Welcome to the Remark Holdings' Fiscal Year 2019 Financial Results Conference Call. My name is Cody and I will be the operator for today and will handle the Q&A. As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Brian Harvey, Director of Capital Markets and Investor Relations. Please go ahead sir..
Thank you, Cody. Good afternoon and thank you everyone for your patience as we put the call together. I’d like to welcome you to Remark Holdings’ fiscal 2019 financial results conference call. As Cody indicated, I’m Brian Harvey, I’m the Director of Capital Markets and Investor Relations for Remark.
On the call with me this afternoon is, Kai-Shing Tao, Remark’s Chairman and Chief Executive Officer. In just a moment, Mr. Tao will provide an update on our business and I will recap our fiscal 2019 financial results. Following those remarks, we will open the call to questions. But before I turn the call over to Mr.
Tao, I would like to take this opportunity to remind you that some of the statements made today may be forward-looking. These statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements.
Any forward-looking statements reflect Remark Holdings' current views, and Remark Holdings expressly disclaims any obligation to update or revise any forward-looking statements after the date hereof.
This disclaimer is only a summary of Remark Holdings' statutory forward-looking statements disclaimer, which is included in its full filing with the SEC. I’d now like to turn the call over to Remark’s Chairman and Chief Executive Officer, Mr. Tao so he can provide additional color on Remark’s businesses and recent developments.
Shing?.
Thank you. Thank you everyone for taking the time to join us on this call. I hope you and your loved ones are safe and healthy during this time. Being in New York, when just about to shutdown and coming back to Vegas was almost 15 years just as we were shutting down has certainly been a shock to us and the rest of the world.
The only thought in my mind walking down the Seria Mt Las Vegas strip every day over the last two months is how can America reopen and what can an American tech company headquartered out in Las Vegas do now.
I knew we had the technology, but with this COVID-19 virus due to the spark that finally work America, while that we transformed overnight, the process to get here has taken seven years. Over the last seven years, we have built one of the world's most comprehensive AI platforms.
The breadth and the depth of our technology was evident not only by the different industries we could be in, but also by the number of different applications we could apply to it.
It took us the first five years to collect the data, seeing our algorithm, and build the AI platform has distinguished itself in artificial intelligence and more specifically in computer vision, for example in 2019, we won CVPR and ICCV conference otherwise known as the Computer Vision Pattern Recognition and International Conference on Computer vision.
And it is widely considered to be the most prestigious conference in computer vision excellence and help us to be the leader in real time object tracking and visual segmentation. These advanced computer vision technology are now being used in our new products and showing great value to our customers.
Two things held us back number one, we did not have a strong balance sheet and two the long sales cycles to adopt AI technology as in any new field pioneering takes time.
We’re happy to announce that we place both of those issues behind us as we have retired our debt to our senior lenders, which will now allow us to focus our energy building on the momentum that has been created by our award winning AI platform going into the second half of 2020 especially in the face of COVID-19 virus.
While the COVID-19 virus has certainly affected the world economy in a very dramatic fashion, the Remark AI platform that we have built over the last seven years have allowed us to be positioned favorably against the terrible situation. As they say, we never let a good crisis go away.
We have very strong demand and are experiencing quick closing on system to manage CV-19 issues. While we are under strict NDAs with our customers, in terms of disclosing who they are, I can assure you that they are the best in class in their industry. And in fact, they are our biggest sales lead generators.
We’re engaged with the test in the hospitality, sourcement, medical, ports, banking and we are closing on average one to two large deals a week, and we expect that to accelerate as America reopen. Most importantly, they’re uncompromising in their vision and dedication to both protecting their employees and of course, the customers.
The basic need for a system was for body temperature scanning, our body scan is better because it provides number one access, two throughput, three wider and more flexible repoint and four a UI that makes managing clouds much easier. It is important to know the other body scanning competitors are one component that only do body temperature scanning.
While body scanning is the tip of the spear that got these installations going quickly, that is a very small part of our AI solution less than 3% of our total capability. What is exciting are the add-on that are and will be picked up by these body scan points.
