8-K
DUOS TECHNOLOGIES GROUP, INC. (DUOT)
UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
——————
FORM 8-K
——————
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934
Date of Report (Date of earliest event reported):March 31, 2025
——————
Duos Technologies Group, Inc.
(Exact name of registrant as specified in itscharter)
——————
| Florida | 001-39227 | 65-0493217 |
|---|---|---|
| (State or Other Jurisdiction | (Commission | (I.R.S. Employer |
| of Incorporation) | File Number) | Identification No.) |
7660 Centurion Parkway, Suite 100, Jacksonville,Florida 32256
(Address of Principal Executive Offices) (ZipCode)
(904) 296-2807
(Registrant’s telephone number, includingarea code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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 per share) | DUOT | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 2.02
Results of Operations and Financial Condition.
On March 31, 2025, Duos Technologies Group, Inc. (the "Company") issued a press release announcing the financial and operating results of the Company for the fourth quarter (“Q4 2024”) and full year ended December 31, 2024. The text of the press release is furnished as Exhibit 99.1 and incorporated herein by reference.
Additionally, on March 31, 2025, the Company held an earnings phone call open to the public (the “Earnings Call”). Mr. Chuck Ferry, the Company's Chief Executive Officer, and Mr. Adrian G. Goldfarb, the Company’s Chief Financial Officer, discussed the financial and operating results of the Company for Q4 2024 and the full year ended December 31, 2024. The transcript of the Earnings Call is furnished as Exhibit 99.2 and incorporated herein by reference.
Item 7.01
Regulation FD Disclosure.
The information set forth in Item 2.02 of this Current Report on Form 8-K is incorporated by reference into this Item 7.01.
The information in Item 2.02 and Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K includes information that may constitute forward-looking statements. These forward-looking statements are based on the Company's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to the Company. By their nature, forward-looking statements address matters that are subject to risks and uncertainties. Forward-looking statements include, without limitation, statements relating to projected industry growth rates, the Company's current growth rates and the Company's present and future cash flow position. A variety of factors could cause actual events and results, as well as the Company's expectations, to differ materially from those expressed in or contemplated by the forward-looking statements. Risk factors affecting the Company are discussed in detail in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.
The press release and transcript of the Earnings Call may also be found on our website at https://www.duostechnologies.com/.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit No. | Description of Exhibit |
|---|---|
| 99.1 | Press Release,<br> dated March 31, 2025. |
| 99.2 | Transcript of<br> Earnings Call with Mr. Chuck Ferry and Mr. Adrian G. Goldfarb, dated March 31, 2025. |
| 104 | Cover Page Interactive Data File<br> (formatted as Inline XBRL and contained in Exhibit 101) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| DUOS TECHNOLOGIES GROUP, INC. | ||
|---|---|---|
| Dated: April 2, 2025 | By: | /s/ Adrian G. Goldfarb |
| Adrian G. Goldfarb<br><br> <br>Chief Financial Officer |
Exhibit 99.1
Duos Technologies Group Reports 4th Quarterand FY 2024 Results
Issues guidance following a transformative year with the Company adding two new business lines, significantly strengthening the BalanceSheet and demonstrating enhanced operational capabilities for additional services and consulting related to the fast power business.
JACKSONVILLE, FL /Globe Newswire / March 31, 2025 - Duos Technologies Group, Inc. (“Duos” or the “Company”) (Nasdaq: DUOT) a provider of machine vision and artificial intelligence that analyzes fast moving vehicles, Edge Data Centers and power solutions, reported financial results for the fourth quarter (“Q4 2024”) and full year ended December 31, 2024.
Fourth Quarter 2024 and Recent OperationalHighlights
| · | Signed Asset Management Agreement (“AMA”) with New APR Energy and Fortress Investment Group value at up to $42 million<br>to manage 850MW of Gas-Powered Turbines. This agreement includes a 5% equity stake in the parent of New APR Energy and is the largest<br>contract in the Company’s history. |
|---|---|
| · | Secured a $5 million advance payment for future services related to the AMA providing low-cost interim<br>working capital as the Company grows. |
| --- | --- |
| · | Initiated marketing campaign targeted at the Tier 3 and Tier 4 data center markets for the provision of<br>Duos Edge AI Edge Data Centers (“EDC”s). |
| --- | --- |
| · | Acquired six EDCs for initial deployments to Texas Regional Schools as “anchor” locations<br>for service provisions. |
| --- | --- |
| · | Installed an initial EDC site in Amarillo, Texas with contract to include primary power for the support<br>of installation site in addition to backup power. |
| --- | --- |
| · | Developing a high-density Data Center Park in Pampa, Texas in cooperation with New APR Energy and the<br>Pampa Energy Center. The project includes the deployment of two Edge Data Centers and up to 500MW of bridging and permanent power, to<br>support growing AI hyperscalers and HPC demands. |
| --- | --- |
| · | Added further intellectual property with patents covering the Railcar Inspection Portal (“RIP®”)<br>and issued potential “IP Infraction” letters to a Class 1 railroad and its technology partner. |
| --- | --- |
| · | Scanned almost 10 million railcar images on over 700,000 unique railcars for the full year. This metric<br>encompasses all railcars scanned at locations across the U.S., Canada, and Mexico, representing approximately 44% of the total freight<br>car population in North America. |
| --- | --- |
| · | Entering 2025, the Company estimates $50.5 million of revenue in backlog including near-term extensions. |
| --- | --- |
| · | Completed an At-The-Market (“ATM”) capital raise for approximately $7.5 million with an average<br>price of greater than $5.00 per share and low issuance costs. |
| --- | --- |
Fourth Quarter 2024 Financial Results
It should be noted that the following FinancialResults represent the consolidation of the Company with its subsidiaries Duos Technologies, Duos Edge AI, Inc., and Duos Energy Corporation.
Total revenue for Q4 2024 decreased 4% to $1.46 million compared to $1.53 million in the fourth quarter of 2023 (“Q4 2023”). Total revenue for Q4 2024 includes approximately $1.43 million in recurring services and consulting revenue, an increase of 9% over the same period. The increase in recurring services and consulting revenues was driven by new revenue from power consulting work, which was not present in the comparative period.
Cost of revenues for Q4 2024 increased 47% to $1.79 million compared to $1.22 million for Q4 2023. The increase in costs year-over-year stems from $548,121 in amortization expenses recorded in Q4 2024 to offset site revenue related to a nonmonetary transaction for the new services and data agreement signed during the second quarter of 2024. The Company also generated $415,580 in services and consulting revenue from power consulting work, which was provided at cost, further increasing the cost of revenue for services and consulting, which was also not present in the corresponding period of Q4, 2023.
