DUOT 10-K & 10-Q changes, risk factors and insider trading
Duos Technologies Group, Inc. · Nasdaq · Services-Prepackaged Software · CIK 1396536 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We are shifting our business to focus on data centers and digital infrastructure markets.”
New heading “Our portfolio depends upon local economic conditions and is geographically concentrated in certain locations.”
New heading “We lease the locations on which our data centers are located and the ability to retain these leases, and to find suitable locations for future deployment of data centers and negotiate leases and satisfy all other development issues for these new locations, could be a significant risk for our ongoing operations.”
New heading “We are dependent upon third-party suppliers for power and other services, and we are vulnerable to service failures of our third-party suppliers and to price increases by such suppliers.”
New heading “We depend on third parties to provide network connectivity to the customers in our data centers, and any delays or disruptions in connectivity may adversely affect our business and results of operations.”
Removed heading “There is currently not an active liquid trading market for the Company’s common stock.”
Largest changes
“We lease the locations on which our data centers are located and the ability to retain these leases, and to find suitable locations for future deployment of data centers and negotiate leases and satisfy all other development issues for these new locations, could be a significant risk for our ongoing operations.”see in full comparison
“We depend on third parties to provide network connectivity to the customers in our data centers, and any delays or disruptions in connectivity may adversely affect our business and results of operations.”see in full comparison
“We are dependent upon third-party suppliers for power and other services, and we are vulnerable to service failures of our third-party suppliers and to price increases by such suppliers.”see in full comparison
“Our portfolio depends upon local economic conditions and is geographically concentrated in certain locations.”see in full comparison
“We are shifting our business to focus on data centers and digital infrastructure markets.”see in full comparison
“There is currently not an active liquid trading market for the Company’s common stock.”see in full comparison
Full comparison: every changed paragraph (26)
We are shifting our business to focus on data centers and digital infrastructure markets.
We have increasingly prioritized the development, deployment and operation of modular edge data centers and related digital infrastructure services. This strategic shift requires the allocation of capital, management attention and operational resources toward markets in which we have shorter operating history compared to our legacy offerings. If we are unable to execute this new strategy effectively, it could have a material adverse effect on our business, financial condition and results of operations.
Our portfolio depends upon local economic conditions and is geographically concentrated in certain locations.
Our portfolio of edge data centers currently is concentrated in the State of Texas. We have begun deployments in other states and expect that geographical expansion will remain our focus. Until then, however, our current edge data center portfolio is dependent on local economic conditions in the State of Texas and could be materially adversely affected by a downturn in the State.
We lease the locations on which our data centers are located and the ability to retain these leases, and to find suitable locations for future deployment of data centers and negotiate leases and satisfy all other development issues for these new locations, could be a significant risk for our ongoing operations.
We lease and do not own the land on which we operate our data centers. We also expect that we will lease the land on which we deploy our data centers in the future. If we are unable to renew our existing leases on favorable terms, if at all, or if we are not able to lease suitable locations for future deployments, our business could be materially adversely affected. Deploying data centers involves substantial planning and entails risks relating to zoning, regulatory approvals, disruptions and delays. In addition, we will be required to secure an adequate supply of power from local utilities, which may result in unanticipated costs. Any inability to secure an appropriate power supply on a timely basis or on acceptable financial terms could adversely affect our ability to deploy our data centers.
We are dependent upon third-party suppliers for power and other services, and we are vulnerable to service failures of our third-party suppliers and to price increases by such suppliers.
We generally rely on third-party local utilities to provide power to our data centers. We are therefore subject to an inherent risk that such local utilities may fail to deliver such power in adequate quantities or on a consistent basis. Any sustained loss of power may also reduce the confidence of our customers in our service. In addition, even when power supplies are adequate, we may be subject to pricing risks and unanticipated costs. Many factors beyond our control may increase the rates charged by the local utilities.
We depend on third parties to provide network connectivity to the customers in our data centers, and any delays or disruptions in connectivity may adversely affect our business and results of operations.
Our customers require internet connectivity and connectivity to the fiber networks of third-party telecommunications carriers. Our data centers need to provide sufficient access for customers to connect to the carriers. Any carrier may elect not to offer its services within our data centers or may elect to discontinue its service. Furthermore, carriers may periodically experience business difficulties which could affect their ability to provide telecommunications services or the service provided by a carrier may be inadequate or of poor quality. A material loss of adequate third-party connectivity could have an adverse effect on the businesses of our customers and, in turn, our business and results of operations.
Current supply chain issues continue to extend
deadlines deadlines
for shipment of key components used in our technology systems. The effect of this may be to delay revenue recognition. We have
have experienced and expect to continue to experience delays to our business operations resulting from lack of materials availability, delays
delays in securing key components such as video cameras requiring certain computer chips,components, and other material and personnel shortages that
may impact our ability to implement our products and services
in a timely manner or meet required milestones or customer commitments.
In addition, higher costs for travel may adversely impact
our business, financial condition, operating results and cash flows.
This has made it necessary for the Company to order certain components
prior to receiving a contract to ensure we have key components
available when necessary to satisfy future contract obligations.
The markets in which we operate are characterized
by rapid, and sometimes disruptive, technological developments, evolving industry standards, frequent new product introductions and enhancements
and changes in customer requirements. In addition, both traditional and new competitors are investing heavily in our market areas and
competing for customers. As next-generation video analytics technology continues to evolve, we must keep pace in order to maintain or
expand our market
position. We continue to introduce new product offerings focused on automating mechanical and security inspections in
the rail, logistics, intermodal and government sectors as potential revenue drivers. If we are not able to successfully add staff resources
with sufficient technical skills to develop and bring these new products to market in a timely manner, achieve market acceptance of our
products and services or identify new market opportunities for our products and services, our business and results of operations may be
materially and adversely affected.
We believe that operators in the business sectors
we are focused on continue to be cautious about sustained economic growth and seek to maintain or improve profitability through cost
control control
and constrained spending. While our core technologies are designed to address cost reduction, other factors may cause companies
to delay
or cancel capital projects, including the implementation of our products and services. In addition, the business sectors in
which we are
focused are under financial pressure to reduce capital investmentinvestment, which may make it more difficult for us to close large
contracts in
the immediate future. We believe there is a growing market trend toward more customers exploring operating expense models
as opposed to
capital expense models for procuring technology. We believe the market trend toward operating expense models will continue
as customers
seek ways of reducing their overhead and other costs. All of the foregoing may result in continued pressure on our ability
to increase
our revenue and may potentially create competitive pricing pressures and price erosion. If these or other conditions limit
our ability
to grow revenue or cause our revenue to decline our operating results may be materially and adversely affected.
