Welcome to the Remark Holdings, Inc. Second Quarter 2021 Financial Results Conference Call. My name is Cody, and I'll be the operator today and will handle the Q&A. As a reminder, this conference is being recorded. I'd now like to turn the call over to Brian Harvey, Director of Capital Markets & Investor Relations. Please go ahead..

Thank you, Cody. Good afternoon, everybody and welcome to Remark Holdings fiscal second quarter 2021 financial results conference call. I am Brian Harvey, Senior Vice President of Capital Markets & 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 businesses, and I will recap our second quarter financial results. Following these 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 maybe 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 full in its filings with the SEC. I will now turn the call over to Remark's Chairman and Chief Executive Officer, Mr. Tao, so he can provide additional color on Remark's business and recent developments.

Shing?.

Good afternoon and thank you for joining the Remark Holdings second quarter '21 financial results conference call. Before I turn the call back to Brian to review the financials, I want to provide an update on the progress we’ve made in certain business segments since our last call, and provide information on where we see additional opportunities.

I would also like to first take this moment to acknowledge our research and development team for their continued success as our latest software achieved a top-five ranking in the recent computer vision testing known as the Face Recognition Vendor Test, or FRVT conducted by the U.S.

National Institute of Standards and Technology, otherwise known as NIST. Specifically, 198 systems were tested in the FRVT for their ability to verify that a person is wearing a face mask and we finished in the top-five ahead of well-known public companies, several billion-dollar private AI unicorns and well-known AI research labs.

Our consistent and continued leadership in AI innovation and practical execution has given us a strong advantage to beating our much larger and capitalized competitors in this space. 2021 is turning out to be a transformation year for us.

We’ve already nearly surpassed our 2020 revenue numbers and only expect our third quarter and fourth quarter to be stronger, setting us up in a perfect position to continue to win new businesses, continue to capitalize on in-sell opportunities and expand into new verticals.

Our current pipeline and future potential wins remain very strong, and we will continue to commercialize our industry leading AI technology around the world. Here are some of the highlightṣ. In Asia, after our first -- after Q1 successful implementation of smart bank retail stores and good results from our DMP solutions.

In the second quarter, we won the second phase with Bank of China in their DMP business, where we run their offline traffic and convert them both offline and online across the entire Sichuan Province. At the same time, through our banking industry partners, we have won more than 100 Smart Bank retail store deals with Bank of China as well.

School businesses. In the second quarter, we developed several school product distributors who have started to help us get into schools in Sichuan and Chongqing Province, where we have deployed our smart school solutions in 35 out of the 200 schools. Combining with other provinces schools, we've now deployed in more than 250 schools in 2021.

China Mobile. Although China Mobile's retail store innovation, and smart community projects have been experiencing a slower-than-expected rollout due to COVID situations, we still managed to complete Phase 1 and continue to execute Phase 2 and Phase 3 smart retail store contracts.

While the smart community project Phase 1 is still being executed for China Mobile smart communities and expected to be completed by Q3 we are confident in our ability to win the second phase of China Mobile smart community projects.

We will provide our AI solution to enforce COVID-19 protection rules for communities by enforcing health codes, conducting real time temperature checks, ensuring mask wearing, allowing access only to residents or authorized persons, controlling vehicle access and helping to protect the elderly and children all in addition to what we delivered in Phase 1.

Factory Businesses. After several successful POC projects in Q4 2020 and Q1 2021, with many cement factory clients into the second quarter, we have won the first five cement factories out of the 35 expected deployment for 2021.

While we've provided a complete safety solution that covers AI worker management, the AI key device management, three conveyor belt safety management, and four protective gear checkup.

In the wave of technological improvements for traditional factories, our proprietary AI technologies are now being tested in many different heavy industries, including cement factories, mines, power plants, ports, railways, and et cetera.

For Q3, our speed of deployment has increased quite significantly, and our target for '21 and '22 is to deploy across 300 factories. Winter Olympics in Beijing in 2022.