For example, on top of body temperature scanning, amongst other AI applications we offer are PPE detection, Personal Protection Equipment detection, people counting, which includes virtual time cards on big locations by construction, behavior tracking, food handling, which covers food handling, shoplifting, aggressive behavior.
Fire and smoke detection, which is also protects people on falling detection for public safety, social distancing, and mask detection and intrusion detection which also means creating virtual electric fences.
While it took up the first five or seven years to build our technology, it took the next few years to take this award winning proprietary technology to commercialize to different industries like retail, safety, surveillance, construction and agriculture.
The breadth of our own proprietary AI application is wide improving, as we have won major contract to China Mobile, the world's largest telecom operator by revenue and subscribers where our AI will be transforming their 17,000 plus stores nationwide in large stores. So allow them to compete with real time analytics versus their online competitor.
And two, CP Group, one of the world's largest food conglomerates, where we are working on installing AI solutions to help with the biosafety of their Big Box to help combat the African swine disease. In 2019, one of the key projects Remark AI won was with the Education Bureau's of several major states.
Many schools are required to check children's medical condition daily, along these issues. To avoid long lines and human errors we were cast by the city to use a Smart Campus System to handle these issues.
By the start of the summer in 2019 we successfully launched our Smart Campus product in Hongo China which is a city with 12 million people, and where Alibaba is there. Our Smart Campus system scans every student daily for their confirmed attendance and campus system show no one enters with elevated temperature.
And finally, at the end of the day, we make sure students are properly checked out of school and picked up by their parents or rightful guardians. These daily health checks becoming a new norm and seem to be mandated in school campuses. We have now expanded to two other major cities in China.
So and they have been deploying our system at 50 schools per month rate, and with more schools now opening, we’re expected to see greater opportunities in the market of 160,000 plus Kindergarten through fifth grade schools in China.
Fast forward to the end of 2019, when the first time the COVID-19 hit China, hospitals in Shanghai and Hangzhou that were aware of our AI solutions access to use the technology be the first line of defense because we build our algorithms from the ground up, we were able to quickly repurpose the product to meet the needs of the hospitals.
We soon launched Remark AI body temperature scanning solution to meet these needs. Our solutions accomplish three primary objectives A, to be the first line of defense for hospitals before the medical professionals even reached the hospital by checking for authorized by access and elevated body temperature.
B, once within the hospital, our solution reviews not only continually check this medical professional for access in elevated temperature, but they were used to the contactless control access that doors require different security clearances. I emphasized contactless and as you know, being contactless allows for lower chances of transmitting virus.
C, and for the front of the house, our mass scanning solution, which has the ability to scan over 120 people a minute is used to not only check the temperature, but also has the ability to perform contact tracing in case someone comes in with an elevated temperatures.
In addition, our Remark AI platform allows us to perform other applications that are now being required to the reopening of each country's economy by people counting PPE detection or social distancing.
The fact that we had a working live solution that we launched in early 2019 has allowed us to expand our product to other parts of the world has found looking for solution that is safety, live and scalable.
In early 2020, we expand our product into Japan with one of Japan's largest technology [conglomerate] with interest spanning from e-commerce to travel, to telecom. And by this past spring, we continue the expansion of our AI solution into the United States.
We first started off with the Las Vegas Metro Police as they were looking for SaaS and accurate solution to help with their own offices, as well as the tough [subjects] and current business in the system.
This is a relationship that we've built over the last five years and through trust and of course rigorous testing became our first customer in the U.S. using our AI solution. Las Vegas Metro Police is one of the largest law enforce agencies in the U.S. and the support envision of the Sheriff has been invaluable for the launch of Remark AI in the U.S.
Since coming on board we've expanded our U.S. customer base to include shopping, amusement scene park, casinos, hotels and sports venture. Most recently we handled the body temperature scanning for the United Medical Center, Southern Nevada.
We are screening 4,000 patients a day for the next month, as the employees of the various casinos are coming back to work. In addition, our AI was featured in the welcome back video for the world's most luxurious casino operator.
Our customers are at the top of the industry, and most importantly not compromise on their employees and customers and because they are the leaders of their respective industries we are experiencing strong unsolicited demand from companies aspiring to be like them.
As the company is generally are opening at under 25% capacity we are confident we will continue to grow our orders with them as they understand the lay of the land post [real] and gradually open up the business back to where it was just a few months ago.
