SOURCE: Duos Technologies Group, Inc.

Duos Technologies Group, Inc. Logo

May 17, 2016 08:00 ET

Duos Technologies Group Reports First Quarter 2016 Results

Anticipated 2016 Revenue Growth Fueled by New Signed and Pending Contracts

JACKSONVILLE, FL--(Marketwired - May 17, 2016) -  Duos Technologies Group (OTCQB: DUOT), a provider of intelligent security analytical technology solutions, today reported its operating results for the first quarter ended March 31, 2016.

Following the merger, which became effective in April of 2015, the two companies have successfully integrated all operations and continue to grow the business in all of its target markets. Based on current growth projections, the Company anticipates that by year end 2016, it will operate at or very close to breakeven on an annual basis, albeit with anticipated losses in specific quarters. Duos also continues to build a solid pipeline of business which is translating into firm orders on a consistent basis.

Key Highlights for the Quarter ended:

  • Revenues of $1.0 Million, Despite Two Project Delays;
  • Gross Margins Remain Above 50%;
  • Backlog of $4.0 Million, of which 90% is Expected to be Recorded as Revenue During 2016;
  • Closed Senior Secured Non-Convertible Debt Financing with Aggregate Proceeds of Approximately $1.5 million;
  • Settled and Satisfied Pending Lawsuit;
  • Received Contract Award from Class I Railroad for Proprietary Rail Inspection Portal as Image Portal for Mechanical Inspection; and
  • Awarded Major Contract Award in IT Services for International Mobile Telecommunications Operator

Gianni Arcaini, Chairman and CEO of Duos Technologies Group, stated, "Over the past several years, we have made substantial investments in product research and development, and achieved significant milestones in the development of our technology solutions. We have made progress in penetrating the market with our proprietary technology solutions, more particularly in the rail industry, which is currently undergoing a major shift in maintenance strategies. We believe that this shift will be a significant motivating factor for using our technologies. We also continue to expand our IT professional services business." Mr. Arcaini further noted that one of the two delayed projects expected to start in the first quarter has since commenced. "Our recently expanded key hires and infrastructure make us well-positioned to deliver upon our increased backlog and signed and pending contracts for the remainder of 2016. We expect a robust year-over-year revenue growth in 2016, with a goal of operating profits."

A detailed description of Duos' business, our results of operations and financial statements are contained in the Quarterly Report on Form 10-Q filed on May 16, 2016.

Financial Results for the Quarter Ended March 31, 2016:
Total revenue was $1.0 million for the three months ended March 31, 2016, a 9% decrease from $1.1 million for the corresponding prior year quarter. The decrease in revenue for 2016 was mainly caused by the delay of two projects, which were anticipated to start during the quarter ended March 31, 2016. The revenue breakdown consisted of $0.2 million of new projects, $0.6 million of maintenance and technical support and $0.2 million of IT asset management services.

Gross profit was $0.5 million, or 52% gross profit margin. Operating expenses for the quarter ended March 31, 2016 were $1.3 million, an increase of $0.4 million from $0.9 million during the same period of 2015. The 40% increase in operating expenses was mainly due to increases in salaries, wages and contract labor of $0.3 million, which is attributable to expansion of the employee base in anticipation of new projects starting later in the year.

Operating loss for the three months ended March 31, 2016 was $0.8 million, an increase of $0.4 million from a $0.4 million operating loss for the three months ended March 31, 2015. Much of the additional increase in expenses and loss from operations is related to operating as a public company, the anticipated growth resulting from signed and pending contracts, and the addition of key employees in the areas of sales, support and research and development.

Net loss for the three months ended March 31, 2016 was $838,381, an increase of $85,957 from a $752,424 net loss for the three months ended March 31, 2015. The resulting EPS remained flat at ($0.01), as compared to ($0.01) for the prior year ago quarter.

At March 31, 2016, Duos Technologies Group had 65.7 million shares issued and outstanding.

Duos Technologies Group, Inc.
Duos Technologies Group, Inc. (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, check out: 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 anticipated breakeven and in 2016, 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 2015, the timing and delivery of purchase orders and receipt of payment, year-over-year growth in 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, 2015. 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
         
    March 31,   December 31,
    2016   2015
    (Unaudited)    
ASSETS        
CURRENT ASSETS:                
Cash   $ 250     $ 140,129  
  Accounts receivable     137,436       452,235  
  Costs and estimated earnings in excess of billings on uncompleted contracts     434,291       421,116  
  Prepaid expenses and other current assets     409,543       165,095  
                   
  Total Current Assets     981,520       1,178,575  
                   
  Property and equipment, net     80,901       72,544  
                   
OTHER ASSETS:                
  Patents and trademarks, net     55,649       57,006  
                   
  Total Other Assets     55,649       57,006  
                 
TOTAL ASSETS   $ 1,118,070     $ 1,308,125  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT        
                 
CURRENT LIABILITIES:                
  Bank overdraft   $ 3,604     $ -  
  Accounts payable     1,179,885       1,061,961  
  Accounts payable - related parties     41,205       30,070  
  Commercial insurance/office equipment financing     133,133       44,024  
  Notes payable - related parties     495,786       486,964  
  Notes payable     189,108       196,608  
  Convertible notes payable, including premiums     193,950       193,950  
  Line of credit     40,822       40,216  
  Payroll taxes payable     456,368       296,215  
  Accrued expenses     1,032,683       955,570  
  Billings in excess of costs and estimated earnings on uncompleted contracts     420,048       303,064  
  Deferred revenue     609,316       908,206  
  Contingent lawsuit payable     550,000       550,000  
                   