We are in the process of deploying our smart hotel solution, and energy saving solution for one of the largest ski resorts outside of Beijing of where the Beijing Winter Olympics will be held. With some of those sports competitions will be expected to be completed before the snow season starts [Indiscernible].

As mentioned on the previous earnings calls, these solutions will range from helping to lower the labor costs, monitoring employee and guest safety in areas of power management, where they can help significantly lower the cost from transferring water to snow. Our pipeline is very strong, as I mentioned, and here are some of them.

After a successful POC project with one of China's largest airlines, we are in the process of securing an AIS service project where our AI algorithms can be the foundation of many aviation applications.

We believe this is the first of its kind complete platform for the aviation industry and presents a tremendous future opportunity for Remark AI around the world. Potential AI algorithms for aviation applications include facial recognition, PPE recognition, metal surface defect detection, LiDAR signal-based object recognition, and personal REID.

This project is expected to be completed by the end of 2021. We've also entered the bidding process for a large, easy bus charging station where we will provide real time fire and smoke detection monitoring for over 500 EV buses every night.

It is critical to be able to detect fire and smoke fast and accurately enough and trigger fire distinguishing equipment before the charge station gets on fire. There are over 2,000 EV bus charging stations throughout China.

And given all the issues with battery safety for all EV vehicles, as the recent headlines have spotlighted, we believe this is not just the China opportunity, but a global one. Moving to the U.S. During the second quarter, we continued to build our data intelligence business using our AI data intelligence platform.

Based on initial success, we are looking forward to the start of the fall sports season and to additional growth options with other online sports gaming, and [I] (ph) gaming businesses. Our AI is used to find insights with their own proprietary data sets, particularly with respect to understanding a customer's needs and buying patterns.

This helps with analyzing first-party predicted data and benefits from the shift away from cookies and third-party data sources. These initiatives which began in Q1 2021 led to a doubling of U.S. revenue in Q2 '21 as compared to the comparable quarter a year ago, in 2020.

Our technology includes geo framing targeted audiences, where we can track the physical and virtual visits qualify them as an interested potential customer. Historically, companies use Facebook because they had the best identity graph. Therefore, you know your customer, you can ask Facebook to find similar customers.

With all the new privacy rules against Facebook, it marks the -- it makes the identity graph much less useful. Taking advantage of this opportunity, we've created our own proprietary identity graph.

Our ability to exactly geo target based on longitude and latitude in geo framing our competitors have allowed us to really understand who is going to the website and allows us to refine our targeting. For example, if you're an NBA Lakers fan, you are likely to be interested in participating in anything Lakers related.

Our Geo targeting allows us to identify anyone that's been in the Staples Center, or any of the restaurants or retail stores around it. We can figure out exactly what email that lakers.com has sent out to their -- that sent it out outbound street their fan clubs in Facebook groups.

Now that we know who the profile of this person is, we can match it with our own data sets. Usually, you have the name and email, but you know nothing about the customer, or vice versa the profile of your customer, but not how to contact them. We become that bridge for our customers.

And once we were able to identify, we can go through their social behavior and see who their friends are or people they associate with similar behavior. We then cut [indiscernible], a customized offer for them. And through our AI data intelligence, we're able to do automated rapid AV testing.

Our platform is running 24 hours, 7 days 365 days a year, while not taking breaks and dealing with human constraints. In the daily fantasy sports industry, we're able to track the largest competitors as well as the fan engagement on Facebook groups.

Knowing that customer is actively receiving emails from a team site and participating in fan chatter with their friends, we are able to confirm their interest and following the seasonal games as well as their favorite athletes, who can positively marketed to regarding who, how, who and how to participate in clients daily fantasy contests.

With the upcoming NFL and college football season, expect to be the busiest period for players participating in daily fantasy sports.

we're expected to fully leverage the 32 million historic daily fantasy sports players we have identified in our graph, in our identity graph, including the active 1.8 million active participants who currently bet on competitor daily fantasy sites to introduce an attractive to our clients' offerings.

