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8-K - CURRENT REPORT - DUOS TECHNOLOGIES GROUP, INC.duot_8k.htm
EXHIBIT 99.1
 

                         G O V E R N M E N T  U T I L I T I E S  O I L A N D G A S  R A I L  C H E M I C A L  D I S T R I B U T I O N    2018The MicroCap Conference – April 9-10       
 

 Safe Harbor Statement  2  This presentation, as well as other written or oral statements made from time to time, includes “forward-looking statements,” within the meaning of the U.S. Securities Act of 1933, as amended and the U.S. Securities Exchange Act of 1934, as amended, or the “Exchange Act.” Forward-looking statements are not based on historical information and include, without limitation, statements regarding our future financial condition and results of operations, business strategy and plans and objectives of management for future operations. Forward-looking statements reflect our current views with respect to future events. The words “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “project,” “estimate” and similar expressions identify forward-looking statements. These forward-looking statements are based upon estimates and assumptions made by us or our officers that, although believed to be reasonable, are subject to certain known and unknown risks and uncertainties that could cause actual results to differ materially and adversely as compared to those contemplated or implied by such forward-looking statements.All forward-looking statements involve risks, assumptions and uncertainties. You should not rely upon forward-looking statements as predictors of future events. The occurrence of the events described, and the achievement of the expected results, depend on many events, some or all of which are not predictable or within our control. Actual results may differ materially from expected results. These risks, assumptions and uncertainties are not all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other known as well as unknown or unpredictable factors also could harm our results. All of the forward-looking statements we have included in this presentation are based on information available to us on the date of this presentation. We undertake no obligation, and specifically decline any obligation, to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this presentation might not occur.Any reference to financial projections in this presentation, if any, are for illustrative purposes only and are based upon certain hypothetical assumptions, which we believe are reasonable as of the date of this Presentation. The selection of assumptions requires the exercise of judgment and is subject to uncertainty due to the effect that economic or other changes may have on future events. The assumptions used for the projections in this Presentation, if any, are those we believe to be most significant to the projections. 
 

     About Us    Our Headquarters inJacksonville, FL    Headquartered in Jacksonville, FL | Staff of 40Design, develop and implement advanced intelligent technologiesIntelligent Sensor and Data Analytics Enterprise Information Management (EIM) Turnkey Engineered SolutionsIndustry-agnostic with current focus on rail transportation, retail distribution centers, correctional facilities and critical infrastructure security9 patents granted and 2 patents pendingCore intellectual property are technology platforms distributed as licensedsoftware suites, and natively embedded within engineered turnkey systems:centraco® - intelligent customer facing user interface (front end)praesidium® - intelligent analytics process (back-end)    3  3 
 

 Our Proprietary Technologies are Disruptive  Open-Architecture - Easily Integrates Third-Party Systems      Intelligent Data Analytics Modules including Artificial Intelligence  Presentation Layer for Decision Making  Modular Common Operating FrameworkMulti-Layered Intelligent Unified User Interface    Analytics modulesApplication specific Artificial Intelligence      Duos also develops and implements application specific hardware for complete turnkey solutions:Vehicle Undercarriage Examiner ( vue® )Linear Speed Sensor (commercially available were not accurate for high speed rail inspection)Thermal vue® (under development)  4 
 

 Our Target Markets and Select Customers                                                      G O V E R N M E N T U T I L I T I E S O I L A N D G A S R A I L C H E M I C A L D I S T R I B U T I O N      5 
 

               The Total North American Markets WeServe Exceed $100BThe Total Addressable Market is Global 
 

 7          We Serve the $60B North American RailMarket and Its Developing Trends  "Big Data will continue to help railroads make intelligent decisions about the rail network and maintain a system of cargo delivery second to none."Source: AAR State of the Industry 2016 Full Report                                  RAIL MARKETDATA  $ 60BFreight Rail Network  1.56MFreight Cars  26,500Locomotives  140,000Miles of Class 1 Track  500+Freight Rail Yards  21Regional Railroads510Local Railroads          Source: US Federal Railroad Administration    p.7                                    665,630  128,916  122,567  90,175  21,35921,53528,04255,554  Metallic OrePrimary Heavy ProductsMotor Vehicle PartsCoal Petroleum & Petrol Crushed Stone, SandGrain & Other Farm ProuductsIntermodel    Rail Car Loads  2014 vs. 2013 Freight Demand Growth  Increase in Number of Rail Car Loads                      16014012010080 6040200  06 07 08 09 10 11 12 13 14 15Source: Association of American Railroads    RR Spending    Train Accident Rate  Rail Investment Leads to Fewer AccidentsTrain Accidents Per Million Down 43% Since 2000  "Major freight railroads plan to spend an estimated $29B to build, maintain and grow therail network."Source: aar.org 2015 Outlook Source: Association of American Railroads “TotalAnnual Spending 2013 Data” 
 

