Welcome to the Remark Holdings' First Quarter 2020 Financial Results Conference Call. My name is Karina. I will be the operator for today and will handle the Q&A. As a reminder, this conference is being recorded. Now, I would like to turn the call over to Mr. Brian Harvey, Director of Capital Markets and Investor Relations. Please go ahead, sir..

Thank you, Karina. Good afternoon, everybody, and welcome to Remark Holdings First Quarter 2020 financial results conference call. I’m Brian Harvey, 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 first quarter 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 statements.

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 our 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?.

Good afternoon, everyone, and thank you for joining us on our 2020 first quarter earnings call. I hope everyone and their family has been safe and healthy and will continue to be. It is good to see America open up again, and we see it as our duty to help make sure it opens up the right way. Three points I want to cover today.

First, our cleanup of our balance sheet and our plans to further strengthen it. Two, successful deployment of our thermal imaging products. And three, Remark AI being more than just thermal imaging and how we are well positioned to upsell our other AI solutions.

While we recently just did our earnings call roughly a month ago, for Remark, not one day nor week is wasted as we continue on our journey to achieving our goal in becoming the world's number one provider of AI solutions.

As we announced on the last call, we are transforming our company's balance sheet to give us the financial flexibility to continue to achieve our goals. We took the measures to do this quickly as the picture for our future has become very clear.

While the journey is never in a straight line, our core AI business solutions was growing rapidly, not just in China and Asia, but to the U.S. and other parts of the world. We cannot afford for our growth to be stifled by our debt, especially with those that do not understand our business nor share in our vision.

Second, the underlying business strength of Sharecare, plus the overall industry strength of the digital health industry headlined by Livongo, a $7 billion plus market cap business, and the upcoming $1.2 billion IPO filing of Accolade, our decision to monetize our stake in Sharecare our way and in better ways is clearly the right one.

As we all know, the world around us changes quickly, and we have to be ready to adapt to it to any moment, as we've shown with the launch of our Remark AI Thermal Kit solution. Our debt now is principally gone. We continue to lower our ongoing costs.

And we've negotiated down our one-time payments, and now have a good cash cushion, which we expect to augment through the course of the next 6 to 12 months through cash flow from operations, strategic partnerships and monetizations. We can now finally focus on capitalizing on our momentum, driven by our AI business with our world class customers.

As I mentioned on our last call, our Remark AI Thermal Kit business is only the tip of the spear for us.

In the last few months in the U.S., we have signed pay contracts and currently executing for one of the most luxurious resort companies in the world, with locations in Las Vegas, soon to be reopened in Boston and Macau, University Medical Center of Southern Nevada in the headquarters and their primary and quick care centers, the Las Vegas Metro Police and one of the top technology conglomerates based in Japan are first working with their office and facilities management.

These are just a few examples of the type of clientele we are working with, and potential to scale up with them as the economy reopens and recovers. As expected in any growth industry, there will be a lot of competitors looking to grab their share of the pie.

The two key differentiators is, what we are best-in-class in terms of speed and accuracy and, two, Remark AI is a AI platform service company with the ability to provide end-to-end solution in a multitude of industries.

We are not a one-trick pony and providing only body temperature scanning, and we can provide all the other many applications that we need to open up as part of the operational protocol and, most importantly, operate efficiently post opening. Some of the applications that I'm referring to.

One, ability to detect the wearing of PPE; two, people counting; and three, social distancing. Our customers, whether big or small, share a one common denominator. They are uncompromising in their search of best in class for guest and employee safety.

We have already witnessed firsthand not just in Las Vegas, but other parts of the US and the world, the ramifications of when you do not hold yourself to a high standard and doing things just for the placebo effect.

The bigger opportunity is forming for us as our customers are not just looking to add more additional AI applications on to their initial spend, but upgrading to our flagship products because of the versatility of its technology. Because the AI industry is the future, there will be many competitors.

This simply speaks to the growth and potential and profitability just like other industries that are experiencing the same, like payments with Square and PayPal, and sports like DraftKings and FanDuel.

I can go on and on about different industries and who is best positioned to win, but what is consistent is that the best product and technology wins at the end.

