Q2 2024 Duos Technologies Group Inc Earnings Call - Q&A

August 13, 2024

Operator: Ladies and gentlemen, thank you for your patience. The teleconference will begin in approximately two minutes. Transcription by ESO. Translation by — Edward Woo.

Unknown Executive: Ladies and gentlemen, thank you for your patience. The teleconference will begin in approximately two minutes.

Ladies and gentlemen, thank you for your patience to teleconference will begin in approximately two minutes.

[music].

Unknown Executive: Good afternoon. Welcome to Duos Technologies. Second quarter, 2024 earnings conference call.

Edward Woo: Edward Woo, Unknown Executive, Adrian Goldfarb, The American Heart Association The U.S. Department of Health and Human Services The American Heart Association The American Heart Association The American Heart Association We'll see you in the next video! Edward Woo, Unknown Executive, Adrian Goldfarb Charles Ferry, Duos Technologies Group, Hello, I'm Edward Woo. I'm Edward Woo, I'm Edward Woo, I'm Edward Woo. Unknown Executive, Adrian Goldfarb, Good afternoon.

Good afternoon, welcome to do those technologies second quarter 'twenty 'twenty four earnings conference call joining us for today's call are divorces CEO, Chuck Ferry and CFO Adrian Goldfarb following their remarks, we will open the call for your questions.

Unknown Executive: Joining us for today's call are Duos' CEO, Chuck Ferry, and CFO, Adrian Goldfarb. Following their remarks, we will open the call for your questions.

Unknown Executive: Then, before we conclude today's call, I'll provide the necessary questions regarding the forward-looking statements made by management during this call.

Then before we conclude today's call I'll provide the necessary cautions regarding the forward looking statements made by management. During this call now I would like to turn the call over to do Oh CEO Chuck Ferry Sir. Please go ahead.

Edward Woo: Welcome to Duos Technologies' second quarter 2024 earnings conference call. Joining us for today's call are Duos CEO Chuck Ferry and CFO Adrian Goldfarb. Following their remarks, we will open the call for your questions. Then, before we conclude today's call, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call. Now, I would like to turn the call over to Duos CEO Chuck Ferry. Sir, please go ahead.

Charles Ferry: Now, I would like to turn the call over to Duos' CEO, Chuck Ferry, so please go ahead. Welcome everyone, and thank you for joining us. We've just released our press release, as well as our 10-Q announcing our financial results for the second quarter, 2024, and other operational highlights. Office of both are available in the best-of-relations section of our website. I encourage all listeners to view that release and 10-Q filing with SEC to better understand some of the details we'll be discussing during today's call.

Charles Ferry: Welcome, everyone, and thank you for joining us. We've just released our press release as well as our 10Q announcing our financial results for the second quarter of 2024 and other operational highlights. Copies of both are available in the Investor Relations section of our website. I encourage all listeners to view that release and our 10-Q filing with the SEC to better understand some of the details we'll be discussing during today's call. In the last few earnings calls, I have articulated our strategy to diversify our growing technology business into areas where we have expertise and synergies with the intent to more rapidly increase our value and return on investment to our shareholders.

Chuck Ferry: Welcome everyone and thank you for joining us.

Speaker Change: <unk> released our press release as well as our 10-Q announcing our financial results for the second quarter 2024, and other operational highlights.

Speaker Change: Both are available on the investor.

Chuck Ferry: Relations section of our website.

Speaker Change: I encourage all listeners to view that release and 10-Q filing with the SEC to better understand some of the details will be discussing during today's call.

Charles Ferry: In the last few earnings calls, I have articulated our strategy to diversify our growing technology business into areas where we have expertise and synergies, with the intent to more rapidly increase our value and return on investment to our shareholders. On our call today, I'm going to report on those diversification efforts and what they will mean for us going forward. We are making steady progress with our rail car inspection for a business to include ongoing installation projects with Amtrak and the planning for a new rip installation at a large chemical manufacturer. As I have reported earlier, we now have an important agreement and partnership in place with one of our long-term Class One railroad customers, currently the largest user of our waste site technology.

Speaker Change: In the last few earnings calls I have articulated our strategy to diversify our drilling technology business.

Speaker Change: The areas, where we have expertise in synergies with the intent to more rapidly increase our value and return on investment to our shareholders.

Charles Ferry: On our call today, I'm going to report on those diversification efforts and what they will mean for us going forward. We are making steady progress with our rail car inspection portal business, including ongoing installation projects with Amtrak and the planning for a new RIP installation at a large chemical manufacturer. As I reported earlier, we now have an important agreement and partnership in place with one of our long-term class one railroad customers, currently the largest user of our wayside technology. The new agreement allows us to add subscribers to seven of our 13 portals, along with an 8th portal owned by a different customer.

Speaker Change: Our call today I'm going to report on those diversification efforts and what they will mean for us going forward.

Speaker Change: We are making steady progress with our railcar inspection pool of business to include ongoing installation projects with Amtrak and the planning for a new rep installation at a large chemical manufacturer.

Speaker Change: As I reported earlier, we now have an important agreement and partnership in place with one of our long term class one railroad customers currently the largest user of our wayside technology.

Charles Ferry: The new agreement allows us to add subscribers to 7 of our 13 portals, along with an 8 portal owned by a different customer. We'll talk more about the subscription offering later in the call. Our Edge Data Center business called Duos DJI has made fast progress commercially, given the high demand. And for Edge Computing Infrastructure. Our plans to have 4 Edge Data Centers installed in various locations in Texas this year are on schedule. And we expect recurring revenue from those data centers to begin in Q4. I just returned from a TD Calendar Data Center Investor Conference being held in Boulder, Colorado.

Speaker Change: New agreement allows us to add subscribers to seven of our 13 portals.

Speaker Change: Along with an eighth portal owned by a different customer will talk more about the subscription offering later in the call.

Charles Ferry: We'll talk more about this subscription offering later in the call. Our Edge Data Center business, called Duos Edge AI, has made fast progress commercially given the high demand for edge computing infrastructure. Our plans to have 4-Edge data centers installed in various locations in Texas this year are on schedule, and we expect recurring revenue from those data centers to begin in Q4. I just returned from a TD Cowen Data Center Investor Conference held in Boulder, Colorado.

Speaker Change: Our edge data center business called Duals edge AI has made fast progress commercially given the high demand for edge computing infrastructure.

Speaker Change: Our plans to have for edge data centers installed in various locations in Texas. This year are on schedule and we expect recurring revenue from those data centers to begin in Q4.

Speaker Change: Just returned from our TD Cowen Datacenter Investor Conference.

Charles Ferry: And I can tell you that there is excitement in this industry about our business and discussing it with potential customers, investors, and animals. Our pipeline of new orders is growing, and I expect to install at least 15 more edge data centers in FY 2025. I have previously spoken about the power industry experience that the Duos team and I have from our time at APR Energy. With our entry into the data center space, we are now getting requests to participate in and, in some cases, lead opportunities to install power and support data centers here in the United States.

Speaker Change: Being held in Boulder, Colorado, and I can tell you that there is excitement in this industry about our business along with discussing it with.

Charles Ferry: And I can tell you that there is excitement in this industry about our business and discussing it with potential customers, investors, and analysts. Our pipeline of new orders is growing, and I expect to install at least 15 more Edge Data Centers in FY 2025. I have previously spoken about the power industry experience that the Duos team and I have from our time at APR Energy. With our entry into the data center space, data center space, we are now getting requests to participate and, in some cases, lead opportunities to install power and supported data centers here in the United States.

Speaker Change: With potential customers investors and analysts.

Speaker Change: Our pipeline of new orders is growing and I expect to install at least 15 more edge data centers in FY 2020 five.

Speaker Change: I have previously spoken about the power industry experienced that the duals team and I have from our time at APR energy.

Speaker Change: With our entry into the data center space data Center space. We are now getting request to participate and in some cases lead opportunities to install power in support of data centers here in the United States.

Charles Ferry: Based on this rapidly growing demand, we have incorporated Duos Energy Corporation as a third subsidiary to Duos Technologies Group and already have a small pipeline of projects that could further accelerate our goal for more recurring revenue and profitability.

Speaker Change: Just on this rapidly growing demand we have incorporated Jewish Energy Corporation as a third subsidiary to do those technologies group and already have a small pipeline of projects that could further accelerate our growth our goal for more recurring revenue and profitability.

Charles Ferry: We'll discuss each line of business in more detail after the financial review.

Adrian Goldfarb: We'll discuss each line of business in more detail after the financial review. So at this time, I'll turn it over to Adrian to discuss our financial results. Thanks, Chuck.

Speaker Change: We'll discuss each line of business in more detail after the financial review. So at this time I'll turn it over to Adrian to cover our financial results.

Adrian Goldfarb: So, at this time, I'll turn it over to Adrian to cover our financial results. Thanks, Chuck. Following on from Chuck's introductory remarks, I would like to give a brief commentary on the recent operational highlights and my expectations just to how and when these will translate into revenue growth and, most importantly, profitability.

Adrian Goldfarb: Thanks Chuck.

Adrian Goldfarb: Following on from Chuck's introductory remarks, I would like to give a brief commentary on the recent operational highlights and my expectations as to how and when these will translate into revenue growth and, most importantly, profitability. Chuck mentioned the company is in the process of expanding into three distinct lines of business. Complex visualization with AI, as manifested in our legacy DuosTech business, the recently announced business of providing EDGE data centers and related operational services, and the brand new subsidiary, which will focus on power provision for data centers, both EDGE and Tradition. While these three divisions may, on the face of it, look as if they are not related.

Adrian Goldfarb: Following on from Chucks introductory remarks, I would like to give a brief commentary on our recent operational highlights and my expectations as to how and when these will translate into revenue growth and most importantly profitability.

Adrian Goldfarb: As Chuck mentioned, the company is in the process of expanding into three distinct lines of business. Complex visualization with AI has manifested in our legacy Duos Tech business. The recently announced business of providing edge data centers and related operational services, and the brand new subsidiary which will focus on power provisions for data centers, both edge and traditional. While these three divisions may, on the face of it, look as if they are not related, in fact, Duos and its management team and staff have extensive experience in all three domains.

Adrian Goldfarb: As Chuck mentioned the company is in the process of expanding into three distinct lines of business.

Adrian Goldfarb: Complex visualization with AI as manifested in our legacy domestic business the.

Adrian Goldfarb: The recently announced business of providing edge data centers and related operational services and the brand new subsidiary, which will focus on how provision for data centers, both edge and traditional.

Adrian Goldfarb: While these three divisions may on the face of it look as if they're not related in fact does and its management team and staff have extensive experience in all three domains.

Adrian Goldfarb: In fact, Duos and its management team and staff have extensive experience in all three domains. Chuck will address the three-year strategic plan for the company in his commentary following my discussion of the financials, but from my perspective, the transition plan is expected to be complete by the end of 2024 with a markedly improved financial position and guidance at the conclusion of the transition. During the last call, I stated that I believe that we are on the threshold of steadily improving results, and I believe we are seeing the first signs of this in our most recent quarterly results.

Adrian Goldfarb: Chuck will address the three-year strategic plans for the company in his commentary following my discussion of the financials. But from my perspective, the transition plan is expected to be complete by the end of 2024, with an expected, markedly improved financial position and guidance at the conclusion of the transition period. During the last call, I stated that I believe that we are on the threshold of steadily improving results, and I believe we are seeing the first lines of this in our most recent quarterly results. As such, we will detail out our plans for the remainder of 2024, and the indications are that a 70 plus million dollar investment in building a talented organization, intellectual property with highly defendable patents.

Adrian Goldfarb: Chuck will address the three year strategic plan for the company in his commentary following my discussion of the financials, but from my perspective. The transition plan is expected to be complete by the end of 2024 with unexpected markedly improved financial position and guidance.

Adrian Goldfarb: Conclusion of the transition period.

Speaker Change: During the last call I stated that I believe that we're on the threshold steadily improving results and I believe we are seeing the first signs of that.

Chuck Ferry: Our most recent quarterly results.

Adrian Goldfarb: Ursula Burns, Senior Financial Advisor, Valentine Ru, What's New in Virginia, intellectual property with highly defendable patents, and now access to new markets with key assets that the company owns or plans to own, will provide a solid foundation for the expected increasing recurring revenues. With that in mind, let us now look at the results for the second quarter and first half of 2024. During the second quarter, total revenue for the quarter decreased 15% to $1.51 million compared to $1.77 million in the second quarter of 2023.

As such we will detail out our plan for the remainder of 2024 and indications are that at 70 plus million dollar investment and building a talented organization intellectual property property with highly defensible patents.

