SOURCE: Duos Technologies Group, Inc.

Duos Technologies Group, Inc. Logo

March 31, 2017 09:00 ET

Duos Technologies Group Reports 2016 Results

Fourth Quarter Revenue Growth of 15% to $2.1 Million from $1.8 Million in Fourth Quarter 2015

JACKSONVILLE, FL--(Marketwired - March 31, 2017) - Duos Technologies Group (OTCQB: DUOT), ("Duos" or the "Company"), a provider of intelligent security analytical technology solutions, today reported financial and operating results for the year ended December 31, 2016.

The Company completed its first full year of operations since the combined merger in early 2015.

Key Business Highlights for Full Year 2016:

  • Successfully implemented a $1.2 million rail inspection portal for Ferrocarril Mexicano (Ferromex)
  • Strengthened its high resolution train imaging system for security and mechanical inspection strategies
  • Delivering against IT infrastructure service project of over $1 million
  • Completed software deployment for a major independent oil and gas company

Key Financial Highlights for Full Year 2016:

  • Revenues of $6.1 million
  • Revenues of $2.1 million in the fourth quarter of 2016, representing 15% growth over 2015
  • Gross margins continue to be above 50%
  • Reduced operating loss throughout the year to near breakeven in the fourth quarter
  • Secured new financing to support growth

Gianni Arcaini, Chairman and Chief Executive Officer of Duos Technologies Group, Inc. commented, "We finished the year strong as evident by the revenue growth in the fourth quarter. Our team has been successful in refining and improving our security and analytical technologies to address much needed demand of such solutions in the marketplace. We are well positioned to enter the next phase of evolution as we prepare to uplist our common stock to a national exchange."

Financial Results for the Year Ended December 31, 2016:

Revenue was $6.1 million for the twelve months ended December 31, 2016, a 10% decrease from $6.8 million for the twelve months ended December 31, 2015. The decrease was primarily due to the cancellation of a one-off $2.4 million project with one of the Company's large customers. The cancellation was due to a withdrawal of funding in conjunction with the federal government. Excluding this one-time project loss, there was revenue growth by new projects within the Company's main business focus and an approximate 27% growth in IT asset management services.

Gross profit was $3.4 million for the twelve months ended December 31, 2016, a 6% decrease from $3.6 million for the twelve months ended December 31, 2015. Improved gross margins in the project business and lower costs overall in the maintenance and technical support areas resulted in an increase in gross profit margin as a percentage of revenue.

Operating loss for the twelve months ended December 31, 2016 was $1.7 million, an improvement of $0.5 million from a $2.2 million operating loss for the twelve months ended December 31, 2015.

Net loss for the twelve months ended December 31, 2016 was $2.6 million, an increase of $0.3 million from a $2.3 million net loss for the twelve months ended December 31, 2015. This increase was due to a one time Other Income gain of $0.9 million in 2015.

At December 31, 2016, Duos had $0.2 million of cash and cash equivalents and approximately 66 million shares issued and outstanding.

Of note, the Company came close to breakeven during the fourth quarter despite the added investment in resources as a prelude to anticipated growth in 2017.

Duos Technologies Group, Inc.

Duos Technologies Group, Inc. (OTCQB: DUOT), based in Jacksonville, FL, provides intelligent security analytical technology solutions with a strong portfolio of intellectual property. The Company's core competencies include advanced intelligent technologies that are delivered through its proprietary integrated enterprise command and control platform, Centraco™. The Company provides its broad range of technology solutions with an emphasis on mission critical security, inspection and operations within the rail, utilities, petrochemical, healthcare, and hospitality sectors.

For more information, visit: http://www.duostech.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve substantial uncertainties and risks. These forward-looking statements are based upon our current expectations, estimates and projections and reflect our beliefs and assumptions based upon information available to us at the date of this release. We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited to, our expectations as to continued revenues growth and profitability in 2016 and beyond, our ability to raise working capital to further grow our business and the impact thereon of the going concern qualification in our auditors report for 2016, our business environment and industry trends, competitive environment, the sufficiency and availability of working capital, general changes in economic conditions and other risks and uncertainties described in our filings with the Securities and Exchange Commission, including our Annual Report Form 10-K for the year ended December 31, 2016. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to revise or update any forward-looking statement for any reason.

