Creative Realities Inc (CREX) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Wireless Ronin Technologies, Inc. fourth-quarter and full-year 2010 earnings call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to your host, Erin Haugerud, Manager of Communications & IR. You may begin.

Thank you and welcome, everyone, to our 2010 fourth-quarter and full-year conference call. With me today are Scott Koller, President and Chief Executive Officer; Darin McAreavey, Senior Vice President and Chief Financial Officer; and Terri Sayler, Senior Vice President of sales and marketing. After Scott's opening remarks, Darin's financial review and Terri's sales updates, we will open up the call to your questions. Today's call will be an interactive webcast that will feature presentation slides of the fourth-quarter and full-year 2010 results. To access the webcast, please visit the investors section of our corporate website at www.wirelessronin.com.

Please note that the information presented and discussed today includes forward-looking statements, which are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results in future periods may differ materially, and you should not attribute undue certainty to our forward-looking statements. Risks and uncertainties that could cause our actual results to differ from those expressed or implied by forward-looking statements include those set forth in the risk factors section of the annual report on Form 10-K we filed on March 26, 2010. In addition, our comments may contain certain non-GAAP financial measures, including non-GAAP operating loss per share. For additional information, including a reconciliation from GAAP results to non-GAAP measures. How the non-GAAP measures provide useful information and why we use non-GAAP measures please see the reconciliation section of our press release, which appears on our website at www.wirelessronin.com.

Now, I'd like to turn the call over to Scott.

Thank you, Erin, and good afternoon, everyone, and thank you for joining us on today's call. I would like to start by mentioning the previously-announced leadership transition that took place on January 1st of this year. First and foremost, let me say that it is my pleasure to speak to all of you today in my new role at President and Chief Executive Officer of Wireless Ronin.I look forward to applying my experience with Wireless Ronin and the digital signage industry my new role. On behalf of the employees and the entire management team, I would like to thank Jim Granger, our former CEO, for all of his hard work and dedication to Wireless Ronin. Through his leadership Jim positioned WRT for success. We wish Jim nothing but the best as he transitions from the corporate world to his much-deserved retirement.

Secondly, we'd like to congratulate Steve Birke on his new role as Chairman of Board. Steve replaces Greg Barnum and will actively work with the executive management team to provide strategic direction and guidance to ensure the future the success of our Company. Greg will continue as a Director of the Company, as Chairman of the Audit Committee and as a member of the executive committee. We thank Greg for his service as Chairman of the Board since September 2008.

Now, moving to the fourth-quarter and full-year 2010 results, the past year brought several significant accomplishments. First, we reached the highest level of revenue in the Company's history, $8.6 million, representing an increase of 71% over the previous year. Second, our gross margin continued to expand during 2010, averaged 47%, which represents a 19 percentage point improvement from 2009. Thirdly, our non-GAAP EBITDA loss for 2010 of $6.3 million marks an improvement of $2 million from the previous year, demonstrating our continued efforts to achieve profitability. And lastly, with the recent capital raise we ended the year with over $7 million of cash. Our cash position, coupled with the access to a $2.5 million credit line with Silicon Valley Bank and zero debt provides a very strong balance sheet and available capital entering 2011.

I will now turn the call over to Darin for a more in-depth review of our financials for the fourth quarter and full year of 2010 followed Terri Sayler's update on sales and marketing. Afterwards I will add some additional thoughts prior to opening up the call for Q&A.

Thanks, Scott, and good afternoon, everyone. We reported revenue of $2.9 million for the fourth quarter of fiscal 2010, an 89% increase from $1.5 million in last-year's fourth quarter. As of December 31, 2010 we had received purchase orders totaling approximately $1.1 million that had not been recognized as revenue. The increase in our year-over-year revenue continued to be generated, primarily from the success of Chrysler's iShowroom branded tower initiative. In November 2010 we received an order for approximately $1 million from Chrysler to outfit an additional 100 dealers with Chrysler's retail-branded tower program, featuring the iShowroom application. This brings the total number of orders we have receive from the Chrysler to date to $2.2 million for 200 dealers displayed 800 branded towers. Chrysler has indicated that dealer interest in the program remains strong and we believe additional orders will come via blanket PO issued in November 2010. Terri Sayler, Senior Vice President of sales and marketing, will add color on Chrysler, as well as recap our sales and marketing initiatives throughout 2010.