While some of you may have had your doubts about Remark over the years, especially to just how real and good our technology is, let me just tell you, we are winning and continue to beat our peers and we don't see that changing anytime soon. Most recently, led by our own Remark AI Head of R&D, Dr.

Yang Xiaoyun at the ECCV, which stands for the European Conference on Computer Vision, which is widely considered to be one of the top two conferences in the world to be invited to present at, out of the five top prize competitions, we won three first prizes or first places.

So, when you combine award-winning technology with strong product design, we are able to consistently beat our larger and better funded competitors. In Q1, we launched our two COVID-19 prevention products – Thermal Kit and Thermal Pad. Version 1.0 Thermal Kit and Pad with third-party hardware had been released and deployed in early April.

Version 2.0 of the Kit and Pad, with hardware designed by Remark, have been released in June being FCC certified. The Remark AI Thermal Kit is designed for mass temperature scanning with fast and high precision on temperature check.

With Remark AI's proprietary facial detection, mask detection, face tracking and face angle correction algorithms, combined with fine-tuned thermal-based temperature detection device, the Thermal Kit gives us touchless, accurate and fast temperature readings at 120 persons per minute rate, while people just walk through without stops.

There Remark AI Thermal Pad is designed for automated one-by-one temperature scanning, with optional mask detection and facial recognition functions. It is perfect for unmanned gate and entrance control where people line up and go in and out one by one, whether it's indoors or outdoors.

With high accuracy on temperature check with or without mask on, it can check 30 to 60 people per minute and the entry log can be connected to various timesheet, timecard systems. These advanced products have been widely deployed in hotels, casinos, shopping malls, government agencies, sports stadiums and restaurants, and COVID-19 test centers.

Our products have already been helpful, especially in Las Vegas, in identifying potential COVID carriers before they enter the premises.

In addition, UMC, the primary hospital in Nevada, witnessed this effectiveness firsthand and subsequently engaged us to screen over 4,000 plus employees a day for over the last month as they get ready to go back to work.

As this has been going on, the hosting site, Las Vegas Convention Authority, which is one of the world's largest convention centers in the world, upon seeing the success at UMC, has recently become a customer to help them handle 5 million plus square feet of exhibit space as the Consumer Electronics Show is planning to run in early 2021.

As you can see, our demand continues to be very strong. And as the second wave of COVID seemingly just around the corner, we expect this to continue for some time. At the end of last year, we released and deployed our Smart Store products in over 2,000 China Mobile stores as part of the phase one Smart Store contract we won in Q2 of 2019.

With AI people counting, VIP recognition and facial identification, the smart queueing system and self-service kiosks have started to transform 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 expecting over 5,000 stores deployment in the rest of 2020 and over 10,000 stores in 2021. In the first quarter of 2020, our smart store AI platform has won the bid on the China Mobile Smart Store phase two.

This platform provides in-store real time heat map, staff behavior monitoring, fire, smoke detection, and virtual security patrol. The goal is to connect all 17,000 plus stores to the platform in the next two years and the contract value exceeds over $2 million. In the first quarter of 2020, we've also released our first AI cattle biosafety system.

The system performs real-time video analysis on top of existing surveillance cameras installed in the cattle farm. It identifies biosafety violations and forbidden behaviors based on which produces early warnings, and thus enforces the biosafety procedures to every detail.

The system includes the following functions to enforce the defined biosafety rules. Personal access management through face and gesture recognition, the system authorizes access to the important facilities of the cattle farm.

While in the farm, the system monitors staff activities to make sure they follow biosafety protocols, such as on the right walking path to avoid cross contamination between dirty and clean area, the shower, cleaning cotton rolls or PPE protocols, etc.

Vehicle decontamination monitoring automatically analyzes the operational steps of the staff performing sampling, car washing and drying to determine whether they follow biosafety protocols, such as the time spent on car washing, drying, proper equipment tools used and placed and proper uniform or PPE worn during the procedure.

Articles disinfection monitoring. In the process of disinfection of articles, the staff activity is detected, tracked and monitored to enforce safety protocols, such as the crossing of infectious and non-infectious flows. And live or dead cattle transportation monitoring.