Historically, the Company has leveraged significant
milestone payments at a contract onset to fund the purchase of required materials. Expansion into a subscription format would allow the
Company to potentially transact faster and more routinely with a larger customer base than it has previously had. In certain instances
where the Company plans to build,
own and operate its own assets, it will require a different working capital and capitalization strategy
whereby the Company will be required
to make upfront investments without significant customer milestone payments to offset the investment.
The Company believes that this presents
a short-term capital risk but is expected, long-term, to improve the overall performance of the
business.
We cannot be certain that our technologies and
products products
do not and will not infringe on issued patents or other proprietary rights of others. While we are not currently subject to
any infringement
claim, any future claim, with or without merit, could result in significant litigation costs and diversion of resources,
including the
attention of management, and could require us to enter into royalty and licensing agreements, any of which could have a
material adverse
effect on our business. We may not be able to obtain such licenses on commercially reasonable terms, if at all, or the
terms of any offered
licenses may be unacceptable to us. If forced to cease using such technology, we may be unable to develop or obtain
alternate technology.
Accordingly, an adverse determination in a judicial or administrative proceeding, or failure to obtain necessary
licenses, could prevent
us from manufacturing, using, or selling certain of our products, which could have a material adverse effect
on our business, operating
results, and financial condition.
Our future success depends, in part, on our ability
to anticipate and respond effectively to the threat and opportunity presented by new technology disruption and developments. These may
include new software applications or related services based on artificial intelligence, machine learning, or robotics. We may be exposed
to competitive risks related to the adoption and application of new technologies by established market participants or new entrants,
start-up start-up
companies and others. These new entrants are focused on using technology and innovation, including artificial intelligence,
to simplify
and improve the client experience, increase efficiencies, alter business models and effect other potentially disruptive changes
in the
industries in which we operate. We must also develop and implement technology solutions and technical expertise among our employees
that that
anticipate and keep pace with rapid and continuing changes in technology, industry standards, client preferences and internal control
standards. We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis and our
ideas ideas
may not be accepted in the marketplace. Additionally, the effort to gain technological expertise and develop new technologies in
our business
requires us to incur significant expenses. If we cannot offer new technologies as quickly as our competitors, or if our
competitors develop
more cost-effective technologies or product offerings, we could experience a material adverse effect on our operating
results, client
relationships, growth and compliance programs.
Under the Asset Management Agreement, New APR will
shareshares certain management functions with the Company and its subsidiaries, including the Chief Executive Officer, Chief Operating Officer,
Chief Commercial Officer and General Counsel, and other services will be provided by the Company in a combination
of direct staffing with
specific experience in the power generation industry and other functions as necessary via a “shared services”
agreement. This
may at times affect such employees’, including members of senior management, ability to devote time, attention,
and effort to the
Company.
For the year ended December 31, 2025, two customers accounted for 69% (related party) and 13% (related party) of revenues. For the year ended December 31, 2024, four customers accounted for 34%, 31%, 13%, and 12% of revenues. The Company is subject to significant concentrations of credit risk due to our reliance on a limited number of customers across our Rail and Edge lines of business, including a related party customer under an asset management agreement. These concentrations increase our exposure to revenue volatility, collection risk, and liquidity constraints, particularly if any key customer delays payment, or elects not to renew service and maintenance arrangements.
For the year ended December 31, 2024, four customers
accounted for 34%, 31%, 13% and 12% of revenues. For the year ended December 31, 2023, three customers accounted for 48%, 30%, and 11%
of revenues. In all cases, there are no minimum contract values stated. Each contract covers an agreement to deliver a rail inspection
portal which, once accepted, must be paid in full, with 30% or more being due and payable prior to delivery. The balances of the contracts
are for service and maintenance which is paid annually in advance with revenues recorded ratably over the contract period.
As of December 31, 2024,2025, threeone customerscustomer accounted
for 73%,88% 17%(related and 10%party) of our accounts receivable. In the case of insolvency by one of our significant customers, accounts receivable
with with
respect to that customer might not be collectible, might not be fully collectible, or might be collectible over longer than normal
terms, terms,
each of which could adversely affect our financial position. This concentration of credit risk makes us more vulnerable economically.
The loss of any of these customers could materially reduce our revenues and net income, which could have a material adversee effect on
our business. We expect this concentration risk will increase due to the significance of the anticipated revenues under the AMA with New
APR.
Our anticipated business growthhas isbeen highly dependent
on an Asset Management Agreement with New APR Energy.
TheOur Companyresults isof expectingoperation toin report2025 improved revenues
and potentially achieve profitability during fiscal year 2025. That expectation iswere based on
substantial revenues being achieved from the
AMA with New APR. Although the Company has some influence on that agreement, we are dependent on the market
for “behind the meter”
power growing as anticipated. If the market should not grow as anticipated or due to some other circumstances
either within or beyond
our control, revenues recognized from this agreement could be substantially less than expected which would have
a material impact on the
agreement or lead to its cancellation.
There is currently not an active liquid trading market for the Company’s
common stock.
Our common stock is quoted on the Nasdaq Capital Market
tier under the symbol “DUOT”. However, there is currently limited active trading in our common stock. Although there are periodic
volume spikes from time to time, we cannot give assurance that a consistent, active trading market will develop. If an active market for
our common stock develops, there is a significant risk that our stock price may fluctuate in the future in response to any of the following
factors, some of which are beyond our control:
We recently completed an “At the Market”
(ATM) offering and may consider registering additional shares
using our S3 shelf registration facility.
We currently have an active shelf registration
statement statement
(S-3). We are able to file a supplement to raise potentially as much as $16.5$185 million under the “baby shelf” rules and use
a new ATM to raise additional capital. The future issuance
of a substantial number of shares of common stock into the public market, or
the perception that such issuance could occur, could adversely
affect the prevailing market price of our common shares. A decline in the
price of our common stock could make it more difficult to raise
funds through future offerings of our common stock or securities convertible
into common stock.