 8            The $53B Enterprise                      EIM optimizes use of information within organizations for decision-making processes and operations that require the availability of knowledge.  Source: Research and Markets "Global Enterprise Information Management Market 2016-2020  8  The $2B Video  Analytics Market  "Analysts forecast the global video analytics market to grow at a CAGR of 33.2% over the period 2014-2019."Source: Technavio, 2015  Information (EI) Market2012-2016 EIM Growth Driven by Big Data(in Billions of dollars)  We Also Target Two Additional Large Markets    Rising security and safety issues drive video analytics market growth                                                        10.2  $16.8  $32.1  $48.0  $53.4  6050403020100  2012 2013 2014 2015 2016"The global enterprise information management market is expected to grow at a CAGR of 19.5% through 2020.“ 
 

             Our Technologies, Products and Applications        rip®  vue® 
 

             Detection of illegal ridersUnder carriage inspectionOpen DoorsOpen/Missing Hatches  SYSTEM SUMMARY FOR SECURITY INSPECTIONS  Live imagery is simultaneously viewed by CBP officers in the field and by The National Rail Targeting Unit (“NRTU”) in the US and in MexicoEach rail car is inspected by stakeholders virtually at the portal using proprietary local databaseAll images are stored on local database and simultaneously uploaded to duostech’s cloudDatabases are continuously synchronizedOpen doors, missing hatches tagged via Automatic Equipment Identification(AEI) tag correlationChanges and suspicious detections are flagged and tagged on centraco® ‘s CBP user interfaceComprehensive reporting via e-Mail and live displaysIndividual car tracking throughout rail system  AT BORDER CROSSINGSFreight trains entering the US from Mexico pass our Rail Inspection Portal at low speedsRail cars are inspected remotely by US Customs and Border Protection (“CBP”)OBJECTIVES  rip® Rail Inspection Portal for BorderSecurity (first generation)    STATUSC O M P L E T E D  10  10  BORDER CROSSINGSCalexico, CA; Nogales, AZ; El Paso, TX; Eagle Pass, TX *1  SECURITY INSPECTIONSSaltillo, MX; San Luis Potosi, MX*1 Eagle Pass, TX currently out of order due to derailment 
 

                       Open Door Detection      Illegal Rider Detection  1. Open DoorsIdentifies open doors. Identifies location within train. Automatically sends alarm to operators.      Open or Missing Hatch Detection    2. Open and Missing HatchesIdentifies missing top hatches. Identifies location within train. Automatically sends alarm to operators.      3. Illegal RidersDetects hiding individuals. Identifies location within train. Automatically transmits alarms to operators.      10  11    rip® Rail Inspection Portal for BorderSecurity (first generation) cont’dLinear Panorama View Stitches and synchronizes 360 ͦ vertical viewimages (top bottom and sides) of each railcar passing through the inspection portal at speeds of up to 120 MPH. The panoramic view allows inspectors to detect; 
 

       Mechanical inspection of all rail cars and locomotives is mandatory as they leave the yard.Source: Federal Railroad Administration (FRA) Regulation  Industry ObjectiveReplace current in-yard physical inspection practice with an automated process, conducted prior to train entering a yardCurrent Practices  Upon arrival of trains in each yard, car inspectors conduct visual, physical inspection of mechanical components “walking” on both sides of each car of a trainProcess is inefficient and ineffective; depending on factors such as weather and the availability, motivation and capability of inspectorsTime consuming process – dwell time 3 - 4 hrs.+ per train while train is immobilized in an inspection yard                        MECHANICAL FIELD INSPECTIONS ARE:              CostlyInconsistentLong Dwell Time                      The Number of Required Daily Inspections is Enormous1.56MFreight Cars26,500Locomotives500+Freight Rail Yards  12  Source: US Federal Railroad Administration  rip®  Rail Inspection Portal forMechanical Inspection (second generation) 
 

       Mechanical inspection of all rail cars and locomotives is mandatory as they leave the yard.Source: Federal Railroad Administration (FRA) Regulation  Industry ObjectiveReplace current in-yard physical inspection practice with an automated process, conducted prior to train entering a yardCurrent Practices  Upon arrival of trains in each yard, car inspectors conduct visual, physical inspection of mechanical components “walking” on both sides of each car of a trainProcess is inefficient and ineffective; depending on factors such as weather and the availability, motivation and capability of inspectorsTime consuming process – dwell time 3 - 4 hrs.+ per train while train is immobilized in an inspection yard                        MECHANICAL FIELD INSPECTIONS ARE:              CostlyInconsistentLong Dwell Time                      The Number of Required Daily Inspections is Enormous1.56MFreight Cars26,500Locomotives500+Freight Rail Yards  MECHANICALFIELD INSPECTIONSCostly Inconsistent Increases Dwell Time12  12  Source: US Federal Railroad Administration  rip®  Rail Inspection Portal forMechanical Inspection (second generation) 
 
