Duos Technologies (US:DUOT)2025-11-13 21:31Revenue Growth - Revenues for the three months ended September 30, 2025, increased by 112% to $6,877,283 compared to $3,238,910 in the same period of 2024[298]. - Services and consulting revenue surged by 324% to $6,589,373, primarily driven by the Asset Management Agreement with New APR, generating $4,248,680 in revenue[300]. - Total revenues for the nine months ended September 30, 2025, reached $17,565,509, a 202% increase from $5,820,086 in 2024[311]. - Services revenue for the nine months ended September 30, 2025, increased by 377% to $17,163,518, primarily driven by the AMA with New APR[312]. Cost and Expenses - The cost of revenues for the three months ended September 30, 2025, rose by 88% to $4,360,881, reflecting increased costs associated with services and consulting[303]. - Operating expenses for the three months ended September 30, 2025, totaled $2,839,379, a 28% increase from $3,632,382 in 2024, with general and administration costs rising by 66%[307]. - Operating expenses for the nine months ended September 30, 2025, increased by 34% to $11,695,308, with general and administration costs rising by 71%[320]. Profitability and Loss - The gross margin for the quarter was $2,516,402, compared to $919,099 in the same quarter of 2024[298]. - Gross margin for the three months ended September 30, 2025, improved by 174% to $2,516,402, driven by the execution of the AMA with New APR[306]. - Net loss for the three months ended September 30, 2025, decreased by 26% to $1,040,254 from $1,401,663 in 2024, with net loss per share improving to $0.06 from $0.18[310]. - Net loss for the nine months ended September 30, 2025, was $6,637,948, a 10% decrease from $7,358,143 in 2024, with net loss per share improving to $0.49 from $0.98[324]. Cash Flow and Financing - Net cash used in operating activities increased to $11,031,943 for the nine months ended September 30, 2025, compared to $6,200,147 for the same period in 2024[326]. - Net cash used in investing activities rose to $7,873,079 in 2025 from $1,555,544 in 2024, reflecting ongoing investments in capitalized construction-in-progress costs for edge data centers[327]. - The company generated $45,840,224 from financing activities in the first nine months of 2025, significantly up from $5,959,962 in 2024, primarily due to an ATM offering and a public stock offering[328]. Strategic Initiatives - The Company is actively deploying Edge Data Centers, with the first site operational as of September 30, 2025, and an additional 14 expected to be operational in Q4 2025[291]. - The Company is shifting to a modular and subscription-based approach for its Railcar Inspection Portal, enhancing recurring revenue streams through "RIP-as-a-Service"[291]. - The Company anticipates continued growth in services revenue from power, hosting, and related data center services throughout 2025 and into 2026[302][315]. - Management is focused on cost elimination and realigning resources to improve growth and profitability, with a positive outlook on contracted backlog and new commercial projects[334]. Financial Position - As of September 30, 2025, the company reported a working capital surplus of $27,574,533 and a net loss of $6,637,948 for the nine months ended September 30, 2025[325][332]. - The accumulated deficit as of September 30, 2025, was $81,005,957, indicating ongoing financial challenges despite a working capital surplus[332]. - The company raised over $11,500,000 from the sale of Series E and F Convertible Preferred Stock in 2023, and additional capital through various offerings in 2024 and 2025, strengthening its financial position[333]. Investments and Assets - The Company holds a 5% interest in Sawgrass Parent, accounting for it as an Equity Method Investment with an initial carrying value of $7.2 million[348][349]. - The Company recorded $7.2 million of deferred revenue for services to be performed under the AMA, with no revenue recognized during the year ended December 31, 2024[349]. - An intangible asset valued at $11,161,428 was recorded in May 2024, representing non-monetary consideration under a 5-year customer contract for maintenance services[356]. - The intangible asset is amortized over its useful life of five years, with an immediate amortization of $199,008 related to pre-contract costs[358][359]. Impairment and Valuation - The Company assesses its equity method investment for impairment, with no impairment losses recognized during the year ended December 31, 2024, or the nine months ended September 30, 2025[355]. - The Company has not indicated any impairment of the intangible asset as of September 30, 2025[361]. - The Hypothetical Liquidation at Book Value (HLBV) method is used to reflect the Company's claim on net assets under the Agreement with Sawgrass Parent[351]. - The Company will continue to present the equity method investment at its initial fair value unless the HLBV calculation yields a profit or the investment becomes impaired[353]. - The Company expects its hypothetical claim on net assets to remain zero until other investors have received their Total Contributed Capital and the MOIC Threshold has been met[352].