Our recurring hosting and services revenue during the fourth-quarter 2010 totaled $391,000, representing an increase of 80% from the same period in the prior year. Revenue for fiscal 2010 totaled $8.6 million compared to $5 million for 2009, representing an increase of 71%. The increase in revenue when comparing fiscal 2010 to 2009 was attributable to revenue generated from our marquee customers, including Chrysler, ARAMARK, Thomson Reuters, in addition to new customers.

Lastly, our recurring hosting and support revenue increase 140% in 2010 to $1.3 million when compared to 2009, the result of an expansion in customer base from our new deployments. In the fourth-quarter 2010 gross margins averaged 46%, up from 37% in the fourth quarter of 2009 and down from 50% from the third-quarter 2010. The sequential decline was primarily due to the additional costs incurred to fulfill the deployment of the Chrysler retail-branded tower program and related volume pricing.

Gross margin for fiscal 2010 averaged 47%, or $4 million, represented 180% increase in gross margin dollars over the prior year. We continue to caution our investors that our ability to maintain these levels of gross margins percentages can be impacted in any given quarter by shifts in our sales mix, competitive landscape and timing. However, we continue to believe over the long term our gross margin percentage will increase as our recurring revenue grows.

On a GAAP basis, our fourth-quarter fiscal 2010 net loss totaled $1.7 million, or $0.09 per basic and diluted share, an improvement from our net loss of $2.2 million, or $0.13 per basic and diluted share a year ago. For fiscal 2010 our net loss totaled $7.9 million, or $0.44 per basic and diluted share, down from $10.2 million, or $0.67 per basic and diluted share in the prior year. Our net loss during the fourth quarter improved over the same period in the prior year as a result of an increase in gross margin dollars of approximately $800,000. Sequentially, our net loss increased by approximately $300,000, primarily as a result of outside consulting costs. Excluding one-time expenses and non-cash charges the fourth-quarter fiscal 2010 non-GAAP operating loss totaled $1.1 million, or $0.06 per basic and diluted share, versus a non-GAAP operating loss of $1.7 million, or $0.10 per basic and diluted share in the fourth quarter of fiscal 2009. Sequentially our non-GAAP operating loss increased by approximately $100,000.

Our non-GAAP operating loss for 2010 totaled $6.3 million, or $0.35 per basic and diluted share, representing a $2 million improvement from 2009 non-GAAP operating loss of $8.3 million, or $0.54 per basic and diluted share. With our commitment to making further investments in [RoninCast] software, trade show expenses and additional consulting costs we anticipate our operating expenses will increase in the near term. However, we are still very much dedicated to achieving a non-GAAP EBITDA break-even quarter in 2011. Included in today's earnings release and financial results is a reconciliation between the GAAP and non-GAAP operating loss. This highlights one way in which we look at profitability and cash utilization for the Company. It is similar to EBITDA, but adjusted for certain other one-time and non-cash items. This supplementary schedule details the items and effects of non-cash and one-time adjustments.

Turning to balance sheet. At the end of the fourth-quarter fiscal 2010 , cash, cash equivalents, in combination with restricted cash, totaled approximately $7.1 million compared to $6.6 million at the end of September 2010. Our cash burn for the fourth quarter, excluding the net proceeds from the November 2010 capital raise, was approximately $1.1 million, which, again, marks the lowest quarterly cash burn since becoming a public Company and a sequential improvement of approximately $400,000. January of 2011 we entered into an amendment to our loan and security agreement with Silicon Valley Bank, which extends the term through March 2012 and provides us more flexible financial covenants with drawing down the $2.5 million line of credit that we have not yet borrow against this facility. With the recent savings in operating costs and assuming continued recent improvements in the business, we believe our current cash balance, access to capital is sufficient to support our operations through fiscal 2011.