This is our first venture in the U.S applying our AI data analytics platform. As you remember, we've had success in doing this before in other parts of the world. We are excited by our initial results, and look forward to continue to work with super draft in their peers.

Brands that use our AI are using it for richer and more effective connection with their customers.

In addition, we are also enthused by the additional opportunities and other verticals that are looking for similar situations and solving the issue of how do I acquire more customers with a higher conversion rate, while lowering our overall acquisition cost.

For example, in the mortgage loan industry, we're able to geo frame customers who participate in real estate open houses, which suggests that they would likely be interested in pursuing a mortgage for their eventual purpose. The mortgage loan origination process is waiting to be disrupted and this is slow and costly.

We will soon be entering this industry with a couple of name partners along our side. Other updates in our U.S businesses. Our biosafety business saw slowdown in the second quarter commensurate with the vaccine push and the overall relaxing of regulations with some customers delaying orders, while they await the final regulations.

However, with variants such as the Delta virus emerging, we've begun to see business development activity pick up again. It is our continued belief that creating a safe environment for both customers, employees will be crucial and a differentiator in the marketplace and we believe our solutions are ideally suited to meet these needs.

We're working with Sharecare, the partner to help their Sharecare safe certification process, leveraging our thermal safety products.

We are also currently testing our AI safety and security solutions at the West Palm Beach location, one of the largest private and publicly funded high-speed railways in the U.S., currently connecting Miami to West Palm Beach, and in the future with Orlando to come.

We are looking to hit our goal of a full rollout when the station becomes fully operational in Q1 2022. In Q3, we expect full deployment of our AI security surveillance platform with the shrine group, the largest vertically integrated cannabis company in California. Was trying group becoming our anchor partner in this fast-growing industry.

We are enthused by the number of different solutions we can provide for the industry in general, which extends beyond helping manage the retail dispensary operations. This includes opportunities to use the remark AI platform for cultivation and manufacturing as well.

We continue to also be working with a large hospitality customer as they begin the planning for their new hotel ventures in the U.S with the intention to leverage the latest AI technologies to save costs and improve operations.

And finally, as mentioned before, with our ESG efforts in China already underway, we look forward to the massive infrastructure bill in the U.S allocating combined $15 billion to EV infrastructure, including 7.5 billion to electric buses alone. Our technology is well tested and needed in the U.S., so we like our chances in entering this market.

Subsequent to June 30, 2021, Sharecare completed its merger with Falcon acquisition, providing us with an initial liquidity of $2.3 million plus approximately 9.5 million shares of Sharecare.

We anticipate that monetizing our position will fund our balance sheet while simultaneously supporting working capital needs to meet our growth goals and new initiatives. Despite the recent turmoil was speculated deals, we remain very bullish on shirkers leadership, business plan and execution.

Unlike most companies in the digital healthcare space, Sharecare is a category of one. Digital health business that is growing revenues at 25% Plus, while generating positive EBITDA. There are not many companies in this hyper growth, digital health space, I can say that.

And in addition, the recent Anthem Blue Cross Blue Shield strategic partnership brings 44 million prospective members to the cross marketed Sharecare platform. Looking forward into Q3 and Q4, Remark Holdings will now be taking our first step into building and bringing the Metaverse to life.

Inspired by the division of the global leading companies like Epic Games, who created a Fortnight, Facebook, Roblox and Nvidia. We will pivot to leverage our bikini com brand equity and IP asset to create a beach lifestyle metaverse where we can integrate the digital and physical worlds together.

With the bikini.com Metaverse, we are creating a full-fledged economy and offering an unprecedented quote this unprecedented interoperable interoperability. Users have the ability to take their advertising goods from one place in the metaverse to another, no matter who runs it.

With bikinis calm, we will capitalize on our name being recognized around the world, as it means the same in every language.