Gross margin for Q4 2024 decreased 209% to negative $330,000 compared to $303,000 for Q4 2023. The decline in margin during the quarter was a direct result of lower business activity timing in the technology systems area of the business as well as $415,580 in services and consulting revenue from power consulting work, which was largely provided at cost, and had a onetime dilutive effect on gross margin. These same project revenues and subsequent margin impacts were absent during Q4, 2023.
Operating expenses for Q4 2024 decreased 21% to $2.76 million compared to $3.48 million for Q4 2023. The decrease in expenses is attributed to reductions in development and administrative costs due to the completion of certain activities and the impact of previously implemented cost reductions. The decrease in operating expenses was slightly offset by additional investments in sales resources for expansion of the commercial team in preparation of the business expansions planned for Power and Data Centers. Beginning in late Q3 2024 and throughout all of Q4 2024 the Company allocated personnel costs, typically recorded under operating expenses, to costs of revenue associated with power consulting efforts, allowing the Company to recover costs that it would not have otherwise allowing the Company to maintain certain key resources required for anticipated business growth.
Net operating loss for Q4 2024 totaled $3.09 million compared to net operating loss of $3.18 million for Q4 2023. The decrease in net operating loss was as a result of planned reductions in operating expenses offset by anticipated lower revenues which resulted in an overall decrease in operating loss compared to the same quarter in 2023.
Net loss for Q4 2024 totaled $3.41 million compared to a net loss of $3.16 million for Q4 2023 as a result of higher interest costs related to the acquisition of 3 Edge Data Centers.
Cash and cash equivalents at December 31, 2024 totaled $6.27 million compared to $2.44 million at December 31, 2023. As of year-end, the Company had an additional $0.40 million in receivables, bolstering its liquidity position to approximately $6.67 million. Duos also had an additional $0.80 million of inventory as of December 31, 2024, consisting primarily of long-lead items for future RIP installations.
Across January and February of 2025, the Company issued an aggregate of 633,683 shares of common stock at a weighted average price of $6.24 per share through its ATM offering program, generating total net proceeds of approximately $3,836,032.
Full Year 2024 Financial Results
Total revenue for the full year 2024, decreased 3% to $7.28 million, down from $7.47 million for 2023. Much of the decrease in overall revenues was due to ongoing customer-driven delays beyond the Company’s control related to the deployment of two high-speed transit-focused Railcar Inspection Portals (RIPs). Although the systems were largely ready in 2023, installation was delayed due to customer site preparation issues, which has prevented the Company from recognizing the next phase of revenue. However, in 2024, the Company secured an equitable adjustment as partial compensation for those delays and increased the total contract value by $1.4 million, a substantial portion of which was recognized during the year. The customer is now nearing completion of site preparation, and field installation is expected to progress in 2025 with anticipated completion in 2026. Meanwhile, the Company continued its transition toward a greater focus on AI software and support services. Services and consulting revenues increased by 31% compared to 2023, driven by the addition of new AI and subscription customers, higher service contract pricing, and $921,562 in new revenue from power consulting work, all which was not present in for the full year in 2023. Underlying recurring revenues also continued to grow as new maintenance contracts are being established on installations coming online during 2025. The Company anticipates continued growth in service revenue from both new and existing customers, supported by upcoming renewals, a growing backlog, and the next generation of technology systems currently in production and expected to be completed in 2025.
Cost of revenues for the full year 2024, increased 11% to $6.81 million, up from $6.16 million in the same period of 2023. The increase in cost of revenues was driven by $1,569,311 in amortization expenses recorded in 2024 to offset site revenue related to a non-monetary transaction for the new services and data agreement signed during the second quarter of 2024. The Company also generated $921,562 in services and consulting revenue from power consulting work, which although was provided at cost, was partially performed by existing Duos staff. Part of the work was the retention of outside consultants further increasing the cost of revenue for services and consulting, which was also not present in the corresponding period of 2023, but prepared the Company for the signing of the Asset Management Agreement and expected significant revenue increases in 2025 and beyond. The Company continues to put into service additional artificial intelligence algorithms and maintenance and support services which are high margin and represent only marginal increases in the requisite costs to deliver these services. Cost of revenues on technology systems decreased during the period compared to the equivalent period in 2023 in line with the decline in project revenues. The decline in costs generally follows the same year-over-year trend as project revenues due to timing differences in major project work. This is primarily related to the procurement and manufacturing of transit-focused RIPs. As we are near the end of the manufacturing cycle and begin preparations for field installation in 2025, the cost of revenues for technology systems decreases accordingly. In contrast, during the same period in 2023, the Company was still progressing through the advanced stages of procurement and manufacturing for these RIPs.
Gross margin for the full year 2024, decreased 64% to $469,000, down from $1.31 million in the same period of 2023. As noted above, the decline in margin was primarily driven by the timing of business activity related to the two high-speed, transit-focused Railcar Inspection Portals. In 2024, activity centered on the advanced stages of procurement and manufacturing for these systems, but customer driven delays in installation deferred the recognition of higher-margin revenue. Additionally, the Company generated $921,562 in services and consulting revenue from power consulting work that was provided at cost, which further diluted overall gross margin. These power consulting revenues, and their margin impacts were not present in 2023. The gross margin for 2024 was approximately 6%, compared to 18% in 2023. This decline also reflects the fixed nature of certain departmental costs and the evolving stage of project completion. When comparing year-over-year results, the timing of manufacturing and installation milestones should be taken into consideration, as they can significantly impact the gross margin profile in any given period.
Operating expenses for the full year 2024, decreased 10% to $11.45 million, down from $12.76 million in the same period of 2023. There was a 43% increase in sales and marketing driven by continued investment in the commercial team, including the addition of professionals with extensive experience and leadership across the rail, Edge data center, and power industries. Research and development expenses declined by 16%, primarily due to lower personnel costs allocated to R&D and reduced testing as a result of completion of certain activities for prospective technologies. General and administration costs decreased by 18%, influenced by reductions in headcount and related personnel expenses, as well as a decline in non-cash amortization charges associated with the forfeiture of approximately 781,323 share options during 2024. Further contributing to the decrease were reductions in consulting and legal expenses compared to 2023.
Net operating loss for the years ended, December 31, 2024 and 2023 were $10,983,526 and $11,446,566, respectively. The decrease in losses from operations during the year was the result of planned decreases in operating expenses, which offset the impact of lower revenues recorded in the period as a consequence of delays in going to field for the two high-speed RIPs for a passenger transit client, and the short term lower gross margins from the impact of the initial power industry consulting.
Net loss for the years ended December 31, 2024 and 2023 was $10,764,457 and $11,241,718, respectively. The decrease in overall net loss was primarily attributable to a decrease in operating costs. Net loss per common share was $1.39 and $1.56 for the years ended December 31, 2024, and 2023, respectively, an improvement of $0.17 per share (basic).