Management's Discussion & Analysis (MD&A)
New heading “Other Income (Expense)”
Largest changes
“The Company successfully raised approximately $3,544,689 in gross proceeds through its ATM offering program in 2024 and secured an additional $3,954,940 in gross proceeds during the first two months of 2025. Furthermore, in the second quarter of 2025, the Company raised $1,835,874 in gross proceeds through its ATM offering program, followed by an additional $3,136,533 in July 2025. On July 30, 2025, the Company priced a public offering of its common stock for net proceeds of approximately $37.1 million. …”see in full comparison
“Due to the unavailability of Q4-2025 financials from Sawgrass Parent, our equity method investee, the Company has applied a one-quarter lag (in accordance with ASC 323- 10-35-6) in reporting and recording the value of its 5% minority investment. The Company records its 5% interest using the Equity Method as we have significant influence. ASC 323-10-35-4 requires an entity to recognize its share of earnings or loss of an equity method investee which adjusts the carrying amount of the investment and is reflected as earnings or loss in income. …”see in full comparison
“Net cash provided by financing activities for the years ended December 31, 2025 and 2024 was $46,688,761 and $9,154,439, respectively. Cash flows provided by financing activities during the year 2025 were primarily attributable to gross proceeds of $8,927,347 from our At-The-Market (ATM) offering program and a public offering of common stock for gross proceeds of approximately $45 million, offset partially by $2,200,000 in repayments toward the principal balance of the secured promissory notes entered into with 21 April Fund LP and 21 April Fund Ltd. …”see in full comparison
“As previously noted, the Company was successful during 2023 in raising gross proceeds of over $11,500,000 from the sale of Series E and F Preferred Stock. Additionally, late in the first and second quarters of 2024, the Company raised gross proceeds of $2,995,002 from the issuance of a combination of Series D and E Preferred Stock (See Note 14). The Company successfully raised approximately $3,544,689 in gross proceeds through its At-The-Market (ATM) offering program in 2024 and secured an additional $3,954,940 in gross proceeds during the first two months of 2025. …”see in full comparison
“Management believes that, at this time, the conditions in our traditional market space with ongoing contract delays and the additional time needed to execute on new contracts previously reported could put a strain on our cash reserves. However, the anticipated steady cashflow from the AMA and the ability to raise capital via its shelf registration indicate there is no substantial doubt for the Company to continue as a going concern for a period of twelve months. We expect to continue executing the plan to grow our business and achieve profitability as previously discussed. …”see in full comparison
As reflected in the accompanying consolidated financialsee in full comparisonfinancialstatements, the Company had a net loss of$10,764,457$9,835,031 for the year ended December 31,2024.2025. During the same period, cash used in operating activities was$3,488,687.$13,748,223. The working capitaldeficitsurplus and accumulated deficit as of December 31,2024,2025, were$8,002,361 and $74,368,009, respectively. In previous financial reports, the Company had raised substantial doubt about continuing as a going concern. This was principally due to a lack of working capital prior to an underwritten offerings and private placements which were completed during the first, third$11,986,673 andfourth$84,203,040,quarters of 2022, the first, third and fourth quarters of 2023, as well as 2024 and 2025.respectively.
Full comparison: every changed paragraph (110)
The Company’s plan of operation is focused on improving operational execution, advancing its technology platform, and scaling its digital infrastructure initiatives to support long-term revenue growth and increased recurring revenues.
During 2025, the Company continued to transition its business toward a more diversified model centered on digital infrastructure, artificial intelligence, and technology-enabled services. The Company’s operations are increasingly focused on expanding its edge computing platform, growing its energy and consulting capabilities, and enhancing its technology solutions offerings.
Key elements of the Company’s plan of operation include:
Expansion of Edge Data Center Platform
The Company, through Duos Edge AI, Inc., is actively deploying a network of modular Edge Data Centers (“EDCs”) designed to support localized computing, artificial intelligence workloads, and low-latency applications.
The Company’s EDC strategy is intended to support recurring revenue through hosting, colocation, and managed infrastructure services. The execution of this strategy requires capital investment, customer adoption, and operational execution, each of which is subject to risks, including those described in Item 1A. Risk Factors.
Expansion into Energy and Power Solutions
The Company expanded its operations into energy and power solutions through Duos Energy Corporation, which focuses on energy consulting, power infrastructure planning, and behind-the-meter (“BTM”) energy solutions.
The Company entered into an Asset Management Agreement (“AMA”) with New APR beginning in January 2025. In connection with this agreement, the Company also acquired a minority, non-voting equity interest in the ultimate parent of New APR.
Growth of Technology Solutions and Infrastructure Services
In 2025, the Company expanded its Technology Solutions business to provide infrastructure-related services supporting data center and digital infrastructure deployments.
These services include procurement, supply chain management, logistics coordination, and deployment support for infrastructure projects. The Company’s Technology Solutions platform is intended to complement its EDC strategy and provide additional revenue opportunities through both internal deployments and third-party customer engagements.
The Company believes that demand for integrated infrastructure solutions is increasing; however, the growth of this business is subject to supply chain conditions, vendor availability, and competitive factors.
Development of AI Technologies and Automation
The Company continues to invest in the development of proprietary artificial intelligence technologies, including computer vision, machine learning, and predictive analytics.
These technologies are being integrated across the Company’s platforms to enhance performance, enable automation, and support real-time data processing. The Company is also advancing AI-powered capabilities such as self-diagnostics, predictive maintenance, and system monitoring.
Transition to Recurring Revenue Models
The Company continues to transition certain offerings toward subscription-based and recurring revenue models. This includes expanding hosting services, software-based offerings, and long-term service agreements.
In connection with its inspection technologies, the Company has introduced more modular and flexible deployment options, allowing customers to select specific capabilities aligned with their operational requirements. This approach is intended to improve scalability and increase recurring revenue over time.
Legacy Technology Systems
The Company continues to support its legacy inspection systems and related technologies. While these systems continue to generate revenue, they are no longer the primary focus of the Company’s growth strategy.
The Company expects that over time, its legacy systems will represent a decreasing percentage of total revenues as newer infrastructure and service-based offerings expand.
The Company’s growth
strategy includes expansion of its technology base through organic development efforts, strategic partnerships, and targeted acquisitions
where appropriate. The Company provides a broad range of technology solutions with a primary emphasis on the Vision Technology market
sector, specifically within the Machine Vision subsector. Machine Vision companies provide imaging-based automatic inspection and analysis
for process control, with the potential for expansion into additional industries. Duos is currently developing industry solutions targeting
rail, trucking, aviation, and other vehicle-based processes while also expanding into the fast-growing Edge Data Center and power generation
markets.
The Company’s flagship
product, the Railcar Inspection Portal (RIP), enables freight and transit railroad customers and select government agencies to conduct
fully automated railcar inspections in real-time as trains move at full speed. The RIP integrates sophisticated optical, laser, and speed
sensors with edge computing and artificial intelligence (AI) algorithms to detect safety and security defects instantly, allowing operators
to take immediate action.
In 2024, the Company made
a strategic decision to leverage its core expertise in high-speed data processing and AI-driven analysis to expand into additional markets.
This resulted in the formation of two new subsidiaries:
The strategic expansion into
Edge Computing and power generation aligns with the Company's long-term vision to drive growth through diversified revenue streams while
leveraging its existing technology infrastructure and domain expertise.
The Company’s prospects are influenced by its ability to execute its strategic initiatives and by broader industry trends affecting digital infrastructure, artificial intelligence, and energy markets.
The Company’s primary objectives for 2026 and beyond include:
Scaling Edge Data Center Deployments
The Company intends to expand its network of Edge Data Centers to support increasing demand for distributed computing and AI workloads. These deployments are expected to target enterprise customers, telecommunications providers, and public sector organizations, particularly in underserved markets.
