Q4 2025 Duos Technologies Group Inc Earnings Call

March 31, 2026

Operator: Thank you. Good afternoon. Welcome to Duos Technologies Group's Q4 and full year 2025 earnings conference call. Joining us for today's call are Duos President, Doug Recker, and CFO, Leah Brown. Following the remarks, we will open the call to your questions. 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'd like to turn the call over to Mr. Doug Recker. Sir, please proceed.

Operator: Thank you. Good afternoon. Welcome to Duos Technologies Group's Q4 and Full Year 2025 Earnings Conference Call. Joining us for today's call are Duos President, Doug Recker, and CFO, Leah Brown. Following the remarks, we will open the call to your questions. 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'd like to turn the call over to Mr. Doug Recker. Sir, please proceed.

Doug Recker: Welcome, everyone, and thank you for joining us. Earlier today, we issued our earnings press release and our 10-K for 2025. Copies are available in the investor relations section of our website. I encourage all listeners to view press releases and our 10-K filing to better understand some of the details we'll be discussing during this afternoon's call. Before I begin, I would like to take a minute to personally thank Chuck Ferree for his leadership and guidance. Chuck has served the Duos organization and provided personal mentorship to me. I value Chuck and the opportunity he has provided me at Duos. It is not every day that you get to be mentored by a war hero and a corporate champion, and for that, I will be ever forever grateful. I look forward to your continued mentorship and guidance as you continue to serve on our board of directors.

Earnings, press release, and our 10-K for 2025 copies are available in the Investor Relations section of our website. I encourage all listeners to view press releases and our 10-K filing to better understand some of the details we'll be discussing during this afternoon's call.

Doug Recker: Chuck has served the Duos organization and provided personal mentorship to me. I value Chuck and the opportunity he has provided me at Duos. It is not every day that you get to be mentored by a war hero and a corporate champion, and for that, I will be ever forever grateful. I look forward to your continued mentorship and guidance as you continue to serve on our board of directors.

Before I begin, I would like to take a minute to personally thank Chuck Ferry for his leadership and guidance. Chuck has served Duos Technologies Group and provided personal mentorship to me. I value Chuck and the opportunity he has provided me at Duos.

Doug Recker: Thank you, Chuck, for all you have done and continue to do for the Duos organization. As your newly appointed CEO, I am honored and excited to discuss the focus of Duos Technologies Group. We are now fully dedicated to the data center market through our Duos Edge and Tech Solutions division, driven by accelerating customer demand. I will get into more of that in a minute, but want to give you an update on the rail technology and Duos Energy subsidiaries. First, let me talk to you about our legacy business, which is the Railcar Inspection Portal. In the previous calls, we had discussed that this line of business has become less important to our future at Duos. We also talked about diversifying our business strategy to edge computing. Thus, we have made the decision to completely divest the rail division.

It is not every day that you get to be mentored by a war hero and a corporate champion, and for that I will be forever grateful. I look forward to your continued mentorship and guidance as you continue to serve on our board of directors.

Thank you, Chuck, for all you have done and continue to do for the Duos organization.

As your newly appointed CEO, I am honored and excited to discuss the focus of Duos Technologies Group.

We are now fully dedicated to the data center market through our Duos Edge and Tech Solutions division, driven by accelerating customer demand.

Doug Recker: First, let me talk to you about our legacy business, which is the Railcar Inspection Portal. In the previous calls, we had discussed that this line of business has become less important to our future at Duos. We also talked about diversifying our business strategy to edge computing. Thus, we have made the decision to completely divest the rail division.

I will get into more of that in a minute, but I want to give you an update on the rail technology and do US Energy subsidiaries.

First, let me talk to you about our legacy business, which is the rail car inspection portal. In previous calls, we had discussed that. This line of business has become less important to our future at Duos.

We also talked about diversifying our business strategy to edge computing,

Doug Recker: This divestiture is expected to take place over the next 60 days. This decision did not come lightly, and I know the rail technology has a rich history with Duos shareholders. In fact, my involvement goes back many years before joining Duos, and I was intimately involved in the design and building of the edge data centers that the portal uses today. However, the lack of growth and regulatory hurdles for that business has proved to be extremely challenging to manage. The decision to divest frees up company resources and cuts significant SG&A expenses. For more details will be made available on the few divestitures in the near future. Second, I would like to talk about Duos Energy Corporation.

Thus, we have made the decision to completely divest the rail division.

This divestiture is expected to take place over the next 60 days.

This decision did not come lightly. And I know that rail technology has a rich history with Duos shareholders. In fact, my involvement goes back many years before joining Duos, and I was intimately involved in the design and building of the edge data centers that the portal uses today.

However, the lack of growth in regulatory hurdles for that business has proved to be extremely challenging to manage.

The decisions, invest freeze up company resources, and cut, significant sgna expenses.

More details will be made available on the few destitutes in the near future.

Doug Recker: As many of you may remember from last year, Duos entered into an asset management agreement with New APR Energy to help find new contracts to engineer, procure, construct, and operate fast power plants. Duos also was giving a 5% equity stake in the parent of APR Energy. The AMA provided the interim financial ability to execute and pivot to our data center strategy. We announced on the Q3 earnings call that the AMA would conclude in 2026, but Duos will remain or will retain the 5% equity stake. Now I would like to discuss our data center strategy and our new line of businesses at Duos Technology Solutions. Part of our strategy in building and deploying data centers at a rapid pace has always been focused on cost savings, lowering our Capital Expenditures. Building data center infrastructure is very capital intensive.

Second, I would like to talk about Doulas Energy Corporation. As many of you may remember from last year, Doulas entered into an asset management agreement with New APR Energy to help find new contracts to engineer, procure, construct, and operate fast power plants.

She was also given a 5% equity stake in the parent of APR Energy.

The AMA provided the interim financial ability to execute and pivot to our data center strategy.

We announced on the Q4 earnings call that the AMA would conclude in 2026, but Doers will remain and will retain the 5% equity stake.

Now, I would like to discuss our data center strategy and our new line of businesses at Duos Technology Solutions.

Part of our strategy in building and deploying data centers at a rapid pace has always been focused on cost savings, lowering our capital expenditures.

Doug Recker: As Duos is relatively small buyer compared to the larger hyperscalers and colocation companies, we needed a way to buy products cheaper, so we created Duos Technology Solutions. This brand-new division allows us to do just that, as well as provide a new stream of revenue for us. We started by hiring an industry veteran with a proven track record who understands our business as well as the data center market overall. Kristen Sanderson joined Duos and will serve as the Senior Vice President of Duos Technology Solutions. Kristen has over 18 years of data center product experience, vast market distribution knowledge, relationships with all the key supplier partners that Duos needs to work with, and a wealth of relationships in the data center industry.

Building data center infrastructure is very capital intensive.

As Zeus is a relatively small buyer, compared to the larger, hyperscalers, and collocation companies, we needed a way to buy products cheaper.

So, we created Duo's Technology Solutions. This brand new division allows us to do just that, as well as provide a new stream of revenue for us.

We started by hiring an industry veteran with a proven track record, who understands our business as well as the data center market overall.

Kristen Sanderson joined Duos and will serve as a Senior Vice President of Duos Technology Solutions.

Doug Recker: This new division allows Duos to procure materials for its own builds at a much lower rate than the legacy way of purchasing through traditional distribution. Duos Technology Solutions offers the same strategic sourcing and product distribution to new customers, including large-scale enterprise organizations, hyperscalers, large colocation companies, low voltage contractors, and general contractors across the United States. I'm very pleased to report that through Q1, Duos Tech Solutions has already sold $10 million in new business, which currently sits as backlog, all of which I expect to be recorded as revenue this year. This new line of business has low overhead and is simple to execute while having strong commitments by the end client.

Kristen has over 18 years of data center product experience, vast market distribution knowledge, relationships with all the key supplier partners that Duos needs to work with, and a wealth of relationships in the data center industry.

This new division allows Duos to procure materials for its own bills at a much lower rate than the legacy of purchasing through traditional distribution.

Duo Technology Solutions offers the same strategic sourcing and product distribution to new customers including large-scale Enterprise organizations hyperscalers, large. Collocation companies low voltage contractors and general contractors across the United States.

I'm very pleased to report that through the first quarter, Duo Tech Solutions has already sold $10 million in new business, which currently sits as backlog.

Recorded as Revenue this year.

Doug Recker: The revenue generator from Duos Technology Solutions is expected not only to replace the revenue from the New APR Energy, but also provide better margins, thus further contributing to the overall future profitability and growth of Duos Technologies Group. Kristen has built a seasoned team with the talent, in short three-month build, tremendous sales pipeline, and we expect amazing things from this new venture. Now I want to shift our discussion to the core of our new data center-focused organization, Duos Edge AI. The demand for edge computing continues to grow at a rapid pace, and I'm pleased to share that Duos Edge AI is in a great place to meet this demand. H2 2025 proved to be extremely busy for Duos Edge.