In addition, we are now leveraging remark entertainments platform to create proprietary content from leading influencers, entertainers and artists building a non-fungible token otherwise known as the NFT business in the U.S and Asia let's token otherwise known as the NFT business in the U.S and Asia, with a target is Q4 launch anchored by a very well-known global celebrity, with substantial valuable intellectual property and assets.

For those unfamiliar with what an NF T is, a non-fungible token is a unit of data stored on a digital ledger called the blockchain that certifies a digital asset to be unique, and therefore not interchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.

The market for NFT exploded earlier this year, with 2.5 billion in platform sales in the first 6 months of 2021. up from just $13.7 million in the first half of 2020. And the investment we made to capitalize on this that BAT business is poised to capture that growth.

Our core strengths in artificial intelligence give us the market intelligence to make early investments to develop and support the NFT and Metaverse vision, and we believe we're well-positioned to prosper in this fast-growing industry.

The recent pandemic has changed both lifestyle and work habits, advancing technology trends that would have taken decades to adopt and taking place in years. Human beings continued to crave social interaction, while keeping a form of unique identity.

The virtual world has mirrored the physical world with owners deciding to own unique brand and status symbols to show off the same way customers as for now and [indiscernible] probably wear their brands to reflect social status.

In summary, our Remark Holdings continues to grow and transform our business that is either reoccurring or repetitive in nature. Our AI based platform with proprietary services attached to it, a business and earnings model that leads to increased margins, and significant cross channel selling opportunities.

I'd now like to turn the call back to Brian for a review of the second quarter '21 financial results..

Thank you, Shing. The second quarter was highlighted by a 75% year-over-year increase in revenue, which included in near doubling of revenue from the United States.

Our U.S business saw the recognition of over 2 million in revenue from a data intelligence product project leading to $2.6 million in total U.S revenue compared to $1.3 million in the comparable quarter of 2020. Revenue from China was up 40% or $1.4 million compared with $1 million in last year second quarter.

This growth was achieved despite periodic regional lockdowns associated with COVID-19 and long celebration of the 100th anniversary of the founding of the CCP. Our gross profit improved to $1.8 million from $1.1 million, commensurate with the increased revenue. The overall gross profit margin was 43.9% in the second quarter.

We incurred an operating loss of $2.5 million in the second quarter of 2021, compared to an operating loss of $2.8 million in the second quarter of 2020. Gene A increased by approximately 600,000, but was offset by 300,000 of other operating expense decreases and the improved gross profits.

The company reported a net loss of $1.6 million or $0.02 per diluted share in the second quarter of 2021, which compared favorably to a loss of $9.8 million, or $0.11 per diluted share in the second quarter of 2020.

A decrease in the company's stock price between December 31, 2020 and June 30, 2021 led to a $1.3 million non-cash gain in the change in fair value of our one liability, which compared favorably to a $6.3 million non-cash charge for the same category last year.

At June 30, 2021, our cash balance totaled $0.1 million, compared to a cash balance of $0.9 million at December 31, 2020. Proceeds of $4.8 million from a debt issuance and $800,000 from stock option exercises were offset by $6.3 million of cash used in operations.

And as Shing noted, subsequent to years, the quarters end, Sharecare completed its merger with Falcon acquisition, which provided us with initial liquidity of $2.3 million, and approximately $9.5 million shares of the new Sharecare. With that, I'll turn the call back to the operator. And we will now open the conference call to questions.

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.

Operator, could you please instruct the callers how to queue up with their questions?.

Absolutely. Thank you [Operator Instructions] We'll take our first question from Darren Aftahi from ROTH Capital Partners. Please go ahead..

Hey, this is Dillon on for Darren. Thanks for taking my questions. First, with China, how confident are you that you can redeem some of that momentum that you saw sort of the second half of last year and into Q1 of this year to get that back to sequential growth, just given the opportunities that you have there in the pipeline.

What are you seeing so far in 3Q that's sort of pointing towards positive momentum, just given some of the, I guess COVID related headwinds that could pop up..