Adrian Goldfarb: And now access to new markets with key assets for the company owns or plans to own will provide a solid foundation for the expected increasing recurring revenues.

Chuck Ferry: Now access to new markets. The key assets that the company owns or plans to all who will provide a solid foundation for the expected increasing recurring revenues.

Adrian Goldfarb: With that in mind, let us now look at the results for the second quarter and first half of 2024. During the second quarter, total revenue for the quarter decreased 15% to $1.51 million, compared to $1.77 million in the second quarter of 2023. Total revenue for Q22 2024 represents an aggregate of approximately 265,000 of technology systems revenue but more than $1.25 million in recurring services and consulting revenue, representing a 38% increase in this important metric. For the six months ended 2024, total revenue decreased 42% to 2.58 million from 4.41 million in the same period last year.

Adrian Goldfarb: Total revenue for Q2 2024 represents an aggregate of approximately $265,000 of technology systems revenue and more than $1.25 million in recurring services and consulting revenue, representing a 38% increase in this important metric for the six months ended 2020-24. Total revenue decreased 42% to $2.58 million from $4.41 million in the same period last year. Total revenue for the sixth month of 2024 represents an aggregate of approximately half a million dollars of technology systems revenue and approximately $2.05 million in recurring services and consulting revenue, which is also an increase in recurring revenues of $19.5 million.

Chuck Ferry: With that in mind, let us now look at the results for the second quarter and first half of 2024.

Chuck Ferry: During the second quarter total revenue for the quarter decreased 15% to $151 million compared to $1 $77 billion in the second quarter of two.

Chuck Ferry: 2023.

Chuck Ferry: Total revenue for Q2 2024 represents an aggregate of approximately 265000 of technology systems revenue.

Chuck Ferry: More than one point to $5 million in recurring services and consulting revenue.

Chuck Ferry: Presenting a 38% increase in this important metric.

Chuck Ferry: For the six months ended 2000 2024.

Chuck Ferry: Total revenue decreased 42% to 2.58 million from $4 4 million in the same period last year.

Adrian Goldfarb: Total revenue for the six months of 2024 represents an aggregate of approximately $1.5 million of technology systems revenue and approximately $2.05 million in recurring services and consulting revenue, which is also an increase in recurring revenues of 19%. Growth of the services portion of revenues was driven by successful completion and implementation of artificial intelligence detections, which represents services and support for those detections, as well as increases in service contract revenue to higher service contract prices. For both periods of small revenues in the technology systems area, it reflects the ongoing delays in revenue recognition for the Amtrak installation, who, as discussed previously, postponed delivery last year into Q4 this year.

Speaker Change: Total revenue for the six months of 2024 represents an aggregate of approximately a half million dollars technology systems revenue and approximately two point or $5 million in recurring services and consulting revenue, which is also an increase in recurring revenues.

Chuck Ferry: Right.

Adrian Goldfarb: Growth of the services portion of revenues was driven by the successful completion and implementation of artificial intelligence protection, which represents services and support for those detectives, as well as increases in service contract revenue. For more information, see here. Thank you for tuning in. We hope you have a great day. Bye.

Chuck Ferry: Growth of the services portion of revenues was driven by successful completion and implementation of artificial intelligence protections.

Speaker Change: Which represents services and support for those detection as.

Speaker Change: As well as increases in service contract revenue.

Speaker Change: Highest service contract pricing.

Adrian Goldfarb: For both periods, the small revenues in the technology systems area reflect the ongoing delays in revenue recognition for the Amtrak installation, which, as discussed previously, postponed delivery last year into Q4 of this year. I am pleased to report that although revenue was expected to be booked in Q4, the company has accelerated delivery of part of the system, and we expect to report an increase in these revenues in Q3. I should caution, however, due to the complex nature of this project at the site.

Speaker Change: For both periods small revenues in the technology systems area.

Speaker Change: Next the ongoing delay revenue recognition for the Amtrak installation, who as discussed previously postponed delivery last year into Q4 of this year.

Adrian Goldfarb: I'm pleased to report that, although revenue was expected in the books in Q4, the company has accelerated delivery of part of the system, and we expect to report an increase in these revenues in Q3. I should caution, however, that due to the complex nature of this project at the site, both the delays may be encountered, such that the project might not be complete until mid 2025. Also, revenues for the second quarter increase 13% to 1.73 million compared to 1.53 million for Q2 2023, and for the six months end of 2024, costs of revenue decreased 26% to 2.7 million from 3.64 million in the same period last year.

Speaker Change: I'm pleased to report that although revenue was expected to be booked in Q4.

Speaker Change: The company has accelerated delivery of part of the system and we expect to report an increase in these revenues in Q3.

Speaker Change: I should caution however that due to the complex nature of this project site.

Adrian Goldfarb: Further delays may be encountered, such that the project might not be complete until mid-2020. Cost of revenues for the second quarter increased 13% to $1.73 million compared to $1.53 million for Q2 2023, and for the six months ended 2024, cost of revenues decreased 26% to $2.7 million or $3.64 million in the same period last year. Both periods reflect certain cost increases related to project delivery, where we expect to record higher revenues in Q3, and to the effect of the new Class 1 subscription business startup.

Speaker Change: The delays may be encountered such that project might not be complete until mid 2025.

Speaker Change: Cost of revenues for the second quarter increased 13% to $1 seven 3 million compared to 1.53 million for Q2 2023 and for the six months ended 2024.

Speaker Change: Cost of revenue decreased 26% to $2 7 million or 364 million in the same period last year.

Adrian Goldfarb: Both periods reflect certain cost increases related to project delivery, where we expect to record higher revenues in Q3, and to the effect of the new Class One subscription business start-up cost. Gross margin for Q2 2024 decreased 189% to negative 215,000 compared to 241,000 for Q2 2023. And for the six months end of 2024, gross margin decreased 150% to negative 120,000 from 779,000 in the same period last year. For my previous comment, we're comparing the results between the two periods, the stage of completion for production and installation to be factored into these comparisons, and taking into account when analyzing the two periods.

Speaker Change: Both periods reflect certain cost increases related to project delivery, where we expect to record high revenues in Q3, and two the fact that the new class one subscription business start up costs.

Adrian Goldfarb: Gross margin for Q2 2024 decreased 189% to negative 215,000 compared to 241,000 for Q2 2023. And for the six months into 2024, gross margin decreased 115% to negative $120,000 from $779,000 for the same period last year. For my previous comment, we're comparing the results between the two periods. Stage of Completion for Production and Installation should be factored into these comparisons and taken into account when analyzing the two pairs.

Speaker Change: Gross margin for Q2, 2024 increased to 189% and negative 215000 compared to 241000 for Q2 2023.

And for the six months ended 2020 for gross margin decreased 115% to negative 120770 9000 in the same period last year.

Speaker Change: So in my previous comment when comparing the results between the two periods stages.

Speaker Change: Stage of completion for production and installation to be factored into these comparison.

Speaker Change: Taking into account when analyzing the two periods.

Adrian Goldfarb: Specifically, the decrease in gross margin was driven by the timing of business activity in Q2 2024, related to the manufacturing of two high-speed transit-focused rips for entry. Act. As previously mentioned, the temporary decline in technology revenues was not completely offset by related ongoing costs to support that revenue segment. Operating expenses for Q2 2024 decreased by 11 per cent to $3 million, compared to $3.39 million for Q2 2023, and for the six months ended 2024, operating expenses decreased 4% to 5.86 million from 6.07 million in the same period last year. Company implemented a number of expense reduction measures in late 2023, and the results of these measures are now being seen in the overall financial results.

Adrian Goldfarb: Specifically, the decrease in gross margin was driven by the timing of business activity in Q2 2024 related to the manufacturing of two high-speed transit-focused RIFs for Amtrak. As previously mentioned, the temporary decline in technology revenues was not completely offset by related ongoing costs to support that revenue. Operating expenses for Q2 2024 decreased by 11% to $3 million, compared with $3.39 million for Q2 2023. For six months ended 2024, operating expenses decreased 4%, to 5.86 million from 6.07 million in the same period last year.

Speaker Change: Specifically the decrease in gross margin was driven by the timing of business activity in Q2, 2020 or related to the manufacturing of two high speed transit focused ribs or.

Speaker Change: On track.

Speaker Change: Previously mentioned the temporary decline in technology revenues was not completely offset by related ongoing cost to support that revenue segment.

Speaker Change: Operating expenses for Q2, 2024 decreased by 11% to $3 million compared to $3 three 9 million for Q2 2023.

Speaker Change: Six months ended 2020 for operating expenses decreased 4% 5.86 million from 6.07 million in the same period last year.

Adrian Goldfarb: The company implemented a number of expense reduction measures in late 2020, and the results of these measures are now being seen in the overall financial assessment. The decreases being recorded are related to targeted costs in some developments and more specifically administrative costs that are offset with continued investment in sales resources as the company continues to build the commercial resources necessary to address the expansion into new markets. The expense cuts have been precise to reduce investment in certain areas where certain activities are now complete, but we continue to invest in the technology that has delivered the wide-ranging patent for the RIP and associated ARS.

Speaker Change: <unk> implemented a number of expense reduction measures in late 2023, and the results of these measures are now being seen in the overall financial results.

Adrian Goldfarb: The decreases being recorded are related to targeted costs in some development, and more specifically administrative costs, but are offset with continued investment in sales resources. The company continues to build the commercial resources necessary to address expansion into new market. The expense cuts have been precise to reduce investment in certain areas where certain activities are now complete, but we continue to invest in the technology that has delivered the wide-ranging patent for the RIP and associated AI. We continue to anticipate that operating expenses will remain stable throughout the remainder of 2024, but we have taken additional actions in Q3 to further improve efficiency and align our staffing to address both the new and existing business areas so as not to impact the expected growth and revenue.

Speaker Change: The decrease is being recorded a related to targeted cuts and some development and more specifically administrative costs.

Speaker Change: Offset with continued investment in sales resources as the company continues to build the commercial resources.

Speaker Change: To address the expansion into new market.

Speaker Change: The expense cuts have been precise to reduce investments in certain areas, where certain activities are now complete but we continue to invest in the technology that has delivered the wide ranging patent for the rip and associated payout.

Adrian Goldfarb: We continue to anticipate that operating expenses will remain stable throughout the remainder of 2024, but we have taken additional actions in Q3 to further improve efficiency and align our staffing to address both the new and existing business areas so as not to impact the expected growth. Net operating loss for Q2 2024 totaled $3.22 million compared to a net operating loss of $3.15 million for Q2 2023, and for the six months ended 2024, net operating loss totaled $5.98 million compared to a net operating loss of $5.30 million in the same period last year.

Speaker Change: We continue to anticipate that operating expenses will remain stable throughout the remainder of 2024.

Speaker Change: We have taken additional actions in Q3 to further improve efficiency and align our staffing to address the address both the new and existing business areas. So as not to impact the expected growth in revenue.

Adrian Goldfarb: Net operating loss for Q2 2024, total 3.22 million compared to net operating loss of 3.15 million for Q2 2023, and for the six months ended 2024, net operating loss total 5.98 million compared to a net operating loss of 5.30 million in the same period last year. Although operating losses were higher than the comparative quarter a year ago, the increase was proportionally less than the relative decrease in revenues and gross margin. The increase in loss from operations was primarily the result of lower revenues recorded in the first and second quarters as a consequence of the delays previously noted, offset by continued increases in services and consulting revenues.

Speaker Change: Net operating loss for Q2, 2024 totaled $3 2 million compared to net operating loss of $3. One 5 million for Q2 2023.

Speaker Change: And for the six months ended 2024 net operating loss totaled $5 nine 8 million compared to a net operating loss of $5 3 million in the same period last year.

Speaker Change: Although operating losses were higher than the comparator quarter, a year ago. The increase was proportionately that's the relative decrease in revenues and gross margin.

Speaker Change: The increase in loss from operations was primarily the result, lower revenues recorded in first and second quarters as a consequence of the delays previously noted offset by continued increases in services and consulting revenue.

Adrian Goldfarb: Net loss for the second quarter was 3.2 million or negative 43 cents per share, compared to a net loss of 2.9 million or negative 42 cents per share for Q2 2023, with the 7% increase being lower proportionally than might have been expected with the decrease in overall revenues. For the six months ended 2024, net loss total 5.96 million or negative 81 cents per share, compared to a net loss of 5.13 million or negative 72 cents per share in the same period last year. The increase in net loss was a trivial due to the increase in revenues, as previously noted above, partially offset by the increase in services and consulting revenue and a decrease in operating expenses.