The Company believes that localized computing infrastructure will play an important role in supporting next-generation applications; however, adoption rates, capital availability, and competitive factors may impact growth.
Expansion of Energy and Power Solutions
The Company intends to build upon its initial energy and consulting activities, including the AMA with New APR, to expand its presence in the distributed energy and fast power markets.
The Company believes that increasing demand for power associated with data centers and AI infrastructure presents a significant opportunity; however, this market is subject to regulatory, operational, and competitive risks.
Growth of Technology Solutions Platform
The Company expects to further develop its Technology Solutions capabilities, including infrastructure procurement, logistics, and deployment services.
These offerings are intended to support both the Company’s internal infrastructure initiatives and third-party customer projects, providing additional revenue diversification.
Continued Development of AI and Automation Technologies
The Company plans to continue enhancing its AI capabilities to improve system performance, enable automation, and support advanced analytics across its platforms.
Forward-Looking Considerations
The Company believes that its diversified strategy, including digital infrastructure, energy solutions, and technology services, positions it to pursue growth opportunities in multiple markets.
However, the Company’s ability to achieve its objectives is subject to numerous risks and uncertainties, including:
The Company is focused on
improving operational and technical execution, which, in turn, will enable commercial expansion and new technology offerings. The primary
objectives for 2025 and beyond include:
Expansion into power
generation and energy solutions: The newly formed Duos Energy subsidiary is positioned to capitalize
on the increasing demand for behind-the-meter (BTM) energy solutions. The Company’s AMA with New APR, valued at approximately $42
million over two years, along with its 5% non-voting equity interest in the ultimate parent of New APR, establishes a strong foundation
for further market penetration in the fast power sector. This business expansion in conjunction with the revenue generated under the AMA
is expected to provide a significant portion of the Company’s revenues in 2025.
Expansion of the RIP
business model: The Company is shifting to a modular and subscription-based approach, allowing customers to select specific Acquisition
Modules suited to their operational needs. This transition provides flexible pricing structures, improves scalability, and enhances recurring
revenue streams through “RIP-as-a-Service.”
Deployment of AI-powered
self-diagnostics: Enhancing RIP systems with AI-driven self-diagnostics enables real-time monitoring, improved system uptime, and
predictive maintenance capabilities, reducing operational disruptions for customers.
Integration of Edge Data
Centers: The Company is actively deploying Edge Data Centers to enable faster, localized data processing, particularly in rural and
underserved markets. The first six sites are expected to become operational in the first half of 2025, with a further nine sites anticipated
for the second half of 2025. These initial Edge Data Centers are providing scalable solutions for enterprise and government clients.
Enhancements in artificial
intelligence and automation: The Company continues to refine its proprietary AI solutions, including computer vision, deep learning,
and predictive analytics, to improve inspection accuracy and operational efficiency across all product offerings.
Expansion into new vehicle
inspection markets: While the Company remains committed to its core rail technology solutions, it continues to explore applications
for scanning and inspecting other vehicle types, including trucks, buses, and aircraft. These markets offer potential growth opportunities
through partnerships with logistics providers, government agencies, and commercial transport operators.
In 2024, Duos entered a long-term
agreement with a major Class 1 railroad, securing data access from its RIPs and enabling new subscription-based services for over 3,000
railcar owners and lessors. This initiative is expected to open up significant new revenue streams while strengthening the Company's market
leadership.
The Company recognizes that
technology adoption within the rail industry can be a gradual process, requiring substantial capital investment from customers. To accelerate
adoption, Duos is focused on demonstrating clear ROI for its solutions, securing long-term service agreements, and pursuing partnerships
that enhance its value proposition. Additionally, investments in engineering and software development will ensure compliance with evolving
Federal Railroad Administration (FRA) and Association of American Railroad (AAR) standards, further positioning the Company for continued
success in the rail sector.
The decreases in technology systems revenues from $2,252,357 to $373,270 for the year ended December 31, 2025, compared to the year ended December 31, 2024, is primarily attributed to delays outside of the Company’s control with deployment of our two high-speed Railcar Inspection Portals, which are recorded in the technology systems portion of our business. Although these systems remain largely ready for deployment, customer delays at the deployment site continue to prevent installation even though these two high-speed Railcar Inspection Portals were deep into their production and manufacturing phases, which did not allow us to record the next phase of recognition. We believe that the customer is approaching the completion of the local site preparation and is preparing for field installation in 2026. The Company has begun recognizing its first revenues from the Technology Solutions business unit, which provides manufacturer-agnostic infrastructure sourcing, integration, and value-added supply chain services supporting data center, AI, and enterprise deployments identified as “Technology Solutions”. The significant increase in services revenue, related parties for the year ended December 31, 2025, was primarily driven by Duos Energy beginning to execute on the AMA with New APR that was established on December 31, 2024. Under the AMA, Duos Energy oversees the deployment and operations of a fleet of mobile gas turbines and related balance-of-plant inventory, providing management, sales, and operational support services to New APR. As a result, the Company generated $18,740,343 in revenue from the AMA during the year 2025. In addition, the Company recognized $3,616,500 in revenue from amortized deferred revenue liability associated with its 5% non-voting equity interest in the ultimate parent of New APR. Revenue from the AMA and the 5% interest is reported under “Services and consulting – related parties” on the statements of operations. Services revenue from the rail business decreased modestly during the year 2025.
The Company is now recording its first revenues from the deployment of Edge Data Centers and identified as “Hosting”. The $56,000 of revenues recorded in the year 2025 represent those received from the first data center which became “live” in the second quarter. The Company is investing capital in building out a network of these data centers all of which will begin generating revenue following deployment with the “anchor” tenant.
The Company expects services revenue from both its hosting and technology solutions to increase throughout 2026. This growth is expected to be driven by the deployment of additional edge data centers coming online, as well as expanding technology solutions revenue tied to growth in the data center market.
For the full year 2024, there was a 3% decrease
in overall revenues compared to 2023. The decrease in overall revenues is primarily attributed to delays outside of the
Company’s control with the deployment of our two high-speed Railcar Inspection Portals, which are recorded in the technology
systems portion of our business. Although these systems were largely ready for deployment in 2023, customer delays at the deployment
site prevented installation even though these two high-speed Railcar Inspection Portals were deep into their production and
manufacturing phases, which did not allow us to record the next phase of revenue recognition. The Company was able to contract an
equitable adjustment related to our two high-speed Railcar Inspection Portals project in 2024. This adjustment added $1.4 million to
the contract’s total value, with a substantial portion recognized in 2024. We believe that the customer is approaching the
completion of the local site preparation and is preparing for field installation in 2025. Additionally, the Company continues to see
opportunities for expansion of its programs with existing customers. In spite of the timing delays that continue to impact results,
management remains confident in the long-term potential of the RIP product.