This new line of business has low overhead and is simple to execute, while having strong commitments by the end client.

The revenue generator from Tech Solutions is expected. Not only to replace the revenue from the new APR AMA, but also provide better margins thus further contributing to the overall future profitability and growth of Duos Technologies Group.

Kristen has built Seasons. Kristen has built a seasoned team with the talent and short, 3-month build, tremendous sales Pipeline. And we expect amazing things from this new venture.

Now, I want to shift our discussion to the core of our new data center, Focus organization, Duo's Edge. AI

The demand for edge computing continues to grow at a rapid pace, and I'm pleased to share that Duos Edge.AI is in a great place to meet this demand.

Doug Recker: In July 2025, we successfully completed a capital raise of $45 million with Titan Partners to fund the construction and deployment of 15 EDCs to further broaden the connectivity and compute needs of underserved Tier 3 and Tier 4 markets. Duos Edge AI was also awarded a patent for clean room technology for modular data center deployments, which gives us a strategic competitive advantage in the space. Our goal in 2025 was to procure, manufacture, deploy 15 edge data centers. This goal was extremely aggressive and unheard of in our industry. We are proud to report today that we have accomplished that goal. Our focus for H1 2026 is to continue executing our sales strategy to acquire new customers in our markets to fully utilize the capacity of each EDC.

The second half of 2025 proved to be extremely busy for Duos Edge. In July 2025, we successfully completed a capital raise of $45 million with Tyton Partners to fund the construction and deployment of 15 EDCs, to further broaden the connectivity and compute needs of underserved Tier 3 and Tier 4 markets.

Newest Edge. AI was also awarded a patent for clean room. Technology for modular data center deployments, which gives us a strategic competitive advantage in the space?

Our goal in 2025 was to make sure manufacturers deploy 15 edge data centers. This goal was extremely aggressive and unheard of in our industry.

We are proud to report today that we have accomplished that goal.

Doug Recker: In March 2026, we completed a $65 million capital raise to deploy approximately 2,300 GPUs as a service, a 4.8MW high-density EDC deployment for a leading hyperscaler, and to expand our high-density EDC footprint to support growing demand for power and compute across AI inference, training, enterprise, and hyperscale AI workloads. We also have 5 new EDCs in production, with plans for an additional 20MW of deployed capacity by year-end. Having inventory for our EDCs to deploy in critical is crucial for our continued growth and success in this market. The Duos Edge AI story and its initial success is garnering tremendous excitement and demand, so inventory will allow us to react quickly to new market requests. Part of this new demand we now see is for higher density power, which serves AI and high-power compute needs.

Our Focus for the first half of 2026 is to continue executing our sales strategy, to acquire new customers. In our markets to fully utilize, the capacity of each EDC.

In March 2026, we completed a $65 million capital raise to deploy approximately 2,300 GPUs as a service. A 4.8 megawatt high-density EDC deployment for a leading hyperscaler, and to expand our high-density EDC footprint to support growing demand for power and compute across AI inference, training, enterprise, and hyperscale AI workloads.

We also have 5 new edc's in production with plans for an additional 20 megawatts of deployed capacity by year end.

Have an inventory for our edc's to deploy in critical is crucial for our continued growth and success in this market.

The Duo's Edge AI story and its initial success is garnering tremendous excitement and demand, so inventory will allow us to react quickly to new market requests.

Doug Recker: While Duos Edge AI is committed to sticking to our original model of deploying in the tier 3 and tier 4 markets, we are seeing unprecedented demand for power and megawatts compared to kilowatts. The data center market is experiencing a boom like we've never seen before, and building at scale is costly, and it takes years to complete. During the course of this deployment, our 15 EDCs, we saw an influx of calls requesting more power in the markets where we're forming organizations all across the country. There is such a shortage of data center space and power that companies are turning to Duos Edge AI. We are going to start to build our new EDCs with greater power capacity to meet this demand. We have shown the market we can deploy at lower costs with an incredibly faster speed to market.

Part of this new demand we now see is for higher-density power, which serves AI and high-powered compute needs.

While Duo's EDI is committed to sticking to our original model of deploying in the Tier 3 and Tier 4 markets, we are seeing unprecedented demand for power in megawatts compared to kilowatts.

The data center market is experiencing a boom like we've never seen before, and building at scale is costly—it takes years to complete.

during the course of this deployment, our 15 edds, we saw an influx of calls requesting more power in the markets, where we are formed or organizations all across the country,

There is such a shortage of data center space and power that companies are turning to Duos Edge.AI.

So, we are going to start to build our new EDCs, with greater power capacity, to meet this demand.

Doug Recker: Duos Edge AI will now be able to cater to customers that have the high-density needs, like the Neocloud providers and hyperscalers for their remote edge sites. These higher power capacity EDCs should provide much higher monthly recurring revenue for Duos, which we will explain in our financial update coming up shortly. Before I transition to the financials, I would like to touch on our start of the year and our first partnership in deploying high-density power EDCs. This month, Duos executed its first contract across two newly launched business lines, GPU as a service, and high-power colocation service for AI infrastructure. Under our GPU as a service agreement, Duos will deploy 2,304 NVIDIA GPUs across our edge data center platform, generating recurring revenue through a GPU rental model purpose-built for enterprise and AI workloads.

We have shown the market we can deploy at lower costs, with an incredibly faster speed to market.

Due to Edge, AI will now be able to cater to customers that have high-density needs, like the Neo clouds providers and hyperscalers, for their remote Edge sites.

These higher power capacity EDCs should provide much higher monthly recurring revenue for Duos.

Which we will explain in our financial update coming up shortly.

Before I transition to the financials, I would like to touch on our start of the year and our first partnership in deploying high density, power edc's.

This month, Duos executed its first contract across two newly launched business lines: GPU as a Service.

And high-power, collocation service for AI infrastructure.

Doug Recker: This contract is expected to generate approximately $176 million in revenue over a 36-month term, with margins exceeding 80% and expected annual EBITDA of approximately $40 million. Separately, Duos was awarded a high-powered colocation contract to deliver 4.8MW of critical compute power to support a leading hyperscaler's high-density NVIDIA GPU cluster housed within Duos Edge data centers. This contract represents Duos' entry into the market of high-power colocation, where demand for AI-grade infrastructure continues significantly outpacing supply. Together, these contracts mark a significant commercial inflection for Duos, establishing two distinct and complementary revenue streams within our data center platform and validating edge data center infrastructure at the highest level of the AI compute market. Since announcing these contracts, we have received strong incremental inbound interest from hyperscalers, Neocloud providers, and other large-scale compute customers seeking high-density EDC solutions.

Reoccurring Revenue through a GPU rental model purpose, built for Enterprise and AI workloads.

This contract is expected to generate approximately 176 million in Revenue.

Over 36 month term with margins exceeding, 80% and expected annual ibida of approximately 40 million.

Separately, Duos was awarded a high-powered colocation contract to deliver 4.8 megawatts of critical compute power to support a leading hyperscaler's high-density Nvidia GPU cluster, housed within Duos' Edge data centers.

This contract represents Duos' entry into the market of high-power collocation, where demand for AI-grade infrastructure continues to significantly outpace supply.

Together these contracts mark a significant commercial inflection for Duos, establishing two distinct and complementary revenue streams within our data center platform and validating edge data center infrastructure at the highest level of the AI compute market.

Doug Recker: We see a significant opportunity to scale the high-power EDC model through 2026 and beyond. Now I would like to turn it over to our CFO, Leah Brown, who will go over our financials for 2025. Leah.

Since announcing these contracts, we have received strong incremental inbound interest from hyperscalers, NIO, cloud providers, and other large-scale compute customers seeking high-density EDC solutions. We see a significant opportunity to scale the high-power EDC model through 2026 and beyond.

Leah Brown: Thank you, Doug. This has been an exciting year for Duos. 2025 is a year marked by significant revenue growth, strategic investment, and meaningful progress toward building a stronger, more scalable company. I am truly excited to walk through our full year financial performance and highlight key operational drivers that shaped our results. For 2025, total consolidated revenue was approximately $27 million. The company previously projected revenue in 2025 of $28 million. Although that target was not met, we recorded a little over $1 million in deferred revenue for technology solutions, which is contracted, cash was received, and we will record as revenue in 2026. In 2025, the $27 million in revenue was a significant increase compared to $7.3 million in 2024, which is over a 270% increase year over year.

Now, I would like to turn it over to our CFO, Leah Braun, who will go over our financials for 2025.

Thank you, Doug.

This has been an exciting year for Duos. 2025 is a year marked by significant Revenue growth, Strategic investment in meaningful progress, toward building a stronger more scalable company,

I am truly excited to walk through our full-year financial performance and highlight key operational drivers that shaped our results.