In live or dead pig transportation operations, the system monitors the staff behaviors and triggers alert when biosafety rules are violated. For example, unauthorized personnel in transferring, both entrance and exit doors are open. And for example, the dead cattle being in the transfer room for too long.

This is the first AI biosafety system in the market that helps with fighting cattle disease. With proven value by the current cattle farm, Remark AI Biosafety System Version 2 is requested by a customer to be released in the Q3 2020, with AI cattle temperature checking, cattle counting, cattle weight measure and cattle facial recognition.

We see tremendous opportunities to deploy our AI systems to cattle farms in Asia and around the world. In the battle against COVID-19, our AI Smart Campus product got attention to many schools where they've been planning to reopen, while battling with the pandemic.

The core functions of the system include automated student check in and check out and mass temperature screaming when students come to school in the morning and school in the afternoon. Elevated temperature will be captured and sent to the schools nurse, COVID-19 medical responders and parents for further exams.

Teacher and school administrators can monitor every student's medical status to ensure the safety on the campus. With daily health check in becoming a new norm in school campuses, we have been deploying our system at 50 schools per month rate.

And with more schools opening, we're expecting to see greater opportunities in the market of 160,000 plus primary schools in China. Thanks to the successful product development and implementation experience in China Mobile's Smart Store, we have built up a unique smart service platform for Smart Store and retail industry.

And based on the smart service platform, we have rapidly expanded our business to bank retail stores. Our Smart Store solution for banks provides passenger flow management, VIP identification and marketing, smart interactive and targeted marketing kiosks and smart membership management functions.

Our Smart Bank retail solution has been implemented in [indiscernible] and entered the supplier procurement shortlist for Bank of China, China Construction Bank, and Agricultural Bank of China. We expect to deploy over 100 bank retail stores in 2020, and there are over 200,000 bank retail stores throughout China.

In the first quarter, as mentioned in our press release, after the successful supermarket opening in partnership with CP Group, using our award winning AI technology and facial and object and behavior recognition, we are now moving forward to additional stores with them to other parts of their network in China.

The virtual membership, customer insight and behavior analysis, AI interactive promotional kiosk, product popularity analysis are among the most interesting features which can help operational teams to largely improve their efficiency and reduce costs. Finally, we are asking for an increase in authorized shares to 300 million from 100 million.

First, I would note that it took us more than 10 years to reach our authorized cap. And we don't anticipate using all the shares requested in the authorization for many years, if ever. However, having that availability gives us tremendous flexibility.

As I'm sure you're aware, most companies have many multiples of their issued shares available under their authorization and we have asked for the same. The reasons are quite simple. We may need the shares for, one, strategic partnerships.

Several years ago, we did a strategic partnership with CP Group, a large Asian conglomerate that is using our systems and helping to sell our systems overseas. They purchased approximately 1 million shares. Other strategic partnerships contemplated may require shares for which we currently don't have the authorization for. Two, acquisitions.

The recent COVID epidemic has led to a wealth of strategic acquisition opportunities that complement our current product line. If a timely acquisition became available to us, we want to act quickly. Without having any authorized shares available, we might miss out.

New hires and employee retention on a much smaller basis, shares issued via our RSUs or options are necessary to attract talent. As part of a compensation package, we generally prefer to keep base salaries low and using stock option grants as incentives. This also aligns employees with shareholders.

Not having more shares authorized could severely handcuff our options going forward. As a significant shareholder who has not sold a single share in over 10 years, I've never been more excited about how Remark Holdings is positioned.

We believe the combination of a large currently underserved market, along with the strong momentum generated by COVID provides the potential to create an environment of continuous category expansion for many years to come around the world.

We see ourselves as one of the best brands in artificial intelligence and uniquely positioned in a market expected to grow to over $400 billion by 2025. At Remark, we have always been ahead of the curve and will continue to invest in our product and technology capability to stay ahead.

It is our products' uniqueness that has continued to be a key differentiator for us to win with our customers and, ultimately, our shareholders. With that, I will turn to Brian Harvey. .

Thank you, Shing. I'd now like to provide a brief overview of our financial results for the first quarter ended March 31, 2020. Revenue from continuing operations in the first quarter of 2020 was $0.4 million, down from $1.2 million during the same period of 2019.