We can safely say as the world has been paralyzed by COVID-19 we didn't count the day we made the days count. And to be clear, we are not a one trick pony with only having the ability to scan temperatures. In fact our Remark AI body temperature scanning solution is only a small part of our overall AI platform can do.
We are winning contracts against much larger and better finance competitors not just due to outperformance, but because of the versatility and other Remark AI applications we can add. With the reopening of America there are many operational protocols mandate in order to reopen.
For example, there is a limit to how many people can be in the room and the requirement ways 30 PPE right now. Amongst other applications that we own and built from the ground are, we can automate people counting, automate the monitoring of PPE wherein and look for suspicious [indiscernible]. This is what excites us about the feature of the Remark AI.
Body temperature scan in just the tip of the iceberg for the growth of the company. The U.S. Remark AI application has started which speak directly to our strength that we have shown time and time again about regardless of what part of the world we operate.
The ability to continue to up-sell to our customer Remark's AI applications through their existing camera infrastructure and/or the set up we have built for them, allows us to continue our growth trajectory even when the current pandemic hits us.
This is mutually beneficial as a solution to allow our customers to continue to drive revenue while lowering cost which has always been the whole purpose of artificial intelligence. Our strength is in our AI software capability. Our competitors are hardware specialists. We are confident that it is our AI capability that sets our products [required].
For instance, the body temperature scanning thermal technology is not new it has been around for a long time. However, what is new is the spines and brain behind the thermal technology. Therefore buying a thermal camera is just not enough and generally use it especially when you're performing mass scanning for large group of people.
Without the proper software intelligence, you will need someone trained to look at thermal imaging, this leads to addition of human cost and our. With Remark's AI we're able to simplify and intelligently read thermal images for the customer.
Our AI helps to quickly differentiate the different people and the temperatures rather than just seeing blobs of red.
Our AI is able to quickly discern the difference between human and non-human key [admitting] object and because of our accomplishments in the field computer vision, we are able to quickly track a season when a guest walks through the door and quickly find the most accurate part on the face to take the temperature.
For example taking the temperature of your lips is very different from the area between your chin in terms of accuracy.
And the effort of fighting current COVID-19 pandemic we have not only developed a high-precision mass detection AI model, but also upgraded our facial recognition with mask with 96% accuracy which exceeds most of the competitors numbers in the market. In addition, we have also developed our proprietary social distancing algorithm at 98% accuracy.
And our proprietary people just recognition and people counting algorithm with over 99% accuracy which have been tested in various scenarios and locations around the world. To get ready for the reopening of the businesses, we have developed our mass temperature scanning software and product at 99% accuracy over a 120 people per minute while scanning.
In addition to address any concerns regarding customer data privacy. We are conducting [external GDPR audits] on all Remark AI process which by far is the most strict guidelines on data and privacy protection in the world. We'll talk briefly regarding our products and other projects. Remark AI has released two COVID-19 prevention pods.
Thermal kit and thermal pad version 1.0 of thermal kit and our thermal pad with third-party hardware has been released and deployed in early April. We also are very pleased to announce version 2.0 of the kit and pad as Remark AI own proprietary [orders] will soon be released in early June. Let me give you a brief overview of our products.
Remark AI thermal kit is designed for mass temperature scanning for fast and high-precision on temperature check.
With Remark AI proprietary facial protection mask detector, face tracking and face angle correction algorithm combining with fine tuning thermal based temperature detection device the thermal kits gives out [indiscernible] accurate and fast temperature reading at 120 persons per minute rate while people just walk through seamlessly.
Remark AI thermal pad is designed for automated one by one temperatures scanning with optional mask expansion and facial recognition features. It is perfect for unmanned gate and entrance control where people line up and go in and are out one by one whether it's indoors or outdoors.
With high accuracy on temperature check with or without mask you can check 30 to 60 people in a minute and the introduction can be connect to various timesheets and card system.
As mentioned before, these advanced products have been widely deployed in hotels, casinos, shopping malls, government agencies, sports stadium, restaurant & COVID-19 test centers. Remark's AI had turned into a 2-headed dragon where we are able to capitalize now in both in Asia and the U.S. Let me now give you an update on our other Remark AI projects.