For 2025, total consolidated revenue was approximately $27 million.

The company previously projected revenue in 2025 of $28 million.

Although that Target was not met. We recorded a little over 1 million in deferred revenue for Technology Solutions, which is contracted cash was received and we will record as Revenue in 2026.

In 2025, the $27 million in revenue was a significant increase compared to $7.3 million in 2024.

Leah Brown: This growth was primarily driven by services and consulting revenue from the asset management agreement with New APR Energy, totaling $22.4 million in 2025 versus $900 thousand in 2024. The company delivered materially stronger gross margin in 2025, generating $7.9 million in gross profit, achieving approximately 29%, a significant year-over-year improvement. This was driven by improved cost absorption and continued operating efficiency. The company reported net loss of approximately $9.8 million in 2025, an improvement from the $10.8 million net loss in 2024. The year-over-year improvement was driven primarily by higher revenue and significantly stronger gross margin. As we discussed on our Q3 earnings call, achieving positive adjusted EBITDA was an important milestone for the company, reflecting the early benefits of revenue scale and margin improvement.

Which is over a 270% increase year over year.

This growth was primarily driven by services and consulting revenue from the asset management agreement with New APR Energy.

Totaling $22.4 million in 2025, versus $900,000 in 2024.

The company delivered materially stronger gross margin in 2025, generating $7.9 million in gross profit and achieving approximately 29%.

A significant year-over-year Improvement.

This was driven by improved cost absorption and continued operating efficiency.

The company reported a net loss of approximately $9.8 million in 2025.

An improvement from the $10.8 million net loss in 2024.

The year-over-year improvement was driven primarily by higher revenue and, significantly, stronger gross margin.

As we discussed on our Q3 earnings call.

Achieving positive adjusted ibida was an important milestone for the company.

Leah Brown: I'm pleased to report that we've built on that progress in Q4, delivering positive adjusted EBITDA for the second consecutive quarter. This consistency is meaningful and demonstrates that the Q3 result was not a one-time event, but rather the continuation of improving operating performance as the business scales. The consecutive improvement from Q3 to Q4 reinforces our confidence in the direction of the business, driving higher revenue volume, improved gross margin, and more efficient cost structure. Let's shift to the balance sheet. The company ended 2025 with approximately $63 million in total assets, reflecting meaningful growth year over year. Cash increased significantly compared to the prior year, driven by capital raised during the year, which strengthened liquidity and enhanced our ability to support operations and planned investments.

Reflecting the early benefits of Revenue scale and margin improvements.

I'm pleased to report that we've built on that progress in Q4.

Delivering positive adjusted EBITDA for the second consecutive quarter.

This consistency is Meaningful and demonstrates that the Q3 results was not a 1-time event.

But rather the continuation of improving operating performance as the business scales.

Q4 reinforces our confidence in the direction of the business.

Driving higher Revenue, volume improve gross margin and more efficient cost structure.

Let's shift to the balance sheet.

The company ended 2025 with approximately 63 million in total assets.

Reflecting meaningful growth year-over-year.

Leah Brown: Another strong position on the balance sheet is property and equipment, each of which significantly increased year over year, reflecting continued investment in infrastructure and assets required to support the program's execution and long-term growth initiatives. The current contract liabilities over $5 million support the company's future revenue recognition. On the equity side, capital raised during the year strengthened our balance sheet and liquidity, while ongoing investment in the business aligns our strategy to scale operations and drive longer-term value creation. 2025 was a transformative year for Duos Technologies Group. We significantly scaled revenue, strengthened our liquidity position, and made strategic investments that position the company for increased operating leverage and margin expansion going forward. As previously reported, the Rail Segment remains relatively flat. In response, we are divesting the Rail business and reallocating resources to support the continued expansion of our Edge Data Center segment.

Increased significantly compared to the prior year, driven by the capital raise during the year, which strengthened liquidity and enhanced our ability to support operations and planned investments.

Another strong position on the balance sheet is property and equipment.

Each will significantly increase year-over-year, reflecting continued investment in infrastructure and assets required to support the program's execution and long-term growth initiatives.

The current contract liabilities over $5 million support the company's future revenue recognition.

On the equity side, capital raised during the year strengthened our balance sheet and liquidity, while ongoing investment in the business aligns with our strategy to scale operations and drive longer-term value creation.

2025 was a transformative year for Duos Technologies Group.

We significantly scaled revenue, strengthened our liquidity position, and made strategic investments that position the company for increased operating leverage and margin expansion going forward.

As previously reported, the rail segment remains relatively flat.

Leah Brown: Turning to our 2026 outlook. The company is providing revenue guidance of $50 to 55 million in total revenue across all business lines. This forecast reflects growth from both our core operations and newer initiatives, which Doug will cover, and we believe positions us for a strong year. Due to the timing of revenue recognition, a significant portion of revenue is expected to be recognized in the H2 of the year, coinciding with the periods in which we expect to achieve positive EBITDA. Our investments and expanded revenue opportunities give us confidence in our ability to execute and continue building a stronger, more profitable company. Doug, I'll turn it back to you for additional comments.

In response, we are divesting the rail business and reallocating resources to support the continued expansion of our Edge data center segment.

Turning to our 2026 Outlook.

The company is providing revenue guidance of $50 to $55 million in total revenue across all business lines.

This forecast, reflects growth from both our core operations, and newer initiatives, which dove will cover

And we believe positions us for a strong year.

Due to the timing of revenue, recognition of a significant portion of revenue is expected to be recognized in the second half of the year.

Coinciding with the periods in which we expect you to achieve positive evidence.

Our investments and expanded Revenue opportunities. Give us confidence in our ability, to execute and continue building a stronger, more profitable company.

Doug Recker: Leah, thank you. Before we open this up for questions, I wanted to say again how honored I am to serve as your new CEO. The new data center-focused strategy is the new Duos Group, Duos Technologies Group, and we are poised for great success. We have been awarded global recognition with the Innovation of the Year award at the largest data center and telecom conference at Pacific Telecommunications Council 2026 in January. We have also been nominated for Breakout Success in North America Digital Infrastructure Leader of the Year from The Tech Capital Global Awards coming up in May. The global recognitions only solidifies we are on the right path at Duos with a prosperous future ahead. We understand we have a new focus, and this is a departure from our legacy business past.

Doug, I'll turn it back to you for additional comments.

Leah, thank you. Before we open this up for questions, I wanted to say again how honored I am to serve as your new CEO.

The new data center focus strategy is the new Duos group, Duos Technologies Group, and we are poised for great success.

We have been awarded global recognition with the Innovation of the Year award at the largest data center and telecom conference at the Pacific Telecom Council 2026 in January.

We have also been nominated for Breakout Success in North America, and for Digital Infrastructure Leader of the Year from the Tech Capital Global Awards coming up in May.

The global recognition only solidifies that we are on the right path at Duos, with a prosperous future ahead.

Doug Recker: We are taking steps to ensure the new messaging is relayed to the market and that we will be given the appropriate market coverage moving forward. We will be retaining an IR firm to assist and expect several analysts to report on our new focus and business activities in the near future. With that, I will open it up to questions. Operator?

We understand. We have a new focus, and this is a departure from our legacy business past.

We are taking steps to ensure the new messaging is relayed to the market and that we will be given the appropriate market coverage moving forward.

We will be retaining an IR firm to assist, and expect several analysts to report on our new focus and business activities in the near future.

Operator: Thank you. 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 tone will 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. One moment please while we poll for questions. Thank you. Our first question comes from the line of Ed Wu with Ascendiant Capital Markets. Please proceed.

And with that, I will open it up to questions. Operator?

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please, while we pull your questions.

Thank you. Our first question comes from the line of Ed Woo with Ascendiant Capital Markets. Please proceed.

Edward M. Woo: Yeah, I'd just like to give my congratulations to you, Doug, and to the entire Duos team. The growth that you guys had has just been amazing. My question is, as you know, you mentioned that demand remains very, very strong. Are there any worries of competitors entering this market? What can Duos do to be able to, you know, have the advantages to be able to compete if new entrants come in?

Edward Woo: Yeah, I'd just like to give my congratulations to you, Doug, and to the entire Duos team. The growth that you guys had has just been amazing. My question is, as you know, you mentioned that demand remains very, very strong. Are there any worries of competitors entering this market? What can Duos do to be able to, you know, have the advantages to be able to compete if new entrants come in?

Doug Recker: That's a great question, and that's why we manage the business appropriately. You're going to see some people come into the market, like you just probably saw the press release from Crusoe. They're entering the market as far as building 5- to 10- to 20-megawatt modular data centers. They're one of the largest in the business. They build Stargate. They're huge. That in itself tells us we're in the right market. What we've done, and this is an incredible piece. I just got back from GTC, and everybody was talking about how they're concerned about deploying with modular because GPUs are extremely sensitive to particles, to dust. Ironically, the best part about our business, we obtained a patent in September called the Clean Room.

