Duos Technologies Group Reports Strong Full Year 2015 Results

Annual Revenue Growth of 61% to $6.8 Million

JACKSONVILLE, FL -- (Marketwired) -- 03/31/16 -- Duos Technologies Group (OTCQB: DUOT), a provider of intelligent security analytical technology solutions, today reported strong operating results for the year ended December 31, 2015. Significant revenue growth, operating income improvements and efficiency and growing backlog of business all validate Duos' patented technology and services to its growing customer base. Of note, Duos has continued to grow organically from business operations.

Key Highlights:

  • Revenues of $6.8 Million for 2015, up 61% from 2014
  • Revenues of $1.8 Million in the Fourth Quarter of 2015
  • Gross Margins Consistently above 50% for 2015
  • Operating Loss of $0.6 Million for 2015, Excluding One-Time Non-Cash Impairment Charge as a Result of the Merger
  • Improved Balance Sheet with Increases in Cash, Working Capital and Shareholders Equity and Less Debt
  • Upgraded and Released New Generation of Technology Platforms of praesidium 3.0 and centraco 3.0
  • Completed significant improvements to Rail Inspection Portal Technology
  • Awarded Contract by Class I Railroad for Proprietary Rail Inspection Portal as Image Portal for Mechanical Inspection
  • Received Renewal of SAFETY Act Designation from the U.S. Department of Homeland Security

The increase in revenue is primarily the result of three quarters of operations reflecting the reverse merger with Duos Technologies, Inc., which was completed in April 2015 and reflects a more than doubling on project revenue as investments in sales and R&D over the past two years deliver significant return on investment and position our company to capture substantial market share within our target verticals. All revenue categories showed increases year-over-year including a more than 30% growth in IT asset management services, our legacy business prior to the reverse merger, as compared to its standalone business in 2014.

Gianni Arcaini, Chairman and CEO of Duos Technologies Group, stated, "We are thrilled to report this significant growth in our business and to share our excitement in our business prospects with our shareholders. We expect at least 25% year-over-year revenue growth in 2016, with a goal of operating profits. Our investment in R&D continues to be substantial, and I am particularly proud of the significant progress we have made towards achieving several important milestones in the evolution of our technology solutions. Our proprietary technology solutions are being well-received by our customers in general and particularly in the rail industry which is undergoing a major shift in maintenance strategies to become safer and more efficient." Mr. Arcaini, added, "We have validated our technologies and applications with significant project awards, and we look forward to another year with strong revenue growth, as well as continued transparency and consistent communication with our shareholders."

Financial Results for the Year ended December 31, 2015:
Total revenue was $6.8 million for the year ended December 31, 2015, a 61% increase from $4.2 million for the same period of 2014. The revenue breakdown consisted of $3.8 million of project revenue and $3 million of maintenance, technical support and IT professional services.

Gross profit was $3.6 million, or 53% gross profit margin. Operating expenses for the year ended, December 31, 2015 were $5.8 million, an increase of $1.5 million from $4.3 million during the same period of 2014. The 36% increase in operating expenses was primarily due to a one-time, non-cash impairment loss of $1.6 million as a result of the write-off of intangible assets associated with the merger with Duos Technologies, Inc. which was completed in April 2015. Excluding this one-time charge as well as a one-time write-off of accrued salaries, operating expenses slightly declined as a result of tight cost controls. This very low expense growth versus revenue is partially attributable to a reallocation of some expenses to cost of sales. On a "like-for-like" basis, the increase in overall operating expenses excluding one-time, non-cash charges was in line with the revenue growth.

The loss from operations for the year ended, December 31, 2015 was $2.2 million, compared to $1.6 million for the prior year 2014. The increase in loss from operations was primarily due to a one-time impairment loss of $1.6 million from the write-off of intangible assets recorded in connection with the merger. Excluding this one-time, non-cash charge, the loss from ongoing operations was reduced by more than 41%.

Net loss for the year ended, December 31, 2015 was $2.3 million, an increase from a net loss of $2.1 million for the prior year 2014. The increase in net loss was due to the non-cash impairment loss of $1.6 million for goodwill and intangible assets.

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 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 2015, 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.