 Benefits:  Reduction of field laborSubstantial reduction of dwell time per trainIncreased safety, accuracy and efficienciesIncrease in average system velocityPrevent derailments (see ROI Study)  Substantial savings and positive impact on rail operator’s bottom line  rip® Automated Rail Car Mechanical Inspection    Yard 1    Yard 2                                      Remote Rail Inspection Portal        360 Inspection  r⸰ip®  (second generation)The Future of Rail Mechanical InspectionsRemote, four-sided (360°), automated mechanical inspection while traveling at speeds of up to 140 MPH - before train enters a yard    13 
 

   Intelligent Interface -Detections at Speeds Up to 140 mph  Second Generation  rip®      Speed of This Train = 61.3 km/h      Algorithmic and Operator Detections        Linear Speed Sensor – Accuracy to 0.02 mphImage Capture with Machine Vision – 2px x 2048 pxLine Scans are stitched to a panoramic viewAutomated and inspector detections are flagged in redSynchronizeddisplayInspection Modewith Ultra HD Zoom      15 
 

   Inspection ModeDetections at Speeds Up to 140 mph    rip®      Enter Inspection Mode              Click to Define Area and to Navigate to an Ultra High Definition Image Detail      Annotate or select from FRA Library  16  Second Generation 
 

 rip® Examples of 360° Remote Detections                  Body  Bogey Separated from BearingAdapter  Illegal Riders  Damaged AEI Tag  Damaged Ladder  Oil Leak  Misaligned Bolster Spring  Open Hopper Bottom Hatch  Shaved Axel From Break Rod  Spring Out of Seated Position  Open Cargo Door  Open Hatch                          These detections are the result of a combined automated (algorithmic) process and the manual verification by our remote inspection team.The manual process will be reduced and eventually significantly reduced as more algorithms are developed.  17 
 

 Rail Technologies Under Development  We believe THE FUTURE OF RAIL TECHNOLOGIES uses algorithms to build analytical models, helping computers “learn” from data through deep learning and neural network modeling. Images collected from the Rail Inspection Portal are applied to custom requirements for automated mechanical, FRA safety and security criteria.        TECHNOLOGIESTrack intrusion detection for transit passenger rail platformsIndependent Zone operation – Train detection and Passenger Alert zonesOperator customizationTriggering alarms – programmable thresholdsMask-able areasTrain detection with dynamic masking updateAutomated pantograph inspectionHigh speed thermal vehicle undercarriage examiner    18 
 

           Our Technologies' Future in Intelligent    Information Management and Intelligent    Analytics    NEURAL NETWORKING 
 

 20          Additional centraco® ApplicationsUnder Development    THE COMBINATION OF NEURAL NETWORK MODELLING WITH CENTRACO® enterprise information management capabilities will enable processing complex analytics and pattern recognition processes  PRODUCT  PRICE RANGE  Intelligent Corrections Automation SystemJust completed implementation of South Florida correctional facilityPlanning to build dedicated business and technical implementation unit  $500K-$4.0M / unit  Automated Logistics Information System (ALIS)Completing distribution center system prototype for Kohl'sPlanning to build dedicated business and technical implementation unit for retail sector  $200K-$300K / unit  Inspection Portal ApplicationsJust awarded an inspection portal application for FEMA  $300K-$500K / unit       
 

               Financial Review 
 

 Income Statement  21  (in ‘000s)      FY 2016  FY 2017  Revenue      $6,105  $3,884  Cost of Sales      2,733  2,294  Gross Margin      3,372  1,590  % of Revenue      55%  41%  Operating Expenses    5,116    5,033  Income (Loss) from Operations      (1,744)  (3,443)  Other Income (Expense) *      ( 818)  (1,709)  Net Income (Loss)      ($2,562)  ($5,152)  FINANCIAL REVIEW 2016 – 2017Transition year for technology and industry focusAlso affected GM % where early installs are discountedDelayed closing of raise slowed project implementationStrong start to 2018  * Includes $900k in non-cash interest expense w/ respect to bridge loan 
 

 Income Statement  21  (in ‘000s)      FY 2016  FY 2017  Revenue      $6,105  $3,884  Cost of Sales      2,733  2,294  Gross Margin      3,372  1,590  % of Revenue      55%  41%  Operating Expenses    5,116    5,033  Income (Loss) from Operations      (1,744)  (3,443)  Other Income (Expense) *      ( 818)  (1,709)  Net Income (Loss)      ($2,562)  ($5,152)  FINANCIAL REVIEW 2016 – 2017Transition year for technology and industry focusAlso affected GM % where early installs are discountedDelayed closing of raise slowed project implementationStrong start to 2018  * Includes $900k in non-cash interest expense w/ respect to bridge loan 
 