Yeah I just like to give my congratulations to you Doug and to the entire duels team, the growth that you guys had has just been amazing. Um my question is as you know you mentioned that the demand remains very very strong are there any worries of competitors entering this market and what kind of duels do to be able to you know have the advantages to be able to compete if new entrance come in?

That's great question. And and that that's why we're we managed the business appropriately. So you're you're going to see some people come into the market. Like you just probably saw the press release um from kuso they they're entering the market as far as building 5 to 10 to 20, megawatt modular data centers. They're 1 of the largest in the business, they build Stargate their their huge so that in itself tells us we're in the right Market. But what we've done and this is an incredible piece. I I just got back.

From GTC. And, uh, everybody was talking about

They're concerned about deploying with modular because GPUs are extremely sensitive to particles, to dust, and—

Doug Recker: We actually have a patent that connects to our modular data center that cleans the air before you come in. So all the particles on your body, on your equipment are blown off, filtered off, then you walk actually into the data center. That is huge when it comes to deploying, because what's gonna happen is the GPU providers like NVIDIA and, you know, everybody that makes chips, everybody that makes servers, they won't honor their warranties if the fans get dirty and dust in them. So that is a huge win for us, and it's gonna help us, you know, differentiate us from the competitors coming in the market. You will see them, but we are the only ones that have deployed, prime example, 15 pods.

Doug Recker: I challenge everybody that comes into this business that doesn't have a three-D rendering to go look at, physically look at their pods. We had a customer fly in from China last week, and they flew into Corpus Christi and toured our pods just to see our manufacturing capabilities. It looks like they'll be a new customer of ours on the hyperscale side, possibly. We have the experience. We've done it. We can actually show people our markets. They can physically go there, see our customers, see gear burning, and see how the facility works. We welcome the competition, but we're strong where we sit.

Ironically in the best part about our business. We obtained a patent in September called the clean room. We actually have a patent that goes on top of our, it connects to our modular data center, that cleans the air before you come in. So all the particles on your body on your equipment are are blown off filtered off, then you walk actually into the data center. That is huge when it comes to deploying. Because what's going to happen is the GPU. Provider is like Nvidia and, and, uh, you know, everybody that makes chips everybody makes servers. They won't honor to, they won't honor their warranties if the fans get dirty and dust in them. So that is a huge win for us. And it's going to help us, you know, differentiate us from the competitors coming in the market, you will see them. But we are the only ones that have deployed prime example, 15 pods. Um I challenge everybody that comes into this business that doesn't have a 3D rendering if you go look at physically, look at their pod we had a customer fly in from China last week and they flew into

Corpus Christi and toward our pods, just to see our manufacturing capabilities. So it looks like there'll be a new customer of ours on the hyperscale side, possibly. So, we have the experience, we've done it, we can actually show people our markets—they can physically go there, see our customers, see your burning, and see how the facility works. So, uh, we welcome the competition, but, uh, we're strong—strong where we said.

Edward M. Woo: That sounds good. My last question is, you know, kind of like a longer-term plans. I know you guys kind of been focused on the rural underserved markets. Is there plans to go into the bigger markets? Also you mentioned China customers or China partners. Do you anticipate possibly going international? Thank you.

Edward Woo: That sounds good. My last question is, you know, kind of like a longer-term plans. I know you guys kind of been focused on the rural underserved markets. Is there plans to go into the bigger markets? Also you mentioned China customers or China partners. Do you anticipate possibly going international? Thank you.

Doug Recker: Well, right. Yeah, great question. Right now, our focus is tier three and tier four markets, and let me tell you why. The demands to deploy in a tier three market, I can deploy my pods and get access to power in 90 to 120 days. If I go into a tier one market, I'm competing against the larger data centers and the infrastructure that's already in place. We're going to build infrastructure fast. Where do you do that? You go into markets that have accessible power. They've built substations that have 5 to 10 MW available on them, and permitting is a lot quicker. Our focus is gonna continue to tier three and tier four markets, and that business sector is huge, and it's gonna be huge for the next 10 years. And international.

That sounds good. And my last question is you know, kind of like a longer term plans. I know you guys kind of been focused on the the rural underserved markets is their plans to go into the bigger markets. And also you mentioned uh China customers or China Partners. Do you anticipate possibly going International?

Thank you. Well, write that right? Yeah, great question. Right now our focus is is tier 3 and tier 4 markets and let me tell you why the demand to deploy in a tier 3 Market. I can deploy my pods and get access to power in 90 to 120 days. If I go into a tier 1 market, I'm competing against the larger data centers in the infrastructure that's already in place. We're going to build infrastructure fast. So where do you do that? You go into markets that have accessible power. They've built substations that have 5 to 10 Meg, available on them and permitting is a lot quicker. So our focus is going to continue to tier 3, tier 4 markets and that business sector is is huge and it's going to be huge for the next 10 years.

Edward M. Woo: Great. Thanks for answering my question.

Edward Woo: Great. Thanks for answering my question.

Doug Recker: Yeah. To answer your international question. Once we start deploying at scale here and move on, we'll be open to international. But right now, our number one focus is in the US into the tier three and tier four markets.

Yeah, and the international question—what? Once we start deploying at scale here and move on, we will be open to international. But right now, our number one focus is in the US, into the tier 3 and tier 4 markets.

Edward M. Woo: Great. Well, thank you, and I wish you guys good luck.

Edward Woo: Great. Well, thank you, and I wish you guys good luck.

Doug Recker: Thank you, sir. Thank you so much.

Great. Well, thank you, and I wish you guys good luck.

Thank you, sir. Thank you so much.

Operator: Thank you. Our next question comes from the line of Dan Weston with Weston Capital Management. Please proceed.

Operator: Yeah. Hi, good afternoon, everyone. Thanks for taking the questions, and congrats on the quarter. Doug, a couple of quick points of clarification. I think you mentioned you were expecting to have, or you do have 5 new EDCs in production to be deployed by year-end, if I heard that right.

Dan Weston: Yeah. Hi, good afternoon, everyone. Thanks for taking the questions, and congrats on the quarter. Doug, a couple of quick points of clarification. I think you mentioned you were expecting to have, or you do have 5 new EDCs in production to be deployed by year-end, if I heard that right.

Thank you. Our next question comes from the line of Dan Weston with West Capitol Management. Please proceed.

Doug Recker: That's right.

Doug Recker: Are those five EDCs specific to the GPU as a service contract you just signed?

Dan Weston: Are those five EDCs specific to the GPU as a service contract you just signed?

Doug Recker: No, those 5 EDCs are committed to markets that have been contracted. There are markets in Georgia, and we're working with a utility to deploy on their network as well. Those are our normal pods that we deploy, and that we've deployed. Like the 15 we've deployed, they're identical.

Uh, Doug a couple of quick points of clarification. The, um, I think you mentioned, you were expecting to have, uh, or you do have 5 new edcs in production to be deployed by year end, if I heard that right. Are those 5?

Doug Recker: All right. Okay.

Dan Weston: All right. Okay.

No, those 5 EDS are committed to markets that have been contracted. So um there are markets in Georgia and uh we're working with a utility to deploy on their Network as well. So those are our normal pods that we deploy uh and that we've deployed like the 15 we've deployed. They're identical.

Doug Recker: Yeah. Let me give some clarification because this might help answer a lot of questions for other folks too. We're still building our same model. Our core is you go after the education, health care, and local government in these markets. What we're doing at the factory is we're building the pod with more power. We're deploying these units, the same concept, the same places, but we're building them at more scale so we can bring in higher density users. Yeah, so that's the model.

Doug Recker: Got it. Thank you for that clarification. Back to the first GPU as a Service customer that you just recently signed. When do you expect to have those larger pods, if you will, in the ground and expected to generate revenue?

Dan Weston: Got it. Thank you for that clarification. Back to the first GPU as a Service customer that you just recently signed. When do you expect to have those larger pods, if you will, in the ground and expected to generate revenue?

So let me click. Yeah, and let me, let me give some clarification because this is my help. Answer a lot of questions for others too. We, we're still building our same model. Our core is you go after the education, Healthcare in local government in these markets. But what we're doing at the factory is we're building the Pod with more power. So we're deploying these units to the same concept, the same places, but we're building them at more at scale so we can bring in higher, density, users. So, so yes. So, that's the model.

Doug Recker: We're on track for July, August. You know, with permitting and things like that, I wanna say August to you, but we're looking good. More August timeframe.

Got it, thank you for that clarification. Uh, uh, back to the the first GPU as a service, customer that you just recently signed. Uh, when do you expect to have those, those, uh, larger pods, if you will, in the ground and, uh, expected to generate Revenue?