    December 31,     December 31,  
    2015     2014  
CURRENT ASSETS:                
  Cash   $ 140,129     $ 85,435  
  Accounts receivable     452,235       317,934  
  Costs and estimated earnings in excess of billings on uncompleted contracts     421,116       218,309  
  Prepaid expenses and other current assets     165,095       92,859  
  Total Current Assets     1,178,575       714,537  
  Property and equipment, net     72,544       44,883  
OTHER ASSETS:                
  Patents and trademarks, net     57,006       52,496  
  Total Other Assets     57,006       52,496  
TOTAL ASSETS   $ 1,308,125     $ 811,916  
CURRENT LIABILITIES:                
  Accounts payable   $ 1,061,961     $ 550,456  
  Accounts payable - related party     30,070       53,122  
  Commercial insurance/office equipment financing     44,024       33,055  
  Notes payable-related parties     486,964       75,000  
  Notes payable     52,500       -  
  Convertible notes payable, including premiums     338,058       1,425,106  
  Line of credit     40,216       -  
  Payroll taxes payable     296,215       600,181  
  Accrued expenses     955,570       694,498  
  Billings in excess of costs and estimated earnings on uncompleted contracts     303,064       153,783  
  Deferred revenue     908,206       865,394  
  Contingent lawsuit payable     550,000       1,411,650  
  Total Current Liabilities     5,066,848       5,862,245  
  Total Liabilities     5,066,848       5,862,245  
Commitments and Contingencies                
  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 64,777,621 and 57,738,209 shares issued and issuable, and outstanding at December 31, 2015 and December 31, 2014, respectively     64,778       57,738  
  Additional paid-in capital     17,127,675       13,517,159  
  Accumulated deficit     (20,951,176 )     (18,625,226 )
Total Stockholders' Equity (Deficit)     (3,758,723 )     (5,050,329 )
Total Liabilities and Stockholders' Equity (Deficit)   $ 1,308,125     $ 811,916  
    For the Year Ended  
    December 31,  
    2015     2014  
  Project   $ 3,758,653     $ 1,802,930  
  Maintenance and technical support     2,481,183       2,399,527  
  IT asset management services     527,927       -  
  Total Revenues     6,767,763       4,202,457  
COST OF REVENUES:                
  Project     2,051,969       1,146,045  
  Maintenance and technical support     958,995       986,058  
  IT asset management services     185,212       -  
  Total Cost of Revenues     3,196,176       2,132,103  
GROSS PROFIT     3,571,587       2,070,354  
OPERATING EXPENSES:                
  Selling and marketing expenses     254,083       283,440  
  Salaries, wages and contract labor     2,586,735       2,264,333  
  Research and development     216,806       191,662  
  Professional fees     256,111       83,538  
  General and administrative expenses     906,344       835,073  
  Impairment loss on intangible assets and goodwill acquired     1,578,816       -  
  Total Operating Expenses     5,798,895       3,658,046  
INCOME (LOSS) FROM OPERATIONS     (2,227,308 )     (1,587,692 )
OTHER INCOME (EXPENSES):                
  Interest expense     (744,343 )     (515,539 )
  Gain (loss) on settlement of debt, net     (216,271 )     -  
  Other income, net     861,973       76  
    Total Other Income (Expense)     (98,641 )     (515,463 )
Loss before income taxes     (2,325,950 )     (2,103,155 )
Franchise tax     -       (3,860 )
NET LOSS     (2,325,950 )     (2,107,015 )
Preferred stock dividends     -       (536,376 )
Net loss applicable to common stock   $ (2,325,950 )   $ (2,643,391 )
  Basic   $ (0.04 )   $ (0.05 )
  Diluted   $ (0.04 )   $ (0.05 )
  Basic     61,250,974       56,611,537  
  Diluted     61,250,974       56,611,537  
    For the Year Ended  
    December 31,  
    2015     2014  
Cash from operating activities:                
Net loss   $ (2,325,950 )   $ (2,107,015 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     44,411       55,162  
Gain on settlement of accounts payable/note conversion     (27,194 )     -  
Stock issued for services     58,775       -  
Loss on settlement of debt     243,465       -  
Amortization of stock based prepaid consulting fees     41,126       -  
Loss related to warrants exchanged for stock     3,082          
Common Stock issued for inducement     -       380,947  
Impairment loss on intangible assets and goodwill acquired     1,578,816       -  
Changes in assets and liabilities:                
  Accounts receivable     (134,301 )     337,689  
  Costs and estimated earnings on uncompleted contracts     (202,807 )     (23,211 )
  Prepaid expenses and other current assets     (35,526 )     (5,463 )
  Accounts payable     (657,920 )     (365,547 )
  Accounts payable-related party     (23,052 )     (7,589 )
  Interest from premium accretion on convertible notes     -       25,889  
  Payroll taxes payable     (303,966 )     143,226  
  Accrued expenses     294,117       (36,650 )
  Billings in excess of costs and earnings on uncompleted contracts     149,281       144,266  
  Contingent lawsuit payable     (861,650 )     409,326  
  Deferred revenue     42,812       63,320  
Net cash used in operating activities     (2,116,481 )     (985,650 )
Cash flows from investing activities:                
  Cash acquired in acquisition     1,346       -  
  Purchase of patents/trademarks     (10,420 )     (5,500 )
  Purchase of fixed assets     (66,162 )     (24,846 )
Net cash used in investing activities     (75,236 )     (30,346 )
Cash flows from financing activities:                
  Bank overdraft proceeds     -       (97,491 )
  Proceeds from bank line of credit     40,216       -  
  Proceeds from related party notes     464,464       -  
  Proceeds from borrowings under convertible notes and other debt     1,730,772       1,198,370  
  Proceeds of insurance and equipment financing     10,959       302  
Net cash provided by financing activities     2,246,411       1,101,181  
Net increase (decrease) in cash     54,694       85,185  
Cash, beginning of period     85,435       250  
Cash, end of period     140,129       85,435  
Supplemental Disclosure of Cash Flow Information:                
Interest paid   $ 59,398     $ 52,062  
Taxes paid   $ 3,136     $ 4,243  
Supplemental Non-Cash Investing and Financing Activities:                
Preferred stock dividends   $ -     $ 536,376  
Common stock issued upon conversion of convertible debt   $ 2,258,071     $ -  
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   $ 30,722     $ -  
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 in intangible assets   $ 1,578,816     $ -  

Jean Martin

Investors Relations
Adrian Goldfarb

Hayden IR

Source: Duos Technologies Group, Inc.