Duos Technologies Group, Inc. (“Duos” or the
“Company”) (Nasdaq: DUOT), a provider of machine vision and
artificial intelligence that analyzes fast moving vehicles,
reported financial results for the first quarter (“Q1 2024”) ended
March 31, 2024.
First Quarter 2024 and Recent
Operational Highlights
- Notified of an award for an
additional Railcar Inspection Portal (“rip®” or “RIP®”) system in a
new industrial application environment. The contract is expected to
be valued at approximately $2.7 million and installed in 2024. This
addition to the Duos portfolio of RIPs currently deployed in North
America expands the potential addressable market outside of the
traditional passenger and freight rail operators.
- Granted further, wide ranging,
Patent for "Device to Capture High Resolution images of a Train as
it passes through an Inspection Portal" bringing the total number
of patents for the RIP technology to 10, covering all aspects of
the automated visual inspection of railcars. The Company has a
further 6 patents pending for visualization of moving objects.
- Over 2.4 million comprehensive
railcar scans performed in the first quarter across 13 portals, of
which more than 386,000 were unique railcars. This metric
encompasses all railcars scanned at locations across the U.S.,
Canada, and Mexico, representing approximately 24% of the total
freight car population in North America.
- Released an article sponsored by
Dell Technologies in Forbes magazine (“AI at the Edge; The New
Vanguard of Railway Innovation”). Duos was also featured in a Dell
Technologies customer profile, highlighting how the Company is
performing Artificial Intelligence (“AI”) based railcar inspections
at the Edge, enhancing railroad safety.
- Formed a new business, “Duos Edge
AI, Inc.”, as a subsidiary of Duos Technologies Group, that plans
to build and operate Edge Data Centers (“EDCs”) that provide Edge
colocation data services. Duos is currently in negotiations with
several large telecommunications companies to support the rollout
of AI Information Technology (“IT”) infrastructure at the Edge,
using our existing in-house expertise to support the massive demand
for AI, Edge computing, and 5G rollout. This is aligned with our
strategy to be an important part of the overall AI value
chain.
- As of the end of the first quarter,
the Company had $10 million of revenue in backlog and near-term
extensions and renewals, and expects $7 million to be recognized
during the remainder of 2024.
First Quarter 2024 Financial ResultsIt should
be noted that the following Financial Results represent the
consolidation of the Company with its subsidiary Duos Technologies,
Inc.
Total revenues for Q1 2024
decreased 60% to $1.07 million compared to $2.64 million in the
first quarter of 2023 (“Q1 2023”). Total revenue for Q1 2024
represents an aggregate of approximately $270,000 of technology
systems revenue and approximately $800,000 in recurring services
and consulting revenue. The revenue decrease in the first quarter,
compared to the same quarter last year, is mainly due to timing in
revenue recognition for a major customer, with postponed delivery
expected to be booked in Q4 2024. The 2% decline in recurring
revenue services and consulting revenue for the same comparison
period is due to the transition from certain services revenue to
subscription.
Cost of revenues for Q1 2024
decreased 54% to $0.98 million compared to $2.11 million for Q1
2023. The decrease in cost of revenues was driven by a similar
decrease in technology systems revenue primarily stemming from the
manufacturing of two high-speed, transit-focused Railcar Inspection
Portals.
Gross margin for Q1 2024
decreased 82% to $94,000 compared to $537,000 for Q1 2023
reflecting the decline in revenues and the equivalent lower costs
that were largely in-line with the revenue decrease. The gross
margin was improved in our technology systems business despite the
relatively small revenue recorded.
Operating expenses for Q1 2024
increased 6% to $2.86 million compared to $2.68 million for Q1
2023. The increase in expenses is attributed to investment in sales
resources for expanding the commercial team. This was offset by
reductions in R&D and administrative costs due to the
completion of certain activities and the impact of previously
implemented cost reductions. Stable operating expenses are expected
for the remainder of 2024 while we continue to focus on further
efficiencies to support anticipated revenue growth.
Net operating loss for Q1 2024
totaled $2.76 million compared to net operating loss of $2.15
million for Q1 2023. Operating losses were higher than the
comparative quarter a year ago, but the increase was proportionally
less than the relative decrease in revenues and gross margin should
have produced.