We're, we're, we're on track for July, August. So, you know, with permitting and things like that, I want to say August to you, but we're, we're looking good. So,

Doug Recker: That's amazing. As it just kinda ties into the guidance that Leah provided, Leah, if you're there, I think I wrote down $50 to 55 million of revenue expected for this year. Could you give us a sense of how that revenue breaks down, please?

Dan Weston: That's amazing. As it just kinda ties into the guidance that Leah provided, Leah, if you're there, I think I wrote down $50 to 55 million of revenue expected for this year. Could you give us a sense of how that revenue breaks down, please?

More August time frame.

That's amazing. Uh and and as a just kind of ties into the guidance that uh Leah provided. Uh if if Leah if you're if you're there. I think I wrote down 50 to 55 million dollars of Revenue expected for this year. Could you give us a sense of how that Revenue breaks down please?

Leah Brown: Yeah. Thank you for that question. The revenue lines that we anticipate for this year, we're expecting definitely on a holistic view to achieve that aggregate. As a company, we don't go into specifics for each business line, but overall, we do anticipate to meet that guidance.

Um, so yeah, yeah, thank you for that question. Um, so the revenue line that we anticipate for this year? Um, we're expecting definitely on a holistic, um, view to, um, to achieve that aggregate. Um, as a company, we don't go into specifics for each business line. Um, but overall, um, we do anticipate to meet that guidance.

Leah Brown: I understand. While you're there, you mentioned the PP&E up at $27 million and change. That's obviously a massive increase from last year, but also up $12 million from your Q3. Could you give us a breakdown of what that PP&E is, please?

Dan Weston: I understand. While you're there, you mentioned the PP&E up at $27 million and change. That's obviously a massive increase from last year, but also up $12 million from your Q3. Could you give us a breakdown of what that PP&E is, please?

Leah Brown: Absolutely. The majority of our PPE is our Edge Data Centers. We have 15 Edge Data Centers, and we've also started pre-buying for the next lot that is coming online in 2026. You-

Okay, okay, I I understand. Um and while you're there, uh you mentioned uh the pp&e up at 27 million and change. That's a obviously a massive increase from last year but also up 12 million from your Q3. Uh, could you give us a breakdown of what that pp&e is? Please?

Leah Brown: Got it.

Dan Weston: Got it.

Leah Brown: The majority of that. Yes.

Leah Brown: Great stuff. Last one for me, I'll jump back in. Doug, I think you mentioned that you'd secured the 4.8MW of power for, I assume you're talking about the GPU as a Service contract. The initial LOI, I think you mentioned 10MW dedicated to that project. Could you explain a little bit what the delta is there between the 4.8MW and the 10MW?

Dan Weston: Great stuff. Last one for me, I'll jump back in. Doug, I think you mentioned that you'd secured the 4.8MW of power for, I assume you're talking about the GPU as a Service contract. The initial LOI, I think you mentioned 10MW dedicated to that project. Could you explain a little bit what the delta is there between the 4.8MW and the 10MW?

Absolutely. So the majority of our PPE is our Edge data center. So, we have 15 Edge data centers, and we've also started pre-buying for the next slot that is coming online in 2026. So, the majority of that, yes.

Doug Recker: Sure. The site is built to 10MW, so there's 10MW available. They're taking down 4.8 for critical load. That means I can add to that site quickly up to 10MW. Now, that site can go to 20MW, but it might take another year to get access to another 10MW. The winner here is that site has the capability that's already been transformed down at 10MW. There's 10MW physically available today if I wanted to sell it. I would just build the pods. I build another section of pods to get to the 10MW. Another 5MW cluster of pods.

Great stuff. Uh, and then, last one for me. I'll jump back in, uh, Doug. I think you mentioned that you had secured the 4.8 megawatts of power for—uh, I assume you're talking about the GPU-as-a-service contract. Uh, the initial LOI, I think you mentioned, had 10 megawatts dedicated to that project. Could you explain a little bit what the delta is there between the 4.8 and the 10 megawatts?

sure, the so the site is built to 10 megawatt, so there's 10 megawatt available,

So they're taking down 4.8 to to for critical load. So that means I can add to that site quickly up to 10 mag. Now that site can go to 20 mag, but it might take another year to get access to another 10. So that, so the, the winner here is that site has a capability that's already been, uh, transformed down at 10, mags 10 mag physically available today if I wanted to sell it. So I would just build the pods I build another section of PODS to get to the 10 mag. So another 5 mag cluster of pods.

Doug Recker: In terms of, you know, real estate, if you will, there's plenty of space there to just drop another 2, 3 or 5 pods down if needed.

Dan Weston: In terms of, you know, real estate, if you will, there's plenty of space there to just drop another 2, 3 or 5 pods down if needed.

Doug Recker: Yes. There's 3 acres there, and what we've noticed is 3 acres is plenty. Basically, if you look at our model, you know, if we're deploying 5 meg, it's really like looking at five school buses.

Uh and in terms of you know, real estate if you will. There there's plenty of space there to just drop another 2 3 or 5 pods down if needed.

Doug Recker: Understood completely. Do you anticipate that your first technology, global technology customer for the GPU as a Service, will end up taking the whole 10 megs?

Dan Weston: Understood completely. Do you anticipate that your first technology, global technology customer for the GPU as a Service, will end up taking the whole 10 megs?

Yes, so there's 3 acres there. And what we've noticed is 3 acres is plenty. Um, basically, if you look at our model, um, you know, if we're deploying 5 MAG, it's really like looking at 5 school buses.

Doug Recker: Yes. Absolutely. They're looking at five more sites at 5 meg with us right now. Obviously, we've researched, we found five sites with the power there, but we're gonna get this one installed and the one in Iowa installed first. Then, you know, we'll report on how quickly we did it and how the revenue looks. The demand, I mean, I came back from GTC, and we had 21 inquiries on 5 to 10 meg sites.

Doug Recker: That's amazing.

Dan Weston: That's amazing.

Uh, yes, the the actual there's, there's 2 customers that are. Yes, absolutely. They're, they're looking at 5 more sites at 5 mag for those right now, obviously. Um, we've researched we found 5 sites with the, the power there. But uh we're we're going to get this 1 and the 1 in Iowa installed first. And then, then I'm, you know, then we'll report on how quickly we did it and how the revenue looks. But the demand I mean I came back from GTC and there was 21, we had 21 inquiries on 5 to 10 mag sites.

Doug Recker: The demand-

Doug Recker: Yeah.

Dan Weston: Yeah.

Doug Recker: The demand in this niche is unbelievable. Like I said, I'm not real worried about other people coming in. Our secret sauce is how we deploy quickly, how we find the power, we have a secret to that, and the other piece is the clean room. I don't see you. Prime example, in one of these pods, you're talking $10 to 12 million just in GPU in a pod. A clean room, I don't understand why you wouldn't go to somebody that has a clean room. It doesn't cost them more.

That's amazing. There's a demand. The demand in this Niche is is unbelievable. So like I said, I'm not not real worried about other people coming in our secret sauce is how we deploy quickly, how we find the power, we have a secret to that and the other piece is the clean room. I I don't see you prime example, in 1 of these pods, you're talking 10 to 12 million dollars, just in GPU in a pod.

So a, a clean room.

Doug Recker: Understood.

Dan Weston: Understood.

Doug Recker: I keep-

Doug Recker: Yeah.

Dan Weston: Yeah.

Doug Recker: Yeah.

Doug Recker: By the way, do you anticipate that you'll be able to disclose who that first technology customer is in the near future?

Dan Weston: By the way, do you anticipate that you'll be able to disclose who that first technology customer is in the near future?

I I don't understand why you wouldn't go to a somebody that has a clean room. It doesn't cost them more so understood. Yeah. Bye. By the way, do.

Doug Recker: I'm not sure. It's a very strict NDA right now, so I think maybe once we prove ourselves to them, it might be an option. I'll put it this way, they're tier one, so we're good.

Do you do you anticipate that you'll be able to uh disclose who that first technology customer is in the near future.

Doug Recker: I appreciate that. You know, let me squeeze one last one, and I'll hop back. As

Dan Weston: I appreciate that. You know, let me squeeze one last one, and I'll hop back. As

Um, I'm not sure. It's a very, very, very strict NDA right now. So, uh, I think maybe if we once we prove ourselves to them, it it might be an option. But uh, I'll put it this way. They're, they're Tier 1, so we're good.

Doug Recker: Sure.

Doug Recker: You mentioned that there was a $10 million backlog in the tech solutions business that you expect to record as revenue for this year.

Dan Weston: You mentioned that there was a $10 million backlog in the tech solutions business that you expect to record as revenue for this year.

Doug Recker: Yes.

Doug Recker: Is that typical for this business where the booking of the contract could take several quarters to actually run through the revenue line?

Dan Weston: Is that typical for this business where the booking of the contract could take several quarters to actually run through the revenue line?