Companywide slowdowns in business coinciding with January Chinese New Year celebrations and the subsequent COVID-19 based regional quarantine lockdowns in China, combined with working capital constraints, that negatively impact revenue by preventing our Chinese personnel from continuing project rollouts and extending project testing and customization work on large projects.

The result was a slight decrease in the company's technology and data intelligence business segments instead of the growth which we had planned.

Our advertising and other revenues decreased by nearly $700,000 due to certain Remark's entertainment contracts that were not renewed as we scaled that business back and a decline in e-commerce revenue due to working capital constraints.

Total cost and expense for the quarter was $3.9 million, a decrease from $7.1 million reported in the same period of 2019.

The decrease is primarily attributable to decreased cost of sales, resulting from the completion of a large project in the first quarter of 2019, a decrease in payroll and related expenses due to headcount reduction, and a decrease in rent and other professional fees associated with asset sales that occurred in 2019.

Our operating loss declined to $3.5 million in the first quarter from $5.9 million in last year's first quarter, commensurate with the aforementioned cost and expense decline.

Our net loss from continuing operation totaled $2.4 million or $0.05 per diluted share in the quarter ended March 31, 2020 compared to a net loss from continuing operations of $7.7 million or $0.20 per diluted share in the prior fiscal quarter.

At March 31, 2020, our cash and cash equivalents balance was $1.6 million compared to a cash balance of $272,000 at December 31, 2019. Cash increased from the issuance of common stock, which offset operating losses. And with that, operator, we'd like to turn the conference call to questions.

We encourage any callers with questions to queue up with the operator as soon as possible, so that there will be a minimal lag time between each caller.

Operator, can you please instruct the callers how to queue up with their question?.

[Operator Instructions]. We'll take our first question from Ron Nash with Nash Partners. Please go ahead. .

Yes, good afternoon.

Now that it seems that you have your balance sheet in order and that's out of the way, where do you expect your growth to come from for the company?.

Hi, Ron. I think, as you know, the balance sheet issues have hampered us in the past. We are free and clear from it. We expect very strong growth just not only from the current industries that we're currently in. We are in retail, we are in construction, we currently are in agriculture.

But because of the success that we've had, we've had so many inbound requests that have come, really all started off by this whole COVID situation. So, I think really the plan for us is that we are able to win the first contract to implement our systems.

And as we do that, we have the opportunity to scale up on the other AI applications that we can sell alongside that. So, I think all this demand is coming in inbound, unsolicited. Of course, we're still going out and reaching out to our different relationships to be ready when they're ready. A big part of this process is obviously takes two to tango.

And our customers, from their side, may have some difficulty in figuring out where – how they plan their business, but it's important for us to be properly positioned to when they are ready. .

Okay, thank you. .

[Operator Instructions]. We'll take our next question from Steve Wagner with Wagner Financial. Please go ahead..

I loved, Shing, your overview of what's been going on and that's pretty exciting, sounds like, going forward. So, thank you for your hard work there. I do have a couple of questions. On a prior conference call, you talked about a potential dual listing China for your KanKan subsidiary.

Is that still something that you're looking at?.

Yeah. No, I think we definitely are – even during the last few months when things seem to be slowing down over there because of the pandemic, this is something that we've been studying. Clearly, the markets right now in our favor to do that. We have very successful examples.

I think almost a – more than a handful of companies that have been listed in the US that have gone through dual listing. I think what's attracted to it to us is that a number of the investors out there because the customers are very well known, like China Mobile or China Construction Bank.

This is something that's very attractive to them to be a part of. And certainly, the AI adoption in Asia is a few years ahead of where it is here in the US. So, I think it'll be very receptive if we were to go down that line, and that's something that we're looking very closely to do. .

Thank you for that. Of course, in following you guys real close on social media, Twitter, really great things going on there. Really appreciate the information you give us.

Can you talk a little bit about the lead generation, how many calls you guys getting on a weekly basis, how well that's going from these different lines of businesses that you spoke about?.