  Total Current Liabilities     5,345,908       5,066,848  
                   
  Total Liabilities     5,345,908       5,066,848  
                 
Commitments and Contingencies (Note 5)                
                 
STOCKHOLDERS' DEFICIT:                
  Preferred stock, $0.001 par value     -       -  
    10,000,000 authorized, none issued or outstanding                
  Common stock: $0.001 par value; 500,000,000 shares authorized     65,718       64,778  
    65,716,721 and 64,777,621 shares issued and issuable, and outstanding at March 31, 2016 and December 31, 2015, respectively                
  Additional paid-in capital     17,496,001       17,127,675  
  Accumulated deficit     (21,789,557 )     (20,951,176 )
                 
Total Stockholders' Deficit     (4,227,838 )     (3,758,723 )
                 
Total Liabilities and Stockholders' Deficit   $ 1,118,070     $ 1,308,125  
                 
                 
 
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
     
    For the Three Months Ended
    March 31,
    2016   2015
                 
REVENUES:                
  Project   $ 229,123     $ 504,969  
  Maintenance and technical support     607,879       597,126  
  IT asset management services     167,241       -  
                   
  Total Revenues     1,004,243       1,102,095  
                   
COST OF REVENUES:                
  Project     141,078       334,495  
  Maintenance and technical support     267,581       214,395  
  IT asset management services     77,758       -  
                   
  Total Cost of Revenues     486,417       548,890  
                   
GROSS PROFIT     517,826       553,205  
                   
OPERATING EXPENSES:                
  Selling and marketing expenses     86,040       59,329  
  Salaries, wages and contract labor     886,167       589,627  
  Research and development     55,487       49,836  
  Professional fees     77,229       90,305  
  General and administrative expenses     180,285       128,639  
                   
  Total Operating Expenses     1,285,208       917,736  
                 
LOSS FROM OPERATIONS     (767,382 )     (364,531 )
                 
OTHER INCOME (EXPENSES):                
  Interest expense     (72,305 )     (391,094 )
  Gain on settlement of accounts payable     -       3,200  
  Other income, net     1,306       1  
                   
    Total Other Income (Expense)     (70,999 )     (387,893 )
                 
Loss before income taxes     (838,381 )     (752,424 )
                 
Income tax     -       -  
                 
NET LOSS     (838,381 )     (752,424 )
                 
Preferred stock dividends     -       -  
                 
Net loss applicable to common stock   $ (838,381 )   $ (752,424 )
                 
NET LOSS APPLICABLE TO COMMON STOCK PER COMMON SHARE:                
    Basic   $ (0.01 )   $ (0.01 )
    Diluted   $ (0.01 )   $ (0.01 )
                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                
    Basic     65,655,807       57,738,209  
    Diluted     65,655,807       57,738,209  
                 
                 
 
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    For the Three Months Ended
    March 31,
    2016   2015
                 
Cash from operating activities:                
Net loss   $ (838,381 )   $ (752,424 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     12,099       12,596  
Gain on settlement of accounts payable     -       3,200  
Stock and warrants issued for services     95,036       -  
Loss on conversion of notes payable included in interest expense     -       352,093  
Amortization of stock based prepaid consulting fees     198,068       -  
Loss related to warrants exchanged for stock     630       -  
Changes in assets and liabilities:                
  Accounts receivable     314,797       (580,739 )
  Costs and estimated earnings on uncompleted contracts     (13,175 )     (74,617 )
  Prepaid expenses and other current assets     (45,336 )     (67,017 )
  Accounts payable     118,522       333,672  
  Accounts payable-related party     11,135       (9,269 )
  Interest from premium accretion on convertible notes     -       10,384  
  Payroll taxes payable     160,153       (34,520 )
  Accrued expenses     77,114       54,322  
  Billings in excess of costs and earnings on uncompleted contracts     116,984       714,042  
  Deferred revenue     (298,890 )     (256,538 )
                 
Net cash used in operating activities     (91,245 )     (294,815 )
                 
Cash flows from investing activities:                
  Purchase of patents/trademarks     (70 )     (1,600 )
  Purchase of fixed assets     (19,029 )     (1,897 )
                 
Net cash used in investing activities     (19,099 )     (3,497 )
                 
Cash flows from financing activities:                
  Bank overdraft     3,604       13,534  
  Proceeds from related party notes     50,000       118,500  
  Repayments of related party notes     (41,178 )     -  
  Proceeds (repayments) of insurance and equipment financing     (34,461 )     10,000  
  Proceeds (repayments) of notes payable     (7,500 )     71,093  
                 
Net cash (used in) provided by financing activities     (29,535 )     213,127  
                 
Net decrease in cash     (139,879 )     (85,185 )
Cash, beginning of period     140,129       85,435  
Cash, end of period     250       250  
                 
Supplemental Disclosure of Cash Flow Information:                
Interest paid   $ 5,969     $ 22,129  
Taxes paid   $ -     $ 800  
                 
Supplemental Non-Cash Investing and Financing Activities:                
Stock issued to convert convertible notes and accrued interest   $ -     $ 1,415,546  
Common stock issued for prepaid consulting services   $ 273,600     $ -  
Common stock issued to settle accounts payable   $ -     $ 16,800  
Write-off balance of put premium liability related to convertible notes   $ -     $ 37,120  
Note issued for financing of insurance premiums   $ 123,580     $ -  
                 

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