 2018 Key Wins            Application    Client  Contract $  Automated Logistics Information System    Large Retailer  $2.7M          Trailer Manufacturing Inspection Portal    FEMA  $0.5M          Intelligent Branch Security    Regional Bank  $0.5M  Rail Inspection Portal (Annual Maintenance)    Freight Railroad  $1.1M          Completion of Ongoing Projects    Various  $0.2M  22 
 

 Consolidated Balance Sheet Data  As of December 31, 2017    Actual  Cash  1,941,818  Total Other Current Assets *  813,020  Total Liabilities  2,243,643  Series B Convertible Cumulative Preferred Stock  2,830,000  Total Stockholders’ Equity **  622,535    * A/R and other cash owed on projects**Negatively affected by non-cash interest charges  23 
 

     as of 12/31/2017    Common Stock  20,651,371  Warrants*1  25,216,336  Series B Convertible Preferred  5,660,000*2  24  Capital Structure  *1) Weighted Average Exercise Price : $0.70*2) Equivalent Common Shares as converted 
 

 Experienced Leadership Team  25  Wm. Scott CarnsVP, Operations | Operating SubsidiaryMr. Carns is responsible for all aspects of Operations and Engineering within the Intelligent Technologies Division. He has extensive experience in the information technology industry with an emphasis on intelligent video analytics and centralized command and control applications. Prior to joining Duos, Mr. Carns worked as the Information Technologies Coordinator for Environmental Capital Holdings, Inc. and was President of Software Solutions Group, Inc. He also served in the US Army and attended Kansas State University.  Gianni ArcainiChairman, President, CEOMr. Arcaini’s thirty five year executive career began in Europe, leading a range of companies, spanning multiple industries. After immigrating to the United States, Mr. Arcaini, together with a group of investors, formed Environmental Capital Holdings, Inc. (ECH), a company focusing on the transfer of technologies from Europe to theU.S. ECH later acquired Duos Engineering B.V. which was later rebranded as Duos Technologies (USA), Inc., the predecessor company of Duos. In 2002, Duos Technologies (USA) spun off from ECH and under the leadership of Mr. Arcaini expanded into a broad-based technology company with a special focus on developing technologies for the homeland security industry. Mr. Arcaini is the inventor and co- inventor of all current technologies offered by Duos and is signatory to 14 granted patents or patents pending. He graduated from the State Business School in Frankfurt, Germany and is fluent in five languages.Adrian GoldfarbEVP, Chief Financial Officer, DirectorMr. Goldfarb is a thirty-five-year industry veteran including more than 30 years in information technology beginning at IBM. For most of the last twenty years, Mr. Goldfarb has specialized in new venture and early stage organizations where he has assumed roles of increasing responsibility and leadership including CFO, President, and Board member. Mr. Goldfarb currently serves as our CFO and on the Board, He also oversees the Company’s Data Center Infrastructure Solutions business unit. He holds a Bachelors of Arts in Business Administration with a concentration in Finance.Connie WeeksEVP, Chief Accounting OfficerMs. Weeks has over twenty-five years of accounting experience and is responsible for all aspects of financial reporting, internal controls, and cash management. She has been a key member of the Duos team for over twenty years.  Noel HeiksPresident, Chief Operating Officer | Operating SubsidiaryMs. Heiks’ is a technology entrepreneur and a C-Level executive with a career spanning over twenty years in both operational and business development roles, Her science, technology and engineering background are a valuable combination to effectively lead our business development, engineering and operations teams. Ms. Heiks has a strong track record of translating complicated technology concepts to client solutions while remaining focused on technology commercialization. She has worked within multiple industry sectors including defense, government, and commercial organizations and is proficient in driving business growth through direct customer relations with large organizations. Ms. Heiks has successfully completed several M&A transactions. She has bought and sold patent portfolios and has been involved in fund-raising, selling companies, and licensing technologies. Her mission is to drive disruptive technologies from theoretical research into practical applications for large, international markets. She has a Bachelor’s degree in Physics, a Masters in Electrical Engineering, and a thesis in Computer Vision all from Virginia Tech,David PonevacSVP, Chief Technology Officer | Operating SubsidiaryMr. Ponevac has over fourteen years of software engineering experience concentrating on web and mobile environments; considerable expertise in Objective-C, Java, C#, PHP and many other scripting languages. Previously, David was CTO of Luceon and worked with a range of domestic and international public and private sector clients. He holds a Bachelors of Science in Electrical Engineering and a Masters in Computer Science.