Yeah. So, I would say we get about – just unsolicited, I would say, we get about 40 to 50 contacts, either through email or phone calls. With that, we obviously have to vet that out as there are a lot of competitors that want to find out what we do. So, there is some research that we need to – that goes into each group.

And because there's only obviously that much time, we tend to shy away from the tire kickers, right? So, I would say, we get about 40 to 50. And a lot of the – so out of that, I would say 40% of them are real leads. And those are things that we've generally, within a very short time, moved on to the next stage of testing our products with them.

As I've mentioned before, I think it's important that – if we don't know them, then we kind of can jump to the ahead of the line to get to know them, right? At a certain point, it then just becomes a whole proof of concept, where it's our product versus whoever they were trying to – whoever they were speaking about.

That's the first one from unsolicited leads. The second, which I think is even more important, and probably the most important, is just the referrals from our current customers. Our current customers are very happy with us. They are all primarily in the Fortune 500 companies.

And when you have a product that works, you quickly get introduced to their network, and that's what we have been very grateful for and that's something that we certainly protect and treat very seriously.

So, that's really been the best where the CTO, the CEO of a couple of our Fortune 500 customers call us and say, hey, I'd like to introduce you to another one of our peers because your solution works. So, both paths are ways that we're going down the road right now, and going out in full force. .

Thank you.

And with that lead generation and sounds like a lot of interest, and congratulations on that, how was your infrastructure in terms of handling that? Salespeople? Capacity? How are you addressing this increased demands?.

Yeah. As you can probably appreciate, everyone here is picking up the slack. With that, we are working and bringing on more people that are experienced in enterprise software sales, right? And they're able to do the follow-ups and the implementation and deployment of the systems in a much more rapid pace.

Prior to this or prior to two or three months ago, we didn't have that infrastructure and we've been working very quickly to not just really fill up the team, but really to find the right person who are kind of sharing the same kind of work ethic, DNA and making sure this is not the time to slow down, but it's the time to keep the pedal to the metal kind of thing.

And that's what we're doing. We've built a pretty strong network across not just the US, but other countries right now where we've had existing relationships and they've brought on their own trusted teams. So, we feel we'll be pretty well equipped to handle all this demand. We're not there yet, but we're getting there pretty soon. .

Excellent. Just a couple of quick questions, and I'll be done. I appreciate you answering them. On Sharecare, now that you've got your balance sheet cleaned up, as you mentioned – again, congratulations on that.

That's a welcome thing for all of us – are you now more inclined in your view to wait until an IPO on their end or are you continuing to look at opportunities to monetize before that?.

Yeah, I think for the right prices, always – we will of course have any discussions with the right price. But having said that, we're also governed by the shareholders agreement that we have with Sharecare, right? So, there are only that many things that we can do.

But the reality is the market is strong for digital health companies, whether that's through an IPO, whether that's through an outright sale. We also have seen the success of DraftKings through a stack. And that's probably the best performance stack ever.

And I think there is a huge number of stacks that have been raised over the past year and soon to be raised that I think leads to another tremendous opportunity for us to be able to monetize. But, certainly, we're now able to monetize our speed and for the right price instead of being forced to do anything.

We also have very strong confidence in generating the cash flow from our operations. So, we don't see that we need to raise any money to be able to meet any type of shortfall in the future. .

And of course, that is number one.

And then, my final question comes to – obviously, now that Remark is, obviously, positioned for the present and future as a viable entity going forward, obviously, with the clean balance sheet and all that, the Sharecare interest and this fascinating technology that you have, as an RIA, as someone who is out there on behalf of his clients every day looking for opportunities, this isn't something that I'm really able to do on a mainstream wide basis for my clients until we get maybe some coverage.

I know ROTH is involved. But I'm just kind of interested, what is Remark is doing – and maybe this is a question for Brian – in terms of more of a longer term stronger hands type of institutional ownership program, funds and hedge funds and things like that? So, that's my last question. Thank you guys for your comments. .

Sure. Steve, this is Brian. I'll address that. And you're right. We are working very hard to get additional analyst coverage. ROTH has been doing a great job for us, but more would be better. There's lots of opportunities with some very good firms that we talk to on a regular basis right now. So, more to come on that.