We're doing very well, this quarter. And Q4 will be even stronger for us. I think the first two quarters, generally Q1 is slower anyway, because of the Chinese New Year difficulties. But certainly, with COVID and for Q2, this year, we had the 100th anniversary of the CCP. So certainly, there was a bit of delay in how we were able to deploy things.

But also keep in mind is that when we recognize revenues when we collect the cash, so what we report on the revenue doesn't reflect what our growth pipeline is..

Got it.

And then on a similar note, how much of the revenue that you're expecting in the second half of the year is from continued deployments versus some of the new stuff like with the cement mixing on the industrial side, and also sort of the electric vehicles and buses that you're talking about?.

I think, no, it’s just hard to tell, I think it's I want to kind of go down the line or down the middle with a 50-50, it's, I think it would be impossible to always get the exact timing down. But a lot of these projects where we've either won or close to winning. And we're working out the details on how we deploy.

Keep in mind as well is that again, as I've always said, this is the first for both sides, right? Not just for us, but for the customer as well. So, there's always a lot of changes that are done until we get to the finished product because a lot of the situations haven't been forecasted before.

So -- but I would say down the line in terms of 50% new business or in sell opportunities and then 50% would be -- well I'm sorry, 50% would be new business and 50% is old business but in addition to new faces that we've been able to win, but certainly like the cement and factory business that we - I just mentioned, the aviation, those are all new business and that will continue to evolve.

But we're very excited because we're in at the ground floor, we were able to break through. And once you do become the underlying technology or AI technology platform for that company, it's very easy to add on afterwards.

And this was something that we were able to beat a multi-multibillion-dollar AI business to win, simply because they weren't able to produce what they said they were able to do. And we proved it over the last, let's say, 3 to 5 months, that we're able to accomplish it..

Got it, thank you. And then on the data intelligence side in the U.S.

with both the fantasy sports and gaming and then mortgage, I know, in the past, you might have talked about sort of leveraging partnerships to help get better sales, is that still a thing that you're looking at?.

Yes, absolutely. We for -- we are never an expert in any particular industry, we provide a very strong technology platform that can be adapted to different industries. So clearly, to move faster we would want to, that's our desired way to entering into something new.

So certainly, on the mortgage industry, as I mentioned, we would -- we're in the process of working with several groups there, to moving into the live streaming business, we'd be doing the same.

And we were basically replicating what we've done in this fantasy sports, online sports business efforts where no one in the industry has done it before, or we were the first to bring it to the market.

Now that we've been able to now both sides have been able to learn from the mistakes, and now we have a much better product and just in time for the start of the football season.

So, we're really excited on the things to come not just with our current customer, but with the other groups that are in that space as well, that are in the [I-gaming] (ph) space, or in the online sports gaming..

Got it. The last one for me, was the $2.3 million liquidity from Sharecare.

Can you talk a little bit about where you're sort of planning on giving up some of that cash in order to invest in the business?.

In terms of when you say giving up the cash how are we allocating it?.

Yes, I mean, I guess in terms of like, how investment in I guess, developing net new technology versus using it to basically fill up the backlog of deployments?.

Oh, I mean, it's, we're -- our technology is always -- we're always developing new technology, that will not change. We need to, obviously continue to do that to maintain our lead. But a big focus of certainly our resources that are our pipeline right now is so strong.

A lot of the engineers and development team that we build is really more focused on helping us meet that demand. And just one of these clients just say, for example, we mentioned the cement factory, which is one of the world's largest cement groups.

Now, they've got 1, 500 cement factories, and we certainly need people to help continue to help them develop the solutions to that.

So, it's certainly we're always building new technology, as we as we need to do that and need to continue to lead, but the bulk of the new capital or any capital comes out of the Sharecare monetization will be to meet our current monetization plans..

Thank you. Appreciate it. I'll turn the call over..

Okay. Thank you, Dillon..

Thank you. We'll take our next question from [indiscernible] Group..