In summery, 2010 showed positive momentum across our business, with record revenue and gross margin, along with an improving non-GAAP operating loss and cash burn. For 2011 we will remain focused on further improving our financial results and pursuing the delivery of best-in-class software and services to our customers. I'd like to turn the call over to Terri Sayler, Senior Vice President of Sales And Marketing, for an update.

Thank you, Darin. It's my pleasure to speak with you today and provide you with the sales and marketing highlights from our 2010 fourth quarter and fiscal year. The automotive industry continues to accelerate and is one of the major contributors to our growth. Revenue generated with Chrysler totaled $4 million for fiscal 2010, which was up 457% from the prior year. In addition to the orders received for the branded tower program, we continue to provide development and training content related to the iShowroom initiative. As Darin highlighted, Chrysler completed the first installation of the iShowroom branded tower initiative to 200 dealers, which yielded the placement of 800 towers in 2010. We believe additional orders will come under the November 2010 blanket PO.

As a result of the branded tower initiative, we have seen a significant increase in dealer usage, which is now equal to usage of the web interface and growing. Web and iShowroom branded towers combined, we average approximately 10,000 clicks per day, meaning sales consultants or customers either touch the screen or click [around]10,000 times a day across the entire network. We outlined in our last call that Chrysler has not generated our only activity in this key vertical. We're engaged at various levels with several automotive manufacturers in addition to our work with Chrysler.

Moving to our work in the food service industry, KFC continued to expand its digital signage network, which now brings the total number of KFC stores fully hosted and supported (inaudible) to approximately 200 at the end of 2010. As we indicated in our last call, KFC completed its 2011 budget process, the results of which are not yet public. KFC has included digital signage as a part of their marketing activities and it remains a part of their plan moving forward. We continue to work closely with KFC to extend their digital signage initiative. We'll provide additional detail when it comes available.

Now, moving to our work with ARAMARK. Sales for 2010 to ARAMARK totaled $1.1 million, representing an increase of 4%, as compared to total sales in 2009, with the continued deployment of its food content. ARAMARK continued to throw out a brand refreshes for Burger Studio and Topio's, as well as several new installs in healthcare and corporate account. The total installed base, coupled with scheduled deployments, is currently 90 sites. During 2010 WRT also added several other new clients, including, Snap Fitness, Mall of America, Taco Bueno and Mooyah.In the fourth quarter Snap Fitness continued its digital signage roll out to its fitness centers across the United States. We imaged and shipped 1,000 media players to Snap Fitness and will continue to deploy across all locations.

We've also enjoyed a growing relationship with the Mall of America that continues to expand its digital signage footprint as it remodels each wing of the mall. The screens are arranged throughout the mall and are highly visible to all passing foot traffic. Featuring advertising for Mall of America stores, restaurants and entertainment venues, as well special events, the system ensures that Mall of America guests get the most for -- from their shopping, dining and entertainment experience with up to the minute information. Once the project is complete WRT will have approximately 110 displays installed throughout this marquee venue.

Taco Bueno, a Mexican quick-serve restaurant with nearly 190 locations, selected WRT for our proven software platform, expertise in content engineering and network support through our NOC. WRT worked closely with Taco Bueno to develop a flexible solution. This implementation fit its branding and communication needs and helped it comply with future nutritional labeling laws using day parting -- day part scheduling to maximize menu board messaging space.

Last quarter we also mentioned our new relationship with Mooyah, a rapidly-growing fast casual establishment. Mooyah selected WRT because of our understanding of the restaurant's unique and creative atmosphere while offering a highly-scalable and reliable solution. Mooyah plans to implement (inaudible) promotional boards at 17 other restaurants in 2011 due to the success of the five systems now in place. Our partnership with Thomson Reuters continues to grow. Sales increased substantially in 2010 compared 2009, as we continue to expand the number of info point digital signage locations. As of December 31, 2010 we had a total of 350 locations in 50 countries, which we actively support through our NOC. As we stated on our last call we are installing the Thomson Reuters info point system in 50 locations of a financial institution with approximately 3,000 sites.