As you know, we won a hard-fought victory in securing the Phase 1 AI contract with China Mobile, back in the summer of 2019. This was a long and arduous process as we competed against much larger competitor. By the end of 2019 we released and deployed most of the products in over 2000 China Mobile stores as part of the Phase 1 smart store contract.
With Remark's AI people counting solution VIP recognition and facial identification our smart self-service [product] has started transforming China Mobile's retail operation into automated and data-driven businesses.
Although we are facing some delays in the deployment due to COVID-19 shutdown in China, we are projecting over 5,000 stores deployment in the rest of 2020 and over 10,000 stores in 2021. We are looking forward to expanding our partnership with China Mobile into Phase 2 and beyond.
We are confident that our smart store AI platform will win the Phase 2 bidding process. This platform provides in-store real time feedback, fast behavior monitoring, fire smoke detection and a virtual security control. The goal is to connect all 17,000 plus stores to the platform in the next 2 years.
The contract value is expected to be in the mid to high 7 figures, U.S. dollars – million dollars and software recurring income. As our work with China Mobile have gotten off with favorable start over the last year, we are confident that we will be working with them for the many phases to come in the years to follow.
We are also pleased to have launched our first AI paddle biosafety system while CP Group on that the African swine flu. The African swine flu has been a disaster of post supply over the last few years, and it is lethal and spreads quickly. Our system performs real time video analysis on top of existing surveillance cameras, all in the [indiscernible].
We have identified bio-safety paddle and for bidding behavior based on which produce early warning and enforcement of the bio-safety procedures to the last bit of detail. The system includes the following major function to enforce defined bio-safety rule.
Personal active management to face and gesture recognition the system authorized access to the important facilities of the [Remark]. While in the farm the system monitors stat activities to make sure they follow bio-safety protocol such as the right walking pattern to avoid cross contamination in dirty and clean air.
The shower plus or cleaning or PPE protocol.
Vehicle decontamination monitor, which automatically analyzes the operational step of the staff performing spent sampling, car washes and drying to determine whether they followed bio-safety protocol such as time spent on car washing and drying, proper equipment and tools used in place and proper uniform of PPE warrant during the procedure.
Articles disinfection monitor in the process of disinfection of articles the [indiscernible] activities of detected track and monitored here for safety protocol such as crossing of infectious and non-infectious blood.
And finally life or dead [indiscernible] monitor in life or dead state transportation operations assisted monitors that past behavior and [triggers almost bio-safety provide]. For example unauthorized personnel [in the trance area both entrance] and exit doors being open set powder in the transfer room for too long and et cetera.
This was the first AI bio-safety system in the market that help for fighting cattle disease. The proven value by the current cattle farms, we have great opportunity to deploy the 40 to 50 cattle farms a year globally.
Lastly as we have finally now cleared out our debt with our senior lenders we are able to enjoy the full potential of the monetization of Sharecare. The digital health industry for public companies like Livongo and [Telebox] has been explosive, it looks to continue to be strong as America reopens.
We will be carefully monitoring the progress and look to monetize our stake when the timing is appropriate. In conclusion, we are now have complete our first giant step forward to building a solid balance sheet.
We have three traction on body temperature scan, we have a suite of exciting add on features that will increase our [APIU], these add on are also very possible in the car. We currently sell hardware only as a means to get our software into the market.
Our goal, long-term is to remain the software as a service company and to provide and license our Remark AI software technology for recurring month EC per registered user in the system to every producer of thermal scanners and cameras in the world.
We believe if we focus on what we inherently do that which is AI enabled software solution and camera manufacturers focus on what they do which is producing, distributing and maintaining complicated hardware solutions everybody there.
To this end, we will be announcing the addition of new executive level business development leadership and partners in the coming weeks who can help us navigate these relationships. While we continue to focus on the incredible influx of inquiry and opportunities we have advance.
We are honored to be doing a small part to help reopen America whether it is for large, small profit or non-profit organization. We are excited to what may be the new norm post-COVID era as we all become more cognizant to being responsible other by helping to keep everyone safe and healthy.