Adrian Goldfarb: The net loss for the second quarter was $3.2 million or negative $0.43 per share compared to a net loss of $2.9 million or negative $0.42 per share for Q2 2023, with a 7% increase being lower proportionally than might have been expected with a decrease in overall revenue. For the 6 months ended 2024, the net loss totaled $5.96 million, or negative $0.81 per share, compared to a net loss of $5.13 million, or negative $0.72 per share, in the same period last year. The increase in net loss was attributable to the decrease in revenues, as previously noted above, partially offset by the increase in services and consulting revenue and a decrease in operating costs.

Speaker Change: Net loss for the second quarter was $3 2 million or <unk> 43, or negative <unk> 43 per share.

Speaker Change: To a net loss of $2 9 million or negative <unk> 42 cents a share for Q2 2023, with a 7% increase being low proportionately than might have been expected with a decrease in overall revenues.

Speaker Change: For the six months ended 2024 net loss totaled $5 96 million or negative <unk> 81 per share compared to a net loss of 5.13 million or negative 72 cents per share in the same period last year.

Speaker Change: The increase in net loss was attributable to the decrease in revenues as previously noted above partially offset by the increase in services and consulting revenue and a decrease in operating expense.

Adrian Goldfarb: We took our to the balance sheet. At June 30, 2024, cash and cash grievance was approximately half a million dollars compared to 2.44 million at December 31, 2023. In addition, the company had over 1.27 million receivables and contract assets for a total of approximately 1.77 million cash and expected short term lists. and liquidity. Duos also has more than $1 million in inventory as of June 30, 2024, consisting primarily of long-lead items for future lift installation that are expected to be deployed this year and 2025. There has been a large increase in other assets, notably the recording of a $10.7 million intangible asset, which represents the estimated fair value of 5 years of data to support the recently signed long-term services and data sharing agreement, executed with a previously mentioned class one customer, or the provision of subscription services.

Speaker Change: With regard to the balance sheet at June 32024, cash cash equivalents was approximately $5 million compared to 2.44 million at December 31 2023.

Adrian Goldfarb: We do go out to the ballot. June 30, 2024. Cash and cash equivalents were approximately a half a million dollars, compared to $2.44 million at December 31, 2000.

Adrian Goldfarb: In addition, the company had over 1.27 million receivables and contract assets, for a total of approximately $1.77 billion in cash and expected short-term liquidity. Duos also had more than $1 million in inventory as of June 30, 2024. Consisting primarily of long-lead items for future RIP installations that are expected to be deployed this year and 2022, there has been a large increase in other assets, notably the recording of a $10.7 million intangible asset which represents the estimated fair value of five years of data to support the recently signed Long-Term Services and Data Sharing Agreement executed with the previously mentioned Class I customers for the provision of Subscription 7.

Speaker Change: In addition, the company had over one point to $7 million receivables and contract assets.

Speaker Change: So a total of approximately $1 77 billion in cash unexpected short term liquidity.

Speaker Change: It was also has more than $1 million inventory as of June 32024, consisting primarily of long lead items for future Rip installations that are expected to be deployed this year and 2025.

There has been a large increase in other assets, notably the recording of a $10 7 million intangible asset, which represents the estimated fair value of five years of data to support the recently signed long term services and data sharing agreement executed with the previously mentioned class one customer for the provision of some.

Speaker Change: Coaching services.

Adrian Goldfarb: Total current liabilities are 5.81 million versus 3.25 million at December 31, 2023. 2.2 million of this increase is non-tash and related to the data services agreement. Long-term contract liabilities have increased by $8.5 million, reflecting the non-current portion of this agreement. My overall comment on the balance sheet is that it remains stable and anticipation of the expected growth in the business in the second half of the year.

Adrian Goldfarb: Total current liabilities of $5.81 million versus $3.25 million as of December 31, 2020. $2.2 million of this increase is non-cash and related to the data services agreement. Long-term contract liabilities have increased by $8.5 million, reflecting the non-current portion of this agreement. My overall comment on the balance sheet is that it remains stable in anticipation of the expected growth in the business in the second half of the year. Turning to the back.

Speaker Change: Total current liabilities of $5 eight 1 million versus $3, two 5 million as of December 30, 31 2023.

Speaker Change: $2 2 million of this increase is noncash related to the data services agreement.

Speaker Change: Long term contract liabilities have increased by $8 $5 million.

Speaker Change: <unk> the non current portion of this agreement.

Speaker Change: My overall comment on the balance sheet is that remained stable in anticipation of the expected growth in the business in the second half of the year.

Adrian Goldfarb: Turning to backlog, at the end of the second quarter, the company's contracts in backlog and near-term renewals and extensions are now more than $19.6 million, for which approximately $6.9 million is expected to be recognized as revenue during the remainder of 2024. The balance of contract backlog comprises multi-year service and software agreements, as well as project revenues. Should be noted that $10.7 million of the revenue backlog is for data access to support the new subscription business, and is accounted for as a non-malletry exchange that resulted from an amendment to a massive material and service purchase agreement with a Class 1 railroad.

Speaker Change: Turning to backlog.

Adrian Goldfarb: At the end of the second quarter, the company's contracts and backlogs and near-term renewals and extensions are now more than $19.6 million, of which approximately $6.9 million is expected to be recognized as revenue during the remainder of 2020. The balance of the contract backlog comprises multi-year service and software agreements as well as project revenue. It should be noted that $10.7 million of the revenue backlog is for data access to support the new subscription, a non-monetary exchange that resulted from an amendment to a master material and service purchase agreement. Agreement with a Class 1 Rail. Before turning the call back to Chuck, I would like to address the subject of guys.

Speaker Change: We ended the second quarter, the Companys contracted backlog and near term renewals and extensions are now more than $19 6 million.

Speaker Change: But which approximately $6 $9 million.

Expected to be recognized as revenue during the remainder of 2024.

Speaker Change: About the contract backlog comprises multi year services and software agreements as well as project revenues.

Speaker Change: It should be noted that $10 $7 million of the revenue backlog is for data access to support that use subscription.

Speaker Change: And is accounted for as a nonmonetary exchange that resulted from an amendment to a massive material service purchase agreement with a class one railroad.

Speaker Change: Before turning the call back to Chuck I would like to address the subject of guidance.

Adrian Goldfarb: As we've discussed previously, we have experienced some difficulty getting accurate guidance within the time frame of a fiscal year because of delays and uncertainties in our current market. How will we believe the current analysts' expectations for annual revenues this year represent a reasonable estimate? Chuck will be addressing the transition into new markets, including our growing recurring revenue initiatives such as AI and subscriptions, for which we have already announced some successes. As we transition another few months, my expectation is that we will be able to formally reintroduce, This concludes my financial commentary, and I will now pass the call back. Thank you, Adrian.

Speaker Change: As we've discussed previously we have experienced some difficulty getting accurate guidance within the timeframe of the fiscal year.

Speaker Change: Due to the delays and uncertainties in our current market space.

Adrian Goldfarb: How will we believe the current analyst expectations for annual revenues this year represent a reasonable estimate at this time? Chuck will be addressing the transition into new markets, including our growing recurring revenue initiatives such as AI and subscriptions, for which we have already announced some success this year.

Speaker Change: Although we believe the current analyst expectations of annual revenue this year represent a reasonable estimate at this time.

Speaker Change: Chuck will be addressing that transitioned into new markets, including a growing recurring revenue initiatives, such as AI and subscriptions.

Which we have already announced some success this year.

Adrian Goldfarb: As we transition another few months, my expectation is that we will be able to formally reintroduce guys.

Speaker Change: As we transition to another few months my expectation is that we'll be able to formally reintroduce guidance.

Adrian Goldfarb: This concludes my financial commentary, and I will now pass the call back to Chuck. Thank you, Adrian.

Speaker Change: This concludes my financial commentary and I will now pass the call back to Chuck.

Chuck Ferry: Thank you Adrian.

Charles Ferry: Let's talk first about our rail car inspection portal business, and more specifically about the subscription offering. On May 17, 2024, Duos and our largest Class 1 customer executed a five-year machine vision AI subscription partnership agreement. Much of the expansion on our balance sheet, the Adrian discusses the result of this agreement. This is the first machine vision AI rail safety partnership agreement in North America. The agreement authorizes Duos to offer shippers and rail car owners, transiting the Class 1 network, the opportunity to subscribe, the waste side machine vision AI safety technology. While Duos is the inventor of the rail car inspection portal, and holder of 10 active U.S.

Charles Ferry: Let's talk first about our railcar inspection portal business and more specifically about the subscription offer. On May 17, 2024, Duos and our largest class one customer executed a five-year machine vision AI subscription partnership agreement. Much of the expansion on our balance sheet that Adrian discussed as a result of this, This is the first machine vision AI rail safety partnership agreement in North America. The agreement authorizes Duos to offer shippers and real car owners transiting the Class 1 network the opportunity to subscribe to Wayside Machine Vision AI safety technology.

Chuck Ferry: Let's talk first about our railcar inspection portal business and more specifically about the subscription offering.

On may 17th 2020 for duo and our largest class one customer executed a five year machine vision AI subscription partnership agreement.

Chuck Ferry: Much of the expansion of our balance sheet. The Adrian discussed as a result of this agreement.

Chuck Ferry: This is the first machine vision AI rail safety partnership agreement in North America.

Unknown Executive: Ladies and gentlemen, thank you for your patience. The teleconference will begin in approximately two minutes. Good afternoon.

Speaker Change: Cremant authorizes do else to offer shippers and railcar owners transiting the class one network the opportunity to subscribe.

Speaker Change: <unk> Sighed machine vision AI safety technology.

Charles Ferry: While Duos is the inventor of the rail Car Inspection Portal and holder of 10 active U.S. patents for this innovative wayside defect detection solution, our Class 1 customer is leading the rail Industry in the deployment of machine vision AI wayside detection technology with seven portals in the United States and Canada. More importantly, our Class 1 customer has fully integrated the portals into their mechanical inspection operations. Mechanical Carmen from the class ones that I have talked to say that they are getting great results using the tool and have provided good feedback that we've used to improve the system over time. Going forward, Duos and our Class 1 customer will emphasize standardizing machine vision AI safety technology, so the data can be easily exchanged through a subscription service with other Class 1s, regional carriers, passenger railroads, and first responders.

Speaker Change: While <unk> is the inventor of the railcar inspection portal and holder of 10 active U S patents for this innovative wayside defect detection solution.

Charles Ferry: patents for this innovative waste side defect detection solution, our Class 1 customer is leading the rail industry into the deployment of machine vision AI waste side detection technology with seven portals in the United States and of that. More importantly, our classroom customer has fully integrated the portals into their mechanical inspection operations. Mechanical Carmen, from the class ones that I have talked to you, say that they are getting great results using the tool and have provided good feedback that we've used to improve the system over time. Going forward, Duos and our classroom customer will emphasize standardizing machine vision AI safety technology, so the data can be easily exchanged through a subscription service with other class ones, regional carriers, passenger railroads, and first responders.

Speaker Change: Our class one customer is leading the rail industry in the deployment of machine vision AI wayside detection technology with seven portals in the United States and Canada.

Speaker Change: More importantly, our class one customer has fully integrated the portals into other mechanical inspection operations.

Speaker Change: Canticle Carmen from the class ones that I've talked to say that they are getting great results using the tool and they provide a good feedback that we've used to improve the system over time.

Speaker Change: Going forward duo center classroom customer will emphasize standardizing machine vision AI safety technology.

Speaker Change: So the data can be easily exchange to sit through a subscription service with other class ones regional carriers passenger railroads and first responders.

Charles Ferry: A real car inspection portal technology can be integrated into railroads, public safety, and asset management data systems, with the ability to identify FRA and critical safety appliance defects and communicate alerts to train crews, train dispatchers, railroad operation centers, and first responders in real time. Visual documentation of the train, rail car location within the train, car initial and number, placard, and defects are all presented within 60 seconds of image capture. Currently, we have two subscribers that have been using the system effectively for many months now: Amtrak and another large rail car fleet operator. We are in discussions with another 20 potential subscribers, which includes car owners, shippers, shortlines, passenger rail, and other Class Ones.

Charles Ferry: Our rail Car Inspection Portal technology can be integrated into railroad, public safety, and asset management data systems with the ability to identify FRA and critical safety appliance defects and communicate alerts to train crews, train dispatchers, railroad operation centers, and first responders in real time. Visual documentation of the train, rail Car location within the train, car initial and number, placard, and defects are all presented within 60 seconds of image capture.

