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) -- 03/31/17 -- 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

Contacts:
Corporate
Jean Martin
904-652-1601
jmm@duostech.com

Investors
Hayden IR
917-658-7878
hart@haydenir.com

Source: Duos Technologies Group, Inc.

Released March 31, 2017

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