Financial Outlook
At the end of 2024, the Company’s contracts in backlog represented approximately $50.5 million in revenue, of which approximately $22.6 million is expected to be recognized in calendar 2025 not including an estimated $8.0 - $9.0 million in expected near-term awards and renewals. The remaining contract backlog consists of multi-year service and software agreements, along with project revenues extending through fiscal 2025, related to Duos Technologies, Duos Edge AI, and Duos Energy.
Based on these committed contracts and near-term pending orders that are already performing or scheduled to be executed throughout the course of 2025, the Company is in a position to reinstate revenue expectations for the fiscal year ending December 31, 2025. The Company expects total revenue for 2025 to range between $28 million and $30 million, representing an increase of 285% to 312% from 2024. Duos expects this improvement in operating results to be reflected over the course of the full year in 2025.
Management Commentary
“Over the past several months, we have made significant progress across all three of our business lines—rail, edge computing, and power—while also expanding our investor base and analyst coverage,” said Duos Chief Executive Officer Chuck Ferry. “Our Railcar Inspection Portal continues to gain traction, with growing interest from both rail operators and government agencies, despite the industry's slow adoption cycle. Meanwhile, Duos Edge AI is scaling quickly, with strong demand for our Edge Data Centers, particularly in underserved rural areas. We remain on track to deploy 15 pods by the end of 2025 and are actively exploring opportunities to accelerate that growth. At the same time, Duos Energy is capitalizing on unprecedented demand for behind-the-meter power solutions, securing contracts for 390MW in just the first three months of operation, with additional deals in negotiation. The synergies between our power and edge computing businesses have exceeded expectations, opening doors to new opportunities across both sectors. With strong execution and a diversified portfolio, we are well-positioned for continued growth and profitability in 2025 and beyond.”
Conference Call
The Company’s management will host a conference call today, March 31, 2025, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results, followed by a question-and-answer period.
Date: Monday, March 31, 2025
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
U.S. dial-in: 877-407-3088
International dial-in: 201-389-0927
Confirmation: 13751912
Please call the conference telephone number 5-10 minutes prior to the start time of the conference call. An operator will register your name and organization.
If you have any difficulty connecting with the conference call, please contact DUOT@duostech.com.
The conference call will be broadcast live via telephone and available for online replay via the investor section of the Company's website here.
About Duos Technologies Group, Inc.
Duos Technologies Group, Inc. (Nasdaq: DUOT), based in Jacksonville, Florida, through its wholly owned subsidiaries, Duos Technologies, Inc., Duos Edge AI, Inc., and Duos Energy Corporation, designs, develops, deploys and operates intelligent technology solutions for Machine Vision and Artificial Intelligence (“AI”) applications including real-time analysis of fast-moving vehicles, Edge Data Centers and power consulting. For more information, visit www.duostech.com , www.duosedge.ai and www.duosenergycorp.com.
Forward- Looking Statements
This news release includes forward-looking statementsregarding the Company's financial results and estimates and business prospects that involve substantial risks and uncertainties that couldcause actual results to differ materially. Forward-looking statements relate to future events and typically address the Company's expectedfuture business and financial performance. The forward-looking statements in this news release relate to, among other things, informationregarding anticipated timing for the installation, development and delivery dates of our systems; anticipated entry into additional contracts;anticipated effects of macro-economic factors (including effects relating to supply chain disruptions and inflation); timing with respectto revenue recognition; trends in the rate at which our costs increase relative to increases in our revenue; anticipated reductions incosts due to changes in the Company's organizational structure; potential increases in revenue, including increases in recurring revenue;potential changes in gross margin (including the timing thereof); statements regarding our backlog and potential revenues deriving therefrom;and statements about future profitability and potential growth of the Company. Words such as "believe," "expect,""anticipate," "should," "plan," "aim," "will," "may," "should,""could," "intend," "estimate," "project," "forecast," "target," "potential"and other words and terms of similar meaning, typically identify such forward-looking statements. Forward-looking statements involve risksand uncertainties and there are important factors that could cause actual results to differ materially from those expressed or impliedby these forward-looking statements. These factors include, but are not limited to, the Company's ability to continue as a going concern,the Company's ability to generate sufficient cash to continue and expand operations, the competitive environment generally and in theCompany's specific market areas, changes in technology, the availability of and the terms of financing, changes in costs and availabilityof goods and services, economic conditions in general and in the Company's specific market areas, changes in federal, state and/or localgovernment laws and regulations potentially affecting the use of the Company's technology, changes in operating strategy or developmentplans and the ability to attract and retain qualified personnel. The Company cautions that the foregoing list of risks, uncertaintiesand factors is not exclusive. Additional information concerning these and other risk factors is contained in the Company's most recentlyfiled Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other filings filedby the Company with the U.S. Securities and Exchange Commission (the "SEC"), which are available at the SEC's website, http://www.sec.gov.The Company believes its plans, intentions and expectations reflected in or suggested by these forward-looking statements are based onreasonable assumptions. No assurance, however, can be given that the Company will achieve or realize these plans, intentions or expectations.Indeed, it is likely that some of the Company's assumptions may prove to be incorrect. The Company's actual results and financial positionmay vary from those projected or implied in the forward-looking statements and the variances may be material. Each forward-looking statementspeaks only as of the date of the particular statement. We do not undertake or accept any obligation or undertaking to release publiclyany updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditionsor circumstances on which any forward-looking statement is based, except as required by law. All subsequent written and oral forward-lookingstatements concerning the Company or other matters attributable to the Company or any person acting on its behalf are expressly qualifiedin their entirety by the cautionary statements above.
