JACKSONVILLE, FL / ACCESSWIRE / May 15, 2020 / Duos Technologies Group, Inc. ("Duos" or the "Company") (NASDAQ:DUOT), a provider of intelligent security analytical technology solutions, reported financial results for the first quarter ended March 31, 2020.
First Quarter 2020 and Recent Operational Highlights
- Awarded a $1.8 million contract for a turn-key Rail Inspection Portal (rip®), which is expected to be completed by the end of the third quarter of this year.
- Successfully listed onto the Nasdaq Capital Market and began trading under the ticker symbol "DUOT" effective February 13, 2020. In connection with the listing, Duos management rang the ceremonial Nasdaq Opening Bell on February 21, 2020.
- Also in connection with being listed on the Nasdaq, completed underwritten public offering of 1,542,188 shares of common stock at an offering price of $6.00 per share, resulting in total gross proceeds of $9.25 million, which includes the exercise of its over-allotment option prior to deducting underwriting discounts, commissions and offering expenses payable by the Company.
- Implemented first full-scale rip® in record time for CSX Transportation, Inc., one of the seven Class 1 Railroad operators who own and operate a combined 140,000 miles of rail track.
- Substantially completed another rip® with a different customer, which is scheduled for final acceptance at a site in Mexico upon lifting of travel restrictions related to COVID 19.
- Awarded $945,000 follow-on contract for Monroe County Sheriff's office in Florida to provide the Company's Intelligent Correctional Automation System, icas™, which is expected to be implemented starting in late 2020 and completed in 2021.
First Quarter 2020 Financial Results
It should be noted that the following Financial Results represent the consolidation of the Company with its subsidiaries Duos Technologies, Inc. and truevue360™.
Total revenue decreased 77% to $991,000 compared to $4.35 million in the same quarterly period. The majority of the decrease in total revenue for the quarter was due to delays in anticipated contract awards due to business interruptions affecting several customers. Such business interruptions have also caused delays in some project execution. The current pandemic related to the coronavirus (COVID-19) outbreak has temporarily impacted expected receipt of awards and caused delays in execution due to travel and other restrictions.
Gross profit decreased 95% to $103,000 (10% of total revenue) compared to $2.13 million (49% of total revenue) in the same quarterly period last year. The overall decrease in gross profit reflects the lower revenues for the quarter and increased costs for equipment related to project implementation which was not offset in the current quarter due to the aforementioned delays.
Operating expenses increased 5% to $2.19 million from $2.08 million in the same quarterly period. The increase in operating expense was primarily due to an increase in resources to support the Company's anticipated growth, including research and development, administration and artificial intelligence (AI) technologies expenses, which were offset by a decrease in engineering and sales and marketing expenses.
Net loss totaled $2.15 million, a decrease from net income of $44,000 in the same quarter a year-ago. The increase in net loss was primarily attributable to the aforementioned lower revenues.
Cash and cash equivalents at quarter-end totaled $6.6 million, compared to $56,000 at December 31, 2019.
Financial Outlook
As a result of delays in project execution resulting from the restrictive travel environment currently in place as well as the additional, uncertain final impact on the overall economy from the COVID-19 outbreak, it is uncertain if the Company will realize the 2020 revenue guidance previously stated. Going forward, the Company will continue to re-evaluate the growth and predictability of its operating performance with respect to providing financial forecasts.
Management Commentary
"We began the year with significant operational momentum and in one of the strongest positions in company history," said Duos Chairman and CEO Gianni Arcaini. "Unfortunately, like many businesses, we were not immune to the effects of the ongoing global pandemic, which caused business disruptions for most of our key customers and consequently impacted our operations during the first quarter. As an essential business, we were able to continue working uninterrupted, allowing us to provide critical services and tech support for our on-going commitments.
"Prior to the COVID-19 outbreak, our expectations had already factored in a modest start to the year with sequential growth going forward, and that projection remains intact. The $1.8 million rip® award we received in April was a strong step forward in the right direction, and, hopefully, an indication of progress ahead. We expect to receive a number of additional awards in the near future, however, because of the uncertainty that remains, we cannot accurately quantify the full impact on our operations for the remainder of the year at this time. We have and will continue to push forward in a challenging environment, and we remain confident in the long-term growth opportunity in rail transportation and the other industries we serve."
