JACKSONVILLE, Fla. - Duos Technologies Group, Inc. (NASDAQ:DUOT), through its subsidiary Duos Edge AI, Inc., has obtained $2.2 million in funding from two institutional investors for building its first three Edge Data Centers (EDCs). The investment, in the form of secured promissory notes, will facilitate the construction, deployment, and initial operations of these facilities, which are slated to start generating revenue in the fourth quarter of this year.
The first of the EDCs, designed to serve remote areas including schools, government, and health facilities, is expected to be operational by late October, with the subsequent two units anticipated to follow in November. These centers are part of Duos Edge AI's strategy to provide high-functioning, adaptable computing solutions that support real-time data processing, particularly in underserved communities.
Doug Recker, President of Duos Edge AI, expressed gratitude towards the investors for their confidence and support, which he believes will enable the company to meet its deployment and revenue production targets. Chuck Ferry, CEO of Duos, echoed this sentiment and highlighted the enthusiasm for what he considers the beginning of a new growth phase for the company.
The terms of the funding deal, detailed in a recent 8-K filing, indicate that the $2.2 million debt will mature at the end of 2025 and carries an interest rate of 10% per annum. Duos Edge AI plans to allocate a portion of the revenues from these EDCs for debt repayment, while also maintaining reserves from its at-the-market (ATM) facility to ensure timely repayment.
Duos Technologies Group continues to explore additional debt funding proposals to support the ongoing expansion of its subsidiary, Duos Edge AI. The company's mission is to deliver advanced technology solutions to areas in need by deploying robust edge computing infrastructure that minimizes latency and maximizes performance without requiring significant capital investment.
In other recent news, Duos Technologies Group reported a decrease in total revenue to $1.07 million in Q1 2024, primarily due to timing of revenue recognition for a key customer. The company also announced strategic moves to expand its business, including a partnership with a Class 1 railroad and the formation of a new subsidiary, Duos Edge AI Inc. The new subsidiary will focus on providing Edge Data Centers to remote areas, leveraging the company's expertise in AI processing.
Duos Technologies has also secured a new system sale valued at $2.7 million and is increasing investment in its Edge AI data center initiative. The company's pipeline value exceeds $100 million, buoyed by interest in border security systems. According to Northland's analysis, despite adjusting future revenue projections for the company based on recent performance and future initiatives, they reaffirmed an Outperform rating for Duos Technologies, maintaining a price target of $5.50.
InvestingPro Insights
As Duos Technologies Group, Inc. (NASDAQ:DUOT) embarks on a strategic initiative to build its Edge Data Centers, the company's financial metrics and analyst projections provide a nuanced picture of its market position and future prospects. According to the latest data from InvestingPro, Duos Technologies has a market capitalization of $23.12 million, reflecting the market's current valuation of the company.
While analysts are anticipating sales growth in the current year, which aligns with the company’s plans for its Edge Data Centers, it's important to note that Duos Technologies has been quickly burning through cash. This raises questions about the company's ability to sustain its growth without additional financing. Moreover, the company's gross profit margins appear weak, standing at 14.69% over the last twelve months as of Q1 2024. This could indicate challenges in achieving high profitability, especially as analysts do not anticipate the company will be profitable this year.
Despite these challenges, Duos Technologies has demonstrated a strong return over the last month, with a 19.92% increase in its stock price. This suggests that investors may be responding positively to recent developments, including the funding for the Edge Data Centers. However, it is worth noting that the company's price has fallen significantly over the last year, with a -53.06% return, which could reflect broader investor sentiment about its long-term prospects.
For those interested in a deeper dive into Duos Technologies' financial health and market potential, InvestingPro offers additional insights. There are 11 more InvestingPro Tips available, which can be accessed by visiting: https://www.investing.com/pro/DUOT. Readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing a comprehensive toolkit for informed investment decisions.
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