Speaker Change: Our railcar inspection portal technology can be integrated into railroad public safety and asset management data systems with the ability to identify MRA and critical safety of plants defects and communicate alerts to train crews train dispatchers railroad operation centers and first responders in real time.

Speaker Change: Visual documentation of the train railcar location within the train car initial number placard in defects are all presented within 60 seconds of image capture.

Charles Ferry: Currently, we have two subscribers that have been using the system effectively for many months now, Amtrak and another large rail car fleet operator. We are in discussions with another 20 potential subscribers, which include car owners, shippers, short lines, passenger rail, and other class ones. We will continue our efforts to expand and improve the subscription offering and keep you updated. Our Edge Data Center business, led by data center industry veteran Doug Recker, is completing contract discussions that have effectively sold out our first three Edge Data Centers destined to protect them. A fourth-edge data center is close to being sold out as well.

Speaker Change: Currently we have two subscribers that have been using this system effectively for many months now Amtrak and another large railcar fleet operator, we are in discussions with another 20 potential subscribers.

Speaker Change: Which includes car owners shippers short lines passenger rail and other class ones. We'll continue our efforts to expand that prove out the subscription offering and keep you updated.

Charles Ferry: We'll continue to do our efforts to expand and prove out the subscription offering, and keep you updated.

Unknown Executive: Welcome to Duos Technologies. Second quarter, 2024 earnings conference call. Joining us for today's call are Duos' CEO Chuck Ferry and CFO Adrian Goldfarb. Following their remarks, we will open the call for your questions.

Charles Ferry: Our Edge Data Center business, led by data center industry veteran Doug Recker, is completing contract discussions that have effectively sold out our first three Edge Data Centers, Destin, and Prot Texas. A fourth Edge Data Center is closely being sold out as well. Land leases are in the process of being secured, and our in-house project management team has begun the site survey work, permit requests, and logistical planning to execute installations began in September with the expectation of revenue starting this in October. These Edge Data Centers allow for high-speed connectivity, low data latency, and high reliability that has not ordinarily been available in smaller and rural markets.

Speaker Change: Our edge data center business led by data center industry veteran Doug record is completing contract discussions that are effectively sold out our first three edge data centers destined for Texas.

Unknown Executive: Then, before we conclude today's call, I'll provide the necessary questions regarding the forward-looking statements made by management during this call.

Speaker Change: Our fourth edge data center is close to being sold out as well.

Charles Ferry: Land leases are in the process of being secured, and our in-house project management team has begun the site survey work, permit requests, and logistical planning to execute installations beginning this September with the expectation of revenue starting this October. These edge data centers allow for high-speed connectivity, low data latency, and high reliability that has not ordinarily been available in smaller and rural markets. Those who will greatly benefit our schools, hospitals, first responders, along with large farms and oil and gas operators in that region.

Leases are in the process of being secured and our in House project management team has begun the site survey work permit requests and logistical planning to execute installations beginning of September with the expectation of revenue starting this October.

Charles Ferry: Now, I would like to turn the call over to Duos' CEO Chuck Ferry, so please go ahead. Welcome everyone, and thank you for joining us. We've just released our press release, as well as our 10Q announcing our financial results for the second quarter, 2024, and other operational highlights.

Speaker Change: These edge data centers allow for high speed connectivity low data latency and high reliability that is not ordinarily been available and smaller in world markets.

Charles Ferry: Office of both are available in the best-of-relations section of our website. I encourage all listeners to view that release and 10Q filing with SEC to better understand some of the details we'll be discussing during today's call. In the last few earnings calls, I have articulated our strategy to diversify our growing technology business into areas where we have expertise and synergies with the intent to more rapidly increase our value and return on investment to our shareholders.

Charles Ferry: Those who will greatly benefit our schools, hospitals, first responders, along with large farms and oil and gas operators in that region. Local leaders we are planning with, the installations are very excited, and removing all obstacles to gain access to better connectivity for their communities. Our pipeline of new orders is growing, and I expect you will install at least 15 more Edge Data Centers in FY 2025, and accelerate that if possible to meet the demand.

Speaker Change: Those who will greatly benefit our schools hospitals first responders, along with large farms and oil and gas operators in that region.

Charles Ferry: Local leaders we're planning to work with on the installations are very excited, and we're moving all obstacles to gain access to better connectivity for their community. Our pipeline of new orders is growing, and I expect to install at least 15 more edge data centers in FY 2025 and accelerate that if possible to meet the demand. We have launched a new website specific to this business where you can learn more about how this all works at duosedge.ai.

Speaker Change: Local leaders were planning with the installations are very excited and removing all obstacles to gain access to better connectivity for their communities.

Speaker Change: Our pipeline of new orders is growing and I expect to install at least 15 more edge data centers in FY, 2025, and accelerate that or possible to meet the demand.

Charles Ferry: On our call today, I'm going to report on those diversification efforts and what they will mean for us going forward. We are making steady progress with our rail car inspection for a business to include ongoing installation projects with Amtrak and the planning for a new rip installation at a large chemical manufacturer. As I have reported earlier, we now have an important agreement and partnership in place with one of our long-term class one railroad customers currently the largest user of our waste site technology.

Charles Ferry: We have launched a new website specific to this business, where you can learn more about how this all works at duosedge.ai.

Speaker Change: We have launched a new web site specific to this business, where you can learn more about how this all works at <unk> Dot AI.

Charles Ferry: Let's talk about our new power business and what is driving it. The demand for more computing with 5G and AI is created a Data Center boom, and that has also created a power shortage to meet that demand. Accelerating data center load growth is driving long lead times of three to seven years to procure sufficient utility power for new hyperscale data centers across the U.S., according to analysts from PD Calon. I have previously spoken about the power industry experience that duosedge that the duosedge team and I have from our time at APR Energy. From 2016 to 2020, about 15 members of my current duosedge team and I installed more than one gigawatt of power.

Charles Ferry: Let's talk about our new power business and what is driving it. The demand for more computing with 5G and AI has created a data center boom, and that has also created a power shortage to meet that demand. Accelerating data center load growth is driving long lead times of three to seven years to procure sufficient utility power for new hyperscale data centers across the U.S., according to analysts from P.D. Callan.

Speaker Change: Let's talk about our new power business and what is driving it.

Speaker Change: The demand for more computing with five G&A AI has created a datacenter boom.

Speaker Change: And that has also created a power shortage to meet that demand.

Speaker Change: Accelerating data center load growth is driving long leader long lead times are three to seven years.

Charles Ferry: The new agreement allows us to add subscribers to 7 of our 13 portals along with an 8 portal owned by a different customer. We'll talk more about the subscription offering later in the call. Our Edge Data Center business called Duos DJI has made fast progress commercially given the high demand. And for Edge Computing Infrastructure. Our plans to have 4 Edge Data Centers installed in various locations in Texas this year are on schedule.

Speaker Change: To procure sufficient utility power, new hyperscale data centers across the U S. According to analysts from PD Cowen.

Charles Ferry: I have previously spoken about the power industry experience that the Duos team and I have from our time at APR Energy. From 2016 to 2020, about 15 members of my current Duos team and I installed more than one gigawatt of power. During one period of intense demand in the fall of 2017, our team installed two power plants in South Australia, two power plants in Puerto Rico following Hurricane Maria, and one more power plant in Mexico following an earthquake. All five plants were installed near simultaneously in less than 120 days.

Speaker Change: Previously spoken about the power industry experience that do that do that the duals team and I have from our time at APR energy from.

Speaker Change: From 2016 to 2020 about 15 members of my current deals team and I installed more than one gigawatt of power during.

Charles Ferry: During one period of intense demand in the fall of 2017, our team installed two power plants in South Australia, two power plants in Puerto Rico following Hurricane Maria, and one more power plant in Mexico following an earthquake. All five plants were installed near simultaneous in less than 120 days. with our entry into the data center space. We are now receiving requests to participate and, in some cases, lead opportunities to install power and support of data centers here in the United States. Based on this growing demand, we have incorporated Duos Energy Corporation as a third subsidiary to our Duos Technology family and already have a small pipeline of projects and supported data centers that could further accelerate our plan for more recurring revenue and profitability.

Speaker Change: During one period of intense demand in the fall of 2017.

Charles Ferry: And we expect recurring revenue from those data centers to begin in Q4. I just returned from a TD calendar data center investor conference being held in Boulder, Colorado. And I can tell you that there is excitement in this industry about our business and discussing it with potential customers, investors and analysts. Our pipeline of new orders is growing and I expect to install at least 15 more Edge Data Centers in FY 2025.

Our team installed two power plants in South Australia too.

Speaker Change: Two power plants in Puerto Rico, following Hurricane Maria and one more power plant in Mexico. Following an earthquake of five plants were installed near simultaneous and less than 120 days.

Charles Ferry: With our entry into the data center space, we are now receiving requests to participate in and, in some cases, lead opportunities to install power and support data centers here in the United States. Based on this growing demand, we have incorporated Duos Energy Corporation as a third subsidiary to our Duos Technologies family and already have a small pipeline of projects and supported data centers that could further accelerate our plan for more recurring revenue and profitability.

With our entry into the data center space, we are now receiving requests to participate and in some cases lead opportunities to install powered support data centers here in the United States.

Charles Ferry: I have previously spoken about the power industry experience that the Duos team and I have from our time at APR Energy. With our entry into the data center space, data center space, we are now getting requests to participate and in some cases lead opportunities to install power and supported data centers here in the United States.

Speaker Change: Based on this growing demand we have incorporated dual energy Corporation as a third subsidiary through our dual technologies family.

Speaker Change: We already have a small pipeline of projects and supportive data centers that could further accelerate our plan for more recurring revenue and profitability.

Charles Ferry: With all the excitement around our new divisions, I want to reiterate our commitment to progressing our rail car inspection portal subscription business. Our company has invested nearly $70 million over the past seven years to perfect this technology and patent it. There is strong evidence from across the rail industry that this technology will eventually be deployed in high numbers, benefiting everyone. However, to ensure we can deliver the value and return our shareholders and what they expect, I am strongly committed to diversifying our business into other synergistic areas where we have expertise and market conditions expect fast growth.

Charles Ferry: With all the excitement around our new divisions, I want to reiterate our commitment to progressing our rail car inspection portal subscription business. Our company has invested nearly $70 million over the past seven years to perfect this technology and patent. There is strong evidence from across the rail industry that this technology will eventually be deployed in high numbers, benefiting everyone. However, to ensure we can deliver the value and return our shareholders and return our shareholders and what they expect, I am strongly committed to diversifying our business into other synergistic areas where we have expertise and market conditions expect fast growth. Our team is exceptionally talented and very capable of advancing this strategy.

Speaker Change: With all the excitement around our new divisions I want to reiterate our commitment to progressing our railcar inspection portal subscription business hours.

Our company has invested nearly $70 million over the past seven years to perfect. This technology and patents.

Speaker Change: There is strong evidence from across the rail industry that this technology will eventually be deployed in high numbers benefiting everyone.

Charles Ferry: We'll discuss each line of business in more detail after the financial review.

Adrian Goldfarb: So at this time, I'll turn it over to Adrian to cover our financial results. Thanks, Chuck. Following on from Chuck's introductory remarks, I would like to give a brief commentary on the recent operational highlights and my expectations just to how and when these will translate into revenue growth and most importantly profitability.

Speaker Change: However to ensure we can deliver the value and return to our shareholders.

In return our shareholders and what they expect.

Speaker Change: I am strongly committed to diversifying our business into other synergistic areas, where we have expertise and market conditions expect fast growth.

Charles Ferry: Our team is exceptionally talented and very capable of advancing the strategy.

Speaker Change: Our team is exceptionally talented and very capable of advancing our strategy.

Adrian Goldfarb: As Chuck mentioned, the company is in the process of expanding into three distinct lines of business. Complex visualization with AI has manifested in our legacy Duos Tech business. The recently announced business of providing edge data centers and related operational services and the brand new subsidiary which will focus on power provisions for data centers both edge and traditional. While these three divisions may on the face of it look as if they are not related, in fact, Duos and its management team and staff have extensive experience in all three domains.

Charles Ferry: In closing, I want to thank my board of directors and long-term shareholders for their advice, counsel, and support as we advance the strategy. Thank you for listening, and we'll now open the call for your questions.

Charles Ferry: In closing, I want to thank my board of directors and long-term shareholders for their advice, counsel, and support as we advance this strategy. Thank you for listening, and we'll now open the call to your questions. Operator, would you please provide the appropriate instructions?