For the full year 2024, there was a 31% increase in services and consulting
revenues compared to 2023. The increase in the services portion of our revenues stems from the addition of new AI and subscription customers
that were not present in for the full year in 2023, as well as increases in service contract revenue due to higher service contract prices.
We also generated $921,562 in services and consulting revenue from power consulting work, which was not present in 2023. The Company expects
growth with new revenue from existing customers, including services revenue as the result of new maintenance contracts being established
on installations coming on-line during 2025. The Company anticipates revenue growth from new and existing customers related to the subscription
offering starting in 2025, giving access to RIP data and images to a much broader target market including Class 1 railroads, railcar owners
and lessors, and short-line railroads. The Company also anticipates renewals of existing and backlog contracts and a shift to the next
generation of technology systems which are currently being manufactured and expect to be completed during early 2025. The Company also
expects new revenue growth in 2025 related to its 5% non-voting ownership equity interest in Sawgrass Parent, including revenue attributable
to the AMA.
While customer-driven delays in the installation of
our high-speed transit-focused Railcar Inspection Portals have impacted revenue growth timing year-over-year, the Company's capital structure
remains resilient, allowing us to pursue large projects despite unexpected delays. It should be noted that the Company recently increased
its working capital to account for an increase in pre-contract procurement activities to avoid a slowdown in revenues caused by delays
in receiving certain components as had been the case in previous years.
Overall, in 2024, the Company made significant strides
in advancing the procurement and manufacturing of its transit-focused RIPs. The Company also successfully grew its service contracts and
secured new agreements in AI, enhancing its AI portfolio. Additionally, the Company launched the Duos Edge AI and Duos Energy business
lines, which are expected to start contributing to the Company's success in 2025. Recurring revenue from services and consulting continues
to grow and is expected to contribute significantly to future revenue streams, bolstered by new long-term contracts with existing customers
expected to commence in the coming months.
Cost of revenues largely comprises equipment and labor necessary to support the implementation of new systems, support and maintenance of existing systems, software projects, and support of the asset management agreement with New APR.
During the year ended December 31, 2025, the cost of revenues on technology systems decreased compared to the equivalent period in 2024; however, the decrease was less significant than the corresponding drop in revenue due to fixed cost components that do not vary with revenue. This reduction primarily reflects our ability to reallocate certain fixed operating and servicing costs for technology systems to support the AMA, an allocation we could not make in the comparative period because the agreement was not yet in effect. It also reflects the ramp-down of manufacturing ahead of field installation of our two high-speed Railcar Inspection Portals, which has continued to temporarily slow project activity and further reduced cost of revenues while we await customer readiness for site deployment.
What changed in the latest 10-Q
Risk Factors
See the risk factors previously disclosed in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2026. In addition, GPU as a service presents new material risk factors for the Company. Revenue will be concentrated with a single customer; the Company bears the full risk of customer nonpayment, as the third-party operator, Hydra Host, does not guarantee customer credit performance. The Company will retain ownership of the GPU servers at the conclusion of the customer contract and is exposed to residual value risk related to changes in technology, pricing, and market demand.
We believe there are no other changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2026.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Second Quarter 2026 Financial Highlights”
New heading “Recent Developments – Divestiture of Duos Technologies, Inc.”
New heading “Comparison for the Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025”
New heading “Cost of Revenues”
New heading “Operating Expenses”
New heading “Income (Loss) from Operations”
New heading “Other Income (Expense)”
New heading “Net Income (Loss)”
Removed heading “Equity Method Investments”
Removed heading “Impairment of Intangible Assets”
Largest changes
“Due to the unavailability of Q1-2026 financials from Sawgrass Parent, our equity method investee, the Company has applied a one-quarter lag (in accordance with ASC 323-10-35-6) in reporting and recording the value of its 5% minority investment. The Company records its 5% interest using the Equity Method as we have significant influence. ASC 323-10-35-4 requires an entity to recognize its share of earnings or loss of an equity method investee which adjusts the carrying amount of the investment and is reflected as earnings or loss in income. …”see in full comparison
“Comparison for the Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025”see in full comparison
“Duos Edge AI is expanding its network of modular edge data centers and preparing its GPU-as-a-service operations, while Duos Technology Solutions is scaling its infrastructure sourcing, integration, and supply chain services. The Company expects these two businesses, together with related hosting and colocation services, to be the principal drivers of future revenue growth.”see in full comparison
“As per the guidance above, the subsequent recognition of the equity method investment should reflect the Company’s claim on net assets, determined by its rights to distributions and residual assets under the Agreement’s distribution waterfall. The Hypothetical Liquidation at Book Value (HLBV) method satisfies this requirement by simulating a hypothetical liquidation at each reporting period, allocating net assets based on the rights and priorities defined in the Agreement. …”see in full comparison
Full comparison: every changed paragraph (114)
This quarterly report on Form 10-Q and other
reports filed by Duos Technologies Group, Inc., and its operating subsidiaries, Duos Technologies,Edge Inc. (“Duos”), Duos Edge
AI, Inc. (“Edge”), Duos Technology
Solutions, Inc. (“Solutions”), and Duos Energy Corporation (“Energy”), andand, for periods prior to its divestiture
on August 5, 2026, Duos Technologies Solutions,Technologies, Inc. (“SolutionsDuos”)
(Duos Technologies Group, Inc., Duos, Edge, Energy,Solutions, andEnergy Solutions,and, as applicable,
Duos, collectively the “Company” “we”, “our”,
and “us”) from time to time with the Securities
and Exchange Commission (the “SEC”) contain or may contain forward-looking
statements and information that are based upon
beliefs of, and information currently available to, the Company’s management as well
as estimates and assumptions made by Company’s
management. Readers are cautioned not to place undue reliance on these forward-looking
statements, which are only predictions and speak
only as of the date hereof. When used in the filings, the words “anticipate,”
“believe,” “estimate,”
“expect,” “future,” “intend,” “plan,” “aim,”
“project,” “target,”
“will,” “may,” “should,” “forecast” or the
negative of these terms and similar expressions
as they relate to the Company or the Company’s management identify forward-looking
statements. Such statements typically address
the Company’s expected future business and financial performance and are subject to
risks, uncertainties, assumptions, and other
factors, including the risks contained in the “Risk Factors” section of the Company’s
Annual Report on Form 10-K for
the fiscal year ended December 31, 2025, relating to the Company’s industry, the Company’s
operations and results of operations,
and any businesses that the Company may acquire. Should one or more of these risks or uncertainties
materialize, or should the underlying
assumptions prove incorrect, actual results may differ materially from those anticipated, believed,
estimated, expected, intended, or
planned.