  
  
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
       
         
  December 31,   December 31,  
  2016   2015  
         
ASSETS        
CURRENT ASSETS:          
 Cash $174,376   $140,129  
 Accounts receivable  256,989    452,235  
 Costs and estimated earnings in excess of billings on uncompleted contracts  476,673    421,116  
 Prepaid expenses and other current assets  135,964    165,095  
            
 Total Current Assets  1,044,002    1,178,575  
            
 Property and equipment, net  66,491    72,544  
           
OTHER ASSETS:          
 Patents and trademarks, net  51,423    57,006  
 Total Other Assets  51,423    57,006  
           
TOTAL ASSETS $1,161,916   $1,308,125  
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
           
CURRENT LIABILITIES:          
 Accounts payable $842,787   $1,014,711  
 Accounts payable - related parties  40,136    30,070  
 Commercial insurance/office equipment financing  46,368    44,024  
 Notes payable - related parties  577,716    486,964  
 Notes payable  87,210    196,608  
 Convertible notes payable, including premiums  193,950    193,950  
 Warrant derivative liability  793,099    -  
 Line of credit  38,019    40,216  
 Payroll taxes payable  444,476    296,215  
 Accrued expenses  1,218,105    1,002,820  
 Billings in excess of costs and estimated earnings on uncompleted contracts  219,625    303,064  
 Deferred revenue  675,171    908,206  
 Contingent lawsuit payable  -    550,000  
            
 Total Current Liabilities  5,176,662    5,066,848  
            
 Notes payable, net of discounts  1,206,522    -  
            
 Total Liabilities  6,383,184    5,066,848  
           
Series A redeemable convertible cumulative preferred stock, $10 stated value per share,          
 500,000 shares designated,          
 29,600 shares issued and outstanding at December 31, 2016          
 ($301,920 liquidation value)  301,920    -  
           
Commitments and Contingencies (Note 10)          
           
STOCKHOLDERS' DEFICIT:          
 Preferred stock, $0.001 par value,  -    -  
  10,000,000 authorized, 9,500,000 available to be issued          
 Common stock: $0.001 par value; 500,000,000 shares authorized  66,221    64,778  
  66,220,698 and 64,777,621 shares issued and outstanding at          
  December 31, 2016 and December 31, 2015, respectively          
 Additional paid-in capital  18,077,300    17,127,675  
 Total paid-in-capital  18,143,521    17,192,453  
 Accumulated deficit  (23,518,709 )  (20,951,176 )
 Sub-total  (5,375,188 )  (3,758,723 )
 Less: Treasury stock (114,793 shares of common stock)  (148,000 )  -  
Total Stockholders' Deficit  (5,523,188 )  (3,758,723 )
           
Total Liabilities and Stockholders' Deficit $1,161,916   $1,308,125  
           
   
   
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
     
     
  December 31,  
  2016   2015  
           
REVENUES:          
 Project $3,200,182   $3,758,653  
 Maintenance and technical support  2,230,633    2,481,183  
 IT asset management services  674,078    527,927  
            
 Total Revenues  6,104,893    6,767,763  
           
COST OF REVENUES:          
 Project  1,580,665    2,051,969  
 Maintenance and technical support  785,872    958,995  
 IT asset management services  365,914    185,212  
            
 Total Cost of Revenues  2,732,451    3,196,176  
           
GROSS PROFIT  3,372,442    3,571,587  
           
OPERATING EXPENSES:          
 Selling and marketing expenses  278,264    254,083  
 Salaries, wages and contract labor  3,370,191    2,586,735  
 Research and development  271,950    216,806  
 Professional fees  306,458    256,111  
 General and administrative expenses  889,685    906,344  
 Impairment loss on intangible assets and goodwill acquired  -    1,578,816  
            
 Total Operating Expenses  5,116,548    5,798,895  
           
LOSS FROM OPERATIONS  (1,744,106 )  (2,227,308 )
           
OTHER INCOME (EXPENSES):          
 Interest Expense  (561,174 )  (744,343 )
 Loss on settlement of debt  -    (216,271 )
 Warrant derivative gain (loss)  (264,099 )  -  
 Other income, net  7,766    861,973  
            