Contacts
Corporate
Fei Kwong
Director, Corporate Communications
Duos Technologies Group, Inc. (Nasdaq: DUOT)
904-652-1625****fk@duostech.com
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Years Ended <br> December 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| REVENUES: | ||||||
| Technology systems | $ | 2,252,357 | $ | 3,618,022 | ||
| Services and consulting | 5,028,528 | 3,853,176 | ||||
| Total Revenues | 7,280,885 | 7,471,198 | ||||
| COST OF REVENUES: | ||||||
| Technology systems | 2,818,078 | 4,352,247 | ||||
| Services and consulting | 3,993,592 | 1,810,070 | ||||
| Total Cost of Revenues | 6,811,670 | 6,162,317 | ||||
| GROSS MARGIN | 469,215 | 1,308,881 | ||||
| OPERATING EXPENSES: | ||||||
| Sales and marketing | 2,138,431 | 1,493,309 | ||||
| Research and development | 1,531,390 | 1,812,951 | ||||
| General and administration | 7,782,920 | 9,449,187 | ||||
| Total Operating Expenses | 11,452,741 | 12,755,447 | ||||
| LOSS FROM OPERATIONS | (10,983,526 | ) | (11,446,566 | ) | ||
| OTHER INCOME (EXPENSES): | ||||||
| Interest expense | (286,114 | ) | (7,159 | ) | ||
| Change in fair value of warrant liabilities | 245,980 | — | ||||
| Gain on extinguishment of warrant liabilities | 379,626 | — | ||||
| Other income, net | (120,423 | ) | 212,007 | |||
| Total Other Income (Expenses), net | 219,069 | 204,848 | ||||
| NET LOSS | $ | (10,764,457 | ) | $ | (11,241,718 | ) |
| Basic and Diluted Net Loss Per Share | $ | (1.39 | ) | $ | (1.56 | ) |
| Weighted Average Shares-Basic and Diluted | 7,736,281 | 7,204,177 |
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, | |||||
|---|---|---|---|---|---|
| 2023 | |||||
| ASSETS | |||||
| CURRENT ASSETS: | |||||
| Cash | 6,266,296 | $ | 2,441,842 | ||
| Accounts receivable, net | 403,441 | 1,462,463 | |||
| Contract assets | 635,774 | 641,947 | |||
| Inventory | 605,356 | 1,526,165 | |||
| Prepaid expenses and other current assets | 176,338 | 184,478 | |||
| Note Receivable, net | — | — | |||
| Total Current Assets | 8,087,205 | 6,256,895 | |||
| Inventory – non current | 196,315 | — | |||
| Property and equipment, net | 2,771,779 | 726,507 | |||
| Operating lease right of use asset - Office Lease | 4,028,397 | 4,373,155 | |||
| Financing lease right of use asset - Edge Data Centers | 2,019,180 | — | |||
| Security deposit | 500,000 | 550,000 | |||
| OTHER ASSETS: | |||||
| Equity Investment - Sawgrass APR Holdings LLC | 7,233,000 | — | |||
| Intangible Asset, net | 9,592,118 | — | |||
| Note Receivable, net | — | 153,750 | |||
| Patents and trademarks, net | 127,300 | 129,140 | |||
| Software development costs, net | 403,383 | 652,838 | |||
| Total Other Assets | 17,355,800 | 935,728 | |||
| TOTAL ASSETS | 34,958,677 | $ | 12,842,285 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES: | |||||
| Accounts payable | 969,822 | $ | 595,634 | ||
| Notes payable - financing agreements | 17,072 | 41,976 | |||
| Accrued expenses | 373,251 | 164,113 | |||
| Operating lease obligations - Office Lease -current portion | 798,556 | 779,087 | |||
| Financing lease obligation - Edge Data Centers - current portion | 367,451 | — | |||
| Notes payable, net of discount- related parties | 1,758,396 | — | |||
| Contract liabilities, current | 11,805,018 | 1,666,243 | |||
| Total Current Liabilities | 16,089,566 | 3,247,053 | |||
| Contract liabilities, less current portion | 11,016,134 | — | |||
| Operating lease obligations - Office Lease, less current portion | 3,867,042 | 4,228,718 | |||
| Financing lease obligation - Edge Data Centers, less current portion | 1,724,604 | — | |||
| Total Liabilities | 32,697,346 | 7,475,771 | |||
| Commitments and Contingencies (Note 12) | |||||
| STOCKHOLDERS' EQUITY: | |||||
| Preferred stock: 0.001 par value, 10,000,000 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 December 31, 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 December 31, 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 December 31, 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; 1,299 and 1,299 issued and outstanding at December 31, 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; 13,500 and 11,500 issued and outstanding at December 31, 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 December 31, 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, 8,922,576 and 7,306,663 shares issued, 8,921,252 and 7,305,339 shares outstanding at December 31, 2024 and December 31, 2023, respectively | 8,921 | 7,306 | |||
| Additional paid-in-capital | 76,777,856 | 69,120,199 | |||
| Accumulated deficit | (74,368,009 | ) | (63,603,552 | ) | |
| Sub-total | 2,418,783 | 5,523,966 | |||
| Less: Treasury stock (1,324 shares of common stock at December 31, 2024 and December 31, 2023) | (157,452 | ) | (157,452 | ) | |
| Total Stockholders' Equity | 2,261,331 | 5,366,514 | |||
| Total Liabilities and Stockholders' Equity | 34,958,677 | $ | 12,842,285 |
All values are in US Dollars.
DUOS TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Years Ended<br> December 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Cash from operating activities: | ||||||
| Net loss | $ | (10,764,457 | ) | $ | (11,241,718 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
| Depreciation and amortization | 2,161,722 | 550,201 | ||||
| Stock based compensation | 108,981 | 710,047 | ||||
| Stock issued for services | 165,000 | 143,065 | ||||
| Amortization of debt discount related to warrant liabilities | 184,002 | — | ||||
| Fair value of warrant liabilities | (245,980 | ) | — | |||
| Gain on settlement of warrant liabilities | (379,626 | ) | — | |||
| Amortization of operating lease right of use asset - Office Lease | 344,757 | 316,776 | ||||
| Amortization of lease right of use asset - Edge Data Centers | 50,820 | — | ||||
| Provision for credit losses, accounts receivable | 76,037 | — | ||||
| Provision for credit losses, note receivable | 161,250 | — | ||||
| Write off of inventory | 126,703 | — | ||||
| Changes in assets and liabilities: | ||||||
| Accounts receivable | 982,985 | 1,955,800 | ||||
| Note receivable | (7,500 | ) | (153,750 | ) | ||
| Contract assets | 6,173 | (216,225 | ) | |||
| Inventory | 52,700 | (97,804 | ) | |||
| Security deposit | 50,000 | 50,000 | ||||
| Prepaid expenses and other current assets | 414,091 | 744,771 | ||||
| Accounts payable | 374,188 | (1,694,756 | ) | |||
| Accrued expenses | 209,138 | (289,209 | ) | |||
| Operating lease obligation - Office Lease | (342,206 | ) | (232,007 | ) | ||
| Lease obligation - Edge Data Centers | 22,055 | — | ||||
| Contract liabilities | 2,760,480 | 708,245 | ||||
| Net cash used in operating activities | (3,488,687 | ) | (8,746,564 | ) | ||
| Cash flows from investing activities: | ||||||
| Purchase of patents/trademarks | (9,535 | ) | (69,327 | ) | ||
| Purchase of software development | — | (527,896 | ) | |||
| Purchase of fixed assets | (1,831,763 | ) | (496,686 | ) | ||
| Net cash used in investing activities | (1,841,298 | ) | (1,093,909 | ) | ||
| Cash flows from financing activities: | ||||||
| Repayments on financing agreements | (430,855 | ) | (520,529 | ) | ||
| Repayment of finance lease | — | (22,851 | ) | |||
| Proceeds from notes payable, related parties | 2,200,000 | — | ||||
| Proceeds from warrant exercises | 899,521 | — | ||||
| Proceeds from common stock issued | 3,544,689 | — | ||||
| Stock issuance cost | (220,183 | ) | (25,797 | ) | ||
| Proceeds from shares issued under Employee Stock Purchase Plan | 166,265 | 230,400 | ||||
| Proceeds from preferred stock issued | 2,995,002 | 11,500,000 | ||||
| Net cash provided by financing activities | 9,154,439 | 11,161,223 | ||||
| Net increase in cash | 3,824,454 | 1,320,750 | ||||
| Cash, beginning of year | 2,441,842 | 1,121,092 | ||||
| Cash, end of year | $ | 6,266,296 | $ | 2,441,842 | ||
| Supplemental Disclosure of Cash Flow Information: | ||||||
| Interest paid | $ | 3,865 | $ | 7,159 | ||
| Taxes paid | $ | 20,126 | $ | 29,085 | ||
| Supplemental Non-Cash Investing and Financing Activities: | ||||||
| Debt discount for warrant liability | $ | 625,606 | $ | — | ||
| Notes issued for financing of insurance premiums | $ | 434,883 | $ | 487,929 | ||
| Transfer of inventory to fixed assets | $ | 545,091 | $ | — | ||
| Intangible asset acquired with contract liability | $ | 11,161,428 | $ | — | ||
| Equity Investment - Sawgrass APR Holdings LLC | $ | 7,233,000 | $ | — | ||
| Right of use asset and liability for Edge Data Centers | $ | 2,070,000 | $ | — |
Exhibit 99.2
Duos Technologies Group, Inc.