WRT continues to be recognized in the digital signage industry. We had the opportunity to be the presenting software sponsor of the 2011 Digital Signage Expo that took place in Las Vegas in February where we were privileged to have three key clients receive four awards. Thomson Reuters received a bronze APEX award in the public spaces category and the silver content award in the interactive informational directional category, both for the Reuters Insider -- both for Reuters Insider. Digital Media Group LLC, an advertising-based communication company, won a bronze APEX award in the new concept category. And ARAMARK won a bronze content award in the non-interactive informational directional category for its work with Topio's. We continue to make strides in our sales and marketing efforts and we are very pleased that these efforts continue be the recognized. It's rewarding for our team to see that our continued innovation and hard work is recognized by the industry.

Now I'd like to turn the call back over to Scott for closing remarks.

Thank you, Terri. In closing I'd like to summarize, first, 2010 represented not only the real potential of WRT, but also the much-anticipated potential of the digital signage industry as a whole. With a more cooperative economy we saw a tremendous increase in our business with our current marquee and new customers, which resulted in a 71% year-over-year growth in revenues. The power of digital signage is starting to match the hype and the long-anticipated success of the digital industry. Interest in the adoption of digital signage continues to grow as the ability to improve ROI gains further traction. Pilot and market test, coupled with the continued decline in hardware costs and our ability to provide tangible ROI to our clients, provides real data that digital signage can and will drive sales. The ROI story is further enhanced in 2011, as our clients due to the 2010 tax relief bill are incentivized to invest in capital expenditures, which we believe will further accelerate the adoption of digital signage.

Secondly, as Darin highlighted and is illustrated in the graph, our financial results demonstrate that our business model works and that we will continue to drive our Company toward profitability. Lastly, WRT is committed to the [extent] of both building both client and shareholder value. As mentioned in our recent press release, we have engaged Michael Howe Associates to work with our team to ensure that our strategic and tactical ability is positioned for long-term success. This engagement exemplifies our commitment to building a company that is scalable and can provide sustainable growth.

My tenure as Wireless Ronin's CEO has only just begun. I have watched the digital signage industry since 2004, shortly after the inception of the Company, and I have watched this industry grow and change in so many ways. Likewise Wireless Ronin has grown and experienced significant change. We are no longer just a story. Wireless Ronin has tangible growth. Not only do our marquee customers, Chrysler, KFC, ARAMARK and Thomson Reuters fuel our growth, but our customers in food service, automotive and branded burger [pulse] do, as well. All of our customers represent a tremendous opportunity for growth. We believe we have only just scratched the surface of our large marquee customers, and just as exciting we are developing opportunities for the new customers under the experienced sales management of Terri Sayler.

I want to thank the Board for having the confidence in my leadership. The Board believes that this promotion is consistent with the responsibilities I have discharged as President. With the support of the Board we have assembled an extremely capable management team. The combination of a determined Board of Directors, Michael Howe Associates strategic guidance and a strong management team, WRT now has the pieces in place to realize its full potential. While we continue to focus on execution in the short term, we believe that the long-term prospects for our Company have found the combination of people and strategy necessary to make Wireless Ronin a success.

Before we close the call I want to reiterate that I am committed to Wireless Ronin [in minutes of] the effort of making the Company profitable and to creating value for our shareholders. I want to thank the employees of Wireless Ronin, the Board of Directors and the shareholders for the continued support.

Thank you for joining us on today's call and we look forward to your questions.

(Operator Instructions)Our first question comes from Ryan Wright with Northland Capital.

Hello, guys, thanks for taking the question here. Just in terms of the timing of the $1.1 million in additional Chrysler revenue, do you expect to recognize substantially all of that in the first quarter then, or will some of that roll into the second quarter?

Yes, the majority of that'll be recognized in the first quarter. You're referring to the backlog that we entered into Q1 with?

Yes.

Correct. Yes, the majority of that will be recognized in Q1.

Okay. And just to make sure I'm right here, that refers to the Chrysler orders that you have announced previously, right?

The bulk of it is Chrysler related. Yes, the majority of that is Chrysler related.

Okay, excellent. And you said that you're in various levels of talks with other auto dealers and I know you can't get into too much clarity there, but could you give a little sense in terms of the stage of the process that you're in with any of those and if any of them are toward the -- more toward the end stages?