Second Quarter 2026 Financial Highlights
Recent Developments – Divestiture of Duos Technologies, Inc.
On August 5, 2026, subsequent to the end of the quarter, the Company completed the divestiture of its legacy rail technology subsidiary, Duos Technologies, Inc., through the transfer of all of its issued and outstanding shares to Sandbank Acosta, LLC, a related party (see Note 18 – Subsequent Events). The results of Duos Technologies, Inc. are reported as discontinued operations for all periods presented, and the discussion below is presented on a continuing operations basis unless otherwise noted. Following the divestiture, the Company’s operations are conducted through Duos Edge AI, Inc. and Duos Technology Solutions, Inc., focused on providing technology and colocation solutions for the rapidly growing data center market, with Duos Energy Corporation continuing to support the wind-down of the Asset Management Agreement with New APR.
During the first half of 2026, the Company completed a fundamental repositioning of its business around data center infrastructure and technology-enabled services. The Company divested its legacy rail technology business (completed August 5, 2026), discontinued further investment in and management of that business, wound down the Asset Management Agreement with New APR and realized the value of its related minority investment, and increased its emphasis on its two core growth platforms: Duos Edge AI, Inc. and Duos Technology Solutions, Inc.
During the first quarter of 2026, the
Company continued to transition its business toward a more diversified model centered on digital infrastructure, artificial intelligence,
and technology-enabled services. The Company’s operations are increasingly focused on expanding its edge computing platform, growing
its energy and consulting capabilities, and enhancing its technology solutions offerings.
Expansion into Energy and Power Solutions
Wind-Down of the Asset Management Agreement;
Energy Services Dormant The Company previously expanded its operationsinto
into energy and power solutions through Duos Energy Corporation, which focuses onprovided energy consulting, power infrastructure planning, and asset
behind-the-metermanagement (“BTM”) energy solutions.services.
The Company entered into an Asset Management Agreement ("AMA") with New APR beginning in January 2025 and, in connection with this agreement, also acquired a minority, non-voting equity interest in the ultimate parent of New APR. The AMA was amended after one year, with residual billings occurring in the first quarter of 2026, and the personnel supporting the AMA were transferred out of the Company, eliminating the related staffing expense. In the second quarter of 2026, substantially all of New APR’s assets were sold and the Company realized the value of its minority interest, receiving approximately $60 million, consisting of approximately $50.4 million in cash distributions and a $10.0 million holdback receivable (see Note 8). The Energy Services business is currently dormant; the power and energy infrastructure skills retained within the Company are being applied to its data center expansion initiatives, and the business could be reactivated if suitable opportunities arise.
The Company entered into an Asset Management Agreement
(“AMA”) with New APR beginning in January 2025. In connection with this agreement, the Company also acquired a minority, non-voting
equity interest in the ultimate parent of New APR. In 2026, the Company and New APR mutually agreed to reduce the scope of services under
the AMA, resulting in a corresponding decline in related party revenue and associated costs as part of streamlining operations and aligning
resources with its core strategic initiatives.
Increased Emphasis on Duos Edge AI and Technology Solutions
Following the divestiture of the rail technology business, the Company has discontinued investment in the proprietary machine vision and inspection technologies associated with that business, and its capital and management attention are concentrated on Duos Edge AI, Inc. and Duos Technology Solutions, Inc.
Duos Edge AI is expanding its network of modular edge data centers and preparing its GPU-as-a-service operations, while Duos Technology Solutions is scaling its infrastructure sourcing, integration, and supply chain services. The Company expects these two businesses, together with related hosting and colocation services, to be the principal drivers of future revenue growth.
Development of AI Technologies and Automation
The Company continues to invest in the
development of proprietary artificial intelligence technologies, including computer vision, machine learning, and predictive analytics.
These technologies are being integrated
across the Company’s platforms to enhance performance, enable automation, and support real-time data processing. The Company is
also advancing AI-powered capabilities such as self-diagnostics, predictive maintenance, and system monitoring.
The Company’s recurring revenue model is centered on multi-year hosting and colocation agreements at its edge data centers, GPU-as-a-service arrangements, and repeat order flow from Technology Solutions customers. This approach is intended to improve scalability and increase recurring revenue over time.
In connection with its inspection technologies,
the Company has introduced more modular and flexible deployment options, allowing customers to select specific capabilities aligned with
their operational requirements. This approach is intended to improve scalability and increase recurring revenue over time.
Divestiture of Legacy Rail Technology Systems
Business
The Company’s legacy rail technology business, conducted through Duos Technologies, Inc. and centered on the Railcar Inspection Portal, was divested effective August 5, 2026 (see Note 18). The results of this business are presented as discontinued operations for all periods presented in this report.
The results of the divested business are reported as discontinued operations for all periods presented. The Company has no continuing involvement in the rail technology business other than transitional services provided to the purchaser on a cost-reimbursement basis through December 31, 2026 and the promissory note received in connection with the divestiture (see Notes 3 and 18).
The Company’s legacy business,
which is the railcard inspection portal, has become less important to the Company’s future as we diversify our business strategy.
The Company expects that over time,
its legacy systems will represent a decreasing percentage of total revenues as newer infrastructure and service-based offerings expand.
The Company’s prospects are influenced by
its ability to execute its strategic initiatives and by broader industry trends affecting digital infrastructure,infrastructure and artificial intelligence,
including sustained demand for data center capacity and energythe markets.power required to support it.
As of MarchJune 31,30, 2026, the aggregate estimated cost
cost of these capital commitments was approximately $145 million, as of Marchwhich 31,approximately 2026$68.8 $35.42 Millionmillion has been deposited to secure the respective
respective GPUsGPU and Serverserver assets. The remaining commitments are expected to be funded through a combination of senior debt financing
and customer
prepayments. The Company willintends to secure senior debt financing to fund approximately 70% of its GPU infrastructure investments after
after approximately $43.5 million in funding has been provided to the GPU vendor. The debt willis expected to be secured by the underlying GPU server
assets and include customary covenants and reserve requirements. Interest rates may vary based on market conditions and the future customer
risk profile. In June 2026, the Company also agreed to acquire a data center facility in Columbus, Georgia for $30.0 million, consisting
of $15.0 million in cash and a $15.0 million secured seller note at 0% interest payable as additional power capacity of up to 15 MW is
delivered to the property in 5 MW increments. The purchase closed subsequent to quarter end, and the facility is being equipped to support
the operation of 2,304 NVIDIA B300 GPUs to be operated by Hydra Host for a third-party client (see Note 13 and Note 18).
Expansion of Energy and Power SolutionsCapabilities (Currently
Dormant)
Following the wind-down of the AMA and the realization of the Company’s investment in the ultimate parent of New APR, the Energy Services business is currently dormant. The Company has retained power and energy infrastructure expertise, which is currently being applied to its data center expansion initiatives, including the evaluation of power requirements for its edge data center deployments and the Columbus, Georgia facility.
