Duos Technologies Group Reports Second Quarter and Six Month 2020 Results

Incrementally Improved Quarterly Results Year-Over-Year

Expected Upside in the Second Half of 2020 in Challenging Market Environment

JACKSONVILLE, FL / ACCESSWIRE / August 13, 2020 / Duos Technologies Group, Inc. (“Duos” or the “Company”) (NASDAQ:DUOT), a provider of intelligent security analytical technology solutions, reported financial results for the second quarter ended June 30, 2020.

Second Quarter 2020 and Recent Operational Highlights

  • Awarded a $2.1 million contract by an existing class one railroad customer to integrate up to one hundred (100) artificial intelligent (“AI”) use cases into its proprietary centraco® platform for future use by the railroad in its automation-focused efforts.
  • 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.
  • 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.
  • Recently executed master service agreement with major railroad customer covering service and support and upgrades to existing installations.

Second 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 increased 47% to $1.98 million compared to $1.35 million in the same quarterly period last year. The increase in total revenue for the quarter was due to completion of customer contracts during the quarter.

Gross profit increased 324% to $739,000 (37% of total revenue) compared to $174,000 (13% of total revenue) in the same quarterly period last year. The increase in gross profit was due to the increase in revenues during the quarter.

Operating expenses increased 2% to $2.17 million from $2.12 million in the same quarterly period last year. The minimal increase in expenses was due to due to anticipation of customer contracts that were delayed due to the COVID-19 pandemic, which was mostly offset by reduced hiring plans during the quarter in response to the pandemic.

Net loss totaled $1.47 million, an improvement from net loss of $1.95 million in the same quarter a year-ago. The decrease in net loss was primarily attributable to both higher revenues and reduction of costs given the anticipated impact of certain business delays.

Cash and cash equivalents at quarter-end totaled $5.37 million, compared to $56,000 at December 31, 2019.

Six Month 2020 Financial Results

Total revenue decreased 48% to $2.97 million from $5.70 million in the same period last year. The decrease in total revenue was driven by a slowdown in overall business bookings during the first six months due to delays in executing new contracts and certain travel restrictions.

Gross profit decreased 63% to $842,000 (28.3% of total revenue) from $2.31 million (40.5% of total revenue) in the same period last year. The decrease in gross profit was mainly the result of lower revenues during the six-month period and the proportion of costs allocated to projects being higher as a percentage against lower revenues.

Operating expenses increased 4% to $4.36 million from $4.21 million in the same period last year. The increase in operating expenses was primarily due to certain one-time expenditures related to the Company’s capital raise earlier in the year. The Company has taken actions to reduce certain expenditures to align its spending with the current slowdown in revenues due to delays in execution of existing projects.

Net loss totaled $3.61 million, compared to a net loss of $1.91 million in the same period a year-ago. The greater net loss was primarily attributable to the effect of lower overall revenues during the six-month period.

Management Commentary

“In the second quarter we generated incrementally improved year-over-year results in the face of ongoing, difficult market conditions, and we believe we have effectively adapted our organization to the new normal working environment,” said Duos Chairman and CEO Gianni Arcaini. “Deal flow in recent months has begun to resume as evidenced by a few of the notable contracts we were awarded during the period. We are also encouraged by the strength of our pipeline, which continues to portend a backloaded second half as many of the contracts that were delayed by COVID are now being revisited. In the meantime, we’ve taken decisive measures to control our operational costs to support the long-term viability of our business. As conditions improve, we’ll look to make additional adjustments to address our anticipated increased demand over the coming quarters.

“Looking to the future, the Board of Directors remains focused on finding a replacement for the CEO position with the right mix of technical acumen, sales experience and leadership abilities to guide our Company into its next phase of growth. As organizations the world over are looking increasingly to leverage technology to automate and streamline processes in a more distributed fashion, the opportunity for Duos continues to grow. While some timelines have been pushed out, we are confident that the broad applicability of our solutions will enable us to take advantage of this accelerated digital transformation over the long term.”

Conference Call

The Company’s management will host a conference call today, Thursday, August 13, 2020 at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss these results, followed by a question and answer period.