Net loss for Q1 2024 totaled
$2.75 million compared to net loss of $2.14 million for Q1 2023.
The 28% increase in net loss was mostly attributed to the decrease
in revenues as described above from timing delays along with
growing expenses but was smaller than expected as we were
successful in driving higher margins from our project business, a
trend which is expected to continue.
Cash and cash equivalents at
March 31, 2024 totaled $2.98 million compared to $2.44 million at
December 31, 2023. In addition, the Company had over $1.5 million
in receivables and contract assets for a total of approximately
$4.5 million in cash and expected short-term liquidity.
Financial Outlook At the end of
the first quarter, the Company’s contracts in backlog and near-term
renewals and extensions is now more than $10 million in revenue, of
which approximately $7 million is expected to be recognized during
the remainder of 2024. The balance of contract backlog is comprised
of multi-year service and software agreements as well as project
revenues.
Duos anticipates an improvement in operating
results to be reflected over the course of the full year in 2024.
As a result of timing and other factors, the Company expects
revenues in the second quarter of 2024 to be in-line with the first
quarter of 2024 before ramping up in the latter half of the
year.
Management Commentary
"The Company made solid progress in Q1
particularly in the area of new business development, patent awards
and building the foundation for our subscription data offering."
said Chuck Ferry, Duos CEO. “While our Q1 results were anticipated,
my expectation is that we will deliver growth, particularly in the
second half as the results of all our initiatives become booked
revenues as indicated by the increase in backlog.”
Conference CallThe Company’s
management will host a conference call today, May 13, 2024, at 4:30
p.m. Eastern time (1:30 p.m. Pacific time) to discuss these
results, followed by a question-and-answer period.
Date: Monday, May 13, 2024Time: 4:30 p.m.
Eastern time (1:30 p.m. Pacific time)U.S. dial-in:
877-407-3088International dial-in: 201-389-0927Confirmation:
13746314
Please call the conference telephone number 5-10
minutes prior to the start time of the conference call. An operator
will register your name and organization.
If you have any difficulty connecting with the
conference call, please contact DUOT@duostech.com.
The conference call will be broadcast
live via telephone and available for online replay via the investor
section of the Company's website
here.
About Duos Technologies Group,
Inc.Duos Technologies Group, Inc. (Nasdaq: DUOT), based in
Jacksonville, Florida, through its wholly owned subsidiary, Duos
Technologies, Inc., designs, develops, deploys and operates
intelligent vision-based technology solutions using Machine Vision
and Artificial Intelligence (“AI”) to analyze fast moving freight,
passenger and transit trains and trucks streamlining operations,
improving safety and reducing costs. The Company provides cutting
edge solutions that automate the mechanical and security inspection
of fast-moving trains, trucks and automobiles through a broad range
of proprietary hardware, software, information technology and
artificial intelligence. For more information, visit
www.duostech.com.
Forward- Looking StatementsThis
news release includes forward-looking statements regarding the
Company's financial results and estimates and business prospects
that involve substantial risks and uncertainties that could cause
actual results to differ materially. Forward-looking statements
relate to future events and typically address the Company's
expected future business and financial performance. The
forward-looking statements in this news release relate to, among
other things, information regarding anticipated timing for the
installation, development and delivery dates of our systems;
anticipated entry into additional contracts; anticipated effects of
macro-economic factors (including effects relating to supply chain
disruptions and inflation); timing with respect to revenue
recognition; trends in the rate at which our costs increase
relative to increases in our revenue; anticipated reductions in
costs due to changes in the Company's organizational structure;
potential increases in revenue, including increases in recurring
revenue; potential changes in gross margin (including the timing
thereof); statements regarding our backlog and potential revenues
deriving therefrom; and statements about future profitability and
potential growth of the Company. Words such as "believe," "expect,"
"anticipate," "should," "plan," "aim," "will," "may," "should,"
"could," "intend," "estimate," "project," "forecast," "target,"
"potential" and other words and terms of similar meaning, typically
identify such forward-looking statements. Forward-looking
statements involve risks and uncertainties and there are important
factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements.