Conference Call
The Company's management will host a conference call today, Friday, May 15, 2020 at 11:00 a.m. Eastern time (8:00 a.m. Pacific time) to discuss these results, followed by a question and answer period.
Date: Friday, May 15, 2020
Time: 11:00 a.m. Eastern time (8:00 a.m. Pacific time)
U.S. dial-in: (877) 407-3088
International dial-in: +1 (201) 389-0927
Confirmation: 13703531
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 Gateway Investor Relations at (949) 574-3860.
The conference call will be broadcasted 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., provides advanced, analytical technology solutions with a strong portfolio of intellectual property. The Company's core competencies include intelligent technologies that combine machine learning, artificial intelligence and advanced video analytics that are delivered through its proprietary integrated enterprise command and control centraco® platform. The Company provides its broad range of technology solutions with an emphasis on mission critical security, inspection and operations within the rail transportation, retail, petrochemical, government, and banking sectors. Duos Technologies also offers professional and consulting services for large data centers. For more information, visit www.duostech.com.
Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking terminology such as "believes," "expects," "may," "will," "should," "anticipates," "plans," or similar expressions or the negative of these terms and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause Duos Technologies Group, Inc.'s actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, those described in Item 1A in Duos' Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Duos' filings with the SEC.
Contacts:
Corporate
Tracie Hutchins
Duos Technologies Group, Inc. (Nasdaq: DUOT)
(904) 652-1601
[email protected]
Investor Relations
Matt Glover or Tom Colton
Gateway Investor Relations
(949) 574-3860
[email protected]
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
For the Months Ended | |||||||
|
|
March 31, | |||||||
|
|
2020 | 2019 | ||||||
|
|
||||||||
|
REVENUES:
|
||||||||
|
Technology systems
|
$ | 513,674 | $ | 3,918,438 | ||||
|
Technical support
|
345,187 | 321,474 | ||||||
|
Consulting services
|
132,084 | 112,169 | ||||||
|
AI technologies
|
||||||||
|
|
||||||||
|
Total Revenues
|
990,945 | 4,352,081 | ||||||
|
|
||||||||
|
COST OF REVENUES:
|
||||||||
|
Technology systems
|
581,544 | 2,092,994 | ||||||
|
Technical support
|
234,276 | 105,324 | ||||||
|
Consulting services
|
72,260 | 22,919 | ||||||
|
AI technologies
|
||||||||
|
|
||||||||
|
Total Cost of Revenues
|
888,080 | 2,221,237 | ||||||
|
|
||||||||
|
GROSS PROFIT
|
102,865 | 2,130,844 | ||||||
|
|
||||||||
|
OPERATING EXPENSES:
|
||||||||
|
Research and development
|
406,392 | 383,421 | ||||||
|
Engineering
|
312,428 | 465,907 | ||||||
|
Sales & marketing
|
139,852 | 250,425 | ||||||
|
Administration
|
1,015,559 | 803,327 | ||||||
|
AI technologies
|
316,549 | 181,314 | ||||||
|
|
||||||||
|
Total Operating Expenses
|
2,190,780 | 2,084,394 | ||||||
|
|
||||||||
|
PROFIT (LOSS) FROM OPERATIONS
|
(2,087,914 | ) | 46,450 | |||||
|
|
||||||||
|
OTHER INCOME (EXPENSES):
|
||||||||
|
Interest Expense
|
(68,932 | ) | (2,621 | ) | ||||
|
Other income, net
|
9,798 | 340 | ||||||
|
|
||||||||
|
Total Other Income (Expense)