Date: Thursday, August 13, 2020
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
U.S. dial-in: (877) 407-3088
International dial-in: +1 (201) 389-0927
Confirmation: 13708192

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 news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things our plans, strategies and prospects — both business and financial. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Many of the forward-looking statements contained in this news release may be identified by the use of forward-looking words such as “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,” “intend,” “estimated,” and “potential,” among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this news release include market conditions and those set forth in reports or documents that we file from time to time with the United States Securities and Exchange Commission. All forward-looking statements attributable to Duos Technologies Group, Inc. or a person acting on its behalf are expressly qualified in their entirety by this cautionary language.

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 Three Months Ended     For the Six Months Ended  
 
  June 30,     June 30,  
 
  2020     2019     2020     2019  
 
                       
REVENUES:
                       
Technology systems
  $ 1,419,409     $ 984,991     $ 1,933,083     $ 4,903,429  
Technical support
    382,124       280,601       727,311       602,075  
Consulting services
    2,385       80,213       134,469       192,382  
AI technologies
    178,224             178,224        
 
                               
Total Revenues
    1,982,142       1,345,805       2,973,087       5,697,886  
 
                               
COST OF REVENUES:
                               
Technology systems
    897,514       967,649       1,479,058       3,060,643  
Technical support
    234,754       156,341       469,030       261,665  
Consulting services
          47,415       72,260       70,334  
AI technologies
    110,499             110,499        
 
                               
Total Cost of Revenues
    1,242,767       1,171,405       2,130,847       3,392,642  
 
                               
GROSS PROFIT
    739,375       174,400       842,240       2,305,244  
 
                               
OPERATING EXPENSES:
                               
Research and development
    149,566       487,738       555,958       871,160  
Engineering
    352,970       289,986       665,406       624,549  
Sales & marketing
    122,473       270,196       262,325       520,620  
Administration
    1,023,947       872,972       2,039,497       1,807,645  
AI technologies
    517,475       202,673       834,024       383,986  
 
                               
Total Operating Expenses
    2,166,431       2,123,565       4,357,211       4,207,960  
 
                               
LOSS FROM OPERATIONS
    (1,427,056 )     (1,949,165 )     (3,514,971 )     (1,902,716 )
 
                               
OTHER INCOME (EXPENSES):
                               
Interest Expense
    (58,243 )     (3,692 )     (127,175 )     (6,313 )
Other income, net
    19,410       3,066       29,208       3,407  
 
                               
Total Other Income (Expense)
    (38,833 )     (626 )     (97,967 )     (2,906 )
 
                               
NET LOSS
    (1,465,889 )     (1,949,791 )     (3,612,938 )     (1,905,622 )
 
                               
 
                               
Basic & Diluted Net Loss Per Share
  $ (0.42 )   $ (1.09 )   $ (1.16 )   $ (1.14 )
 
                               
 
                               
Weighted Average Shares-Basic & Diluted
    3,526,382       1,788,659       3,106,660       1,665,439  
                                 

DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS 

             
 
  June 30,     December 31,  
 
  2020     2019  
 
  (Unaudited)        
ASSETS
           
CURRENT ASSETS:
           
Cash
  $ 5,374,786     $ 56,249  
Accounts receivable, net
    496,807       2,611,608  
Contract assets
    845,810       1,375,920  
Prepaid expenses and other current assets
    698,158       716,598  
 
               
Total Current Assets
    7,415,561       4,760,375  
 
               
Property and equipment, net
    346,979       260,181  
Operating lease right of use asset
    316,726       430,146  
 
               
OTHER ASSETS:
               
Software Development Costs, net
    10,000       20,000  
Patents and trademarks, net
    66,649       61,598  
Total Other Assets
    76,649       81,598  
 
               
TOTAL ASSETS
  $ 8,155,915     $ 5,532,300  
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
               
 
               
CURRENT LIABILITIES:
               
Accounts payable
  $ 632,043     $ 2,641,437  
Accounts payable – related parties
    12,491       12,791  
Notes payable – financing agreements
    175,796       42,299  
Notes payable – related parties, net of discounts
          905,373  
Line of credit
          27,615  
Payroll taxes payable
    10,730       115,111  
Accrued expenses
    130,798       393,272  
Current portion – financing lease agreements
    84,635       45,072  
Current portion-operating lease obligations
    252,907       239,688  
Current portion-SBA loan
    627,465        
Contract liabilities
    3,283       8,661  
Deferred revenue
    493,830       936,428  
 