  Total Other Income (Expense)  (817,507 )  (98,641 )
           
NET LOSS  (2,561,613 )  (2,325,950 )
           
Series A preferred stock dividends  (5,920 )  -  
           
Net loss applicable to common stock $(2,567,533 ) $(2,325,950 )
           
           
NET LOSS APPLICABLE TO COMMON STOCK PER COMMON SHARE:          
Basic & Diluted $(0.04 ) $(0.04 )
           
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:          
Basic & Diluted  65,925,944    61,250,974  
           
           
   
   
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
  
   
   For the Years Ended  
   December 31,  
   2016   2015  
            
Cash from operating activities:           
Net loss  $(2,561,613 ) $(2,325,950 )
Adjustments to reconcile net loss to net cash used in operating activities:           
Depreciation and amortization   47,051    44,411  
Gain on settlement of accounts payable/note conversion   -    (27,194 )
Stock and warrants issued for services   90,036    58,775  
Amortization of debt discounts   243,427    -  
Loss on settlement of debt   -    243,465  
Amortization of stock based prepaid consulting fees   351,100    41,126  
Loss related to warrants exchanged for stock   630    3,082  
Impairment loss   -    1,578,816  
Warrant derivative loss   264,099    -  
Changes in assets and liabilities:           
 Accounts receivable   195,246    (134,301 )
 Costs and estimated earnings on uncompleted contracts   (55,557 )  (202,807 )
 Prepaid expenses and other current assets   252,282    (35,526 )
 Accounts payable   (221,379 )  (657,920 )
 Accounts payable-related party   10,066    (23,052 )
 Payroll taxes payable   148,261    (303,966 )
 Accrued expenses   262,535    294,117  
 Contingent lawsuit liability   (550,000 )  (861,650 )
 Billings in excess of costs and earnings on uncompleted contracts   (83,439 )  149,281  
 Deferred revenue   (233,035 )  42,812  
            
Net cash used in operating activities   (1,840,290 )  (2,116,481 )
            
Cash flows from investing activities:           
 Cash acquired in acquisition   -    1,346  
 Purchase of patents/trademarks   (70 )  (10,420 )
 Purchase of fixed assets   (35,345 )  (66,162 )
            
Net cash used in investing activities   (35,415 )  (75,236 )
            
Cash flows from financing activities:           
 Proceeds from issuance of series A preferred stock   296,000    -  
 Proceeds from borrowings under convertible notes and other debt   -    1,730,772  
 Proceeds from bank line of credit   -    40,216  
 Repurchase common stock   (148,000 )  -  
 Proceeds from related party notes   221,570    464,464  
 Repayments of related party notes   (130,818 )  -  
 Proceeds (repayments) of insurance and equipment financing   (220,800 )  10,959  
 Repayments of notes payable   (155,000 )  -  
 Proceeds of notes payable, net of $358,263 cash fees   2,047,000    -  
            
Net cash (used in) provided by financing activities   1,909,952    2,246,411  
            
Net decrease in cash   34,247    54,694  
Cash, beginning of period   140,129    85,435  
Cash, end of period   174,376    140,129  
            
Supplemental Disclosure of Cash Flow Information:           
Interest paid  $245,134   $59,398  
Taxes paid  $10,149   $3,136  
            
Supplemental Non-Cash Investing and Financing Activities:           
Common stock issued upon conversion of convertible debt  $-   $2,258,071  
Common stock issued for prepaid consulting services  $351,100   $-  
Common stock issued to settle notes payable and accrued interest       $610,802  
Common stock issued to settle accounts payable  $-   $16,800  
Common stock issued for accrued salary  $-   $56,482  
Reclassification of put premium liability on convertible notes to paid-in capital  $-   $111,058  
Increase in debt discount and paid-in capital for warrants issued with debt  $791,303   $30,722  
Note issued for financing of insurance premiums  $223,154   $-  
Accrued dividends  $5,920   $-  
            
Liabilities assumed in share exchange  $-   $1,186,234  
Less: assets acquired in share exchange   -    (1,347 )
Net liabilities assumed   -    1,184,887  
Fair value of shares exchanged   -    393,929  
Increase intangible assets  $-   $1,578,816  
            

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