Fourth Quarter and Full Year 2024 Earnings Call
March 31, 2025
| Presenters |
|---|
Chuck Ferry, CEO
Adrian Goldfarb, CFO
Q&A Participants
Ed Woo – Ascendiant Capital MarketsVijay Devar – Northland Capital Markets
Operator
Good afternoon. Welcome to Duos Technologies' fourth quarter and full year 2024 earnings conference call. Joining us for today's call are Duos' CEO, Chuck Ferry, and CFO, Adrian Goldfarb. Following their remarks, we will be opening the call for your questions. Then, before we conclude today's call, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call. Now I would like to turn the call over to Duos' CEO, Chuck Ferry. Sir, please proceed.
Chuck Ferry
Thank you. Welcome, everyone, and thank you for joining us. Earlier today, we issued our earnings press release and our 10-K for 2024. Copies are available in the Investor Relations section of our website. I encourage all listeners to view press releases and our 10-K filing to better understand some of the details we'll be discussing during today's call. We have previously discussed our strategy to diversify our business and accelerate the timeline to profitability. Since our last earnings call, our team has been very busy working to execute our strategy of diversification in Rail Technology, Edge Data Centers, and Power, and things are going very well right now. In the last three months we have closed the Asset Management Agreement with New APR Energy and Fortress Investment Group where we expect to earn approximately $42 million over the next two years.
Under the Asset Management Agreement, we have assumed control of an existing contract with a utility company in Southern California utilizing 90 megawatts of gas turbines. We've also deployed an additional 300 megawatts of gas turbines in support of a large US based AI data center operator. We're continuing with fleet readiness to support additional APR Energy contracts in the negotiation phase.
We also conducted a ribbon cutting ceremony to officially commercialize our first Edge Data Center in Amarillo, Texas. Over 100 local and state officials attended the school district 16 ceremony and it included senior leaders from FiberLight, Accu-Tech, and Amazon Web Services. Our next two Edge Data Centers will be installed in the coming months in Pampa, Texas in cooperation with APR Energy as it works with the Pampa Energy Center on behind the meter power opportunities in that region. Our partnership with APR and Fortress Investment Group has significantly changed the nature of our company in just the last six months, and we will break even financially this year. Given this significant change, after Adrian goes through the financials, I'll discuss each line of business in more detail to help investors understand how we are operating going forward. With that, Adrian, would you please give us a review of the financials?
Adrian Goldfarb
Thank you, Chuck. Before I cover the specific results for the fourth quarter and full year 2024, let me take a few minutes to give my perspective on what the company has achieved in the past year, much of which is not -- much of which is not yet reflected in the posted financial results. Shortly after stepping back into the CFO position, Chuck described to me a bold and ambitious plan for the transformation of the company. His vision, as described in May 2024, seemed far reaching at the time, but the management team felt that it was necessary -- a necessary step to give the company a path to faster growth and profitability.
Sometime back, the company withdrew from giving formal or even basic guidance due to the ongoing uncertainty surrounding our technology business and the segment in which we were operated, namely the railcar industry. We came to the realization that while our technology is the standard for Wayside Detection, as the railroaders describe it, using scanning and advanced AI processing, its adoption by the industry would likely take much longer than desired, causing ongoing losses for our business and continuous requirement for dilutive capitalization. Chuck challenged himself and the management team to take the significant assets that we had developed, including a highly capable staff and leadership team, a portfolio of intellectual property, and operational excellence and evolve the business into other business areas which could capitalize on those strengths.
Accordingly, 2024 was a transformative year that saw the creation of two new subsidiaries, Duos Edge AI and Duos Energy, and the engagement with a significant partner to build a platform for the desired revenue growth and profitability without requiring large amounts of highly dilutive capital. In fact, I'm pleased to inform you that as of December 31, 2024, the Duos Technologies Group balance sheet, business backlog, and estimated pipeline are the strongest in the company's history and that our capitalization table is very clean with just common stock or equivalents in the form of preferred stock without any coupons, ratchets, or other dilutive conditions. We no longer have any warrants and minimal other derivatives consisting of just employee stock options.
To fund our working capital needs through the latter part of 2024, we instituted an at the market program using our -- using our S-3 shelf registration and through careful implementation by restricting the amount of stock sold in any day, raised approximately $7.5 million through the early part of this year. This had a further benefit that in combination with the news of our expansion and the signing of the largest contract in the company's history has generated considerable interest in the company and its stock such that our average trading volumes are considerably higher than historically was the case, and we expect this trend to continue in 2025 and beyond. Interest in our company comes from a wide range of investors, including both retail and institutional investors. Chuck will be giving an extensive overview of the company's expectations for the coming year and beyond, so I will restrict my remarks to the financial and anticipated outcomes from all the initiatives we are now undertaking.