               
Total Current Liabilities
    2,423,978       5,367,747  
 
               
Finance lease payable
    149,314       89,026  
Operating lease obligations
    74,713       202,797  
SBA loan
    782,805        
 
               
Total Liabilities
    3,430,810       5,659,570  
 
               
Commitments and Contingencies (Note 6)
               
 
               
STOCKHOLDERS’ EQUITY (DEFICIT):
               
             
Series A redeemable convertible cumulative preferred stock, $10 stated value per share,
               
500,000 shares designated; 0 issued and outstanding at June 30, 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,
               
             
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,
               
3,527,470 and 1,982,039 shares issued, 3,526,146
    3,528       1,982  
and 1,980,715 shares outstanding at June 30, 2020
               
and December 31, 2019, respectively
               
Additional paid-in capital
    39,527,682       31,063,915  
Total stock & paid-in-capital
    41,236,210       32,770,897  
Accumulated deficit
    (36,353,653 )     (32,740,715 )
Sub-total
    4,882,557       30,182  
Less: Treasury stock (1,324 shares of common stock
               
at June 30, 2020 and December 31, 2019)
    (157,452 )     (157,452 )
Total Stockholders’ Equity (Deficit)
    4,725,105       (127,270 )
 
               
Total Liabilities and Stockholders’ Equity (Deficit)
  $ 8,155,915     $ 5,532,300  
                 

DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

       
 
  For the Six Months Ended  
 
  June 30,  
 
  2020     2019  
 
           
Cash from operating activities:
           
Net loss
  (3,612,938 )   (1,905,622 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation and amortization
    97,353       87,325  
Stock based compensation
    8,100       28,134  
Modification of employee stock options
    190,970        
Stock issued for services
    15,000        
Interest expense related to debt discounts
    94,627        
Changes in assets and liabilities:
               
Accounts receivable
    2,114,802       (302,986 )
Contract assets
    530,110       904,543  
Prepaid expenses and other current assets
    235,194       86,411  
Operating lease right of use asset
    113,419       (565,926 )
Accounts payable
    (2,009,394 )     (519,468 )
Related payable-related party
    (300 )      
Payroll taxes payable
    (104,381 )     (196,609 )
Accrued expenses
    (262,474 )     15,671  
Operating lease obligation
    (114,865 )     592,402  
Contract liabilities
    (5,378 )     (1,170,197 )
Deferred revenue
    (442,598 )     234,988  
 
               
Net cash used in operating activities
    (3,152,753 )     (2,711,334 )
 
               
Cash flows from investing activities:
               
Purchase of patents/trademarks
    (7,735 )     (3,000 )
Purchase of fixed assets
    (171,467 )     (223,549 )
 
               
Net cash used in investing activities
    (179,202 )     (226,549 )
 
               
Cash flows from financing activities:
               
Repurchase of common stock
          (1,151 )
Repayments of line of credit
    (27,615 )     (2,497 )
Issuance cost
    (1,001,885 )     (10,000 )
Repayments of notes payable
    (1,000,000 )      
Repayments of insurance and equipment financing
    (83,257 )     (141,105 )
Repayment of finance lease
    (21,786 )      
Proceeds from SBA loan
    1,410,270        
Proceeds from equipment leasing
    121,637        
Proceeds from common stock issued
    9,253,128        
Proceeds from warrants exercised
          2,164,019  
 
               
Net cash provided by financing activities
    8,650,492       2,009,266  
 
               
Net increase (decrease) in cash
    5,318,537       (928,617 )
Cash, beginning of period
    56,249       1,209,301  
Cash, end of period
    5,374,786       280,684  
 
               
Supplemental Disclosure of Cash Flow Information:
               
Interest paid
  29,830     4,109  
 
               
Supplemental Non-Cash Investing and Financing Activities:
               
Common stock issued for accrued BOD fees
  15,000      
Lease right of use asset and liability
  644,245      
Note issued for financing of insurance premiums
  216,754     217,804  
                 

SOURCE: Duos Technologies Group, Inc.

View source version on accesswire.com:
https://www.accesswire.com/601628/Duos-Technologies-Group-Reports-Second-Quarter-and-Six-Month-2020-Results

error: Content is protected !!