The Company intends to build upon its
initial energy and consulting activities, including the AMA with New APR, to expand its presence in the distributed energy and fast power
markets.
The Company believes that increasing
demand for power associated with data centers and AI infrastructure presentscould apresent significantfuture opportunity;opportunities, however,and thisthe marketEnergy isServices business
could be reactivated if suitable opportunities arise. Any such opportunities would be subject
to regulatory, operational, and competitive
risks.
Concentration of Resources on Core Data Center Businesses
The Company’s investment and management resources are now concentrated on scaling Duos Edge AI’s edge data center network and GPU-as-a-service operations and growing the Technology Solutions business, which became the Company’s largest source of revenue from continuing operations during the second quarter of 2026.
Continued Development of AI and Automation
Technologies
The Company plans to continue enhancing
its AI capabilities to improve system performance, enable automation, and support advanced analytics across its platforms.
The Company believes that its diversifiedfocused
strategy,strategy including— digitalcentered infrastructure,on energyedge solutions,data centers, colocation, GPU-as-a-service, and technology services,solutions for the data center market —
positions it to pursue growth opportunities while retaining optionality in
multiple markets.adjacent areas such as energy services.
With its focus on edge
data centers, colocation, GPU-as-a-service and technology solutions for the diversification
intodata Edgecenter Computingmarket andfollowing powerthe generation,divestiture coupled with continued growth inof its corelegacy
rail machinetechnology visionbusiness, and AI-based inspection technologies,
the Company believes it is well-positioned to drive increased revenue, improve profitability, and generate long-term
shareholder value.
Comparison for the Three Months Ended MarchJune
31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025
The decrease in technology systems revenues to
$44,259 from $64,684 for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, is primarily attributed
to continued delays outside of the Company’s control with deployment of our two high-speed Railcar Inspection Portals, which are
recorded in the technology systems portion of our business. Although these systems remain largely ready for deployment, customer delays
at the deployment site continue to prevent installation even though these two high-speed Railcar Inspection Portals were deep into their
production and manufacturing phases, which did not allow us to record the next phase of recognition. We believe that the customer is approaching
the completion of the local site preparation and is preparing for field installation in 2026.
The Company began recognizing revenues from its
Technology Solutions business unit during the second half of 2025.2025 resulting in $3,231,544 of revenue for the three months ended June 30,
2026. The Technology Solutions business unit provides manufacturer-agnostic
infrastructure sourcing, integration, and value-added supply
chain services supporting data center, AI, and enterprise deployments. No
such revenues were recognized during the comparable prior-year
period.
The decrease in services and consulting revenue
from the rail business from $972,751 to $532,467 for the three months ended March 31, 2026, compared to the three months ended March 31,
2025, was primarily attributable to the cessation of revenue recognition related to the CN Digital Image Agreement.
The decrease in related-party services and consulting
revenue for the three months ended MarchJune 31,30, 2026 was primarily driven by Newthe APRcontinued beginningreduction to reducein the scope of services provided under
the Asset Management Agreement (“"AMA”") established on December 31, 2024.2024, and the sale by New APR of substantially all of its
assets in May 2026. Under the AMA, Duos Energy overseesoversaw the deployment
and operation of a fleet of mobile gas turbines and related balance-of-plant
inventory and providesprovided management, sales, and operational
support services to New APR. As a result, theThe Company generated $648,447$198,955 of revenue under
the AMA during the three months ended March
31,June 30, 2026, compared to $3,010,625$3,856,278 during the comparable 2025 period. In addition, following
the sale of substantially all of New APR’s assets, the Company recognized $904,125the remaining $2,712,375 of revenue during each
of the three months ended March 31, 2026 and 2025 related to the amortization of a deferred revenue liability associated
with the Company’s
non-cash consideration received for its 5% non-voting equity interest in the ultimate parent of New APR.APR, compared to $904,125
recognized during the comparable 2025 period. Revenue generated under the AMA and from the 5% interest is reported
within “"Services
and consulting – related parties”" in the statements of operations.
During the second quarter of 2025, the Company
began recognizing revenues from the deployment of Edge Data Centers, which are reported within the “"Hosting”" category. The Company
$30,275recognized $32,549 of Hosting revenue recognized during the three months ended MarchJune 31,30, 20262026, relatescompared to Edge Data Centers that became operational$8,000 during
the secondcomparable quarter2025 of 2025. period.
The Company continues to invest capital in expanding its network of Edge Data Centers, each of which is expected
to begin generating revenue
upon deployment and commencement of operations with its anchor tenant.
During the three months ended March 31, 2026,
cost of revenues related to technology systems decreased compared to the same period in 2025, primarily driven by a reduction in personnel-related
fixed costs. The decrease also reflects the continued ramp-down of manufacturing activities in advance of field installation of the Company’s
two high-speed Railcar Inspection Portals, which has temporarily slowed project activity and further reduced cost of revenues pending
customer readiness for site deployment.
Cost of revenues related to services and consulting
from the rail business decreased for the three months ended March 31, 2026, compared to the same period in 2025, primarily attributable
to the cessation of amortization expense recognized in connection with the CN Digital Image Agreement, which had previously been recorded
in cost of revenues, as well as lower personnel-related fixed costs.
Cost of revenues related to services and consulting
from related parties decreased significantly during the three months ended MarchJune 31,30, 2026, compared to the same period in the prior year.
The reduction was primarily driven by Newthe APR beginning to scale back thereduced scope of services provided under the AMA,AMA pursuant to which
Duos Energy managesand the deployment and operationswind-down of aAMA-related fleetactivities
following the sale of mobilesubstantially gasall turbines and related balance-of-plant inventory, including
management, sales, and operational support services forof New APR.APR’s assets in May 2026.
Consistent with the revenues generated from the
deployment of Edge Data Centers, reflected in the Hosting category, the Company has begun recognizing associated cost of goods sold, primarily
consisting of depreciation of the Edge Data Center pods and operating costs required to support the operation of the hosting infrastructure. NoSuch
such costs were recognizednot significant during the comparable prior-year period.period, as the Edge Data Center business was in the early stages of deployment
and operations.
Gross margin improved from 27%37.3% during the three
months ended MarchJune 31,30, 2025 to 59%55.8% during the same period in 2026, primarily due to the significantly reduced cost of revenues underassociated
with the AMA relatedand costs
impactingthe costgrowing contribution of goods sold within the Technology SystemsSolutions and Services and Consulting business lines.business. In addition, the Company recognized
$904,125 $2,712,375 of revenue
during each of the three months ended MarchJune 31, 2025 and30, 2026 related to its 5% non-voting equity interest in the
ultimate parent of New APR.APR, compared to
$904,125 in the comparable 2025 period. As this revenue had no associated cost of revenue, it contributed at a 100% gross margin.