Let me turn now to the financial results and my related commentary. I will present summarized information and will refer you to our earnings PR just released as well as our 10-K for in depth disclosure and analysis. Starting with our results for the quarter and the year, total revenue for the fourth quarter decreased 4% to $1.46 million compared to $1.53 million in the fourth quarter of 2023 while total revenue for the year decreased 3%, $7.28 million compared to $7.47 million in 2023. Much of the lack of growth in overall revenues for 2024 is due to ongoing customer driven delays related to the deployment of two high speed transit focused railcar inspection portals. I should note that during the year the company received partial compensation for those delays which increased the total contract value by $1.4 million. Services and consulting revenues increased by 31% compared to 2023 driven by the addition of new AI and subscription customers, higher service contract pricing, and over $900,000 in new revenue from power consulting work.
Cost of revenues for the quarter increased 47% to $1.79 million compared to $1.22 million for Q4 2023, and for the year, the cost of revenues increased 11% to $6.81 million, up from $6.16 million in the same period of 2023. The increase in cost of revenues was driven by almost $1.6 million in amortization expenses recorded in 2024 to offset site revenue related to non-monetary transactions for the new services and data agreement signed during the second quarter of 2024. Also increasing the cost of revenues was the retention of outside consultants further increasing the cost of revenue for services and consulting, which was also not present in the corresponding period of 2023 but prepared the company for the signing of the Asset Management Agreement, the AMA, and the expected significance revenue increases in 2025 and beyond.
Cost of revenues on technology systems decreased during the period compared to the equivalent period in 2023 in line with the decline in project revenues. The declining cost generally follows the same year-over-year trend as project revenues due to timing differences in major project work. This is primarily related to the procurement and manufacturing of transit focused RIPs. As we are near the end of the manufacturing cycle and begin preparations for field installation starting in 2025, the cost of revenues for technology systems will decrease accordingly. In contrast during the same period in 2023, the company was still progressing through the advanced stages of procurement and manufacturing for these RIPs. Gross margin for Q4 2024 decreased 209% to a negative $330,000 compared to a positive $303,000 for Q4 2023. For the year, gross margin decreased 64% to $469,000, down from $1.31 million in the same period of 2023. As noted above, the decline in margin was primarily driven by the timing of business activity related to the two high speed transit focused railcar inspection portals.
Operating expenses for Q4 2024 decreased 21% to $2.76 million compared to $3.48 million for Q4 2023. For the year, overall operating expenses were lower by 10% to $11.45 million, down from $12.76 million the same period of 2023. This decrease was achieved despite a 43% increase in sales and marketing driven by continued investment in the commercial team including the addition of professionals with extensive experience and leadership across the rail, Edge Data Center and Power industries.
General and administration costs decreased by 18% as result of reductions in headcount and related personnel expenses as well as reductions in consulting and legal expenses compared to 2023. Net operating loss for Q4 2024 totaled $3.09 million compared to net operating loss of $3.18 million for Q4 2023. Losses from operations for the years ended December 31, 2024 and 2023 were $10.98 million and $11.45 million, respectively. The decrease in losses from operations during the year was the result of planned decreases in operating expenses which offset the impact of lower revenues recorded in the period as a consequence of delays in going to field for the two high speed RIPs for a passenger transit client and the short term lower gross margins from the impact of the initial Power industry consulting prior to the signing of the AMA. Net loss for the years ended December 31, 2024 and 2023 was $10.76 and $11.24 million, respectively. The decrease in overall net loss was primarily attributable to a decrease in operating costs. Net loss per common share was $1.39 and $1.56, respectively, for the years ended December 31, 2024 and 2023, an improvement of $0.17 per share.
While 2024's results were largely flat versus 2023, I am pleased to discuss the substantial improvement in the company's balance sheet as of 12/31/2024. We ended the year with approximately $6.27 million in cash and cash equivalents. We also have an additional $4 plus million in assets consisting of six Edge Data Centers that are in the process of being deployed to different sites and are all expected to be cash generating within a few months. Another significant asset is the equity investment in Sawgrass APR Holdings doing business as New APR Energy. Our 5% holding in this business is currently valued at over $7 million and is expected to generate profits in future years as a profits interest structure.
On the liability side, the company has traditionally operated with little to no debt other than some minor financing contracts related to insurance or IT equipment. In 2024, we received $2.2 million in debt funding for our initial three EDCs and were able to secure that for around 10% cost of capital, which is an attractive rate for a company of our size. We also secured additional financing for a further three EDCs in the form of a master capital lease with a similar cost of capital and flexible payment terms as we deploy these assets in preparation for the associated cash flows. I'm also pleased to announce that in early 2025 we have retired $1 million of this debt and expect to retire a further $1.2 million by the end of this year, keeping our leverage ratios within reasonable limits.
Next, I would like to discuss our backlog and pipeline. With the signing of the Asset Management Agreement with Fortress Investment Group for the management and operations of New APR Energy, initial deployment of our Edge Data Centers and current and expected contracts in our rail business at the end of the year, our contracting backlog represented more than $50 million in revenue, with approximately 45% or more of that expected to be recognized in 2025. We also have a pipeline of business between Duos and APR Energy related business of more than $500 million, some of which may translate into additional contracts and backlogs for Duos. I plan to give further updates on our progress in upcoming earnings calls.
As discussed, I'm pleased to announce that we are reinstituting financial guidance, and that, due to the considerable improvements in the business in the last six months, we expect that our results will be more consistent than in previous years or quite frankly in the history of the company. Accordingly, here is our formal guidance for 2025. For the year, we expect to record between $28 million and $30 million in revenue in consolidated revenue from our three subsidiaries. Although we do not normally give quarterly guidance, we expect that revenue for Q1 will be in the range of $4 million to $5 million and then build consistently throughout the year.
With respect to earnings, our initial expectation is to lose some money in the first half as we transition and build the new businesses but plan to minimize this as much as possible by some expense reductions in our rail business to match the expected business from that segment. However, I'm very pleased to report that we expect to break even and then make money in the third and fourth quarters and end the full year with positive adjusted EBITDA, the major adjustment being for non-cash stock compensation.
Lastly, we expect to raise between $10 million and $15 million through our S-3 shelf registration to support the rapidly growing Edge Data Center business in order to acquire an additional nine EDCs for deployment by year end, which will put us in the position of exiting 2025 with an expected $3.5 million in high margin annual recurring revenue from that business and position us for further growth in 2026 and beyond. This concludes my formal remarks, and at this point I will turn the call back to Chuck for his commentary.
Chuck Ferry
Thank you, Adrian. Over the last several months, we have added many new investors along with additional analyst coverage, so I'm going to review what our three lines of business do along with the opportunities and risks for each. Let's begin with our legacy business, which is the Railcar Inspection Portal. Although this has had slow growth in the last four years, it may become less important for our future understanding, but understanding it is essential to know why it has allowed us the ability now to diversify into edge computing and power.