I'm going to let Terri address that question.

I would say that relative to the sales cycle, we have some in the beginning, and there are some toward the end. So, I would like to think that we'll be able to bring those to closure in the near future, but they're in various stages of the sales cycle.

Okay, excellent. And just finally here, with respect to the QSR market, more of the 5,000-foot view, are you seeing a continued general interest in uptake with respect to digital menu boards going forward with, other QSR's other than just KFC?

Absolutely. I think that the tipping point is here, I think that the menu labeling law is becoming a reality. I think that they understand that the only way to manage that with any kind of efficiency is going to be digital, but the interest certainly is there from several perspectives.

All right, excellent. Thank you very much.

Thanks, Ryan.

Thank you, Ryan.

Our next question comes from Dick Ryan with Dougherty.

Good afternoon, guys.

Hello, Dick.

Say, Darin, what is this -- with the additional consulting costs and your comments on OpEx, where does that push break-even to at this point?

As we stated on the last call that we were entering into the fourth quarter at that time at a $4 million -- planned $4 million break-even and the one thing at the time we were unaware of is entering into the Michael Howe -- the Howe Associate agreement, and so that was an incremental expense that was unanticipated. We had a few others that hit during the quarter that I would classify as a one-time charge, although as we enter into Q1, we do get the reticket of FICA for the employees. I did just finish up our annual audit so I'll have additional professional fees that'll hit in the first quarter, as well. Then the big one is the front-end load of the marketing expenses, specifically with the DSE trade show, and I will have some -- the remaining expense related to the Howe Associate expense, as well.

So, Q1 would be above the $4 million level, what happens after we get through some of the front-end loaded --?

Correct. It will be above the $4 million level and then as we get into Q2 then our plan would get back down to that level.

Okay, okay. Terri, you went through the customers. I didn't catch the sales that you attributed to Thomson Reuters in 2010? Do you have that number? And also with that, how far are you through the implementation of the 50 sites for the financial institution?

We are about half way through the implementation of the 50 sites, and our Thomson Reuters sales for 2010 was less than $1 million.

Okay. If my math is correct from my previous work, it doesn't look like there was any growth then, in installations at KFC or ARAMARK during the fourth quarter, because I thought KFC was right around that 200 or 205 level and ARAMARK was at 90 in September. So we didn't see any additional installations there?

Minimal. The bulk of our increase in those two customers were previous to fourth quarter.

Okay. And then, Scott, previously you were talking about the work you have been doing with the top dozen or so QSR's. Has that number changed, and can you give a sense of what's going on in pilot activity and what is going on with RFP activity?

As we're mentioned before, 2010 represented a tremendous amount of opportunity [into] as far as specifically when it came to the amount of RFP's and RFI's we were responding to. There has been no change in status as far as the number of QSR's that we are in pi -- are market test with As we have previously mentioned, six of the top 12. Each of those clients are in various stages, and we still make tremendous traction with them. However, they have not moved to a rollout at this point in time. As far as still having the opportunity in front of us, Dick, nothing has changed.

Okay, I'll get back in line. Thanks.

Thank you.

(Operator Instructions)Our next question comes from Rick D'Auteuil with Columbia Management.

I apologize for my voice, I have a cold. But the -- again, I'd like a little more color on the QSR space. Terri, I think you said that one of the drivers here is the healthcare bill. What are the [tastes] behind that, what are the penalties, when do they kick in? It doesn't look like anybody's going to move forward until they're pushed into it, so maybe if we know where those deadlines and penalties kick in that would give us better color on when we can expect something more tangible as far as a rollout?

One of the things that we do expect to hear is on March 23 we should hear some further specific outlines of the law, so it isn't -- all the specifications are not in place, but they are pending. It has also been stated by [Peggy Guenther], who is a lawyer that has -- we've worked with and has also presented at DSE, that she feels it is inevitable situation and an inevitable law. Additionally, that once the QSRs understand the impact it will have on their business, much like the packaging industry, that they will probably be getting on very, very quickly.

I mean are --?

[Do you want to add any more to that, Scott?]