|
(59,134 | ) | (2,281 | ) | ||||
|
|
||||||||
|
NET PROFIT (LOSS)
|
(2,147,048 | ) | 44,169 | |||||
|
|
||||||||
|
|
||||||||
|
Basic Net Profit (Loss) Per Share
|
$ | (0.80 | ) | $ | 0.03 | |||
|
Diluted Net Profit (Loss) Per Share
|
$ | (0.80 | ) | $ | 0.01 | |||
|
|
||||||||
|
Weighted Average Shares-Basic
|
2,687,482 | 1,547,946 | ||||||
|
Weighted Average Shares-Diluted
|
2,687,482 | 3,485,891 | ||||||
|
|
||||||||
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
March 31, | December 31, | ||||||
|
|
2020 | 2019 | ||||||
|
|
(Unaudited) | |||||||
|
ASSETS
|
||||||||
|
CURRENT ASSETS:
|
||||||||
|
Cash
|
$ | 6,552,888 | $ | 56,249 | ||||
|
Accounts receivable, net
|
645,536 | 2,611,608 | ||||||
|
Contract assets
|
383,700 | 1,375,920 | ||||||
|
Prepaid expenses and other current assets
|
887,035 | 716,598 | ||||||
|
|
||||||||
|
Total Current Assets
|
8,469,159 | 4,760,375 | ||||||
|
|
||||||||
|
Property and equipment, net
|
246,811 | 260,181 | ||||||
|
Operating lease right of use asset
|
374,287 | 430,146 | ||||||
|
|
||||||||
|
OTHER ASSETS:
|
||||||||
|
Software Development Costs, net
|
15,000 | 20,000 | ||||||
|
Patents and trademarks, net
|
67,566 | 61,598 | ||||||
|
Total Other Assets
|
82,566 | 81,598 | ||||||
|
|
||||||||
|
TOTAL ASSETS
|
$ | 9,172,823 | $ | 5,532,300 | ||||
|
|
||||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
|
|
||||||||
|
CURRENT LIABILITIES:
|
||||||||
|
Accounts payable
|
$ | 663,746 | $ | 2,641,437 | ||||
|
Accounts payable - related parties
|
12,491 | 12,791 | ||||||
|
Notes payable - financing agreements
|
184,580 | 42,299 | ||||||
|
Notes payable - related parties, net of discounts
|
954,299 | 905,373 | ||||||
|
Line of credit
|
65 | 27,615 | ||||||
|
Payroll taxes payable
|
12,390 | 115,111 | ||||||
|
Accrued expenses
|
150,969 | 393,272 | ||||||
|
Current portion - financing lease agreements
|
46,520 | 45,072 | ||||||
|
Current portion-operating lease obligations
|
248,985 | 239,688 | ||||||
|
Contract liabilities
|
10,170 | 8,661 | ||||||
|
Deferred revenue
|
681,673 | 936,428 | ||||||
|
|
||||||||
|
Total Current Liabilities
|
2,965,888 | 5,367,747 | ||||||
|
|
||||||||
|
Finance lease payable
|
76,876 | 89,026 | ||||||
|
Operating lease obligations
|
137,535 | 202,797 | ||||||
|
|
||||||||
|
Total Liabilities
|
3,180,299 | 5,659,570 | ||||||
|
|
||||||||
|
Commitments and Contingencies (Note 6)
|
||||||||
|
|
||||||||
|
STOCKHOLDERS' EQUITY (DEFICIT):
|
||||||||
|
Preferred stock: $0.001 par value, 10,000,000 authorized, 9,485,000 shares available to be designated
|
||||||||
|
Series A redeemable convertible cumulative preferred stock, $10 stated value per share,
|
||||||||
|
500,000 shares designated; 0 issued and outstanding at March 31, 2020 and
|
||||||||
|
December 31, 2019, convertible into common stock at $6.30 per share
|
- | - | ||||||
|
Series B convertible cumulative preferred stock, $1,000 stated value per share,
|
||||||||
|
15,000 shares designated; 1,705 and 1,705 issued and outstanding at March 31, 2020 and December 31, 2019,
|
||||||||
|
convertible into common stock at $7 per share
|
1,705,000 | 1,705,000 | ||||||
|
|
||||||||
|
Common stock: $0.001 par value; 500,000,000 shares authorized,
|
||||||||
|
3,525,838 and 1,982,039 shares issued, 3,524,514
|
3,526 | 1,982 | ||||||
|
and 1,980,715 shares outstanding at March 31, 2020
|
||||||||
|