Gentlemen, thank you for your report. A couple of quick questions. Number one, you mentioned that you received 9.5 million shares of Sharecare. And I'm guessing that the market is now your stock is now sort of attached and tethered permanently to the performance of Sharecare.

Do you have any specific plans to monetize this Sharecare shares? Its question one..

All right, thanks for your question. Yes, and absolutely.

Obviously, we're subject to the insider lockups, like every other investor, in the private rounds of Sharecare, are subject to, but as our lock-up, and we're certainly in discussions with several large financial groups, that we will that we can achieve some form of financing before that happens, and that will allow us with early monetization to support our activities, as I just mentioned on the previous question, as well as to buy back shares as well..

Yes, okay. Thank you for that answer. And my next question was again back to Sharecare.

What percentage of the Sharecare distribution of shares does 9.5 million shares represent? Is it 3%, 4%, 2%?.

Approximately 3%..

3%. Thank you. And I have a final question. Again, with regard to the proceeds.

You mentioned this $2.3 million, was that from the sale of some shares? Or was that in addition to the shares you got? Would you have to sell any to get to $2.3 million shares?.

Yes, upon the close of the de-SPAC-ing, that was our pro rata share of the Sharecare stock that we were - that we had to sell alongside with all the other investors?.

And how long is the lockup period for the remainder of your shares?.

It is -- it's a year. But there's a bunch of like if there's a bunch of different points, like say, for example, if the stock rises above 12, after a certain amount of trading days, then we're able to sell a certain amount. But there's an actual formula to that. But in general, just plan for a year if the stock stays at this price.

But if the stock continues to trade, get back to an excess of $12, then our options become options to monetize become, in terms of just selling directly into the market become much more..

Okay.

And do you have enough cash right now on hand to fill Q3 orders and anticipated growth for Q4 and then going back into Q1 until the time that you can monetize such shares?.

Q3, we are good. We are looking to as I just mentioned before, we are in talks with several financial groups to help us have an early monetization of our Sharecare stake. And now that will certainly provide us with ample liquidity for Q4 and beyond..

Okay. One final question. I'm noticing that. Hey, I know I keep saying one final question. If I do have one final question. I noticed that in the last 6 months or so that you become tended to share care, because I've sort of walked away from the core business of what we mark is trying to accomplish.

And in reality, you have some very interesting businesses, specifically in the AI. And it's I see the Board's not getting out to the street as to what the real potential is of remark on its own, untethered to Sharecare.

And I'm wondering what can be done with regard to investor relations to let the street know, and let shareholders know that there really is a business here besides collecting cash from the sale of Sharecare?.

Yes, I think that's a great point, and certainly been very frustrating from our side.

When we see private companies, AI companies that are doing comparable, in terms of revenue with us with not a strong technology and losing probably $5 for every dollar of revenue that they generate, it's very frustrating to see them being valued at billions of dollars of valuation, right.

And when we've seen that, pretty much every month, there's a large announcement. So.

So, what we plan on doing really, is I think, number one, it comes down to our execution of our business plan, which is what we're doing, we're continuing to win contracts. We're continue to deploy it. In certainly as we finalize on our deal with our financial partners, a portion of that will be used to buy back our stock.

And we'll continue to do that. Because, to your point, we certainly believe our core business is really the gem here. And it's trading at a fraction of what private companies are trading that.

So, we'll look to aggressively buy back stock when we're able to, and then couple that with our continued performance announcement of partnerships, our numbers have to prove that we're continuing to execute. We do think the valuation will begin to get to where a lot of our private competitors are trading at..

Thank you very much..

Thank you..

Thank you. We'll hear next from Steve Allen, Private Investor..

Hi, Shing. Your last question, pretty much was what I was going to ask you we see on a weekly basis, it seems like private companies reaching multibillion valuations, and I was just getting into your thoughts on that.

Based on, it seems like the leadership position and the contract opportunities that you have, and I think you just went over there, but if you had anything more to say about it, that would be great..