Yes. Rick, there's a couple of factors here. Obviously, the healthcare and the nutritional information is one factor. I think, as I had mentioned on the ROI side of it, as hardware costs have continued to decrease and QSR's are looking at it, not only from a nutritional labeling standpoint, but also from an operational efficiency standpoint, and through promotion the ability to increase sales and influence customer engagement. I think it's one piece of the dynamic, but we have operational, we have driving sales and then we have space management is where the nutritional law really takes effect, which would then be governed with regulatory fines. So it's a lot of moving parts that are all a very compelling story for going to digital signage with QSR.

I sit here and scratch my head. It looks like -- based on what happened in 2010, it looks like nobody's going to make the first move on a rollout until they're forced, so that's why I asked when the penalties kick in. You would think this year would be tax advantaged with the accelerated depreciation, or investment tax credit, for capital expenditures, and you would think they'd all be jumping on the starting line, and yet, if I listen to this quarter versus the last quarter versus the quarter before that I'm hearing the same thing. They're all just there in the kicking it around stage and nobody's rolling forward. So that's why I asked, what's the catalyst, because it seems like there's legitimate catalysts out there, yet you've nothing more tangible to show for it now than you had 90-days ago?

Yes and no, Rick. I think that these are not nimble companies. These are very large corporations and yes, they have taken a tremendous amount of time to make decisions. With that said -- and I'll take KFC as a specific. They have been able to gather so much intelligence with seven different markets being fully digital, and when you add the complexity of having probably 80% of their stores being franchisee, they have to come -- again, they have a lot of moving parts to implement a rollout of this size and the capital expense. They do have plenty incentive, specifically when it comes to the tax reform bill, and if you were able to speak directly with the clients you would hear there's a lot more than just kicking around the tires. If you were able to go to the DSE show and see the importance of mini boards during that show you would see that it's a lot more than kicking around tires. Have they been slow to react? Absolutely. Are they going to react? Absolutely. So I think there's more color. I wish I could add to it, but they're far beyond just seeing if this is going to roll out and waiting to be forced to do it.

So if you were -- if we're sitting here two and three quarters from now, would you say all of the six out of the 12 of the top 12 that you're talking to will be in a full rollout in that period of time with not necessarily you but somebody?

That would be pure speculation, but I would be surprised -- I guess I'll leave that -- very surprised that within the next six months that you don't see rollouts starting to occur.

I will go as far as to say -- just because it's public knowledge -- a presentation that Bob (inaudible) was a part of at DSE, he was very open about the fact that they have been considering digital signage for a while, that his -- he's a strong, strong advocate. And although he encouraged everybody that the technology is optional, but the time to understand the capacity and impact that this technology would have on your business is now. So, he went on the record to encourage all of his counterparts, if they're not looking at it, they better be doing so.

Well, I don't know if you can share this with us, but what's the risk -- if KFC's got 200 stores out there with good data, what's the compelling return on their investment?

They have a positive return on investment. I think we have stated at one point that they had calculated a 30-month break-even as compared to print, and they are seeing lift, and we are not positioned to share what we're hearing from them thus far. And quite frankly, they haven't disclosed completely what they are seeing in lift, but the lift has been compelling enough to move from market to market to market and still have digital mini boards on the forefront of their marketing initiatives.

Okay, thank you.

Thank you, Rick.

Our next question is a follow up from Dick Ryan with Dougherty.

Last number, Terri, I forgot to ask, what was the contribution from KFC for 2010?

Revenue wise?

Yes.

Give us moment, we'll try to get that number quickly for you. Can we go on to your next question while we look that up?

I -- this one's to Darin. Darin, looking at the gross margins on the service side sequentially a little over 46% to about 40.5%, can you talk about that --?

Yes, a lot of that was due -- related to just the additional costs related to our project management, our technical services group and NOC and just rolling out all the Chrysler kiosks for the branded power. So it was a one-time hit of getting those rolled out and delivered.

So, if we see Chrysler rolling out throughout fiscal -- or throughout 2011 here, should we opt toward the low 40% range, then? Will these -- will these be reflective of that?