These factors include, but are not limited to, the Company's
ability to continue as a going concern, the Company's ability to
generate sufficient cash to continue and expand operations, the
competitive environment generally and in the Company's specific
market areas, changes in technology, the availability of and the
terms of financing, changes in costs and availability of goods and
services, economic conditions in general and in the Company's
specific market areas, changes in federal, state and/or local
government laws and regulations potentially affecting the use of
the Company's technology, changes in operating strategy or
development plans and the ability to attract and retain qualified
personnel. The Company cautions that the foregoing list of risks,
uncertainties and factors is not exclusive. Additional information
concerning these and other risk factors is contained in the
Company's most recently filed Annual Reports on Form 10-K,
subsequent Quarterly Reports on Form 10-Q, recent Current Reports
on Form 8-K, and other filings filed by the Company with the U.S.
Securities and Exchange Commission (the "SEC"), which are available
at the SEC's website, http://www.sec.gov. The Company believes its
plans, intentions and expectations reflected in or suggested by
these forward-looking statements are based on reasonable
assumptions. No assurance, however, can be given that the Company
will achieve or realize these plans, intentions or expectations.
Indeed, it is likely that some of the Company's assumptions may
prove to be incorrect. The Company's actual results and financial
position may vary from those projected or implied in the
forward-looking statements and the variances may be material. Each
forward-looking statement speaks only as of the date of the
particular statement. We do not undertake or accept any obligation
or undertaking to release publicly any updates or revisions to any
forward-looking statements to reflect any change in our
expectations or any change in events, conditions or circumstances
on which any forward-looking statement is based, except as required
by law. All subsequent written and oral forward-looking statements
concerning the Company or other matters attributable to the Company
or any person acting on its behalf are expressly qualified in their
entirety by the cautionary statements above.
|
DUOS TECHNOLOGIES GROUP, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
REVENUES: |
|
|
|
|
|
Technology systems |
|
$ |
269,855 |
|
|
$ |
1,827,764 |
|
|
Services and consulting |
|
|
800,825 |
|
|
|
816,524 |
|
|
|
|
|
|
|
|
Total Revenues |
|
|
1,070,680 |
|
|
|
2,644,288 |
|
|
|
|
|
|
|
COST OF REVENUES: |
|
|
|
|
|
Technology systems |
|
|
583,437 |
|
|
|
1,767,209 |
|
|
Services and consulting |
|
|
392,611 |
|
|
|
339,907 |
|
|
|
|
|
|
|
|
Total Cost of Revenues |
|
|
976,048 |
|
|
|
2,107,116 |
|
|
|
|
|
|
|
GROSS MARGIN |
|
|
94,632 |
|
|
|
537,172 |
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
Sales and marketing |
|
|
553,486 |
|
|
|
307,577 |
|
|
Research and development |
|
|
382,142 |
|
|
|
404,885 |
|
|
General and Administration |
|
|
1,920,050 |
|
|
|
1,971,508 |
|
|
|
|
|
|
|
|
Total Operating Expenses |
|
|
2,855,678 |
|
|
|
2,683,970 |
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
|
(2,761,046 |
) |
|
|
(2,146,798 |
) |
|
|
|
|
|
|
OTHER INCOME (EXPENSES): |
|
|
|
|
Interest expense |
|
|
(445 |
) |
|
|
(1,180 |
) |
Other income, net |
|
|
9,182 |
|
|
|
4,295 |
|
|
|
|
|
|
|
|
Total Other Income (Expenses) |
|
|
8,737 |
|
|
|
3,115 |
|
|
|
|
|
|
|