Doug Recker: Yes, exactly. Let me give you an example. We sell a lot of and we have a lot of, you know, our funnel is huge. We have a lot of, like, cabinets, PDUs, fiber connectors. Those are 60 days, 90 days max. Right? Well, we book that, we ship it out quickly. UPSs and other switch gear are 6 to 8, some of them are 9 months out. That's, you know, we had a big booking towards the end of the year, but it took 3 months for us to bill it, right? A lot of the bigger products take longer.

I I appreciate that. You know, let me get squeezed 1 last 1 and I'll hop back as, uh, sure you mentioned that there was a 10 million dollar backlog in the tech Solutions business that you expect to record as revenue for this year is, is that typical for this business where where the, the booking of the contract could take several quarters to actually run through the revenue line.

Doug Recker: Everything that we're booking, that's in the funnel and that you see us report in this quarter, next quarter, will all bill this year because the majority of it is. I wouldn't say off the shelf, but it's more UPS, PDUs, cabinets, cold aisle containment, that kind of stuff. There's a lot of it.

Yes, exactly. So let me give you an example. So, we sell a lot of, and we have a lot of, um, you know, our funnel is huge. So we, we have a lot of like cabinets pdus. Um, fiber connectors. Those are 60 days. 90 days, max, right? Well, we, we booked that. We, we ship it out quickly, but UPS's in other switch here or 6 to 8. Some of them are 9 months out. So that's, you know, we had a big booking towards the end of the year, but it it took 3 months for us to, to build it, right? So a lot, a lot of the bigger products take longer but everything that we're booking, um, that's in the funnel and that you see us report and this quarter, next quarter will all build this year, because the majority of it is, I wouldn't say off the shelf, but it's more UPS, pdus cabinets. Um, cold out, containment that kind of stuff.

Doug Recker: That's incredible. I really appreciate you taking the time to answer the questions. Congrats to everybody.

Dan Weston: That's incredible. I really appreciate you taking the time to answer the questions. Congrats to everybody.

And there's a lot of it.

Doug Recker: Thank you. That's why I'm here. I love the questions. Thank you, sir.

It's incredible. I really appreciate you taking the time to answer the questions. Congrats to everybody.

Thank you, that, that's why I'm here. I love the questions. Thank you, sir.

Operator: Thank you. Our next question comes to the line of Nick Sacchetti with RBC. Please proceed.

Advisor: Hey, Doug.

Nick Sacchetti: Hey, Doug.

Doug Recker: Nick, sir, how are you? Good to hear your voice.

Hey, Doug.

Advisor: Yeah, I'm good. Maybe I'll piggyback on Dan's last question here.

Nick Sacchetti: Yeah, I'm good. Maybe I'll piggyback on Dan's last question here.

Um, negro sir, how are you? Good to hear your voice?

Doug Recker: Okay.

Advisor: Not only is that $10 million of the distribution business, you know, going to-

Nick Sacchetti: Not only is that $10 million of the distribution business, you know, going to-

Doug Recker: 4181.

Um,

Advisor: The one, yeah, actually, recognizing the revenue. Is $10 million, like, a quarter, a typical runway for that business? Is that a huge quarter? Is that low? You know, obviously not looking for a definitive guidance, just trying to get an idea of what you're, like, expecting or what that, the capability of that business could be in just, like, a normalized situation.

Nick Sacchetti: The one, yeah, actually, recognizing the revenue. Is $10 million, like, a quarter, a typical runway for that business? Is that a huge quarter? Is that low? You know, obviously not looking for a definitive guidance, just trying to get an idea of what you're, like, expecting or what that, the capability of that business could be in just, like, a normalized situation.

you know, going back.

Actually recognizing the revenue is 10 million like a quarter.

Doug Recker: Yeah, we're new to the business, but what we're seeing is, you know, when we can recognize it and how stable it is. You know, let's say the funnel is over $150 million. If we, you know, depending on what the product is

A typical run rate for that business is 11 for a huge quarter. Is that low, you know, obviously not looking for a definitive Guidance, just trying to get an idea of what your like expecting or what that like capability of that business could be and just like a normalized uh situation.

Yeah. And and and what we're new to the business but what we're seeing is you know when we can recognize it and how stable it is so you know let's say the funnel is over 150 million. If we, you know,

Advisor: Sorry, just to clarify, you said the funnel, like, annual, like, capacity, is that?

Nick Sacchetti: Sorry, just to clarify, you said the funnel, like, annual, like, capacity, is that?

Depending on what the product is.

to clarify, you said,

Doug Recker: Okay.

Advisor: Is that, like, a high-end number that you could do in a year?

Nick Sacchetti: Is that, like, a high-end number that you could do in a year?

okay.

Is that, like, your high-end number that you could do in here?

Doug Recker: The $10 million was over 2 months, and that was when they first started. Obviously we're looking at a lot greater than that.

Uh, the

Advisor: Yeah.

Nick Sacchetti: Yeah.

Doug Recker: If I could-

The the the 10 million was over 2 months, and that was when they first started. So obviously we're looking at, um, a lot greater than that.

Advisor: Phone was kinda going back in and out a little. Hold on. A little better. I thought you said...

Nick Sacchetti: Phone was kinda going back in and out a little. Hold on. A little better. I thought you said...

Doug Recker: Yeah.

Advisor: I thought you said the funnel is $150 million. Is that, like, an annual, like, TAM or capacity that you could do? Did I hear that number right?

Nick Sacchetti: I thought you said the funnel is $150 million. Is that, like, an annual, like, TAM or capacity that you could do? Did I hear that number right?

I thought you said the funnel is $150 million. Is that like an annual?

Doug Recker: No. Yeah. That number is from two sales reps that she's hired. That's in their funnel.

Am or capacity that that you could do with. Did I hear that number right?

Advisor: Okay, I gotcha.

Nick Sacchetti: Okay, I gotcha.

Doug Recker: For this year. That's only for three months of doing business. You know, this, we just started that group. I mean, look, one data center buys $1.6 billion worth of product, right? That's normal, believe it or not, in this industry.

From two sales reps that she's hired, that's in their funnel.

Okay.

For this year for the and that's that's only that's only for 3 months of of of doing business. You know that this we just started that group. I mean, look, 1 1 data center buys 1.6 billion dollars worth of product, right? So that that

Advisor: It would be fair to say, you know, if there was any kind of negative perception around the loss of that $20 million two-year AMA, that the opportunity here is substantially higher. You mentioned it's replacing that avenue, but it sounds like, this could be a multiple of that in a normalized situation.

Nick Sacchetti: It would be fair to say, you know, if there was any kind of negative perception around the loss of that $20 million two-year AMA, that the opportunity here is substantially higher. You mentioned it's replacing that avenue, but it sounds like, this could be a multiple of that in a normalized situation.

That's normal, believe it or not, in this industry.

So, it would be fair to say, um,

Doug Recker: That's exactly right.

If there was any kind of negative perception or on the lots of that $20 million, 2-year AMA, that the opportunity higher you mentioned, that the placing that revenue. But it sounds like, um, this could be a multiple of that in a normalized situation.

Advisor: Okay.

Nick Sacchetti: Okay.

That's exactly right.

Doug Recker: That's why we brought it on.

Advisor: This is a path.

Nick Sacchetti: This is a path.

Doug Recker: Yeah.

Advisor: Um, so-

Nick Sacchetti: Um, so-

Doug Recker: Nick, just real quick about that division. Remember, the main reason we brought that division on is in the marketplace right now, everybody knows to build a megawatt, it's anywhere from $10 to 13 million, right? To build a megawatt. Why they're looking at us is I can build a megawatt for $6.5 million. Why, how do we do that? It's because that infrastructure group has direct to the manufacturer now. I'm not buying through a Wesco or a Graybar. 20% to 30% comes off the line because I buy direct.

That's that's that's that's that's why we brought it on. Yeah.

Um, and Nico, just—Nico, just real quick. Just real quick about that division. Remember, the main reason we brought that division on is: in the marketplace right now, everybody knows to build a megawatt, it's anywhere from $10 to $13.

Advisor: You are offering, something that can be set up substantially quicker than, like, a traditional, you know, football field-sized data center and at a lower cost, is what it sounds like.

Nick Sacchetti: You are offering, something that can be set up substantially quicker than, like, a traditional, you know, football field-sized data center and at a lower cost, is what it sounds like.

Why why they're looking at us is I can build a megawatt for 6 and a half million and why, how do we do that? It's because that infrastructure group has direct to the manufacturer. Now, so I'm not buying through a Westco or a grey bar. So 20 to 30% comes off the line because I buy Direct

Calculate the 25. So you are offering.

um,

Doug Recker: That's right.

something that can be set up substantially quicker than like a traditional, you know, football field size Data Center and at a lower cost is what it sounds like.

Advisor: Any thought of removing some of the lower cost and just go with the shorter timeframe and go for a better margin profile?

Nick Sacchetti: Any thought of removing some of the lower cost and just go with the shorter timeframe and go for a better margin profile?