Duos Technologies specializes in automated railcar inspection systems that combine advanced imaging technology with artificial intelligence. Our flagship product, the Railcar Inspection Portal, scans fast moving freight and passenger trains, producing high resolution images and sensor data from railcars as they pass through at speeds of up to 125 miles per hour. These inspection portals use a patented solution of hardware, software, IT, and artificial intelligence to create the ability in real time to identify mechanical defects, structural issues, safety concerns, and unauthorized human presence. This automated inspection process augments and could potentially replace traditional manual inspections, detecting problems that human inspectors might miss, while eliminating the need to stop trains for physical examination, thereby saving railroad operators substantial time and operational costs.
The Railcar Inspection Portal evolved from experimental prototypes developed by Duos beginning in 2015, and today we operate portals for CN, CSX, CPKC, Ferromex, and Amtrak. In addition to these railroads, the Federal Rail Administration and rail labor union leadership have expressed strong support for our technology. Perhaps a validation of our technology is that Norfolk Southern, in a partnership with Georgia Technical Institute, has copied our patented solution and begun to deploy them on their network, which is why we have initiated legal action against them for patent infringing. Despite its technical merits, the railcar inspection portal has struggled with widespread adoption, mostly due to the rail industry's conservative nature and slow adoption cycles.
All that said, this technology still has high potential, and while going slow, it is inevitable that it will be adopted broadly in the coming years. For now, the opportunity is to shift towards a subscription business that produces more predictable recurring revenue for us and expands and diversifies our customer base. Currently, we are in discussions with more than 50 other potential car owners, shippers, and shortline railroads. Our railcar inspection portal's ability to detect human presence has drawn interest from the Department of Homeland Security and Customs and Border Protection. The challenges for this business are first -- first is a traditional manual inspection process. This continues to be the required approach by regulation. It has lower upfront costs but is significantly more labor intensive and prone to human error. Our solution is designed to turn finders into fixers. Second are our competitors that include WebTech through their kinetics division, Ensco, who purchased KLD Labs, WID, IEM, and Camlin Rail, who all participate in the visual and optical railcar inspection systems market. Third is our potential rail customers could develop their own systems. I have already spoken about the patent infringement by Norfolk Southern, which we will vigorously pursue.
Here are the advantages of our patented solution. Data processing of an entire train consist is completed in one minute and immediately available through our Edge computing processing, the same technology that we're deploying in our Edge Data Center business, which eliminates latency issues present in cloud-based computing. Our technology can do inspections at up to 125 miles per hour versus our competitors’ 10 to 30 miles per hour. This technology can also be used just as easily to scan automobiles, trucks, and aircraft.
Now let's discuss Duos Edge AI, which is a subsidiary we established last summer which evolved from our edge computing experience used with our railcar inspection technology which requires powerful edge computing to process images and artificial intelligence. Last year we recruited Doug Recker, a former Marine with many years of experience in data centers who had also been a Duos customer. Doug's background includes service in the Marine Corps as an infantryman, experience in the telecom industry, and he also founded and sold two successful data center companies. He built Colo5, a 225,000 square foot facility serving over 100 clients which was sold to Cologix in 2014.
Additionally, he founded Edge Presence in 2017 which he deployed Edge Data Centers across five states before being acquired by Ubiquiti in 2023. His industry experience and connections prove vital for securing our Region 16 and Pampa, Texas customers, and he is currently managing a pipeline of more than 200 interested customers. Simply said, the demand for edge computing is easily on par with a similar demand for big box data centers and power. Duos Edge AI's core product is a modular data center measuring 55 feet long by 13 feet wide. It houses 15 IT racks with integrated power and cooling. Each pod supports 300 to 350 kilowatts of IT load with N plus 1 redundancy for cool power and cooling systems, matching traditional data center reliability standards. The pods are manufactured by our strategic partner Accu-Tech, who can produce more than 20 units monthly.
Deployment includes transporting the pod to the site, installing it onto a concrete pad, connecting power and fiber, and final testing. Currently, Duos only provides pod infrastructure, or what folks will call a powered shell that includes racks, power, cooling, and redundant fiber. Customers and fiber providers install their own equipment. In the future, we may consider offering an Edge cloud computing capability, but for now we're sticking to the current format. Our initial focus is at Texas school districts where we've commercialized our first pod at the Region 16 Education Service Center in Amarillo that serves over 50 rural school districts across 26,000 square miles that previously relied on costly low bandwidth connections to Dallas. These Edge Data Centers reduce latency typically experienced in rural towns and creates new regional internet exchanges, providing faster connectivity through carrier redundancy while enabling local cloud caching and Edge AI. Our plan is to track -- our plan is on track to install a total of 15 pods by the end of 2025, and Doug, Adrian, and I are working on plans to accelerate that. Unlike competitors focused on urban infrastructure via telco offices or cell phone towers, we are targeting rural broadband enhancement, aligning with government funding that indirectly subsidizes these projects, which is often overlooked by larger data center developers and operators.
The opportunity here is we are in a market that currently doesn't have much competition. The demand for Edge computing is very high. Our customers in rural areas really need this, and the availability of getting new Edge Data Centers manufactured is good and capable of scaling. Financially, it provides good recurring revenue with gross margins expected to be in the 70-percentile range, and payoff for a new pod is about two years on an asset that will produce revenue for at least 10 years or more. The long-term vision is to deploy 150 to 200 pods by the end of 2027, potentially generating $60 million to $65 million in annual recurring revenue. This growth will require strategic partnering to obtain the capital necessary, and our team is generating options for that. Our third and newest subsidiary is Duos Energy Corporation that is primarily focused on delivering on the Asset Management Agreement we have with APR Energy and Fortress Investment Group. It is essentially the service company that enables APR Energy, who owns the assets, to find new contracts, engineer, procure, construct, and operate fast power plants.
Now, I've spoken before about the experience that our team and I have running this kind of Power business. I knew that the demand for -- or behind the meter power was very high in the US Data Center market, which is why we pursued this opportunity. But my team and I have never seen so much demand for these type of generation assets, and APR Energy has built a pipeline of opportunities that greatly exceeds 850 megawatts that we currently own, and more calls are coming in every day. I also knew that there were synergies between a power and Edge Data Center business before we closed this deal, but I didn't really realize how strong it was.