Speaker Change: I want to thank my board of directors and long term shareholders for their advice counsel and support as we advance the strategy.

Speaker Change: Thank you for listening and we'll now open the call for your questions.

Unknown Executive: Operator, would you please provide the appropriate instructions? Thank you.

Speaker Change: Operator would you please provide the appropriate instructions.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: Thank you we will now be conducting a question and answer session.

Unknown Executive: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tunnel indicates your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Charles Ferry: You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question comes from Michael Latimore with Northland Capital Markets. Please go ahead.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.

Information Tau indicate your line is in the question queue you.

Speaker Change: You May press star two if he would like to remove your question from the queue.

Adrian Goldfarb: Chuck will address the three-year strategic plans for the company in his commentary following my discussion of the financials. But from my perspective, the transition plan is expected to be complete by the end of 2024 with an expected, markedly improved financial position and guidance at the conclusion of the transition period. During the last call, I stated that I believe that we are on the threshold of steadily improving results and I believe we are seeing the first lines of this in our most recent quarterly results.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the stocking.

Unknown Executive: One moment, please, while we pull for questions.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: Yeah.

Michael Latimore: First question comes from Michael Lattimore with Northland Capital Markets. Please go ahead. Great. Yeah. Thanks very much. So, I guess, as you think about the second half of this year, I know you're not giving specific guidance, but maybe can you sort of highlight the top two or three driver, incremental revenue driver, a second half versus first half?

Speaker Change: First question comes from Michael Latimore with Northland Capital markets. Please go ahead.

Charles Ferry: Great. Yeah, thanks very much. So I guess, um, as you think about the second half of this year, um, I know you're not giving specific guidance, but maybe can you sort of highlight the top two or three driver incremental revenue driver second half versus first half? Yeah, I'll start and I'll let, this is Chuck. I'll start and I'll let Adrian clean up behind me here.

Michael Latimore: Great. Thanks very much.

Speaker Change: So I guess.

Speaker Change: You think about the second half of this year.

Adrian Goldfarb: As such, we will detail out our plans for the remainder of 2024 and the indications are that a 70 plus million dollar investment in building a talented organization intellectual property with highly defendable patents. And now access to new markets with key assets for the company owns or plans to own will provide a solid foundation for the expected increasing recurring revenues.

Speaker Change: I know youre, not giving specific guidance, but maybe can you just sort of highlight the top two or three driver in incremental revenue driver of second half versus first half.

Charles Ferry: Yeah, I'll start now.

Speaker Change: Yeah, I'll start and I'll let.

Charles Ferry: This is Chuck. I'll start now. Let's Adrian clean up behind me here. At a high level, you know, key revenues that we're expecting to come in. First of all, we'll come in from Mantrak, which is an ongoing installation project. Adrian mentioned, we've already accelerated some of that revenue, and that is because we've installed now the very large edge data center, which is a part of that installation, and that occurred here about a month or so ago. We've got another large contract that we're expecting to close with a large chemical producer. And then we do expect to start seeing revenues coming in with our new edge data centers that we deployed out into the field.

Speaker Change: This is Jack I'll, I'll start and I'll, let say Adrian clean up behind me here.

Charles Ferry: At a high level, you know, key revenues that we're expecting to come in, first of all, will come in from Amtrak, which is an ongoing installation project. Adrian mentioned we've already accelerated some of that revenue, and that was because we installed now the very large Edge data center, which is a part of that installation, and that occurred here about a month or so ago. We've got another large contract that we're expecting to close with a large chemical producer, and then we do expect to start seeing revenues coming in with our new Edge data centers that will be deployed out into the field. And Adrian, if you want to add to that, please?

Adrian Goldfarb: At a high level key revenues that we're expecting to come in.

Adrian Goldfarb: First of all will come in from Amtrak, which is an ongoing installation project.

Adrian Goldfarb: With that in mind, let us now look at the results for the second quarter and first half of 2024. During the second quarter, total revenue for the quarter decreased 15% to $1.51 million, compared to $1.77 million in the second quarter of 2023. Total revenue for Q22 2024 represents an aggregate of approximately 265,000 of technology systems revenue but more than $1.25 million in recurring services and consulting revenue representing a 38% increase in this important metric.

Adrian Goldfarb: Adrian mentioned, we've already accelerated some of that revenue that was because we we have installed now the very large edge datacenter.

Adrian Goldfarb: Which is a part of that.

Adrian Goldfarb: That is that installation and that occurred here about a month or so ago.

Adrian Goldfarb: We've got another large contract that we're expecting to close with a large chemical producer.

Adrian Goldfarb: And then we do expect to start seeing revenues coming in.

Adrian Goldfarb: With our new edge data centers that'll be deployed out into the field.

Adrian Goldfarb: And Adrian, do you want to add to that? No, that pretty much describes it to my; I think what you'll see is you'll see a market improvement, obviously, over the past two quarters for Q3 related to the fact that we are now starting to push forward with the abstract installation. There are still some challenges around that, which I've mentioned, and then just waiting to start the other RIP installation at the chemical manufacturer. Outside is that we are currently in discussions with about 20 different potential clients on the subscription side, and with the edge data centers, probably we'll start to kick off probably in about Q4.

Adrian Goldfarb: Adrian do you want to add to that.

Adrian Goldfarb: No, that pretty much describes it, Mike. I think what you'll see is a marked improvement, obviously, over the past two quarters for Q3, related to the fact that we are now starting to push forward with the Amtrak installation. There are still some challenges around that, which I've mentioned, and then just waiting to start the other RIP installation at the chemical manufacturer. Outside of that, we are currently in discussions with about 20 different potential clients on the subscription side, and with the Edge data centers, all of that will probably start to kick off probably in about Q4.

Adrian Goldfarb: That pretty much describes it Mike.

Adrian Goldfarb: I think what you'll see is you'll see a market improvement obviously over the past two quarters for a for Q3.

Adrian Goldfarb: For the six months ended 2024, total revenue decreased 42% to 2.58 million from 4.41 million in the same period last year. Total revenue for the six months of 2024 represents an aggregate of approximately $1.5 million of technology systems revenue and approximately $2.05 million in recurring services and consulting revenue, which is also an increase in recurring revenues of 19%. Growth of the services portion of revenues was driven by successful completion and implementation of artificial intelligence detections, which represents services and support for those detections, as well as increases in service contract revenue to higher service contract prices.

Adrian Goldfarb: Related to the fact that we are now starting to push forward with with the Amtrak installation.

Speaker Change: There are still some challenges around that which which I've mentioned and then just wait to start the other rip installation at the chemical manufacturer outs.

Speaker Change: Outside is that we are currently in discussions with about 20.

Speaker Change: Different potential clients on the subscription side.

Speaker Change: With the edge data centers all of that we saw probably we will start to kick off probably in about Q4.

Adrian Goldfarb: I think what will happen is that the next call for the Q3 call will have a much better visibility on that, but I'm expecting much better results going.

Adrian Goldfarb: I think what will happen is that we will, the next call, the Q3 call, will have much better visibility on that, but I'm expecting much better results going forward. Okay, great. And then I think in the press release, you talked about winning customers already for edge data centers, and that amounts to, I think, a million dollars of ARR starting in the fourth quarter. Does that assume kind of full capacity of those three edge data centers, that $1 million of ARR? Yeah, so it does.

Speaker Change: I think what will happen is that we will the next call. The Q3 call, we'll have a much better visibility on that.

Speaker Change: But im expecting much better results going forward.

Adrian Goldfarb: For both periods of small revenues in the technology systems area, it reflects the ongoing delays in revenue recognition for the Amtrak installation, who, as discussed previously, postponed delivery last year into Q4 this year. I'm pleased to report that although revenue was expected in the books in Q4, the company has accelerated delivery of part of the system and we expect to report an increase in these revenues in Q3. I should caution, however, that due to the complex nature of this project at the site, both the delays may be encountered such that the project might not be complete until mid 2025.

Unknown Executive: Thank you.

Speaker Change: Okay got it.

Unknown Executive: Great. And then I think of the press release you talked about winning customers already for Edgida Center, and that amounts to I think a million dollars of ARR, and starting in the fourth quarter. Is that that that that assume kind of full capacity of those three Edgida Center, is that one million dollars of ARR? Yeah, so it does. So we expect those to be filled to capacity. Again, these edge data centers are effectively small scale co-location data centers, which is why they're in pretty high demand. And we expect them to have filled out.

Speaker Change: Great and then.

I think in the press release, you talked about.

Speaker Change: Winning customers already for edge data center and that.

Speaker Change: I think a million dollars of any IRR in the starting in the fourth quarter.

Speaker Change: That does that.

Speaker Change: Does that does that assume kind of full capacity of those three edge data centers at $1 million from here.

Charles Ferry: So we expect those to be filled to capacity. Again, these edge data centers are effectively small-scale co-location data centers, which is why they're pretty in high demand, and we expect them to have been filled out. The way that kind of operational cadence works, you get it installed, you bring the power and fiber up to the edge data center, and in general, we expect about a 30-day period where customers start to come in and fill out that data center.

Speaker Change: Yeah, so yeah.

Speaker Change: It does so we expect those to be.

Speaker Change: <unk> two capacity you're getting these edge data centers are effectively small scale or co location.

Adrian Goldfarb: Also, revenues for the second quarter increase 13% to 1.73 million compared to 1.53 million for Q2 2023 and for the six months end of 2024, costs of revenue decreased 26% to 2.7 million from 3.64 million in the same period last year. Both periods reflect certain cost increases related to project delivery, where we expect to record higher revenues in Q3, and to the effect of the new class one subscription business start-up cost.

Speaker Change: Data centers, which is why they're pretty they're pretty are in high demand.

Speaker Change: And we expect them to have filled out so the way the kind of the operational cadence works.

Charles Ferry: So the way the kind of operational trades works, you get it installed, you bring the power and fiber up in the edge data center. And in general, we expect about a 30-day period where customers start to come in, fill out that data center. So about 30 days after we commercially turn it on, it's effectively filled with those long-term recurring customers inside those data centers. Yep.

Speaker Change: You get it installed you bring the power in the fiber up in in the edge data Center and in General we expect about a 30 day period, where customers start to come in and.

Charles Ferry: So about 30 days after we commercially turn it on, it's effectively filled with those long-term and recurring customers inside those days. Yeah. And then Chuck, did you say you had 15 people on staff that are kind of experienced in the energy world? Yeah, yeah, we do.

Speaker Change: Fill out that data centers. So about 30 days after we commercially turn it on its effectively filled.

Speaker Change: With those long term recurring customers inside those those data centers.

Adrian Goldfarb: Gross margin for Q2 2024 decreased 189% to negative 215,000 compared to 241,000 for Q2 2023. And for the six months end of 2024, gross margin decreased 150% to negative 120,000 from 779,000 in the same period last year. For my previous comment, we're comparing the results between the two periods, the stage of completion for production and installation to be factored into these comparisons, and taking into account when analyzing the two periods. Specifically, the decrease in gross margin was driven by the timing of business activity in Q2 2024, related to the manufacturing of two high-speed transit-focused rips for entry.

Speaker Change: Yep.

Charles Ferry: Okay. And then, Chuck, did you say you had 15 people on staff that are kind of experienced in the energy world? Yeah, we do.

Speaker Change: And then Chuck did you say you had 15 people on staff that are kind of experienced in the.

Chuck Ferry: Energy World.

Charles Ferry: So, you know, we have a staff of about 70 folks total. Of that, at least 15 are prior APR Energy employees. I'm very fortunate that employees that used to work for me will come back and work for me a second time, which is very helpful. In those 15, they go across all of the skill sets that you need to commercially develop, financially plan for, engineer, procure, install, and then operate and maintain power plants.

Chuck Ferry: Yeah, Yeah, we do so we have a staff of about 70 folks total.

Charles Ferry: So, you know, we have a staff of about 70 folks total. Of that, at least 15, our prior APR energy employees is, you know, I'm very fortunate that, you know, employees that used to work from a, will come back and work for me a second time, which is very helpful. Up in those 15, they go across all of the skill sets that you need to commercially develop a financially planned for engineer, procure, install, and then operate and maintain power plants. In this case, again, it's kind of a convergence of, you know, what we're doing inside the data center space and the data center industry at large. When some of the customers and some of the data center, you know, analysts found out that we have all this power experience, you know, all of a sudden, you know, a lot of these power opportunities against data centers have become, have been presented to us.

Speaker Change: That at least 15 or prior APR energy employees.

Speaker Change: As you know I'm very fortunate.

Speaker Change: Employees that used to work for me will come back and work for me a second time, which is very helpful.