We have a lot of new shareholders on this call and we look forward to continuing to build your trust is us and grow our business long-term together. Finally, I hope America opens up soon, and all of you can come take part of the reopening of Vegas.
[indiscernible]?.
Thank you, Shing. I will now provide a brief overview of our financial results for the fiscal year ended December 31, 2019 and I am going to look the raters comment go. Revenue from continuing operations for fiscal 2019 was $5.0 million down from $10.1 million during 2018.
As many of you are aware regulatory changes in China's financial services market caused us to discontinue our FinTech business in 2018 resulting in no FinTech revenue in 2019 after reporting 3.7 in the prior year.
Our advertising-based business showed a decline dropping from $2 million in fiscal 2018 to $1.4 million in fiscal 2019 primarily as a result of the sale of banks.com in 2018.
On the e-commerce front Bikini.com showed a slight growth in fiscal 2019 and the prospects for Bikini.com were positive in 2020 as online shopping has expanded due to the COVID crisis and recently several major department stores have declared bankruptcy.
Our AI-based products and services revenue declined to $3.6 million from $4.3 million as revenues were constrained by ongoing working capital issues that kept us from purchasing equipment that would have led to higher revenue. Implementation is underway to convert China Mobile stores into smart stores as Shing noted.
During fiscal 2019 over 2,000 stores mobilization have begun and we expect the pace to accelerate in the second half of 2020 to over 5,000 as opposed to lockdown to be used across China. During the year, we also completed and passed several proof-of-concept tests on projects and the beginning of deployment and implementation leases on other projects.
Total cost and expense for fiscal 2019 was $27.8 million, a decrease from the $54.6 million reported in fiscal 2018. The decrease is primarily attributable to decreases in cost of sales as a result of the discontinuance of the FinTech services a decrease in consulting fees and in payroll and related costs as a result of headcount reduction.
Our operating loss declined to $22.8 million in 2019 from $44.5 million in 2018 commensurate with the cost and expense declines.
Our net loss from continuing operations totaled $23 million or $0.52 per diluted share in the fiscal year ended December 31, 2019 compared to a net loss from continuing operations of $18 million or 46% per diluted share in the prior fiscal year.
At December 31 2019, our cash and cash equivalents balance was 272,000 compared to a cash position of 1.4 million at December 31, 2018. Cash decreased primarily due to ongoing operating losses that were offset by the issuance of stock. Cody we'd now like to open the conference call to question.
We encourage callers with questions to queue up with the operator as soon as possible so that there will be minimal lag time between each caller. Cody could you please instruct the callers how to queue up with their questions..
[Operator Instructions] And we'll take our first question from Steve Allen. Please go ahead, sir..
Yes, couple of questions. You've obviously been very active on the social media front mentioning companies win and Simon and the Las Vegas, please.
What's the strategy behind the tweets instead of press releases? And what's your strategy of using social media versus press releases?.
Thanks, Steve. I think that just to be clear, we try to keep our investors informed on what's happening with the company. And so that's what we do and then but certainly, as I mentioned in the comments that there are a strict NDA that are put in place sometimes, many of the times are done after I make the post, or not.
So we are not public yet but we’re to it. But we certainly feel that it's our job to not just use the social media as a way to keep industries updated. We use it as a way to keep potential customers updated. We get many leads for people that follow our social media, not just our Twitter, but really all across the board.
And it is so greatly generated and frankly, it's a cheap way to generate leads, making press releases cost money, and we all know that so until we start getting profitable, we're certainly not in a position to be just sent me there. You don't have to..
Okay, and I'm sure what update can you give us or where they stand from either S-1 registration or you've been able to monetize your position, and with the offerings they've done, what percentage of Sharecare would you own now?.
That I think our percentage will be released in the 10-K tomorrow in terms of any type of their own S-1 plans and all that, that that is something that will be that information is disseminated by them and when they will ever be ready. So, that's something that obviously, we are upheld by and be able to Sharecare, so we can’t comment on that.
But what I can comment on is that this house is very strong as we see Livongo and Telebox has been performed amazing, over the last two months and it's a big reflection of their digital health industry, certainly in the U.S., so Sharecare is very much in that industry and I think it bodes well for us..
We'll take our next question from Darren Aftahi, ROTH Partners..