Yes, I mean, like I said, it is frustrating because we certainly are very confident in what we've built here. The private companies have raised billions of dollars to create a business that's still losing hundreds of millions of dollars.

And we essentially bootstrapped our to build our AI platform, and now we're winning the business not just the business, but from a technical standpoint, we're winning and then from the business that we are winning. So, we certainly see, and I’m very confident in our value here. And we are not -- we are going to keep on moving and getting to our goals.

So, I think it’s a great -- I certainly congratulate those guys being able to raise those money, but we couldn’t afford losing $100 million a year, which is what they're doing right now. So, we like where we are. Our technology is very strong. If not, you can't really replicate what we're doing as we're offering a platform versus a point solution.

And we'll just continue to execute..

Okay. Thank you..

Thank you..

[Operator Instructions] We'll take our next question from Steve Wagner from Integrity Wealth Advisors. Please go ahead..

Hey, Shing. Hey, Brian.

How are you guys?.

Nice, Steve..

Thanks for the good work. Obviously, there's a lot to unpack in this call, Shing. I mean, it's all very positive sounding. And, obviously, we're excited about the future. I -- a lot of my questions have been asked and answered, particularly regarding the one about the private companies and their valuations.

And then some of the other things that were asked by Roth. But just as a follow-up, I mean, just, again, I don't know who's listening, and how many shareholders are on this call, but I did some quick math, the Sharecare valuation right now, is $70 million and change. Your whole market cap is $111 million.

So, I mean, it just represents I think, as you said, a fraction of what your AI is worth.

So, I guess kind of piggybacking on one of the other questions, I mean, what more can you guys specifically do in your view to get this word out? I mean, what do you -- for example, what do you think is preventing institutions from being involved in this thing? Again, if these smart boys and girls are buying up shares in private organizations making private investments, and yet you're worth a fraction, what do you think is the roadblock or the headwind of them taking advantage of clearly a superior technology, and a company that's worth a fraction of what it should be?.

I think a big part is also the -- a lot of the funds that are investing in these private companies have a much longer outlook -- investment outlook, and they're not looking and judging the company from quarter-to-quarter. They're judging it from like, what are the advancements they are doing year-over-year.

Generally, those are made with a 5-year outlook. So, I think a big part of that. This is the -- we have to kind of look at -- if you look at the cloud business, it took about 10 years to when it really began to achieve kind of the tipping point on them becoming very powerful.

And it's obviously, the major driver of success for the biggest companies in the world now, right. For the AI, we started early. Well, this is probably our, I think this is our seventh year since we first started in 2014. And we're close.

So, we've been able to build a very strong technical foundation, and then we will reap the benefits on how we're commercializing. But I think a big part of it really is the so far, the type of investors that invest in private companies versus public companies. So, I mean, what can we do. I think really comes down to execution.

There's certainly a bit of a bitter taste right now, considering what's happening with [indiscernible] happening between U.S and China relations. So, I think we've been kind of caught up in that as, I think a lot of the different rules and the announcements that have been made, they would attribute that to -- that -- how it might affect us.

Our goal is to help businesses run better, our worry, a B2B business, or a B2G business working, trying to make things more efficient. We're not dealing with privacy issues or customer data and all that. That's usually on the other side. So, we feel we're fairly insulated from this.

The only area that these trade wars that affect us is just an -- if we're buying servers, and there's a chip shortage. But that's an issue that every industry from the automobiles to we've seem that right, and that’s not a secret, that there's a major chip shortage. But that's where it's affecting us.

But as far as where China is going, it's a tremendous opportunity, not in the future. It's right now, and the market is huge and we've established ourselves to be one of the competitors. And we've been successful winning projects. So, we'll continue to do that. We'll continue to educate our investor base, who exactly our customers are.

Some number of potential investors call us and ask us who China Mobile is, and we end up having to explain that, they're 3x the size of AT&T and Verizon combined. So, I think a lot of this is about educating.

It's not just about investing by looking at the headlines, but it's really digging deep and understanding what's really happening with our company, and we're pretty excited about it..