Charles Ferry: In this case, again, it's kind of a convergence between the Data Center Industry at large and when some of the customers and some of the data center, you know, analysts found out that we have all this power experience, all of a sudden, you know, a lot of these power opportunities against data centers have become have been presented to us. And so I think we're going to take advantage of the talent we have on staff and our know-how in that space and participate in that. Okay. Bill, best of luck. Thanks. Thanks so much, Mike.

Speaker Change: In those 15.

Speaker Change: They go across all of the skill sets that you need to a commercially developed.

Speaker Change: Financially plan for engineer.

Speaker Change: Procure install and then operate and maintain the power plants. In this case again, it's kind of a convergence of.

Adrian Goldfarb: Act. As previously mentioned, the temporary decline in technology revenues was not completely offset by related ongoing costs to support that revenue segment. Operating expenses for Q2 2024 decreased by 11 per cent to $3 million, compared to $3.39 million for Q2 2023, and for the six months ended 2024, operating expenses decreased 4% 5.86 million from 6.07 million in the same period last year. Company implemented a number of expense reduction measures in late 2023, and the results of these measures are now being seen in the overall financial results.

You know what we're doing inside the edge data center space in the data center industry at large.

Speaker Change: When some of the customers.

Customers.

Speaker Change: And some of the data center.

Speaker Change: You know analysts found out that we have all this power experience.

All of a sudden you know well.

Speaker Change: Well a lot of these power opportunities against data centers are that'd become had been presented to us.

Unknown Executive: And so, I think we're going to participate in that. That's good.

Speaker Change: And so I think we're going to take advantage of the talent we have on staff.

Speaker Change: And our know how in that space and participate in that.

Speaker Change: Hmm.

Speaker Change: Okay great.

Unknown Executive: Thanks so much, Mike.

Speaker Change: Best of luck. Thanks.

Mike: Thanks, so much Mike.

Charles Ferry: Once again, if you would like to ask a question, please press star one on your telephone keypad. The next question comes from Richard Jackson with True North Financial. Please go ahead.

Unknown Executive: Once again, if you would like to ask a question, please press star one on your telephone keypad.

Once again, if you would like to ask a question. Please press star one on your telephone Keypad next question comes from Richard Jackson with true North financial. Please go ahead.

Richard Jackson: Next question comes from Richard Jackson with True North Financial. Please go ahead. Yeah, congratulations on moving most of the business to a subscription model. I always thought that was the place to be long term. Can you give us a range of what gross margins and operating margins you're targeting for that subscription business? Is it vastly different between the power and the data and, you know, your rail car monitoring?

Charles Ferry: Yeah, congratulations on moving most of the business to a subscription model. I always thought that was the place to be long-term. Can you give us a range of what gross margins and operating margins you're targeting for that subscription business? Is it vastly different between power and data and, you know, your rail car monitoring? Yeah, I'll have Adrian cover the subscription part, and I can talk to the data center in the power plant. Go ahead.

Richard Jackson: Yes, congratulations on moving most of the.

Speaker Change: Business to a subscription.

<unk> always thought that was the place to be long term can you give us a range of what gross margins and operating margins you're targeting.

Adrian Goldfarb: We continue to anticipate that operating expenses will remain stable throughout the remainder of 2024, but we have taken additional actions in Q3 to further improve efficiency and align our staffing to address both the new and existing business areas so as not to impact the expected growth and revenue. Net operating loss for Q2 2024, total 3.22 million compared to net operating loss of 3.15 million for Q2 2023, and for the six months ended 2024, net operating loss total 5.98 million compared to a net operating loss of 5.30 million in the same period last year.

Speaker Change: Subscription business.

Speaker Change: Is it vastly different between the power in the data.

Speaker Change: And.

Speaker Change: Your railcar monitoring.

Adrian Goldfarb: Yeah, all of the Adrian covers the subscription part, and I can talk to the data center and the power. Go ahead. Yeah, so from the subscription standpoint, the margins are very high. And that's because the marginal cost of putting in a subscription is not that much. So, typically, you're looking for margin. Gross margin is a minimum range of 70%. And then, typically, we expect that to increase over time and get up into close to the 90% range as it's typical with that type of business.

Speaker Change: Yeah.

Speaker Change: And cover the subscription part and I can talk to the to the data Center and power go ahead, yes. So from a subscription standpoint, the margins are very high.

Adrian Goldfarb: Yeah, so from a subscription standpoint, the margins are very high, and that's because the marginal cost of putting in a subscription is not that much. So, typically, you're looking for gross margins in the minimum range of 70%. And then, typically, we expect that to increase over time and get up into close to the 90% range, as is typical with that type if there is.., and that's kind of been our aim with all the businesses now that we're currently looking at.

Speaker Change: And that's because the marginal cost of putting in a subscription is.

Speaker Change: Not that much.

Speaker Change: Typically youre looking at the margin gross margin as a minimum range of 70% and then typically we expect that to increase over time to get up into close to the 90% range I just typical with that that type of business.

Charles Ferry: And that's kind of been our aim with all the businesses now for currently. So on the edge data centers, again there's obviously there's a cost again because we're we own and operate these edge data centers. So obviously there's cost going in, but those costs are effectively capitalized over the life of a five-year recurring, five-year recurring contracts. And so once that thing is up in operational, we expect gross margins to be at least in the 60 to 70% or higher area on a power plant project. So once there are against these data centers right now, we would expect again, there's going in costs.

Adrian Goldfarb: Although operating losses were higher than the comparative quarter a year ago, the increase was proportionally less than the relative decrease in revenues and gross margin. The increase in loss from operations was primarily the result of lower revenues recorded in the first and second quarters as a consequence of the delays previously noted, offset by continued increases in services and consulting revenues. Net loss for the second quarter was 3.2 million or negative 43 cents per share, compared to a net loss of 2.9 million or negative 42 cents per share for Q2 2023, with the 7% increase being lower proportionally than might have been expected with the decrease in overall revenues.

Speaker Change: And that's kind of been our aim with all of the businesses now that we're currently looking at so on edge data centers again, Theres, obviously theres a cost.

Adrian Goldfarb: So on the edge data centers, again, obviously there's a cost, again, because we own and operate these edge data centers. So, obviously, there's costs going in, but those costs are effectively capitalized over the life of a 5 year recurring 5 year recurring contract.

Speaker Change: Again, because we own and operate these edge data centers.

Speaker Change: So obviously theres costs going in but those costs are effectively capitalized over the life of a five year recurring five year recurring contracts and so once that thing is up and operational we expect gross margins to be at least in the 60% to 70% or higher area.

Charles Ferry: And so, once that thing is up and operational, we expect gross margins to be at least in the 60 to 70% or higher mark area on a power plant project. Ones that are against these data centers right now, we would expect again, there's a, there's going to be costs. The good news in this sector is that data center operators and developers have shown a high willingness to pay up front for milestone payments to offset the costs of going into a power project.

On a on a power plant projects.

Speaker Change: Ones that are against these data centers right now.

Speaker Change: We would expect again theres, a theres going in costs.

Charles Ferry: The good news in this sector is that the data center operators and developers have shown a high willingness to pay up from milestone payments to offset the costs of going into a power project. Once you're in there, again, good recurring revenue, typically five years or more. And we would expect, you know, a gross margin to be probably in the 50 to 60%ile range with that particular business. Again, we're pushing a lot of the costs from an overhead perspective above the line. And then try to really bifurcate that GNA cost below to show a true, you know what we're truly what are that.

Speaker Change: Good news in this sector is that the data center operators and developers have shown.

Adrian Goldfarb: For the six months ended 2024, net loss total 5.96 million or negative 81 cents per share, compared to a net loss of 5.13 million or negative 72 cents per share in the same period last year. The increase in net loss was a trivial due to the increase in revenues as previously noted above, partially offset by the increase in services and consulting revenue and a decrease in operating expenses.

Speaker Change: High willingness to pay upfront milestone payments to offset the costs of going into a power project once you're in there again good recurring revenue typically five five years or more and we would expect our.

Charles Ferry: Once you're in there again, good recurring revenue, typically 5 to 5 years or more, and we would expect a gross margin to be probably in the 50 to 60 percentile range with that particular business. Again, we're pushing a lot of the costs from an overhead perspective above the line, and then try to really bifurcate that cost below to show a true. You know, what we're truly running out of.

Speaker Change: Gross margin to be probably in the 50 to 60 percentile range with that particular business again, we're pushing a lot of the costs from an overhead perspective above the line.

Richard Jackson: And then try to really bifurcate that G&A costs below to show a true what we're truly water that what one other comment on that Richard is that.

Adrian Goldfarb: Yeah, one other comment on that literally is that, as compared to some subscription businesses, although the level of the number of customers is typically on the lower end, just because of the industries they're in, the churn rate is extremely low. All of the contracts we look at are typically minimum multi-year contracts and can go on for a long time. So that's one of the beauties: not only a high margin, but it's also a low churn business.

Charles Ferry: Yeah, one comment on that Richard is that as compared to some subscription businesses, although the level of the number of customers is typically on the lower end, just because of the industries they're in, the churn rate is extremely low. All of the contracts we look at are typically minimum multi-year contracts that can go on for a long time. So, that's one of the beauties of not only a high margin, but it's also a low one.

Richard Jackson: As compared to some subscription businesses.

Richard Jackson: Although the level the number of customers.

Speaker Change: It's typically on the lower end just because of the industries that are in the churn rate is extremely low.

Speaker Change: All of the contracts, we look at are typically minimum multiyear contracts and can go on for a long time so.

Speaker Change: That's one of the beauties is normally a high margin, but it's also a low churn business.

Charles Ferry: So you need capital; you know, an idea of how much yet. Yeah, right now we're not sizing out any capital right now. The data center business, like we said, we've effectively funded the first four. The intention is to get those first four up and prove out the economics with that. And then we'll see what that looks like from there. Like that business could readily be funded from asset backs, debt financing. I'm not saying it's how we'll do that, but it can be. So there are ways to do that without deluding current shareholders on the power side.

Charles Ferry: Sounds like you need capital. Do you have an idea of how much yet? Right now, we're not sizing out any capital right now. It's a data center business. Like we've said, we've effectively funded the first four. The intention is to get those first four up and prove out the economics with that, and then we'll see what that looks like from there. That business could readily be funded from asset back. I'm not saying that's how we'll do that, but it can. So there are ways to do that without diluting current shareholders.

Speaker Change: So we're going to need capital you got an idea of how much yet.

Speaker Change: Yes.

Speaker Change: Right now, we're not sizing out any capital right now the edge data center business like we said we've.

Adrian Goldfarb: There has been a large increase in other assets, notably the recording of a $10.7 million intangible assets, which represents the estimated fair value of 5 years of data to support the recently signed long-term services and data sharing agreement, executed with a previously mentioned class one customer, or the provision of subscription services. Total current liabilities are 5.81 million versus 3.25 million at December 31, 2023. 2.2 million of this increase is non-tash and related to the data services agreement. Long-term contract liabilities have increased by $8.5 million, reflecting the non-current portion of this agreement.

Speaker Change: We've effectively funded the first for the <unk>.

Speaker Change: Attention is to get those first four up and prove out the economics for that and then we will.

Speaker Change: See what that looks like from there.

Speaker Change: That business could readily be funded from our asset backed.

Speaker Change: Debt financing I'm, not saying, that's how we will do that but it can be.

Speaker Change: So there are ways to do that without diluting current shareholders on the power side Theres a lot of different options there with the I'll.

Charles Ferry: On the power side, there are a lot of different options there with, I'll call it, the data center nuclear arms race. There are data center developers and operators that are willing to fund a lot of that as part of a power deal. So we'll see what that looks like and keep everybody updated. All right. Thank you.

Richard Jackson: There's a lot of different options there with the, I'll call, the data center nuclear arms race. There are data center developers and operators that are willing to fund a lot of that as part of a power deal. So, so we'll see what that looks like and keep everybody updated. All right. Thank you. Keep going.

Speaker Change: I'll call it the datacenter nuclear arms race.

Speaker Change: There are data center developers and operators that are.

Willing to fund a lot of that is part of our power deal. So so we'll see what that looks like and keep everybody updated.

Adrian Goldfarb: My overall comment on the balance sheet is that it remains stable and anticipation of the expected growth in the business in the second half of the year. Turning to backlog, at the end of the second quarter, the company's contracts in backlog and near-term renewals and extensions are now more than $19.6 million, for which approximately $6.9 million is expected to be recognized as revenue during the remainder of 2024. The balance of contract backlog comprises multi-year service and software agreements as well as project revenues.