We'll assume that as we go forward that our recurring stream will increase and that --we've stated that we anticipate our margins will increase as that recurring base grows, but we did have some contract health labor to roll those out and, obviously, we get further orders from Chrysler we'll have to continue to engage with those individuals to help deliver.

Okay.

Yes, Dick, if we partition it, the initial rollout, the hardware and getting it started, and the support to get it networked and online, is that one margin base, and we start adding the recurring. So on a project base of the rollout you would expect the lower part of that margin, but overall we're still predicting that the project with recurring is what we are targeting for margin. Does that make sense?

Yes. All right, thanks. Do you have the KFC number?

Yes, just to follow up, Dick. It's less than a million that we recognized.

Okay. So if you're looking at those four, they're right around between $6.5 million and $7 million of the $8.6 million. Can you give a sense of how many other customers make up that additional $1.5-ish million in revenue?

Yes, it's probably anywhere from 20 to 30 accounts.

Okay.

Somewhere in that neighborhood.

Okay, thanks.

Yes.

Our next question comes from the line of Thomas [Pierce] with [Feltol]

Hi, it's Tom [Pierce] here.

Hello, Tom.

Hi, guys, question for you. Having just returned from the digital signage expo in Las Vegas and rolling around there I happened to go to a couple other booths -- more than a couple -- but two that I saw that were -- had screens and they're manufacturers of screens, but both of them -- both of those booths said content developed by Wireless Ronin. Any comments on that?

Yes. We have strategic partners. I believe one of them would've been Fearless, who's a mounting company, and I don't recall the other booth, but we do have --

ViewSonic.

Yes, ViewSonic.

Yes, ViewSonic.

Yes. And ViewSonic, who is the hardware we're using for the iShowroom touchscreen kiosk, so both of those are partners and we provide content for them and we go in strategically together for these accounts. So one is mounting, one is hardware for monitors and yes, we actually work with both of them.

Very good. Okay, I just wanted to ask you about it.

All right. Thank you, Tom, I appreciate it.

Sure.

Our next question comes from Jack Frid with Discovery Investments.

Scott, Darin and Terri, what can you say about the competition that's out there? Also, I was out to the conference. It almost seemed like there were less software companies in your group according to the product categories in the digital signage --?

Yes, that's -- I'm sorry, Jack, do you have a continuing part of the question?

Oh, I just wondered where competition is that you see?

Yes. It continues to be a highly competitive marketplace. The number of pure software providers has decreased. There are companies over 2009 and 2010 that are either no longer around, have been absorbed into other companies or partnered with other companies and/or did not participate in the show. The number of competitors we run into in typical RFI's and RFP's remain a pretty steady mix and it becomes smaller. I think the industry is consolidating a lot. I do think there's opportunity here for the leaders in software, which we consider ourselves one of them, to expand our footprint and to take more dominant roles, but it's still a competitive marketplace, specifically because it's such -- in an infantile stage.

Along with that, can you state how many monitors now that you have online with NOC?

Oh, yes, I think we're 5,500-plus monitors that we're monitoring from the network operations center at this point in time.

Okay. And out of that, just so I get an understanding, if you've got it in 200 KFC units, that means there are five screens in each unit, so KFC must represent about a 1,000 screens, is that correct?

Correct. I think it's 1,100 screens. We have a bigger footprint in their combination stores that are combo KFC and Taco Bell or combo KFC and Pizza Hut, so it's about 1,100 screens being hosted by KFC.

And how many screens would the 200 Chrysler dealerships represent?

800, there's four touchscreens per Chrysler dealership in the branded tower initiative and those four touchscreens are associated with each of the brands, which would be Chrysler, Dodge, Jeep and Ram.

Okay. And the [Staff Fitness], that's one screen in each center, I take it?

It's one to two, but right now it represents a 1,000 screens.

Okay. All right, that's all. Thank you.

Thanks, Jack.

Our next question is a follow up from Rick D'Auteuil with Columbia Management.

Last year you talked about a venture with NEC and where they were developing something called VUKUNET, can you give us an update on that and what your plans are with that this year?

