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 inNorth 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 , andMexico , representing approximately 24% of the total freight car population inNorth 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 ofDuos 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 Results
It should be noted that the following Financial Results represent the consolidation of the Company with its subsidiary
Total revenues for Q1 2024 decreased 60% to
Cost of revenues for Q1 2024 decreased 54% to
Gross margin for Q1 2024 decreased 82% to
Operating expenses for Q1 2024 increased 6% to
Net operating loss for Q1 2024 totaled
Net loss for Q1 2024 totaled
Cash and cash equivalents at
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
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
Conference Call
The Company’s management will host a conference call today,
Date:
Time:
International dial-in: 201-389-0927
Confirmation: 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
Forward- Looking Statements
This 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
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
(Unaudited) | |||||||||
For the Three Months Ended | |||||||||
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 | |||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
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: | ||||||||
Series A redeemable convertible preferred stock, | - | - | ||||||
500,000 shares designated; 0 issued and outstanding at | ||||||||
convertible into common stock at | ||||||||
Series B convertible preferred stock, | - | - | ||||||
15,000 shares designated; 0 and 0 issued and outstanding at | ||||||||
and | ||||||||
Series C convertible preferred stock, | - | - | ||||||
5,000 shares designated; 0 and 0 issued | ||||||||
and outstanding at | ||||||||
convertible into common stock at | ||||||||
Series D convertible preferred stock, | 2 | 1 | ||||||
4,000 shares designated; 1,919 and 1,299 issued | ||||||||
and outstanding at | ||||||||
convertible into common stock at | ||||||||
Series E convertible preferred stock, | ||||||||
30,000 shares designated; 13,625 and 11,500 issued | ||||||||
and outstanding at | 14 | 12 | ||||||
convertible into common stock at | ||||||||
Series F convertible preferred stock, | ||||||||
5,000 shares designated; 0 and 0 issued | ||||||||
and outstanding at | - | - | ||||||
convertible into common stock at | ||||||||
Common stock: | ||||||||
7,315,318 and 7,306,663 shares issued, 7,313,994 and 7,305,339 | 7,315 | 7,306 | ||||||
shares outstanding at | ||||||||
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: | ||||||||
at | (157,452 | ) | (157,452 | ) | ||||
Total Stockholders' Equity | 5,519,839 | 5,366,514 | ||||||
Total Liabilities and Stockholders' Equity | $ | 12,742,440 | $ | 12,842,285 | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) | |||||||
For the Three Months Ended | |||||||
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 CorporateFei Kwong , Director, Corporate CommunicationsDuos Technologies Group, Inc. (Nasdaq: DUOT) 904-652-1625 fk@duostech.com
Duos Technologies Group Reports First Quarter 2024 Results
Key progress on strategic initiatives & intellectual property sets the foundation for an expected improvement in results for the balance of the year
2024 GlobeNewswire, Inc., source