Speaker Change: Alright, Thank you keep going.

Unknown Executive: Thanks, Richard. Right.

Charles Ferry: Thanks, Richard. Thanks. Next question, Ed Woo with Ascendian Capital Markets, please go ahead. Yeah, hi. I just had a question about your pipeline, and has there been any change in the sales cycles as you try to get these new contracts? And are there different sales cycles with, you know, your railroad business and with the data center business? Thank you. That's a great question.

Richard Jackson: Thanks Richard.

Ed Wu: Next question. Ed Wu with the Sendient Capital Markets. Please go ahead. Yeah, I just had a question about your pipeline. And has there been any change in the sales cycles as you try to get these new contracts, and is there different sales cycles with your railroad business and with the data center business. Thank you. That's a great question. And yes, there's a big difference in the sales cycle timeline between the rail and the edge data center. And I'll talk to the power side of this in a moment. So, again, the rail, the cycle for closing rail cap ex deals has typically, as we've seen, taken sometimes 12 to 24 months.

Richard Jackson: Question, Ed Woo with <unk> capital markets. Please go ahead.

Charles Ferry: And yes, there's a big difference in the sales cycle timeline between the rail and the data center. And I'll talk about the power side of this in a moment. So, again, the rail, the cycle for closing rail CapEx deals as typically, as we've seen, you know, taking sometimes 12 to 24 months. It can be a bit painstaking, but that really hasn't changed that much.

Ed Woo: Yeah, Hi, I just had a question about your pipeline and has there been any change in the sales cycles as you try to get these new contracts is there different sales cycles with your railroad business and with the data center business. Thank you.

Speaker Change: Okay. Yeah, that's a great question and yes, there's a big difference in the sales cycle timeline between the rail and the edge data Center.

Adrian Goldfarb: Should be noted that $10.7 million of the revenue backlog is for data access to support the new subscription business, and is accounted for as a non-malletry exchange that resulted from an amendment to a massive material and service purchase agreement with a Class 1 Railroad.

Speaker Change: I'll talk to the power side of this in a moment.

So again the rail the cycle for clothes in rail.

Speaker Change: Capex deals is typically.

Speaker Change: We've seen.

Speaker Change: Taken sometimes 12 to 24 months.

Charles Ferry: It can be a bit painstaking, but it really hasn't changed that much on the script on the subscription side. We're seeing, you know, it's probably taken about, you know, four to six, maybe even eight months, the clothes, a large subscriber subscription customer. Again, we're on the very front end of this.

Adrian Goldfarb: Before turning the call back to Chuck, I would like to address the subject of guidance. As we have discussed previously, we have experienced some difficulties in getting Azure guidance within the time frame of its fiscal year due to delays and uncertainties in our current market space. How will we believe the current analyst expectations for annual revenues this year represent a reasonable estimate at this time? Chuck will be addressing the transition into new markets, including our growing recurring revenue initiatives such as AI and subscriptions, for which we have already announced some success this year. As we transition another few months, my expectation is that we will be able to formally reintroduce guys.

Speaker Change: It can be a bit painstaking, but that really hasnt changed that much on the <unk> on the subscription side.

Charles Ferry: On the subscription side, we're seeing it's probably taken about four to six, maybe even eight months, to close a large subscriber customer. Again, we're on the very front end of this. We've only been able to really, truly offer a subscription to these portals for about the last 60 days.

Speaker Change: We're seeing it's probably taken about.

Speaker Change: Four to six maybe even eight months.

Speaker Change: Close a large subscriber subscription customer.

Speaker Change: Again, we're on the very front end of this we've only been able to really.

Charles Ferry: We've only been able to really, really offer a subscription to these corals for about the last 60 days. So we got a lot of interested customers. And so I think we'll have to come back to you in a couple of months to really give you an accurate metric for how long it's taking to close those customers.

Speaker Change: Truly offer a subscription to these portals for about the last 60 days. So again, we got a lot of interested customers and so I think we will have to come back to you in a couple of months to really give you on that.

Charles Ferry: So we got a lot of interested customers, and so I think we'll have to come back to you in a couple months to really give you an accurate metric for how long it's taken to close those customers. On the Edge Data Center side, what we're seeing is that once we find a customer who, in our cases, has actually been funded by federal and state infrastructure dollars and has been granted that money, we get into a conversation with them. The closure rate with them is about 60 to 90 days. And sometimes it's even faster.

Speaker Change: And accurate metric for how long, it's taking to close those customers.

Charles Ferry: on the Edge Data Center side. What we're seeing is that once we find a customer who in our cases is actually been funded by federal and state infrastructure dollars and then granted that money, we get into a conversation with them; the closure rate with them is about 60 to 90 days. And sometimes it's even faster. Now, once we actually get interest from them and we start discussing the, you know, getting into contracts, you know, now there's a pipeline of about what's called about 90 days to actually manufacture the Edge Data Center. You know, month number four, you're actually installing the data center; by month number five, you're filling it out.

Adrian Goldfarb: This concludes my financial commentary, and I will now pass the call back to Chuck. Thank you, Adrian.

Speaker Change: On the edge data center side, what we're seeing is that once we.

Speaker Change: Find a customer who was in our cases that actually had been funded by federal and state infrastructure dollars and been granted that money.

We get into a conversation with them the closure rate with them.

Speaker Change: <unk> is about 60 to 90 days.

Charles Ferry: Now, once we actually get interest from them and we start discussing the, you know, getting into contracts, you know, now there's a pipeline of about, let's call it about 90 days to actually manufacture the data center, month number four, you're actually installing the data center, and by month number five, you're filling it up. So we're probably talking about from interest to an edge data center in the ground and producing recurring revenue.

Speaker Change: And sometimes it's even faster now once we actually get interest from them.

Charles Ferry: This is the first machine vision AI rail safety partnership agreement in North America. The agreement authorizes Duos to offer shippers and rail car owners, transiting the Class 1 network, the opportunity to subscribe, the waste side machine vision AI safety technology. While Duos is the inventor of the rail car inspection portal, and holder of 10 active U.S, patents for this innovative waste side defect detection solution, our Class 1 customer is leading the rail industry into the deployment of machine vision AI waste side detection technology with seven portals in the United States and of that.

Speaker Change: And we start discussing the.

Speaker Change: Into contracts now Theres, a pipeline of about let's call. It about 90 days to actually manufacture the edge data center.

Speaker Change: You know month number for Ya actually installing the data center by month number five year filling it up so we're probably talking about it from interest to edge data center on the ground and producing recurring revenue, let's call. It about six months for that.

Charles Ferry: So we're probably talking about it from interest to Edge Data Center in the ground and producing recurring revenue.

Charles Ferry: Let's call it about six months for that on the power side. I don't have any specific data points right now for putting power up against data centers. But right now it appears that both later and I were out of a TD count investor conference where, you know, the best and brightest of that industry were there to include data center builders and hyperscalers. There are data center locations that need power now. So now it's a matter of how fast we can bring it to them.

Charles Ferry: Let's call it about six months for that on the power side. I don't have any specific data points right now for putting power up against data centers. But right now, it appears that both Adrian and I were out of the TD Cowan investor conference, where, you know, the best and brightest of that industry were there, including data center builders and hyperscalers. There are data center locations that need power now.

Speaker Change: On the power side.

Speaker Change: I don't have any specific data points right now for the for putting power up I guess datacenters.

Charles Ferry: More importantly, our classroom customer has fully integrated the portals into their mechanical inspection operations. Mechanical Carmen, from the class ones that I have talked to you, say that they are getting great results using the tool, and have provided good feedback that we've used to improve the system over time. Going forward, Duos and our classroom customer will emphasize standardizing machine vision AI safety technology, so the data can be easily exchanged through a subscription service with other class ones, regional carriers, passenger railroads, and first responders.

But right now it appears that.

Speaker Change: Both Peter and I were out of the TD Cowen.

Speaker Change: Investor Conference where.

Speaker Change: The best and brightest of that industry. We're there to include data center builders in Hyperscale.

Speaker Change: There are there are data center locations that need power now.

Charles Ferry: So now it's a matter of how fast we can bring it to them. Again, I think on our next call, I'll be able to tell you with a little bit more clarity about what the interest to closure cycle looks like on it. Great, well, thanks for answering my questions and I wish you guys good luck. Thank you.

Speaker Change: So now it's a matter of how fast we can bring it to them.

Charles Ferry: Again, I think in our next call, I'll be able to tell you with a little bit more clarity about what the interest to a closure cycle looks like on it.

Speaker Change: Again, I think on our next call will be able to tell you with a little bit more clarity about what the interest to closure cycle looks like on that.

Charles Ferry: A real car inspection portal technology can be integrated into railroads, public safety, and asset management data systems, with the ability to identify FRA and critical safety appliance defects, and communicate alerts to train crews, train dispatchers, railroad operation centers, and first responders in real time. Visual documentation of the train, rail car location within the train, car initial and number, placard, and defects are all presented within 60 seconds of image capture. Currently, we have two subscribers that have been using the system effectively for many months now, Amtrak, and another large rail car fleet operator.

Unknown Executive: Great. Well, thanks for giving me an answer. My question is, and I wish you guys good luck. Thank you. Thanks. I appreciate it.

Speaker Change: Great well, thanks for giving me answering my questions and I wish you guys. Good luck. Thank you.

Charles Ferry: At this time, this concludes our question and answer session. I'd now like to turn the call back over to Mr. Ferry for his closing remarks.

Speaker Change: Thanks, Thanks, Ed appreciate it at this time. This concludes our question and answer session.

Unknown Executive: At this time, this concludes our question-and-answer session.

Charles Ferry: I now like to turn the call back over to Mr. Ferry for his closing. I think again, I'd like to thank the audience for joining us today.

Speaker Change: Now I'd like to turn the call back over to Mr. Ferris for his closing.

Charles Ferry: Again, I'd like to thank the audience for joining us today. And, as always, I want to, you know, double thank all my board members and, especially, our shareholders and, especially, our long-term shareholders for your support. I think our strategy is one that is going to be very lucrative for us going forward, like Adrian said, and we'll look forward to keeping you updated. I'll turn the call back over to our operator. Thank you.

Mr. Ferris: Again, I'd like to thank the audience for joining us today.

Charles Ferry: And as always, I want to, you know, double thank all my board members and most especially our shareholders and especially our long term shareholders' support. I think our strategy is one that is going to be very lucrative for us going forward. Like Adrian said, and we'll look forward to keeping you updated.

And as always I want.

Speaker Change: You know double thank all my my board members and most especially.

Mr. Ferris: Our shareholders, especially our long term shareholders for your support I think our strategy is.

Charles Ferry: We are in discussions with another 20 potential subscribers, which includes car owners, shippers, shortlines, passenger rail, and other class ones. We'll continue to do our efforts to expand and prove out the subscription offering, and keep you updated.

Is one that.

Mr. Ferris: It's going to be very lucrative for us going forward like Adrian said and we'll look forward to keeping you updated I'll turn the call back over to our operator. Thank you.

Unknown Executive: I'll turn the call back over to our operator. Thank you.

Unknown Executive: Before I conclude today's call, I would like to provide you a safe-hearted statement that includes important questions regarding forward-looking statements made during this call. This earnings call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking terminology, such as beliefs, expects, may, will, should, anticipates, plans, and their opposites or similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based and could cause Duos Technologies Group, and actual results to differ materially from those anticipated by the forward-looking statements.

Operator: Before we conclude today's call, I would like to provide Duos with a safe heart statement that includes important cautions regarding forward-looking statements made during this call. This earnings call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking terminology such as believes, expects, may, will, should, anticipates, plans, and their opposites or similar expressions are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks, and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based and could cause Duos Technologies Group's actual results to differ materially from those anticipated by the forward-looking statements.

Speaker Change: Before we conclude today's call I would like to provide <unk> safe Harbor statement that includes important cautions regarding forward looking statements made during this call.

Charles Ferry: Our Edge Data Center business, led by Data Center Industry veteran Doug Recker, is completing contract discussions that have effectively sold out our first three Edge Data Centers, Destin, and Prot Texas. A fourth Edge Data Center is closely being sold out as well. Land leases are in the process of being secured, and our in-house project management team has begun the site survey work, permit requests, and logistical planning to execute installations began in September with the expectation of revenue starting this on October.