That was a project associated with NEC, we didn't talk publicly about a lot of it.NEC now has a freeware, if you will, that comes out and support their ADVUKU advertising network, which is -- was their initiative. So we have a project to work with them to help with that endeavor; but at this point in time NEC is a vendor, a partner, a very solid one that we continue to work with at multiple accounts, including KFC, and they have their own digital signage freeware, which would be applicable for public spaces, spaces that are not running very complex schedules and really to host their advertising network ADVUKU.

Okay, thank you.

Thank you, Rick.

(Operator Instructions)Our next question comes from the line of Paul Adal.

Hi, guys, how are you doing?

Doing good.

The first question is, are you getting any interest from any other areas, any other markets that are just showing more interest at this point, or are you at the same -- it's the same QSR/automotive/ARAMARK kind of thing?

Well, I think a couple of them that I mentioned. One of them -- you have seen some progress in the retail environment, Mall of America being one marquee example of that. We have also made some headway in healthcare, which we really didn't mention here, but have done some nice work for some of the local hospitals.

I think another key area there that needs to be highlighted is the work with Thomson Reuters and how the financial side of that could be a very big opportunity for the client -- for the Company. So, yes, QSR and automotive continue, in our opinion, to be -- if there is such a thing in our industry, the low hanging fruit, that are actively looking at digital signage initiatives today. But yes, there are other verticals and other markets that are developing.

Yes, and I would second the financial piece and we certainly have seen some increased interest there and have added some focus there internally there, as well.

Okay. And the financial, so you said -- has this been recent, because I don't recall in the last few quarters since the initial -- you got your initial order from Thomson Reuters that we've seen interest in the financial area?

Well, it's not all associated with Thomson Reuters. There are other financial institutions that have actually gone to RFP and RFI level that we've been involved with. So it's not related just to Thomson Reuters, however --

No, I know. Some -- I'm asking if you have -- because I don't recall you mentioning any of -- or mentioning anything in that space except for the Thomson Reuters, in the financial area. So are you saying that -- was this recent that there was some more interest that came into it?

Yes, that is accurate.

I'm sorry to pressure you on this. Is it this quarter or was it the last couple of quarters?

We saw in fourth quarter of 2010 and thus far in the first quarter an increased activity in that space, specifically from the RFP and RFI standpoint and viewpoint. That would be correct.

And within that space, how am I looking at digital signage in that area? Is it in a banking area? How can you -- anyway you can describe what --?

Oh, yes, absolutely. There's a tremendous amount opportunity in the bank, from behind teller, to in the waiting area, to limited-time offers, to perceived wait time, to pure customer engagement. I think one of the RFPs we responded to talked about three or four different areas in the bank they would like so see our possibilities for digital. One of the key area's in the waiting area, where a tremendous amount of banks right now will put in a CNN-type of TV, CNN-type of entertainment to help with perceived wait time and to provide entertainment and customer engagement. With that said, they're looking for a product that may be advertising agnostic. I don't want to be bank A and inside my waiting area bank B's commercial plays 14 times a day. So there's a tremendous amount of opportunity and marketing power that could be instituted in that area. Behind teller, during busy hours, lunch hours, after work hours, behind teller represents another area to have bodies viewing the signage.

Okay. And the requests -- or the interest you've been getting from, are these large banks or local banks?

They're large banks.

They're large banks, okay.

They're large, global institutions.

Okay. So from the point that you're currently dealing with this, if it were to get into -- if we were to actually get a deal from these guys, what kind of cycle are we looking at? Within the next three or four quarters or -- I'm saying if, if something ever develops?

I think they're in various stages. Terri, would you like to comment on that? They're in various stages but, obviously we have one that's piloting and is very serious about looking at what it can do for their environment. And then we have several others that are just start with the RP today. I don't anticipate but I can't really speculate, if you will, on -- or anticipate the sales cycle being historically (inaudible) with them. But, again, they're just getting involved right now and they're just bringing in the competitive information now to look at it.

I see, I see. Okay, I'll just leave the queue to others. Thank you very much.

Thank you very much, appreciate the call.

At this time I would now like to turn the call back over to Erin Haugerud for closing remarks.

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