As far as the institutional shareholder base, we are adjusting our marketing because obviously a lot had been around traditional conferences, but now there's a lot more of the virtual conferences that we're looking to participate in in order to get in front of those investors. Also, we're reaching out to people who are involved in the space.

They are institutional investors who are involved in some of our competition that we are reaching out to, to try to introduce ourselves to. So, we're taking a holistic approach, going after analysts, going after institutions, all while trying to get people like yourself, other registered investment advisors, family offices involved in the company.

So, we're very excited about where we are and where we're headed with that program. .

Thank you, guys. Appreciate your time. .

Thanks, Steve. .

Thanks, Steve. .

We'll go ahead and take our next question from Darren Aftahi with ROTH Capital Partners. Please go ahead. .

Hi, this is Dillon on for Darren. Thanks for taking my question. Since your last update about a month ago, curious if you could provide a little bit of an update on maybe how the pipeline's changed. You mentioned you've won a lot of business with some entertainment companies and casinos and lodging.

Has that parlayed into any new verticals more recently? And then, of those contracts that you sort of mentioned you've signed, what have you completed to date and have those customers given you any feedback so far? Then I have a few follow-ups..

Yeah. I'll answer and just ask away on the points I kind of missed, if you don't mind. So, I would say where it's brought us in terms of additional opportunities, the hospitality space is clearly – we seem to get a lot of inbound requests from hospitality chains. We don't see that slowing down.

That's across all parts of the US and other parts of the world, like they're beginning to open up. And so, we don't see that slowing down. The other two areas I would say are fairly new is in the exhibit space.

By having the Las Vegas Convention Center, which is one of the largest in the world, opening up, a lot of the different meeting spaces, large convention centers have all reached out to us. Again, this is not just in the US, but other parts of the world. So, we see that as a tremendous opportunity.

And I think it speaks to the fact that we were able to showcase our technology live with UMC, which is the hospital. The third part certainly which is I think a question to a lot of people is the reopening of sports. We continue to go down that path as the leagues reopen.

I think they are trying to figure out exactly what their own operational protocols that – we're seeing tremendous opportunity there at the league level, at the team level, and at the arena/stadium level. So, these are all areas that we're definitely moving down. One other one I'd probably add would be into the school systems here in the US.

It took us some time to break into that and we're along the way. As you know, in China, we kind of established our foothold there. In the US, as the schools are trying to open up in the fall, we've gotten a lot of requests to that. Lastly, I would also say the airports.

There's been a lot of back and forth debate whether TSA is going to embrace temperature scanning. Certainly, from our viewpoint is that the countries in Asia that have been most successful in containing COVID have implemented temperature scanning for many, many years.

So, it's strange to me why the TSA were reluctant to do so even though the airports themselves are asking them to do that. But as soon as that happens, we see that as a great opportunity for us. .

Got it. Thank you.

Could we talk a little bit about some of the supply and demand dynamics on, I guess, the hardware, whether that would be third parties or your internally produced cameras? Just based on sort of requests and funding, how have you been able to sort of meet those going forward? How do you see that pipeline taking care of itself? Just sort of some color there?.

Yeah, yeah. I think it was really important for us to have to be able to – we've always wanted to be able to design our own product. Our technology, it is first class and high end.

And because of that, it requires certain hardware specifications that is not just for the regular camera manufacturer, right? So, one of those it's very important for us to be able to build that.

The second biggest reason for that now is because we have our own, we're actually able to control that supply, build it and ship it out here en masse to meet the demand. Before, because we were working with other branded groups, there were a number of issues on how we were moving that product into the US.

And, frankly, just wasted a lot of time and energy and money. But we're now past that. And so, we think we'll be able to handle this much better. The other part is, going into the last few months, we have been able to request and require that our customers give us a more than 50% deposit on their orders.

Therefore, a lot of the – just say the money raising that we had to do in the past, where we have to provide the deposit, we don't have to do that anymore.

So, for a number of different reasons, I think the last couple months on how we've been able to manage our supply chain proactively really gives us the confidence on how we're managing our balance sheet. And so, that's why we see the future capital needs for us to be lower than what we've had in the past and now we can control it..

Got it. Last two for me.