Shing, maybe if you could start, it’s good to see you pay the debt off.
What's your current state of cash as it stands today and what's kind of the current share count?.
Our share count will be released tomorrow in the same day, I can say our, the cash that we have right now is more than sufficient to handle our working capital needs and to be able to figure it..
On the thermal side, you’ve mentioned some wins. And obviously the piece things together, you can kind of figure out maybe through the business partners or on some questions on that. Maybe can you give us a sense for, I think you kind of went over why you win.
But in terms of how you're selling this, that what's the cost? Maybe a sense for how many cameras or clips are installed in each venue? And then, as you think about your let’s call it 2020 pipeline? How many sort of opportunities do you currently have right now? And maybe how many installations have you put in place already?.
Okay, well, the stuff specifically as it relates to when and you mentioned before, we probably can talk about that, I think the easiest way is to come to Vegas, and you can see for yourself. But we certainly can't just as we can say that our technology was featured on the Welcome Back video.
And I think actually, as soon as you load up the Las Vegas web page, you'll see our technology there. They've been, I would say in general, our sales leads, either come from my relationship, or referral, that has allowed us to get to this point, with the best of I think as I said, with the different industries.
Now I know a lot of CEOs in lot of different industries. And as soon as they heard what we were doing, they clearly were interested. And then the next step was to being able to showcase it as I mentioned Las Vegas Metro Police.
They were an early adopter of our technology which gave a lot of different groups feel confident that that our technology works. So how we're finding it and really is that we go out and sell our thermal fit and we sell that as a $25,000 price thing. And we're selling a lot of them.
And we expect to sell more of them as the different venues begin to open up more because right now they are not allowed to open up there, probably is imprudent for them to open up their entire facility. But kind of anything else, because there's just not a demand there.
But then we will also sell our thermal facial pads as a way of doing secondary screening or as another way to do employee backup house cleaning because not only does it track as I mentioned the temperature, but we can tie it into the different employee management system to handle multifunction, while the other stuff that does like to other, a few other questions they had on the back there..
Yes, I was just kind of curious. Maybe two more on the topic.
So one, what is can you kind of quantify what the number of installations we've actually done, and then what the pipeline perhaps looks like as it stands for what the opportunity looks like to say in 2020?.
I can comment with that. We are in over 20 different installations. But I can't comment on how many we're doing for each..
And then in terms of your backlog, out of that 20 installations compared to kind of your intense kind of quantify 20 or?.
Yes, I mean we probably get out 10 serious inquiries a week by 10 serious inquiries a day. Our backlog I would say would be closer to 70 to 90 different groups, but we need to one power up the business negotiation part of the number two be able to fulfill.
So we don't obviously want to accept the contract until we're sure that we can fulfill it because there are issues with the whole world, once the thermal scan to be able to reopen up.
So especially with China coming back online, we're now having to compete against like the schools have been mentioned in the different businesses over there that have opened up..
And can you speak to perhaps maybe the top three or four industries that you're seeing kind of a greatest demand from and not just the demand, but in terms of extensive scope meaning say sports stadium would have probably more points of presence than something from a smaller venue, so help understand that?.
Yes, so I would say the areas would be like hospitality. It could certainly be sports or sports stadiums. Right, so that includes kind of the concert venues and the live action stuff. Number three would be the amusement parks, which are big. And then the fourth part is government.
I'd say government agencies and you say for example, I say government agency, I'll say, include as part of law enforcement agencies or hospitals. And I'll just add, I think the fact that we have been doing this symmetrically and we are covering both the law enforcement from medical side.
And I think that gives a lot of confidence to the different private enterprises that know that were able to check the box on both sides..
And just last one from me, I noticed on your thermal AI site, there's a tab for becoming a distributor.
What is kind of your strategic focus in terms of getting new sellers and distributors kind of given kind of your limited scope in terms of manpower and capital right now?.
Yes, yes. So we're that's the point. I mean, we went into 2020. We cut a lot of the costs in our business and certainly then did know that. Obviously, this caught everyone by surprise. And frankly, we don't have enough people to service the demand.
