UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number 000-55497

Duos Technologies Group, Inc.

(Exact name of registrant as specified in its charter)

Florida

65-0493217

(State or other jurisdiction of

incorporation or organization)

(IRS Employer Identification No.)

7660 Centurion Parkway, Suite 100, Jacksonville, Florida 32256

(Address of principal executive offices)

(904) 296-2807

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001		DUOT		The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 13, 2024, the registrant has one class of common equity, and the number of shares outstanding of such common equity is 8,410,625.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47

Item 4.	Controls and Procedures	47

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	48

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 3.	Defaults Upon Senior Securities	48

Item 4.	Mine Safety Disclosures	48

Item 5.	Other Information	48

Item 6.	Exhibits	49

SIGNATURES

PART I FINANCIAL INFORMATION

Item 1. Financial Statements.

DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	September 30,			December 31,
	2024			2023
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	613,594		$	2,441,842
Restricted cash		32,519			—
Accounts receivable, net		1,601,152			1,462,463
Contract assets		609,008			641,947
Inventory		1,028,387			1,526,165
Prepaid expenses and other current assets		310,869			184,478
Note Receivable, net		159,375			—

Total Current Assets		4,354,904			6,256,895

Property and equipment, net		2,318,233			726,507
Operating lease right of use asset		4,117,471			4,373,155
Security deposit		500,000			550,000

OTHER ASSETS:
Intangible Asset, net		10,140,238			—
Note Receivable, net		—			153,750
Patents and trademarks, net		128,793			129,140
Software development costs, net		465,228			652,838
Total Other Assets		10,734,259			935,728

Total Assets	$	22,024,867		$	12,842,285

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	1,727,190		$	595,634
Notes payable - financing agreements		128,404			41,976
Accrued expenses		323,593			164,113
Operating lease obligations-current portion		793,658			779,087
Contract liabilities, current		2,982,213			1,666,243

Total Current Liabilities		5,955,058			3,247,053

Contract liabilities, less current portion		7,947,755			—
Notes payable		1,647,995			—
Operating lease obligations, less current portion		3,961,590			4,228,718

Total Liabilities		19,512,398			7,475,771

Commitments and Contingencies (Note 5)

STOCKHOLDERS' EQUITY:
Preferred stock: $0.001 par value, 10,000,000 shares authorized, 9,441,000 shares available to be designated
Series A redeemable convertible preferred stock, $10 stated value per share, 500,000 shares designated; 0 and 0 issued and outstanding at September 30, 2024 and December 31, 2023, respectively, convertible into common stock at $6.30 per share		—			—
Series B convertible preferred stock, $1,000 stated value per share, 15,000 shares designated; 0 and 0 issued and outstanding at September 30, 2024 and December 31, 2023, respectively, convertible into common stock at $7 per share		—			—
Series C convertible preferred stock, $1,000 stated value per share, 5,000 shares designated; 0 and 0 issued and outstanding at September 30, 2024 and December 31, 2023, respectively, convertible into common stock at $5.50 per share		—			—
Series D convertible preferred stock, $1,000 stated value per share, 4,000 shares designated; 1,399 and 1,299 issued and outstanding at September 30, 2024 and December 31, 2023, respectively, convertible into common stock at $3.00 per share		1			1
Series E convertible preferred stock, $1,000 stated value per share, 30,000 shares designated; 13,625 and 11,500 issued and outstanding at September 30, 2024 and December 31, 2023, respectively, convertible into common stock at $2.61 and $3.00 per share, respectively		14			12
Series F convertible preferred stock, $1,000 stated value per share, 5,000 shares designated; 0 and 0 issued and outstanding at September 30, 2024 and December 31, 2023, respectively, convertible into common stock at $6.20 per share		—			—
Common stock: $0.001 par value; 500,000,000 shares authorized, 8,051,189 and 7,306,663 shares issued, 8,049,865 and 7,305,339 shares outstanding at September 30, 2024 and December 31, 2023, respectively		8,049			7,306
Additional paid-in-capital		73,623,552			69,120,199
Accumulated deficit		(70,961,695	)		(63,603,552	)
Sub-total		2,669,921			5,523,966
Less: Treasury stock (1,324 shares of common stock at September 30, 2024 and December 31, 2023)		(157,452	)		(157,452	)
Total Stockholders' Equity		2,512,469			5,366,514

Total Liabilities and Stockholders' Equity	$	22,024,867		$	12,842,285

See accompanying condensed notes to the unaudited consolidated financial statements.

DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended September 30,			For the Three Months Ended September 30,			For the Nine Months Ended September 30,			For the Nine Months Ended September 30,
	2024			2023			2024			2023

REVENUES:
Technology systems	$	1,686,456		$	705,849		$	2,221,310		$	3,404,107
Services and consulting		1,552,454			825,074			3,598,776			2,541,163

Total Revenues		3,238,910			1,530,923			5,820,086			5,945,270

COST OF REVENUES:
Technology systems		947,563			883,836			2,311,912			3,723,151
Services and consulting		1,372,248			420,499			2,709,007			1,217,022

Total Cost of Revenues		2,319,811			1,304,335			5,020,919			4,940,173

GROSS MARGIN		919,099			226,588			799,167			1,005,097

OPERATING EXPENSES:
Sales and marketing		471,411			353,386			1,737,353			962,040
Research and development		396,610			450,006			1,168,752			1,392,692
General and administration		1,971,358			2,394,173			5,790,804			6,916,390

Total Operating Expenses		2,839,379			3,197,565			8,696,909			9,271,122

LOSS FROM OPERATIONS		(1,920,280	)		(2,970,977	)		(7,897,742	)		(8,266,025	)

OTHER INCOME (EXPENSES):
Interest expense		(116,396	)		(1,406	)		(117,991	)		(5,816	)
Change in fair value of warrant liabilities		245,980			—			245,980			—
Gain on extinguishment of warrant liabilities		379,626			—			379,626			—
Other income, net		9,407			24,647			31,984			191,022

Total Other Income (Expenses), net		518,617			23,241			539,599			185,206

NET LOSS	$	(1,401,663	)	$	(2,947,736	)	$	(7,358,143	)	$	(8,080,819	)

Basic and Diluted Net Loss Per Share	$	(0.18	)	$	(0.41	)	$	(0.98	)	$	(1.12	)


Weighted Average Shares-Basic and Diluted		7,724,170			7,240,632			7,494,772			7,189,256

See accompanying condensed notes to the unaudited consolidated financial statements.

DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the Three and Nine Months Ended September 30, 2024 and 2023

(Unaudited)


	Preferred Stock B				Preferred Stock C				Preferred Stock D				Preferred Stock E				Preferred Stock F				Common Stock				Additional
	# of Shares		Amount		# of Shares		Amount		# of Shares		Amount		# of Shares		Amount		# of Shares		Amount		# of Shares		Amount		Paid-in- Capital			Accumulated Deficit			Treasury Stock			Total

Balance December 31, 2022		—	$	—		—	$	—		1,299	$	1		—	$	—		—	$	—		7,156,876	$	7,156	$	56,562,600		$	(52,361,834	)	$	(157,452	)	$	4,050,471

Series E preferred stock issued		—		—		—		—		—		—		4,000		4		—		—		—		—		3,999,996			—			—			4,000,000

Stock options compensation		—		—		—		—		—		—		—		—		—		—		—		—		75,128			—			—			75,128

Stock issuance cost		—		—		—		—		—		—		—		—		—		—		—		—		(299,145	)		—			—			(299,145	)

Stock issued for services		—		—		—		—		—		—		—		—		—		—		12,463		12		32,488			—			—			32,500

Net loss for the three months ended March 31, 2023		—		—		—		—		—		—		—		—		—		—		—		—		—			(2,143,683	)		—			(2,143,683	)

Balance March 31, 2023		—	$	—		—	$	—		1,299	$	1		4,000	$	4		—	$	—		7,169,339	$	7,168	$	60,371,067		$	(54,505,517	)	$	(157,452	)	$	5,715,271

Stock options compensation		—	$	—		—	$	—		—	$	—		—	$	—		—	$	—		—	$	—	$	161,399		$	—		$	—		$	161,399

Stock issuance cost		—		—		—		—		—		—		—		—		—		—		—		—		281,500			—			—			281,500

Stock issued for services		—		—		—		—		—		—		—		—		—		—		5,645		6		32,494			—			—			32,500

Stock issued under the Employee Stock Purchase Plan ("ESPP") for cash and compensation		—		—		—		—		—		—		—		—		—		—		65,561		66		183,199			—			—			183,265

Net loss for the three months ended June 30, 2023		—		—		—		—		—		—		—		—		—		—		—		—		—			(2,989,400	)		—			(2,989,400	)

Balance June 30, 2023		—	$	—		—	$	—		1,299	$	1		4,000	$	4		—	$	—		7,240,545	$	7,240	$	61,029,659		$	(57,494,917	)	$	(157,452	)	$	3,384,535

Series F preferred stock issued		—	$	—		—	$	—		—	$	—		—	$	—		5,000	$	5		—	$	—	$	4,999,995		$	—		$	—		$	5,000,000

Stock options compensation		—		—		—		—		—		—		—		—		—		—		—		—		164,118			—			—			164,118

Stock issued for services		—		—		—		—		—		—		—		—		—		—		7,910		8		40,557			—			—			40,565

Stock Compensation under ESPP		—		—		—		—		—		—		—		—		—		—		—		—		32,728			—			—			32,728

Net loss for the three months ended September 30, 2023		—		—		—		—		—		—		—		—		—		—		—		—		—			(2,947,736	)		—			(2,947,736	)

Balance September 30, 2023		—	$	—		—	$	—		1,299	$	1		4,000	$	4		5,000	$	5		7,248,455	$	7,248	$	66,267,057		$	(60,442,653	)	$	(157,452	)	$	5,674,210

See accompanying condensed notes to the unaudited consolidated financial statements.

DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the Three and Nine Months Ended September 30, 2024 and 2023 (Continued)

(Unaudited)


	Preferred Stock B				Preferred Stock C				Preferred Stock D				Preferred Stock E				Preferred Stock F				Common Stock				Additional
	# of Shares		Amount		# of Shares		Amount		# of Shares		Amount		# of Shares		Amount		# of Shares		Amount		# of Shares		Amount		Paid-in- Capital			Accumulated Deficit			Treasury Stock			Total

Balance December 31, 2023		—	$	—		—	$	—		1,299	$	1		11,500	$	12		—	$	—		7,306,663	$	7,306	$	69,120,199		$	(63,603,552	)	$	(157,452	)	$	5,366,514

Series D preferred stock issued		—		—		—		—		620		1		—		—		—		—		—		—		619,999			—			—			620,000

Series E preferred stock issued		—		—		—		—		—		—		2,125		2		—		—		—		—		2,125,000			—			—			2,125,002

Stock options compensation		—		—		—		—		—		—		—		—		—		—		—		—		141,204			—			—			141,204

Stock issuance cost		—		—		—		—		—		—		—		—		—		—		—		—		(36,188	)		—			—			(36,188	)

Stock issued for services		—		—		—		—		—		—		—		—		—		—		8,655		9		37,491			—			—			37,500

Stock Compensation under ESPP		—		—		—		—		—		—		—		—		—		—		—		—		18,116			—			—			18,116