Excellent. So, one last question. One of the exciting things that I've seen in the past that we've seen on Twitter, so some of this, what do they call merchandising, merchandise control? How are we doing there in that regard? Are we getting more interest? I know, there was one potential customer you guys were working on at some point.

But I mean, are you guys attracting other interest for that, what seems to me to be really an amazing technology and a great way for any company that has stuff on shelves, down lots of aisles to save money?.

Yes, no, I mean, we continue our talks. But, again, we're not magicians. It's not an -- it's not just a quick sales process, right. So, it's a process where they set up a number of different POCs, different areas of where they have stores. And where -- we have to be able to participate that.

it also includes, as I mentioned, I think probably in the first question is like where are you [indiscernible], with that -- with those potential customers, we will have to set up an office, where they're based, recruit the team to help manage that. Right now, where, we haven't been able to do that, but yet, we're pretty far down the process.

So, that I don't expect that to happen, or something much more substantial until fourth quarter, but we're certainly moving towards that. And you're right. our technology, why people call us is because our technology works.

So, it's not -- we're not using them as a guinea pig, not done in the lab environment, but all the real-life experiences and that we've had to say over the last five or six years dealing with the customers in China, where the stores are much bigger, you're dealing with much more skews, you're dealing much more individual visitors that come we can apply that to the U.S., and then think we'll think we'll do it better than our customers just because of our experience.

It was do better than our competitors because of our things..

All right. Well, thank very much. I think you appreciate you taking the time. Thank you, Brian. We'll talk to you guys later..

Thank you..

Thank you..

And we'll take our final question from Laurence Rosen from Rosen capital. Please go ahead..

Gentlemen, congratulations on the improved revenue and earnings. And a lot of my was also covered. But I guess I think the savvy investors that I'm hearing on this phone is seeing or trying to understand what I'm trying to understand here is that the entire value of this company, excluding Sharecare, at the moment is $40 million.

And I think that's what we're all kind of concluding here based on everything that you have, but I'm just doing quick math. Also, with the Sharecare valuation, it looks like the targets and shifts are averaged around 13. So quick math we're way, way off of the potential of the business. So, for me, that's very exciting.

Obviously, in the large holder as we speak. Did I miss the early part of the quality? I'm not sure if you touched on any of the what you're doing in the gambling arena, and how your technology can play a role there..

Yes, absolutely. I talked about that, basically, a big part of our U.S revenue this quarter, we showed I think very strong growth from Q1 to Q2, in terms of us expand our presence in daily fantasy sports with the super draft business.

And everything's done intent in anticipation for the soccer that I'm not talking about football, that will happen very soon in the next few weeks, and we're getting that business all set up for that.

I think just in general, we -- all we read right guy is [indiscernible] the headlines is just how much money is being spent to acquire customers, whether that's for people that are, that are trying to go into the online sports gaming business, or going into the AI gaming business.

So we're actually just, I think, will be a beneficiary of that, because the space is probably as competitive and it's just a race on who can acquire the most paying customers at the lowest rate.

In the same the second quarter, we were able to prove that our technology works, the ability to acquire the right data sets to finetune our AI algorithms has led to that result. So we'll continue to do that. I mean, the market leader in this space loses more than $200 million a quarter, right? So you can imagine just how competitive this industry is.

So we're excited to be part of the spend, and having the ability to not just partner with, our current customer, but all the participants in that industry. So it's definitely an exciting area for us..

Excellent. The rest of my questions were answered throughout the call. So again, I wish you guys well and keep up the good work..

Thank you..

Thank you, Larry..

Again, at this time, I'd like to turn the conference back over to Mr. Harvey for any additional or closing remarks..

Thank you, Kody, and thank you everyone for participating in Remark Holding second quarter 2021 financial results conference call. A replay will be available in approximately 4 hours through the same link issued in our August 16. press release. Have a good evening..

Thank you. And that does conclude today's conference. We really thank you all for your participation. You may now disconnect..