Duos Technologies Group Reports First Quarter 2016 Results
Anticipated 2016 Revenue Growth Fueled by New Signed and Pending Contracts
JACKSONVILLE, FL -- (Marketwired) -- 05/17/16 -- 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 | $ | - | |||||
Contacts:
Corporate
Jean Martin
904-652-1601
jmm@duostech.com
Investors Relations
Adrian Goldfarb
904-652-1616
agg@duostech.com
Hayden IR
646-536-7331
brett@haydenir.com
Source: Duos Technologies Group, Inc.
Released May 17, 2016