas conversion rate, what is the long-term trend and where do they sort of start to play now?.

Thanks for the questions. It’s Michael here. So that’s something that we continuously ask ourselves, right. So what I would tell you is that I think starting in Q2 we started to face a little bit more competition on the good work that we did in 2016. I think that we will continued to see those impressive growth rates in the conversion.

I don’t know that you will see the growth rates that high, but we do feel pretty confident that there is a lot more we can do whether that is on desktop show, certainly in our mobile business. And the part that you don’t hear us talk about a lot is hotel. So we have got lots of work to do in hotel.

And I think that’s where in the coming quarters and coming years you will start to see more growth derived from our hotel business. So we want to get a balance diet there. So I guess what I will say is we would expect continued improvement through the balance of this year. But maybe it wouldn’t be the percentages might not be as significant.

But the absolute number start to get meaningful, right, because we are improving conversion off of a higher base. So when you are starting off of a higher base camp that certainly helps the bottom line much more..

Thank you..

[Operator Instructions] We will go next to George Kafkarkou..

Hi operator. Thank you for taking my call.

Hi guys, can you hear me, okay?.

Loud and clear..

Super, a couple of questions.

KanKan, I just heard the commentary from the individual at ROTH, we have built one product called Social Credit, have we just – have you guys just essentially announced a second product called something for porn and terrorism or is that not a product and part of the vanilla KanKan platform?.

Yes. That is, it’s a new – it’s basically a new product that we are in the process of launching right now..

Does that product have a name, please?.

Not formulized as of yet George..

Okay.

So the $5 million – the more than $5 million guidance for KanKan for 2017, is that the cost of those two products or do you expect to do $5 million or more across more than those two KanKan products?.

George, this is Doug. As you can – as you are well aware, we are coming off a base of zero in 2016, so we wanted to put out a number that would almost get KanKan to breakeven for the year. On a pro forma basis by the fourth quarter cash flow would be a net positive for Remark.

But as you also can be aware we kind of want to make sure we hate what we put out there just like we did with Vegas.com saying we would grow top line with a bottom line 10% EBITDA margin and we exceeded that. We just want to put out at least $5 million. Personally, I would be disappointed if we come in at just $5 million, but that’s the base level..

Yes.

It’s very exciting frankly to hear that you have already developed the second product and porn and terrorism seems to have a big marketplace, can you guys talk generally to that KanKan specific qualified sales pipeline?.

Well, in terms – for which product?.

In the product, just the – how do you guys think – go ahead?.

Okay. I will give a high level on the porn and terrorism just how we would look at it. Because obviously – porn and obviously terrorism are legal in China. But the video operators and the live streaming companies don’t want to run the risk of having their sites shutdown.

Maybe several years ago when the video, when that business is a lot smaller, you could use humans to help you filter out what’s allowed or what’s not.

But obviously, that traffic has increased exponentially and you can only do this through the use of artificial intelligence right for being able to train, being able to train it to decide for what’s worse and what doesn’t.

So that client base to us are these live streaming companies and there are a lot of them whether it’s standalone businesses are part of much larger companies. This is certainly a trend that’s still growing and growing very fast.

As it relates to the social credit business, again less than a third of the people in China actually have a financial history, right.

So the only way for this to – for people to help people to derive [ph] whether they want to be able to loan money is to look at their behavioral history over the years and years of the digital footprint that they have left. So it’s not just their footprint and history that they put on the social networks, but it’s how they live their daily lives.

And because of our different partnerships and it’s not just with Alibaba partnership and it’s not just with Alibaba, it’s not just with Tencent, it’s WiFi providers, it’s with browser companies.

So we are able to – that’s why as we have said, we are able to establish thousands and thousands of different tags on how we are able to identify a person and their kind of close circle on how we are able to define who they are, how they live their lives and what’s the potential.

So because of providing this service, its something that as we continue to build out our own business development team, we also have the benefit of working with our partners.

So it’s just becomes a – I guess a kind of a decision on how we balance, how quick we add the sales team to how we are able to also utilize our partners’ sales team, how we are able to – and I think that’s what Remark has become, right.

It’s not just our company and the ecosystem that we have created, but we have very large companies as our partners that bring a lot of different aspects to the partnership that we come….

Absolutely, very good.

And do you expect – so you already have two products in KanKan, that’s very great, do you expect to have more products with or indeed without partners this fiscal year?.

Yes. This is something that we think that over the course of this year, obviously all these different products require a lot of testing, right. So for example, with the social credit, we tested it with our partners for over six months.

So they were able to look at their history of default and then using – and then testing with our data they are able to see whether our data models work. And fortunately our data models worked much better than the ones that they were using, right. So that’s led us to where we are today.