That's right.

We thought of removing some of the, the lower cost.

Doug Recker: Right. We can deploy quicker, remember that. The CapEx isn't as intensive. You're deploying 5 megs at $25 million. It's a big difference.

For a better margin profile. I can't, I had too much stuff I, right? Yeah. We could deploy quicker. Remember that? So in the capex is in this incentive. So you're deploying 5 Megs at 25 million.

It's a big difference.

Advisor: A lot of what I have are just clarification questions. Obviously, there's a lot of moving parts.

Nick Sacchetti: A lot of what I have are just clarification questions. Obviously, there's a lot of moving parts.

Doug Recker: Yep.

Advisor: I'm just trying to make sense of, you know, what was the company. You had the AMA, the equity, the railcar software. You know, it's going towards this modular data center, you know, school, hospital, anchor tenant. You know, the metrics around that were very black and white, like cost, what the revenue opportunity is. You know, it seems like we're kind of pivoting again. I just wanna make sense of all of these moving parts. Maybe it would be helpful if we could clarify the deck that you have available on your website from February, I think it is. Is this, like, good information? There's just some difference in the numbers. They were off of that specific presentation.

Nick Sacchetti: I'm just trying to make sense of, you know, what was the company. You had the AMA, the equity, the railcar software. You know, it's going towards this modular data center, you know, school, hospital, anchor tenant. You know, the metrics around that were very black and white, like cost, what the revenue opportunity is. You know, it seems like we're kind of pivoting again. I just wanna make sense of all of these moving parts. Maybe it would be helpful if we could clarify the deck that you have available on your website from February, I think it is. Is this, like, good information? There's just some difference in the numbers. They were off of that specific presentation.

so a lot of what I have are just clarification questions, obviously there's a lot of moving parts and just trying to make sense of

Do you know what was the company you had at the AM?

Equity card software, and then you know it's going towards

This modular data center, you know, uh, school hospital, anchor tenant—you know, the metrics are on that. We're very black and white, like cost, what the revenue opportunity is, and then, you know, it seems like we're kind of pivoting again. And so, um, I just want to make sense of all of these moving parts and maybe the—the

It would be helpful if, um,

You could clarify the the deck that you have available on your website from February. I think it is, is this like good information? There's just some some differences in in metrics from, uh, what's on the slide versus like what was reported and I just have some clarification questions. So I'm just

Doug Recker: Yes. We're actually after, obviously after the call, we're gonna update because now we've recognized and told some information. We're gonna update that. Just remember, there's two pieces to our business. I don't wanna make it confusing. That's why I'm trying to change the model here a little bit. One is the Edge Data Center business, and then one is the infrastructure. The Edge Data Center business, the GPU business falls under the Edge Data Center business. Remember, it's the same pod, it's the same concept. It's just I'm building them bigger. Just look at the GPU as a different type of customer. I'm just bringing in different types of customers. It's the same model, and the revenue is a lot higher, obviously, because they're taking power.

curious like how set in stone the numbers were off of that specific presentation.

Doug Recker: We make money off of power, space, and cross-connect, right? The more power we sell, the more money we make. But obviously, the CapEx goes up and the pod cost. The model, you know, I'm pretty sure we shared that. The model on the GPU is a big difference. Prime example, remember our pod model at 15 cabinets is $350,000 to $400,000 a year. That's the goal, right? Out of that. If you compare it to the GPU model, you know, 1MW, you're at $1 million a year. At 4.8MW, you're now at almost $1 million a month. Why not build the pod bigger and take the customers in that need that power?

Yeah. So we're actually after obviously after the call, we're going to update because now we we've we've recognized and and told some information we're going to update that. But just remember, there's 2 and I don't want to make it confusing. I'm trying to that's why I'm trying to change the model here a little bit. There's 2 pieces to our business. 1 is The Edge Data Center business, and the 1 is the infrastructure, The Edge Data Center business. The the GPU business falls under the edge Data Center business. Remember it's the same pod, it's the same concept, it's just I'm building them bigger. Just look at the GPU as a different type of customer, so I'm just bringing in different types of customers. So, it's, it's the same model and the revenue is a lot higher, obviously, because they're taking power, we make money off of Power space and cross connects, right? So, the more power we sell the more money we make. So but obviously the capex goes up in the Pod cost the model. Um, you know, and we we I I pretty sure we shared that the the model on the GPU

It is a big difference, prime example. Remember our pod model at 15 cabinets.

Is 350 to 400,000 a year. That's the goal right out of that.

When you compare it to the GPU model, you know, at 1 mag, you're at a million dollars a year.

Doug Recker: When all it is for us is at the factory, we just put bigger panels in.

So at 4.8 megawatts, you're now at almost a million dollars a month. So why not build the Pod bigger and take the customers in that need that power? When all it is for us, is that at the factory we just put bigger panels in.

Advisor: When you say the same model

Nick Sacchetti: When you say the same model

so,

Doug Recker: Mm-hmm.

Advisor: You know, you've talked about just the original, the standard version of this going to kind of like tier two, tier three markets, rural areas where there is like 500 miles to tap into a data center.

Nick Sacchetti: You know, you've talked about just the original, the standard version of this going to kind of like tier two, tier three markets, rural areas where there is like 500 miles to tap into a data center.

No, you’ve talked about this—the original, the standard version of this going on, kind of like two, two, two, or three markets. Rural areas where there is, like, 500 miles.

Doug Recker: Hey, Nick Sacchetti, you're cutting out. It's hard to hear you.

And Nico, you're... you're cutting out. It's hard to hear you.

Advisor: Yeah.

Nick Sacchetti: Yeah.

Doug Recker: You there?

Advisor: I think I'm having some rough service here. I just wanna get, like, it sounded like it totally depends on which unit to what the metrics are, where it was much more standardized with the other version, the original model, and then.

Nick Sacchetti: I think I'm having some rough service here. I just wanna get, like, it sounded like it totally depends on which unit to what the metrics are, where it was much more standardized with the other version, the original model, and then.

I'm just I think I'm having enough service here. Um I just want to get like do you have sound like

A totally depends on which unit, for what the metrics are, or it was much more.

Doug Recker: Okay.

Advisor: When you say the same model, are they going in the same locations where instead of it being a colocation where you still have the hospital and the school board?

Nick Sacchetti: When you say the same model, are they going in the same locations where instead of it being a colocation where you still have the hospital and the school board?

Standardized with the other version, original model on, and then we say, the same model, are they going in the same location where instead of it, the polo, instead of it being a collocation, where you still have?

Doug Recker: Yeah.

Advisor: It's in a rural area, and you're just having the rest of it available to be leased out essentially by maybe other businesses in that town. Now that it-

Nick Sacchetti: It's in a rural area, and you're just having the rest of it available to be leased out essentially by maybe other businesses in that town. Now that it-

Doug Recker: Yep. You're exactly right, Nico. That's exactly right. Our core customers are our anchor customers, which are education, healthcare, and then enterprise in that market, right? The carriers coming in to take space so they can peer and cross-connect to each other. That's. You there?

The hospital and the school and it's in a a little area and you're just having the rest of it available to be at least out essentially by maybe other businesses in that that town now, get that. Yep.

Yep, that's—you're exactly right, Nico. That's exactly right. So, our core customers are our anchor customers, which are education, healthcare, and then enterprise in that market, right? The carrier's coming in to take space so they can peer and cross-connect to each other. That's the— that's the—

Advisor: Yep.

Nick Sacchetti: Yep.

Doug Recker: Someone's cross-talking. I'm sorry about that. Yeah, Nico, if you can hear me, that's the original model, and that's why we're sticking with that model. We're just adding more capacity to bring those customers in that need higher density. We're always servicing that market, and that's what helps us get into those tier 3 and tier 4 markets, especially with permitting and everything, because we're low on the radar. We're not 10MW, 20MW, 30MW, 40MW that they have to build out that's draining the community. We're going after power that's already there, that's in excess that the utility wants to make money on. In return, it helps the local community as well in tax dollars. They're actually welcoming us.

You there? Yeah, somebody's cross-talking. I'm sorry about that, but yeah, Nico, if you can hear me, that's the original model. That's why we're sticking with that model. We're just adding more capacity to bring those customers in that need higher density.

So the so we're always servicing that market and that's what helps us get into those tier 3 and tier 4, markets, especially with permitting and everything because we're we're low on the radar. We're not 10, 20 30, 40 megawatt, that they have to build out that streaming the community. We're going after power, that's already there. That's an excess that the utility wants to make money on. So and in return, it helps the local community as well.

In tax dollars.

So they're actually welcoming us.

Operator: Thank you. Our next question comes from the line of Carl Weiss with Grow Funds. Please proceed.

Thank you.

Operator: Hey, Doug. How you doing?

Carl Wiese: Hey, Doug. How you doing?

Our next question comes from the line of Carl Lease with Grow Funds. Please proceed.