Operator: These risks and uncertainties include, but are not limited to, those described in Item 1A in Duos' annual report on Form 10-K, which is expressly incorporated herein by reference and other factors, as may periodically be described in Duos' filings with the SEC. Thank you for joining us today for Duos Technologies Group's second quarter 2024 earnings call. You may now disconnect. [inaudible] Edward Woo, Unknown Executive, John F. Kennedy, Unknown Executive, Adrian Goldfarb, Charles Ferry, Duos Technologies Group

This earnings call contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Looking terminology such as believes expects may will should anticipates plans and their opposite or similar expressions or alright.

Speaker Change: Or intended to identify forward looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties risks and other influences many of which are beyond our control, which may influence the accuracy of the statements and the <unk>.

Charles Ferry: These Edge Data Centers allow for high speed connectivity, low data latency, and high reliability that has not ordinarily been available in smaller and rural markets. Those who will greatly benefit our schools, hospitals, first responders, along with large farms and oil and gas operators in that region. Local leaders we are planning with, the installations are very excited, and removing all obstacles to gain access to better connectivity for their communities.

Speaker Change: Projections upon which the statements are based and could cause <unk> technologies group <unk> actual results to differ materially from those anticipated by these forward looking statements.

Charles Ferry: Our pipeline of new orders is growing, and I expect you will install at least 15 more Edge Data Centers in FY 2025, and accelerate that if possible to meet the demand.

Unknown Executive: These risks and uncertainties include, but are not limited to, those described in Item 1A in Duos' Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors, as may periodically be described in Duos' filings with the SEC.

Speaker Change: These risks and uncertainties include but are not limited to those described in item one a in Dallas annual report on Form 10-K, which is expressly incorporated herein by reference and other factors.

Charles Ferry: We have launched a new website specific to this business, where you can learn more about how this all works at duosedge.ai.

Speaker Change: You may periodically be described in <unk> filings with the SEC. Thank you for joining us today for <unk> Technologies Group second quarter 2024 earnings call you may now disconnect.

Unknown Executive: Thank you for joining us today for Duos Technologies Group's second quarter 2024 earning school.

Unknown Executive: You may now disconnect. Thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today, and thank you for joining us today.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Right.

Charles Ferry: I have previously spoken about the power industry experience that duosedge that the duosedge team and I have from our time at APR Energy. From 2016 to 2020, about 15 members of my current duosedge team and I installed more than one gigawatt of power. During one period of intense demand in the fall of 2017, our team installed two power plants in South Australia, two power plants in Puerto Rico following Hurricane Maria and one more power plant in Mexico following an earthquake.

Speaker Change: [music].

Speaker Change: Mhm.

Speaker Change: [music].

Charles Ferry: All five plants were installed near simultaneous in less than 120 days, with our entry into the data center space. We are now receiving requests to participate and in some cases lead opportunities to install power and support of data centers here in the United States. Based on this growing demand, we have incorporated Duos Energy Corporation as a third subsidiary to our Duos Technology family and already have a small pipeline of projects and supported data centers that could further accelerate our plan for more recurring revenue and profitability.

Speaker Change: Okay.

Speaker Change: Yeah.

Charles Ferry: With all the excitement around our new divisions, I want to reiterate our commitment to progressing our rail car inspection portal subscription business. Our company has invested nearly $70 million over the past seven years to perfect this technology and patent it. There is strong evidence from across the rail industry that this technology will eventually be deployed in high numbers benefiting everyone. However, to ensure we can deliver the value and return our shareholders and what they expect, I am strongly committed to diversifying our business into other synergistic areas where we have expertise and market conditions expect fast growth. Our team is exceptionally talented and very capable of advancing the strategy.

Charles Ferry: In closing, I want to thank my board of directors and long-term shareholders for their advice, counsel and support as we advance the strategy.

Charles Ferry: Thank you for listening and we'll now open the call for your questions.

Unknown Executive: Operator, would you please provide the appropriate instructions? Thank you.

Unknown Executive: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tunnel indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Unknown Executive: One moment, please, while we pull for questions.

Michael Latimore: First question comes from Michael Lattimore with Northland Capital Markets. Please go ahead. Great. Yeah. Thanks very much.

Charles Ferry: So, I guess, as you think about the second half of this year, I know you're not giving specific guidance, but maybe can you sort of highlight the top two or three driver, incremental revenue driver, a second half versus first half? Yeah, I'll start now. This is Chuck. I'll start now. Let's Adrian clean up behind me here. At a high level, you know, key revenues that we're expecting to come in. First of all, we'll come in from Mantrak, which is an ongoing installation project.

Charles Ferry: Adrian mentioned, we've already accelerated some of that revenue, and that is because we've installed now the very large edge data center, which is a part of that installation, and that occurred here about a month or so ago. We've got another large contract that we're expecting to close with a large chemical producer. And then we do expect to start seeing revenues coming in with our new edge data centers that we deployed out into the field.

Charles Ferry: And Adrian, do you want to add to that? No, that pretty much describes it to my, I think what you'll see is you'll see a market improvement, obviously, over the past two quarters for Q3 related to the fact that we are now starting to push forward with the abstract installation. There are still some challenges around that, which I've mentioned, and then just waiting to start the other rip installation at the chemical manufacturer.

Charles Ferry: Outside is that we are currently in discussions with about 20 different potential clients on the subscription side, and with the edge data centers, probably we'll start to kick off probably in about Q4. I think what will happen is that the next call for the Q3 call will have a much better visibility on that, but I'm expecting much better results going. Thank you. Great.

Charles Ferry: And then I think of the press release you talked about winning customers already for Edgida Center and that amounts to I think a million dollars of ARR and starting in the fourth quarter. Is that that that that assume kind of full capacity of those three Edgida Center is that one million dollars of ARR? Yeah, so it does. So we expect those to be filled to capacity. Again, these edge data centers are effectively small scale co-location data centers, which is why they're pretty high demand.

Charles Ferry: And we expect them to have filled out. So the way the kind of operational tades works, you get it installed, you bring the power and fiber up in the edge data center. And in general, we expect about a 30-day period where customers start to come in fill out that data center. So about 30 days after we commercially turn it on, it's effectively filled with those long-term recurring customers inside those data centers.

Charles Ferry: Yep. Okay. And then, Chuck, did you say you had 15 people on staff that are kind of experienced in the energy world? Yeah, we do. So, you know, we have a staff of about 70 folks total. Of that, at least 15, our prior APR energy employees is, you know, I'm very fortunate that, you know, employees that used to work from a, will come back and work for me a second time, which is very helpful.

Charles Ferry: Up in those 15, they go across all of the skill sets that you need to commercially develop a financially planned for engineer, procure, install, and then operate and maintain power plants. In this case, again, it's kind of a convergence of, you know, what we're doing inside the data center space and the data center industry at large, when some of the customers and some of the data center, you know, analysts found out that we have all this power experience, you know, all of a sudden, you know, a lot of these power opportunities against data centers have become, have been presented to us. And so, I think we're going to participate in that. That's good. Thanks so much, Mike.

Unknown Executive: Once again, if you would like to ask a question, please press star one on your telephone keypad.

Richard Jackson: Go ahead. Yeah, so from the subscription standpoint, the margins are very high. And that's because the marginal cost of putting in a subscription is not that much. So, typically, you're looking for margin, gross margin is a minimum range of 70%. And then, typically, we expect that to increase over time and get up into close to the 90% range as it's typical with that type of business. And that's kind of been our aim with all the businesses now for currently.

Richard Jackson: So on the edge data centers, again there's obviously there's a cost again because we're we own and operate these edge data centers. So obviously there's cost going in, but those costs are effectively capitalized over the life of a five year recurring, five year recurring contracts. And so once that thing is up in operational, we expect gross margins to be at least in the 60 to 70% or higher area on a on a power plant project.

Richard Jackson: So once there are against these data centers right now, we would expect again, there's going in costs. The good news in this sector is that the data center operators and developers have shown a high willingness to pay up from milestone payments to offset the costs of going into a power project. Once you're in there, again, good recurring revenue, typically five years or more. And we would expect, you know, a gross margin to be probably in the 50 to 60%ile range with that particular business.

Richard Jackson: Again, we're pushing a lot of the costs from an overhead perspective above the line. And then try to really bifurcate that GNA cost below to show a true, you know what we're truly what are that. Yeah, one other comment on that literally is that as compared to some subscription businesses, although the level of the number of customers is typically on the lower end just because of the industries there in the churn rate is extremely low.

Richard Jackson: All of the contracts we look at are typically minimum multi-year contracts and can go on for a long time. So that's one of the beauties is not only a high margin, but it's also a low churn business. So you need capital, you know, an idea of how much yet. Yeah, right now we're not sizing out any capital right now. The data center business, like we said, we've we've effectively funded the first four.

Richard Jackson: The intention is to get those first four up and prove out the economics with that. And then we'll we'll see what that looks like from there. Like that business could readily be funded from asset backs, debt financing. I'm not saying it's how we'll do that, but it can be. So there are ways to do that without deluding current shareholders on the power side. There's a lot of different options there with the I'll call the data center nuclear arms race.

Richard Jackson: There are data center developers and operators that are willing to fund a lot of that as part of a power deal. So, so we'll see what that looks like and keep everybody updated. All right. Thank you. Keep going. Thanks Richard. Right.

Unknown Executive: Next question. Ed Wu with the sendient capital markets. Please go ahead.

Unknown Executive: Yeah, I just had a question about your pipeline. And has there been any change in the sales cycles as you try to get these new contracts and is there different sales cycles with your railroad business and with the data center business. Thank you. That's a great question. And yes, there's a big difference in the sales cycle timeline between the rail and the edge data center. And I'll talk to the power side of this in a moment.

Unknown Executive: So, again, the rail, the cycle for closing rail cap ex deals as typically as we've seen, you know, taken sometimes 12 to 24 months. It can be a bit painstaking, but it really hasn't changed that much on the script on the subscription side. We're seeing, you know, it's probably taken about, you know, four to six, maybe even eight months, the clothes, a large subscriber subscription customer. Again, we're on the very front end of this.

Unknown Executive: We've only been able to really, really offer a subscription to these corals for about the last 60 days. So we got a lot of interested customers. And so I think we'll have to come back to you in a couple of months to really give you an accurate metric for how long it's taking to close those customers, on the Edge Data Center side. What we're seeing is that once we find a customer who in our cases is actually been funded by federal and state infrastructure dollars and then granted that money, we get into a conversation with them, the closure rate with them is about 60 to 90 days.

Unknown Executive: And sometimes it's even faster. Now, once we actually get interest from them and we start discussing the, you know, getting into contracts, you know, now there's a pipeline of about what's called about 90 days to actually manufacture the Edge Data Center. You know, month number four, you're actually installing the data center by month number five, you're filling it out. So we're probably talking about it from interest to Edge Data Center in the ground and producing recurring revenue.

Unknown Executive: Let's call it about six months for that on the power side. I don't have any specific data points right now for putting power up against data centers. But right now it appears that both later and I were out of a TD count investor conference where, you know, the best and brightest of that industry were there to include data center builders and hyperscalers. There are data center locations that need power now. So now it's a matter of how fast we can bring it to them.

Unknown Executive: Again, I think in our next call, I'll be able to tell you with a little bit more clarity about what the interest to a closure cycle looks like on it. Great. Well, thanks for giving me a answer. My question is, and I wish you guys good luck. Thank you. Thanks. I appreciate it.

Unknown Executive: At this time, this concludes our question and answer session.

Charles Ferry: I now like to turn the call back over to Mr. Ferry for his closing. I think again, I'd like to thank the audience for joining us today. And as always, I want to, you know, double thank all my board members and most especially our shareholders and especially our long term shareholders support.

Unknown Executive: I think our strategy is one that is going to be very lucrative for us going forward. Like Adrian said, and we'll look forward to keeping you updated. I'll turn the call back over to our operator.

Unknown Executive: Thank you.

Unknown Executive: Before we conclude today's call, I would like to provide you a safe hearted statement that includes important questions regarding forward-looking statements made during this call. This earnings call contains forward-looking statements within the meaning of the Private Security's Litigation Reform Act of 1995. Forward-looking terminology, such as beliefs, expects may, will, should, anticipates, plans, and their opposites or similar expressions are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based and could cause duos technologies group, and actual results to differ materially from those anticipated by the forward-looking statements.

Unknown Executive: These risks and uncertainties include but are not limited to those described in item 1a in Duos Annual Report on Form 10K, which is expressly incorporated herein by reference and other factors, as may periodically be described in Duos' filings with the SEC.

Unknown Executive: Thank you for joining us today for Duos Technologies Group's second quarter 2024 Earning School.

Unknown Executive: You may now disconnect[inaudible]

Q2 2024 Duos Technologies Group Inc Earnings Call - Q&A

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