Could you talk a little bit about recently with some of the spikes in the COVID-19 cases, how's that impacted talks with customers, whether that be ones you've already been talking to or potential new ones? And then lastly, just curious what your thoughts – you talked a little about Sharecare, but what are your potential plans and potential exit opportunities given some other peers like Livongo and Teladoc has just really – had quite a run [indiscernible].

.

So, I think it's a mixed bag with the second wave. I was just watching Dr. Fauci talk and being asked the question whether this is the beginning of the end or the end of the beginning. And no one knows whether this is the end of the first wave or the beginning of the second waves.

Regardless, there are a number of customers that have asked to upgrade from their initial purchases of pads into our thermal kits. That's obviously one positive outcome for us. Number two, other potential customers because they don't know what's going to happen or how to plan their business.

Now, of course, they're still kind of sitting on the sidelines. Today's announcement with Miami shutting down again, certainly, kind of speaks to that. So, I think we're getting it all over the place.

A common, I guess, point that they say, hey, because there are a lot of asymptomatic customer or potential patients out there, how effective is your temperature screening? Our solution is definitely not an end all, be all. We are part of the solution.

And we certainly think with the hospitals, primarily the UMC, finding our solution to be very effective, they are considered one of the best trauma units in the US and they use our product, they use our technology.

And it's very effective for them, not just to screen out the potential COVID patients, but also allows the nurses and doctors to operate more efficiently as they can now – are freed up to do other activities rather than do the temperature testing and doing the form filling.

So, we look at this as a great opportunity to continue to move down that path to help our customers operate more efficiently in kind of the next wave of COVID. And then lastly, on the Sharecare part, I think that's really as much as I can really kind of talk about at this point.

I think the business with Livongo and the strength of them and Teladoc, I think since our last call, those two stocks have gone up over 40%, which speaks to the optimism that investors have with their business.

And we certainly feel that Sharecare is very comparable to what their business, in many ways from a business standpoint, are able to cover much more ground, right, as Livongo specializes in diabetes, Sharecare handles that plus more. Same thing with Teladoc. So, I think regardless of decision, Sharecare is very well positioned.

And certainly, as I mentioned on the last answer, is that with the strength of the specs, we have a great opportunity, another additional opportunity to help us monetize with that. .

Thank you. .

Thanks..

And, operator, we'll take one last question. .

Thank you. We'll take our last question from Derick Brown with The Anonymous Traders, LLC. Please go ahead. .

Thank you so much for taking my question. I love everything that you guys are doing.

And I actually had a question in regards to the – hello, am I still here?.

Yeah, we missed the last couple of words that you said..

The Hanvon Technology joint partnership contract and the KanKan AI primary school campus transformation press releases that were from August 2009. And I know you all touched upon them. You're going to be rolling out the school campuses throughout this year and next year.

But as longtime investors of your company, when should we expect to see the positive yield from these business operations?.

Well, thank you for your question. As you know, this call is focused on our first quarter results. And as the next couple of quarters comes through, you will see that. .

Okay. Okay, wonderful. And following up, like you said, this is focused on Q1. But our last call, you gave us a little bit of a forecast into Q2, saying it is going to be better than our Q4. Obviously, we had a bad earnings in Q4.

Is there any speculation as to our Q2? And I know we're looking positive, but can you shed a little bit more speculation on that or are you not able to?.

We're not able to do any speculation. I appreciate your question, but we're in the current – right now, we want to eliminate any type of speculation and just stick to the facts and the numbers that we produce. And as each quarter passes, we'll be able to shed more light on our current pipeline and future pipeline. .

Okay, beautiful. Thank you so much. I love everything that you all guys are doing and help us keep America safe. .

Great, thank you. .

Thanks, Derick..

Thank you for taking the time today to join us. As a recap, the first quarter was successful and a transformational quarter for us as we, one, cleaned up our balance sheet; two, successfully deployed our thermal imaging solution to the U.S.

and now moving to other countries; and three, expanded beyond providing thermal solutions and being able to sell across our suite of AI solutions for both security and marketing. I look forward to speaking soon. .

Thank you, everyone. .

And that does conclude today's conference. Thank you very much for your participation. You may now disconnect your phone lines..