During the three months ended MarchJune 31,30, 2026,
the Company experienced an increase in overalltotal operating expenses comparedfrom continuing operations increased to the$3,397,003 samefrom period$3,316,773 in 2025.the comparable 2025 period. Sales and
marketing expenses increased
as additional resources were deployed to support business development initiatives.for Researchthe Edge Data Center and developmentTechnology
Solutions expenses decreased to zero
due to scaled-back testing activities related to prospective technologies.businesses. General and administration expenses increaseddecreased by 99%. This
was due to multiple factors (1) the reduction of AMA related expenses, in 2026 there were approximately $187,0004%, requiredprimarily toreflecting be reclassed
to COGS compared to AMA related expenses of approximately $1.2 million which were reclassed to COGS in 2025. (2) Higherlower non-cash stock-based
compensation of approximately $1.3 millionexpense in the second quarter of 2026 due to some forfeitures of restricted stock, compared to approximatelythe $1comparative millionperiod in 2025. (3) Bonus expense of approximately $600,000
in 2026 compared to zero in 2025. Overall, the Company continues to focus on managing operating expenses while supporting the evolving
needs of its customers.
Income (Loss) from Operations
Income from operations from continuing operations was $49,093 for the three months ended June 30, 2026, compared to a loss from continuing operations of $1,540,182 for the same period in 2025. The decrease was primarily driven by the favorable impact of increased Technology Solutions revenue, accelerated recognition of the remaining AMA-related deferred revenue, and improved gross margins.
Loss from operations was $3,631,546 for the three
months ended March 31, 2026, compared to $1,789,628 for the same period in 2025. The increase in operating loss was primarily driven by
lower revenues during the quarter, resulting from the reduced scope of services provided under the Asset Management Agreement, as well
as higher operating expenses, including non-cash stock-based compensation expense related to restricted stock awards.
Other income, net for the three months ended June 30, 2026 was $53,590,497, compared to other expense, net of $(77,348) for the comparative period in 2025. Other income in 2026 was primarily driven by a gain on sale of investments of $53,173,803 recognized in connection with the sale of substantially all of New APR’s assets and the related distributions received on the Company’s ownership interest in Sawgrass Parent, as well as higher interest income of $413,490 compared to $10,629 for the comparative period in 2025, resulting from a significantly larger cash balance.
Other income(expense) for the three months ended
March 31, 2026 was $139,301 and ($290,035) for the comparative period in 2025. Other income in 2026 was primarily driven by higher interest
income resulting from a significantly larger cash balance compared to the prior period, as well as a $52,302 gain on the sale of investments
recognized during the first quarter of 2026, which did not occur in the comparable 2025 period and no interest expense in 2026 compared
to $322,577 in 2025.
Net Income (Loss)
Net income from continuing operations for the three months ended June 30, 2026 was $48,655,420, compared to net loss of $1,617,530 for the comparable period in 2025. Including the results of discontinued operations, consolidated net income for the three months ended June 30, 2026 was $47,844,430, compared to a consolidated net loss of $3,518,032 in 2025. The increase was primarily attributable to the $53.2 million gain on sale of investments described above. Basic net income per common share was $1.58 for the three months ended June 30, 2026, compared to a net loss per share of $(0.30) in 2025.
Comparison for the Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
The following table sets forth a summary of our unaudited Consolidated Statements of Operations and is used in the following discussions of our results of operations:
Revenues
The Company began recognizing revenues from its Technology Solutions business unit during the second half of 2025 resulting in $3,793,998 of revenue for the six months ended June 30, 2026. The Technology Solutions business unit provides manufacturer-agnostic infrastructure sourcing, integration, and value-added supply chain services supporting data center, AI, and enterprise deployments. No such revenues were recognized during the comparable prior-year period.
The decrease in related-party services and consulting revenue for the six months ended June 30, 2026 was primarily driven by the reduced scope of services provided under the AMA and the sale by New APR of substantially all of its assets in May 2026. The Company generated $847,402 of revenue under the AMA during the six months ended June 30, 2026, compared to $6,866,903 during the comparable 2025 period. In addition, the Company recognized $3,616,500 of revenue during the six months ended June 30, 2026 related to the deferred revenue associated with the Company’s 5% non-voting equity interest in the ultimate parent of New APR, including the accelerated recognition of the remaining balance following the sale of substantially all of New APR’s assets, compared to $1,808,250 during the comparable 2025 period. Revenue generated under the AMA and from the 5% interest is reported within "Services and consulting – related parties" in the statements of operations.
During the second quarter of 2025, the Company began recognizing revenues from the deployment of Edge Data Centers, which are reported within the "Hosting" category. The Company recognized $62,824 of Hosting revenue during the six months ended June 30, 2026, compared to $8,000 during the comparable 2025 period. The Company continues to invest capital in expanding its network of Edge Data Centers, each of which is expected to begin generating revenue upon deployment and commencement of operations with its anchor tenant.
DUOT insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 2 Form 4 filings (2 insiders, 2 trade dates, 15,014 shares, about $133.8K) and open-market sales in 0 filings. Net open-market shares: 15,014 (purchases minus sales); net value about $133.8K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-22 | Recker Frank Douglas |
Open-market purchase | 9,250 | $9.14 | $84.5K |
| 2026-09-18 | Nixon James Craig |
Open-market purchase | 2,857 | $8.50 | $24.3K |
| 2026-09-18 | Nixon James Craig |
Open-market purchase | 2,907 | $8.60 | $25.0K |
| 2026-06-30 | Ferry Charles Parker |
Grant/award | 2,074 | $12.06 | $25.0K |
| 2026-06-30 | Mavrommatis Ned |
Grant/award | 1,659 | $12.06 | $20.0K |
| 2026-06-30 | James Brian J. |
Grant/award | 2,074 | $12.06 | $25.0K |
| 2026-06-30 | Nixon James Craig |
Grant/award | 1,556 | $12.06 | $18.8K |
| 2026-06-30 | Lonegro Frank A |
Grant/award | 2,074 | $12.06 | $25.0K |
| 2026-06-30 | Goldfarb Adrian Graham |
Grant/award | 1,532 | $9.18 | $14.1K |
Well-known investors holding DUOT (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 287,200 | $3.4M | 0.0% | Added 9% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 206,412 | $2.5M | 0.0% | Added 32% |
| Millennium Management (Israel Englander) | 2026-06-30 | 345,454 | $2.4M | — | Sold out |
| D. E. Shaw & Co. | 2026-06-30 | 31,663 | $380.0K | 0.0% | New position |
| Two Sigma Investments | 2026-06-30 | 10,836 | $130.0K | 0.0% | New position |