NET LOSS |
|
$ |
(2,752,309 |
) |
|
$ |
(2,143,683 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Net Loss Per Share |
|
$ |
(0.38 |
) |
|
$ |
(0.30 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares-Basic and Diluted |
|
|
7,306,949 |
|
|
|
7,156,876 |
|
|
|
|
|
|
|
DUOS TECHNOLOGIES GROUP, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash |
$ |
2,977,592 |
|
|
$ |
2,441,842 |
|
|
Accounts receivable, net |
|
596,090 |
|
|
|
1,462,463 |
|
|
Contract assets |
|
912,046 |
|
|
|
641,947 |
|
|
Inventory |
|
1,502,337 |
|
|
|
1,526,165 |
|
|
Prepaid expenses and other current assets |
|
398,856 |
|
|
|
184,478 |
|
|
|
|
|
|
|
Total Current Assets |
|
6,386,921 |
|
|
|
6,256,895 |
|
|
|
|
|
|
|
Property and equipment, net |
|
645,342 |
|
|
|
726,507 |
|
|
Operating lease right of use asset |
|
4,289,807 |
|
|
|
4,373,155 |
|
|
Security deposit |
|
550,000 |
|
|
|
550,000 |
|
|
|
|
|
|
OTHER ASSETS: |
|
|
|
|
Note Receivable, net |
|
155,625 |
|
|
|
153,750 |
|
|
Patents and trademarks, net |
|
127,357 |
|
|
|
129,140 |
|
|
Software development costs, net |
|
587,388 |
|
|
|
652,838 |
|
|
Total Other Assets |
|
870,370 |
|
|
|
935,728 |
|
|
|
|
|
|
TOTAL ASSETS |
$ |
12,742,440 |
|
|
$ |
12,842,285 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
Accounts payable |
$ |
179,916 |
|
|
$ |
595,634 |
|
|
Notes payable - financing agreements |
|
183,763 |
|
|
|
41,976 |
|
|
Accrued expenses |
|
240,483 |
|
|
|
164,113 |
|
|
Operating lease obligations-current portion |
|
783,944 |
|
|
|
779,087 |
|
|
Contract liabilities |
|
1,692,940 |
|
|
|
1,666,243 |
|
|
|
|
|
|
|
Total Current Liabilities |
|
3,081,046 |
|
|
|
3,247,053 |
|
|
|
|
|
|
|
Operating lease obligations, less current portion |
|
4,141,555 |
|
|
|
4,228,718 |
|
|
|
|
|
|
|
Total Liabilities |
|
7,222,601 |
|
|
|
7,475,771 |
|
|
|
|
|
|
Commitments and Contingencies (Note 4) |
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY: |
|
|
|
|
Preferred stock: $0.001 par value, 10,000,000 shares authorized,
9,441,000 shares available to be designated |
|
Series A redeemable convertible preferred stock, $10 stated value
per share, |
|
- |
|
|
|
- |
|
|
500,000 shares designated; 0 issued and outstanding at March 31,
2024 and December 31, 2023, respectively, |
|
convertible into common stock at $6.30 per share |
|
|
|
|
Series B convertible preferred stock, $1,000 stated value per
share, |
|
- |
|
|
|
- |
|
|
15,000 shares designated; 0 and 0 issued and outstanding at March
31, 2024 |
|
|
|
|
and December 31, 2023, respectively, convertible into common stock
at $7 per share |
|
|
|
Series C convertible preferred stock, $1,000 stated value per
share, |
|
- |
|
|
|
- |
|
|
5,000 shares designated; 0 and 0 issued |
|
|
|
|
and outstanding at March 31, 2024 and December 31, 2023,
respectively, |
|
|
|
|
convertible into common stock at $5.50 per share |
|
|
|
|
Series D convertible preferred stock, $1,000 stated value per
share, |
|
2 |
|
|
|
1 |
|
|
4,000 shares designated; 1,919 and 1,299 issued |
|
|
|
|
and outstanding at March 31, 2024 and December 31, 2023,
respectively, |
|
|
|
|
convertible into common stock at $3 per share |
|
|
|
|
Series E convertible preferred stock, $1,000 stated value per
share, |
|
|
|
|
30,000 shares designated; 13,625 and 11,500 issued |
|
|
|
|
and outstanding at March 31, 2024 and December 31, 2023,
respectively, |
|
14 |
|
|
|
12 |
|
|
convertible into common stock at $3 per share |
|
|
|
|
Series F convertible preferred stock, $1,000 stated value per
share, |
|
|
|
|
5,000 shares designated; 0 and 0 issued |