Our efforts to sell Edge Data Centers in the past few months has led us directly to several power and data center development deals and vice versa. As I stated earlier, in the first three months of operation we have contracted for 390 megawatts, and we expect to deploy another 240 megawatts for the summer peaking period. There is certainly no shortage of traditional or Data Center Power opportunities, creating robust work for Duos under the Asset Management Agreement. Like our other lines of business, operational excellence is our number one goal. It creates happy customers, drives new opportunities, and earns our reputation as a company people want to do business with. One of the advantages of the Asset Management Agreement with APR Energy is that our staff was ready on day one to begin deploying assets. Currently, the team is deploying 180 megawatts of contracted turbines and preparing an additional 240 megawatts of generation for future work. This is a major endeavor given the speed at which APR Energy is closing new contracts. All the activities and talent to execute project management, engineering design, developing bill of materials, procurement, logistics, maintenance, and installation are in full motion right now. The Duos operations team is handling all of it in stride and has experienced at multiple simultaneous deployments.
In conclusion, our business has made significant changes in just the last six to nine months. We are now diversified into two areas of high growth, Edge Data Centers and Power, which de-risks our sole reliance on the Rail Technology business and will enable meaningful growth and profitability by the end of this year. As always, I want to thank our business partners, Board of Directors, and our shareholders for their continued support. The outlook for Duos looks very promising right now, and I'm excited to be able to lead it. Thank you for listening. And we'll now open the call for your questions. Operator, please provide the appropriate instructions.
Operator
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first question comes from Ed Woo with Ascendiant Capital. Please proceed with your question.
Ed Woo
Yes. Congratulations on all the progress you made. My question is on rail safety legislation. With a new administration and, as you know, we're further and further away removed from when the Ohio derailment happened, have you noticed any change in terms of people's legislature appetite for rail safety?
Chuck Ferry
Yeah. No. Appreciate it, Ed. And I think on the Railway Safety Act, which under the Biden administration, a lot of effort was being made both in the Senate and in the House of Representatives to try and push something through, and ultimately it did not get through. And it really didn't really get its time with both sides, at least on the floor. I think the sense right now that I get from discussions that I've had with the FRA, some of our Class 1 customers and other rail industry stakeholders is that we could still see some safety regulations go through. I do think, however, given the current administration, the likelihood that any significant regulations being passed is probably unlikely. At least that's the way we've kind of been planning things. That, of course, could always change. But I think the likelihood of a real comprehensive set of regulations coming out through legislation right now I think is probably much lower than it was prior to the Trump administration coming into office.
Ed Woo
Great. Thanks for answering my question. My last question is, with a lot of tariff uncertainties, has that impacted any customers who are going to sign up for the Edge Data Centers or your power contracts?
Chuck Ferry
Yeah. Right now, the threat of tariffs -- and they're coming. I think everybody would agree with me in some fashion or form. It has not impacted our business yet. I think areas that -- where we could see some impacts is primarily the -- probably the cost of raw materials. So, we use steel and aluminum in our railcar inspection portal. That being said, most of our railcar inspection portal, even raw materials come from within the United States. So, we'll have to wait and see what kind of impacts on that particular business. On the Edge Data Center side, our strategic partner Accu-Tech, we already had a discussion around this topic. They are taking measures to make it so that any tariff impacts are minimized. But again, in terms of raw material costs, there could potentially be some risk there. But right now, we have not been impacted by that.
On the power side, no immediate impacts right there because right now we, through the Asset Management Agreement and partnered with APR Energy, effectively we own those assets outright, and they're already all here in the United States. And they're primarily intended to be deployed in the United States up against US data centers, although we are considering a couple of potential contracts that are in overseas locations. And we'll probably wait and see how the tariffs come out before we act on any of those international jurisdictions. But hopefully that gives you kind of a sense of where we're at on the tariffs.
Ed Woo
Yes, it does. Thank you very much, and I wish you guys good luck. Thank you.
Chuck Ferry
Thank you, Ed.
Operator
Vijay Devar, Northland Capital Markets. Please proceed with your question.
Vijay Devar
Hi. This is Vijay Devar for Mike Latimore. A couple of questions. How many data centers are operational now, and do you expect to add a similar amount each quarter to reach your 15 by year-end?
Chuck Ferry
Yeah. No. Appreciate the question. Currently we have one data center that is fully commercialized and now beginning to produce revenue. That's with the school district 16 in the Panhandle of Texas. We currently have two additional Edge Data Centers that are deployed in Pampa, Texas that are scheduled to be -- they're in the middle of installation. They'll be finalized here in the next month or so. And we pretty much plan to probably put in about two to three of these Edge Data Centers each quarter at this moment. And by the end of the year, we'll have 15 in. Right now, that plan is on track. We obviously currently own six of those Edge Data Centers. And so, as Adrian discussed during his earnings -- his part of the earnings call, we're going to make moves to ensure that we can purchase the nine additional. And we already have the customers that have already agreed that they want them. So, finding homes for this -- these Edge Data Centers is -- has been fairly easy and quick. Now we're just trying to accelerate that now that we've got the first one in, and again we kind of exercised our construction and installation muscles on that first one. And now that's going to start going a lot faster.
Vijay Devar
Got it. So, in fact, a continuation to that is do you see a high potential for winning a hyperscaler deal, and do you still view that as an upside to the guidance of reaching 15 data centers?
Chuck Ferry
Yes. We are in active discussions with five or six of the largest hyperscalers in the country. One of the -- one of those hyperscalers is actually using some of our power turbines right now at a large AI data center. And we're seeing interest from the hyperscalers not just for our power and not just at big box data centers. They are also interested in our Edge Data Centers, as well. So, one of the -- Amazon Web Services attended the opening ceremony at our Edge Data Center in Amarillo, Texas, and we had a very nice conversation with that team. And they're interested in both the large data centers where we can provide power as well as our Edge Data Center computing.
Vijay Devar
Thank you. Thanks a lot.
Chuck Ferry
Okay, so at this time --
Operator
At this time --
Chuck Ferry
Yeah. Go ahead, Operator.
Operator
Oh, I was just going to say at this time our question-and-answer session is concluded, and I would now like to turn the call back over to you, Mr. Ferry, for closing remarks.
Chuck Ferry
Yeah. Well, as always, before we can -- we want to just thank everybody for joining the call and thanks for watching us and stay tuned because our business is about to get much larger and become profitable this year. So, thank you for your time. Back to you, operator.
Operator
Before we conclude today's call, I would now like to provide Duos’ Safe Harbor statement that includes important cautions regarding forward-looking statements made during the call. This earnings call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking terminology such as believes, expects, may, will, should, anticipate, plans, and their opposites or similar expressions are intended to identify forward looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks, and other influences, many of which are beyond our control, which may influence the accuracy of these statements and the projections upon which the statements are based and could cause Duos Technologies Group Inc.'s actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include but are not limited to those described in Item 1-A in Duos’ Annual -- Duos’ Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Duos’ filings with SEC. Thank you for joining us today on Duos Technologies Group's fourth quarter and full year 2024 earnings call. You may now disconnect.