and December 31, 2019, respectively
|
||||||||
|
Additional paid-in capital
|
39,329,214 | 31,063,915 | ||||||
|
Total stock & paid-in-capital
|
41,037,740 | 32,770,897 | ||||||
|
Accumulated deficit
|
(34,887,764 | ) | (32,740,715 | ) | ||||
|
Sub-total
|
6,149,976 | 30,182 | ||||||
|
Less: Treasury stock (1,324 shares of common stock
|
(157,452 | ) | (157,452 | ) | ||||
|
at March 31, 2020 and December 31, 2019)
|
||||||||
|
Total Stockholders' Equity (Deficit)
|
5,992,524 | (127,270 | ) | |||||
|
|
||||||||
|
Total Liabilities and Stockholders' Equity (Deficit)
|
$ | 9,172,823 | $ | 5,532,300 | ||||
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For the Three Months Ended | |||||||
|
|
March 31, | |||||||
|
|
2020 | 2019 | ||||||
|
|
||||||||
|
Cash from operating activities:
|
||||||||
|
Net profit (loss)
|
$ | (2,147,048 | ) | $ | 44,169 | |||
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
||||||||
|
Depreciation and amortization
|
48,647 | 41,132 | ||||||
|
Stock based compensation
|
8,100 | 21,892 | ||||||
|
Stock issued for services
|
7,500 | - | ||||||
|
Interest expense related to debt discounts
|
48,926 | - | ||||||
|
Changes in assets and liabilities:
|
||||||||
|
Accounts receivable
|
1,966,072 | (2,084,943 | ) | |||||
|
Contract assets
|
992,220 | 921,608 | ||||||
|
Prepaid expenses and other current assets
|
(5,062 | ) | 91,898 | |||||
|
Operating lease right of use asset
|
55,858 | (557,485 | ) | |||||
|
Accounts payable
|
(1,977,690 | ) | 643,916 | |||||
|
Related payable-related party
|
(300 | ) | - | |||||
|
Payroll taxes payable
|
(102,721 | ) | (156,843 | ) | ||||
|
Accrued expenses
|
(242,303 | ) | 26,265 | |||||
|
Operating lease obligation
|
(55,965 | ) | 571,245 | |||||
|
Contract liabilities
|
1,509 | (999,048 | ) | |||||
|
Deferred revenue
|
(254,755 | ) | (63,965 | ) | ||||
|
|
||||||||
|
Net cash used in operating activities
|
(1,657,012 | ) | (1,500,159 | ) | ||||
|
|
||||||||
|
Cash flows from investing activities:
|
||||||||
|
Purchase of patents/trademarks
|
(7,310 | ) | (3,000 | ) | ||||
|
Purchase of fixed assets
|
(28,935 | ) | (88,511 | ) | ||||
|
|
||||||||
|
Net cash used in investing activities
|
(36,245 | ) | (91,511 | ) | ||||
|
|
||||||||
|
Cash flows from financing activities:
|
||||||||
|
Repayments of line of credit
|
(27,550 | ) | (921 | ) | ||||
|
Issuance cost
|
(1,001,885 | ) | - | |||||
|
Repayments of insurance and equipment financing
|
(23,094 | ) | (64,295 | ) | ||||
|
Payment of finance lease
|
(10,702 | ) | - | |||||
|
Proceeds from common stock issued
|
9,253,128 | - | ||||||
|
Proceeds from warrants exercised
|
- | 1,650,000 | ||||||
|
|
||||||||
|
Net cash provided by financing activities
|
8,189,897 | 1,584,784 | ||||||
|
|
||||||||
|
Net increase (decrease) in cash
|
6,496,640 | (6,886 | ) | |||||
|
Cash, beginning of period
|
56,249 | 1,209,301 | ||||||
|
Cash, end of period
|
6,552,889 | 1,202,415 | ||||||
|
|
||||||||
|
Supplemental Disclosure of Cash Flow Information:
|
||||||||
|
Interest paid
|
$ | 6,643 | $ | 1,536 | ||||
|
|
||||||||
|
Supplemental Non-Cash Investing and Financing Activities:
|
||||||||
|
Common stock issued for accrued BOD fees
|
$ | 7,500 | $ | - | ||||
|
Note issued for financing of insurance premiums
|
$ | 165,375 | $ | 165,864 | ||||
|
|
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SOURCE: Duos Technologies Group, Inc.