|
|
|
|
and outstanding at March 31, 2024 and December 31, 2023,
respectively, |
|
- |
|
|
|
- |
|
|
convertible into common stock at $6.20 per share |
|
|
|
|
|
|
|
|
|
Common stock: $0.001 par value; 500,000,000 shares authorized, |
|
|
|
|
7,315,318 and 7,306,663 shares issued, 7,313,994 and 7,305,339 |
|
7,315 |
|
|
|
7,306 |
|
|
shares outstanding at March 31, 2024 and December 31, 2023,
respectively |
|
|
|
|
Additional paid-in-capital |
|
72,025,821 |
|
|
|
69,120,199 |
|
|
Accumulated deficit |
|
(66,355,861 |
) |
|
|
(63,603,552 |
) |
|
Sub-total |
|
5,677,291 |
|
|
|
5,523,966 |
|
|
Less: Treasury stock (1,324 shares of common stock |
|
|
|
|
at March 31, 2024 and December 31, 2023) |
|
(157,452 |
) |
|
|
(157,452 |
) |
Total Stockholders' Equity |
|
5,519,839 |
|
|
|
5,366,514 |
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
$ |
12,742,440 |
|
|
$ |
12,842,285 |
|
|
|
|
|
|
DUOS TECHNOLOGIES GROUP, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
|
For the Three Months Ended |
|
March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
Cash from operating activities: |
|
|
|
Net loss |
$ |
(2,752,309 |
) |
|
$ |
(2,143,683 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
158,208 |
|
|
|
116,588 |
|
Stock based compensation |
|
159,320 |
|
|
|
75,128 |
|
Stock issued for services |
|
37,500 |
|
|
|
32,500 |
|
Amortization of operating lease right of use asset |
|
83,348 |
|
|
|
77,101 |
|
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
|
866,373 |
|
|
|
2,700,917 |
|
Note receivable |
|
(1,875 |
) |
|
|
- |
|
Contract assets |
|
(270,099 |
) |
|
|
(1,000,590 |
) |
Inventory |
|
23,828 |
|
|
|
(101,167 |
) |
Prepaid expenses and other current assets |
|
57,944 |
|
|
|
228,941 |
|
Accounts payable |
|
(415,718 |
) |
|
|
(1,008,207 |
) |
Accrued expenses |
|
76,370 |
|
|
|
(85,371 |
) |
Operating lease obligation |
|
(82,306 |
) |
|
|
(8,107 |
) |
Contract liabilities |
|
26,697 |
|
|
|
1,108,864 |
|
|
|
|
|
Net cash used in operating activities |
|
(2,032,719 |
) |
|
|
(7,086 |
) |
|
|
|
|
Cash flows from investing activities: |
|
|
|
Purchase of patents/trademarks |
|
(980 |
) |
|
|
(7,339 |
) |
Purchase of software development |
|
- |
|
|
|
(212,067 |
) |
Purchase of fixed assets |
|
(8,830 |
) |
|
|
(41,738 |
) |
|
|
|
|
Net cash used in investing activities |
|
(9,810 |
) |
|
|
(261,144 |
) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
Repayments on financing agreements |
|
(130,535 |
) |
|
|
(201,485 |
) |
Repayment of finance lease |
|
- |
|
|
|
(11,285 |
) |
Stock issuance cost |
|
(36,188 |
) |
|
|
(299,145 |
) |
Proceeds from preferred stock issued |
|
2,745,002 |
|
|
|
4,000,000 |
|
|
|
|
|
Net cash provided by financing activities |
|
2,578,279 |
|
|
|
3,488,085 |
|
|
|
|
|
Net increase in cash |
|
535,750 |
|
|
|
3,219,855 |
|
Cash, beginning of period |
|
2,441,842 |
|
|
|
1,121,092 |
|
Cash, end of period |
$ |
2,977,592 |
|
|
$ |
4,340,947 |
|
|
|
|
|
Supplemental Disclosure of Cash Flow
Information: |
|
|
|
Interest paid |
$ |
- |
|
|
$ |
1,180 |
|
Taxes paid |
$ |
- |
|
|
$ |
- |
|
|
|
|
|
Supplemental Non-Cash Investing and Financing
Activities: |
|
|
|
Notes issued for financing of insurance premiums |
$ |
272,322 |
|
|
$ |
320,004 |
|
|
|
|
|
Contacts
Corporate
Fei Kwong, Director, Corporate Communications
Duos Technologies Group, Inc. (Nasdaq: DUOT)
904-652-1625
fk@duostech.com
Duos Technologies (NASDAQ:DUOT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Duos Technologies (NASDAQ:DUOT)
Historical Stock Chart
From Jul 2023 to Jul 2024