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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 mphImage Capture with Machine Vision – 2px x 2048 pxLine Scans are stitched to a panoramic viewAutomated and inspector detections are flagged in redSynchronizeddisplayInspection 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.