So we are certainly working with the biggest retailers in different parts of not just the U.S., but in the Middle East, Europe, North Asia and Southeast Asia in fixing our technology to their respect clients. You can't call it that. But we've had very strong interest and not just interest but we are partnering up there in terms of the resale..
We will now take Ron Nash with Nash Partners..
A question I got on the call late on, there was some problems were connected.
I'm not sure if you actually mentioned it, but it is interesting $12.7 million payment against the lien, is it correct that is made today?.
Yes..
So tell me if you didn't put it in the release, where did that $12.7 million come from?.
The $12.7 million came from our different partners that provided the financing for us to be able to take care of our debt..
So you issued equity in place of the debt.
Is that what you wanted now?.
Yes..
Okay, so that'll be in the press release tomorrow, I assume..
That will be reflected in the K tomorrow..
In the K, okay that is fair one. I didn't see it put anywhere today. So that was the question.
And another thing is, I'm curious to know, how do you generate most of your sales leads that you get, where did it come from?.
Yes, so Ron we get our sales really through my personal relationship.
But I think even more, more importantly, our customers are our best sales lead generators, right? As I mentioned in my remarks, our customers, our lead generators there, after we show them that it works after they become a customer, they refer us to each one refer just to, I'd say between 10 to 15 other customers.
So we're pretty excited about that because they increased the demand, or help create the demand first..
So, because of the network that you have, it appears that a lot of these contracts are being rolled up from one person to another person, once they get to meet you is that more or less that happens, they see your product, is that the basis of it?.
Yes..
And I will take our final question from Dillon Heslin with Roth Capital Partners..
I wanted to follow-up on the landscape in China, sort of how things trended in terms of the pace and scale. Some of these rollouts across various partners in schools and in construction. So let's think the Chinese economy has opened up a little bit more here sort of the last two months or so..
Dillon, I missed you in the middle of it. I just heard about the China's economy opening up, is it how is it just the other parts become kind of coming in and out..
Okay, just wondering how the pace of the smart terminal rollouts within China, the Chinese economy is starting to reopen, relative to sort of potential exiting sort of December..
Yes, so we are in 2,000 stores already. Certainly the COVID shut everything down in the world as we all know. But now, I think China's maybe 30% there in terms of getting back on speed. So we still think that we will be in about 5,000 stores by the end of 2020.
That is a goal that is set by China Mobile, and then I progress to 2021 to get to be over 10,000 stores..
Got it. And then….
Coming back, that it still comes back to..
And then have you gotten any of sort of the early 2019 deferred revenue recognized at all yet?.
No, we haven't..
Do you have any visibility if you win that could possibly come through?.
We do have visibility and part of it is, as the economy is opening up, we need to balance how basically, when you're dealing with somebody like China Mobile is that the deferment that you're talking about?.
Yes..
So which part?.
I'm not sure..
Just to make call offline and we can get to that detail..
And there is approximately 4Q 2018 I think the last time you talked about, there's about $5 million in deferred revenue that you are yet to collect.
So sort of wondering where that balance stands?.
Right. So that will be okay, so that revenue will be recognizing soon. Some of it will be written off, but most guys will be able to recognize them and it is in the greater detail on that in the K tomorrow..
The last one for me, could you talk a little bit about sort of quarterly, cash OpEx rate and sort of where that's trending so far here in sort of into, I guess mid-2Q?.
I would say it's hard to do any kind of forecasting as the things are changing so much week to week. I know that we had coming into 2020, we cut our costs down dramatically. And now we just have to figure out how to scale up again because of all this increased demand. So that's something that we're working on right now.
But it's too hard for us to forecast, the big part. I think which answered that in the past that we've acquired in the past to put down 100% deposits and we’re working our performance, with our different partners.
And now they're able to handle that using the working capital from our customers because they have to put down 50% to 80% of the deposits in order to get anything started..
Thank you. And that does conclude today's question-and-answer session. I would like to turn the conference back over to Mr. Harvey for any additional or closing remarks..
Okay. Thank you everyone for participating in Remark Holdings fiscal 2019 financial results conference call. A replay will be available in approximately four hours through the same link issued in our May 13 press release. Thank you. Have a good afternoon..
Thank you. That does conclude today’s conference. Thank you all for your participation. You may now disconnect..