Porn filtering and terrorism filtering same thing, we have been testing that for several months. But we do plan to go into other areas. Things are very related to what we are doing. There is for example there is an opportunity in auto loans, right. That’s a very natural area to go into. There is an opportunity to anything that concerns credit.

It could be travel credit for all the different Chinese tourists that are leaving China to go to outside or just within their own areas of traveling to their own domestic locations, they all need credit to travel and this is some way, this is a way where we can provide this as a service to these lenders.

So the 1 million credit checks right now that on average that we are using as a number where we base our own financial model that number is just going to get larger. But we will look to do these things that have similar characteristics, but obviously open up a whole new market for us.

I think the key thing is it’s very important that it’s taken us 3 years to build a strong foundation, right. So and that’s the data.

And it took the first part of those 3 years to build the technology to be able to grab the data and this has taken the last part of those 3 years – last half of those 3 years to develop the technology to make sense to the data. And we wouldn’t have had that opportunity, right.

But the overall technology market has improved the part we are able to do the type of artificial intelligence, the machine learning and the deep learning that we are doing now. We probably wouldn’t have been able to do it 3 years or 4 years ago.

But all these new opportunities have come up where we are allowed to take advantage of this improved growth in technology infrastructure. As I have said in the prepared statements the power of cloud computing and the checks have increased 65x over the last 3 years. And meanwhile the cost remains the same..

And if I could just finally add George, the focus thus far as Shing has been mentioning is obviously to buildup the technology and the engineering skills. Now that we have that it’s to increase our sales team in China to monetize this comprehensive data set and with that we will have other products and deepening of existing products..

Okay.

Guys, I have got a few other questions and I will just go back into queue having respect for other people and if I get the chance shall I come back on?.

That will be great..

That will be great..

Okay..

[Operator Instructions] And gentlemen with no further questions in queue, I will turn the call back to you for any additional or closing remarks. We do have a follow-up, would you like to take it..

Yes..

Okay. Thank you. And we will go back to George Kafkarkou..

Thank you, guys.

Couple of questions, are you providing guidance for FansTang this year, for 2017?.

More to come after the first quarter..

Okay..

45 days from now..

How do you guys think about Sharecare monetization, I think last year we were – I think we were expecting there will be a monetization event in 2017 at some point, is that still the case?.

Let me clarify that. We don’t expect I mean we are one of working voices on the Board. Shing has Board representation. So again we are limited. As you know it’s a hot sector, Sharecare continues to do quite well with its recent wins. That said, when it monetizes it’s really up to the Board.

We are very comfortable in the position we are at right now as far as our stake and how the business itself is doing..

Do you say any public information as to the value of that Sharecare business or is that still private?.

It’s still private, but what I can say is again it was a featured private healthcare company at the JPMorgan Healthcare Conference for the fourth year in row I believe. And I think that would be hard-pressed to find the company with future 4 years in a row. So we are hopeful..

Okay.

Two more questions, obviously the expenses have gone up significantly since last year, I am guessing the majority of that is increased headcount, correct?.

That is correct..

Okay.

And the last question, can you guys talk – I think I head Shing say – he mentioned…?.

Sorry, can I just address that before you move on to the next question. The encouragement just like different investors have come on and said like well, there is always there is a confident balance between cash flow generation and obviously growth opportunities.

For a company of our size where now we are able to sit on the other side of table, very large $20 billion plus market cap companies that to be brought in as a equal partner or a very significant partner to a particular joint venture is very different in my opinion than just having somebody asking us for to do – to execute a services agreement.

So it sounds great short-term, but we are – we have always been very clear on where our business strategy that we set out several years ago on how we build this company, we have been also very fortunate to get to this point where the technology and data that we have built has been invaluable and has been viewed as a major asset to these other partners.

So the opportunity arises which it has on many different occasions where we can come in as a partner clearly we need to contribute our kind of resources to it and most of it’s on the technology side..

Understood fully, okay.

And the final question Shing, I think I heard you say early in the call a name change, can you just repeat that and if I heard it correctly and can you just explain what that means and the thinking behind it?.

Sure. I mean the – our business when we acquired in early 2013, I mean Remark Media was going, going back in kind of history that it was changed – became Remark Media I think in 2010 to reflect the changes in the business from what was then [indiscernible] international business into a media business.

It’s always been our goal to change our business and really to set us up to become a technology business. And that were there. And I think the change from Remark Media to Remark Holdings reflects that. But it doesn’t change our stock ticker or anything else.

This is just something that’s more indicative of all the different things that we are doing right now..

So is there a cusec change or no?.

There will be..

Okay. Thank you. Very exciting, very encouraged. Thank you, guys. Thank you for taking my call..

At this time I would like to turn the call back to Tao for any additional or closing remarks..

Thanks for joining us today. We look forward to speaking with you again in May, first quarter results call. Goodbye..

Thank you. And that does conclude today’s conference. Thank you for your participation. You may now disconnect..