Doug Recker: Good, sir. How are you? Long time no see.

Hey Doug, how you doing?

Doug Recker: Yeah. I was wondering if, you know, you can kinda talk to, you know, at scale, you know, as you go into the H2. You know, what is the, you know, the model look like from a gross margin perspective? With all of the, you know, selling the rail business and winding down the management contract, what kinda OpEx should we expect, you know, on a go-forward basis?

Carl Wiese: Yeah. I was wondering if, you know, you can kinda talk to, you know, at scale, you know, as you go into the H2. You know, what is the, you know, the model look like from a gross margin perspective? With all of the, you know, selling the rail business and winding down the management contract, what kinda OpEx should we expect, you know, on a go-forward basis?

Good, sir. How are you? Long time no see, yeah. Um, I was wondering if, you know, you can kind of talk to, uh, you know, at scale, you know, as you go into the second half.

Yeah. What does the model look like from a gross margin perspective?

And then with all of the, you know, why, or um, selling, or the rail business and winding down the management contract.

What what kind of Opex should we expect, you know, on a go forward basis?

Doug Recker: We'll talk real quick. Let me take over the rail. The rail business, we're hoping to offload or, you know, decommission that biz, offload it in the next 60 days. That's the goal on that. There's no burn on that business for us right now, so hopefully we'll exit that. It frees up a lot of SG&A. We'll obviously not carry that load of employees and all the other expense. That's a good thing, and that should happen in the next 60 days. I'll turn it over to Leah on your numbers there.

So, we'll talk, we'll talk real quick. Let me take over the rail. So, the rail business, we're, we're hoping to offload or, or, you know, decommission that business offload it in the next 60 days. That's the goal, um, on that. So there's no burn on that business for us right now. So hopefully we'll exit that it frees up a lot of sgna. So we'll, we'll obviously not carry that load of employees and all the other expense.

So that's a, that's a good thing and that should happen in the next 60 days.

Leah Brown: Sure. Carl, good afternoon. We should expect to see our gross margin improve in H2. Just a reminder with the revenue recognition for some of our business lines, you are going to see that revenue recognized in H2. We're looking at gross margin, you know, around 70% to 76%.

But but, but I'll, I'll turn it over to Leo on your number there. Sure. Um so, uh, Carl good afternoon. Um, yes, so we should expect to see, uh, gross margin improve the second half of the year. Um, just a a reminder with the revenue recognition for um, some of our business lines. You are going to see um, that Revenue recognized in the second half of the year. Um, so we're looking at gross margin. Um, you know, around 7 to 6%.

Leah Brown: Gross margin, shouldn't it? Well, you know, the data centers themselves are what? 70 to 80 type gross margins?

Carl Wiese: Gross margin, shouldn't it? Well, you know, the data centers themselves are what? 70 to 80 type gross margins?

Gross margin should. Well, you know the center the the data centers themselves are what 70?

Doug Recker: Yeah.

Leah Brown: Yes, exactly. We should see around for gross margin. You're about $7 million, $6 million.

Seventy to eighty-type gross margins.

Leah Brown: Oh, got it. Okay.

Carl Wiese: Oh, got it. Okay.

Leah Brown: Towards the end of the year. Yeah, exactly. Just, you know, when we report here in May, you'll see our Q1. You'll be able to see that revenue picking up in Q3 and Q4.

Leah Brown: OpEx should actually be coming down at the same time.

Carl Wiese: OpEx should actually be coming down at the same time.

Yeah. Yes exactly. So we should see around for gross margin. You're about 7 million, 6 million. Oh, got it at the end of the year? Yeah, exactly. So just you know, when we report um, here in May, um, you'll see our our q1, um, but you'll be able to see that our Revenue picking up in Q3 and Q4 and Opex should actually be coming down.

At the same time.

Doug Recker: The OpEx?

Leah Brown: Yes.

Doug Recker: Yes.

Doug Recker: Yeah. Okay. Just, Doug, as you sit here today, you know, how long do you think this demand environment, you know, will last?

Carl Wiese: Yeah. Okay. Just, Doug, as you sit here today, you know, how long do you think this demand environment, you know, will last?

Yeah, that's yes. Yes.

Okay, and then just to dig in as you said here today, you know, how long do you think this demand environment, you know, will last?

Doug Recker: I think the high demand, like what we're seeing now, like when I go to GTC, and there's 21 people trying to talk to me to sign contracts. I think that is gonna be strong for the next 3 to 4 years. Then what's critical about our business is the main data centers that are out there, and I think we might have talked about this before. The main data centers that are out there are gonna look to us as a hub and spoke because they're gonna wanna capture those markets that we're in, like Dumas, like Corpus Christi, Lubbock. These tier three markets that we're going in, they need to have compute out there. So do the mobile operators. When we go to, you know, 6G. We're at 5G. We're going to 6G now.

Like when I go to GTC and there's 21 people trying to talk to me, to sign contracts, I think that is going to be strong for the next three to four years.

Doug Recker: They need to compute out at the, what we call the eyeballs. All that data is gonna take a lot of fiber to get back, a lot of network, right? They want to be able to own that network, and they wanna own that customer. The best way to do that is obviously buy these mini data centers everywhere, bring them back to the core, because to be honest with you, they're all going back to a core anyway. It makes complete sense. I think, you know, the growth is gonna be very strong and extremely strong in the 3 to 10 meg range, because right now, and I just did this exercise for another potential client. He needed 2 meg worth of power. 2 meg, which doesn't sound like a lot nowadays, but it's a lot.

And then what's critical about our business is the main data centers that are out there. And I think we might talk about this for the main data centers are out. There are going to look to us as a hub and spoke because they're going to want to capture those markets that were in like the Dumas like the Corpus Christi LIC. These tier 3 markets that we're going in. They need to have compute out there so does it. So does the mobile operators when we go to you know, 6G we're at 5, we're going to 16 now. They need to compute out at the what we call the eyeballs. So all that data is going to take a lot of fiber to get back a lot of network, right? So they want to be able to own that Network and they want to own that customer the best way to do that is obviously buy these many data centers everywhere. Bring them back to the core because to be honest with you they're all going back to a core anyway so it makes complete sense. So I I think you know the growth is going to be very strong and extremely strong in the 3 to 10 Meg range because right now and I just did this.

Doug Recker: I couldn't find it throughout the country in one data center. I'm talking about a legacy data center. The market is looking past the need of the 10 to 15 meg data centers. Prime example, like, Johnson & Johnson, they keep their stuff at a local data center. They go to, like, a QTS. They go to a Flexential. That's where they house. They don't go to a hyperscaler. They don't go to these big ones they're building. We're losing sight that the demand is there, and they're still growing. I think you're gonna see the market for the next 5 to 10 years focusing on that 10 to 15 megawatt range. We have a long haul, but we do have to build quickly.

Exercise for another potential client. He needed 2 mag worth of power 2 mags, which doesn't sound like a lot nowadays, but it's a lot. I couldn't find it throughout the country. In 1 data center. I'm talking about a legacy data center so the market is looking past the need of the 10 to 15 mag data centers and prime example like John

And Johnson they keep their stuff at a local data center. They go to like a cuties, they go to a flex Central

Doug Recker: Thank you.

Carl Wiese: Thank you.

That's where they house. They don't go to a hyperscaler. They don't go to these big ones. They're building. We we're losing sight. That the demand is there and they're still growing. So I think you're going to see the market for the next 5 to 10 years, focusing on that 10 to 15 megawatt range. So we have a lot, we have a long haul, but we do have to build quickly.

Doug Recker: Yes, sir.

Thank you.

Doug Recker: Can you tell the operator one more question, and that's it. Thanks.

Carl Wiese: Can you tell the operator one more question, and that's it. Thanks.

Yes, sir.

Operator: Our next question comes from the line of Tom Leonard with River Bay Investments. Please proceed.

Hey, tell the operator one more—one more question, that's everything.

Tom Leonard: Hey, Doug. Tom calling.

Our next question comes from the line of Tom Leonard with River Bay Investments. Please proceed.

Doug Recker: Sir, how are you?

Hey Doc, I'm calling.

Tom Leonard: Doing great. You provided a lot of color on the GPU as a Service, the economics, the revenue of that. I'm trying to think about the revenue exit run rate this year. Could you put more color on the high density EDC? How many total megawatts, and what's the revenue value per megawatt for that high density colocation customer versus the leasing on GPUs that you purchased?

Is there. How are you? I'm doing great.

If I—you provided a lot of color on the GPU as a service, the economics, the revenue. Is that—

Um, I'm trying to think about the revenue exit run rate this year.

and so could you throw more color on the

Hyper high density EDC. How many total megawatts? And what's the revenue value per megawatt?

for that high, density, call location customer versus the

Doug Recker: Sure. On the GPU model, let me back up. The goal for this year is to deploy 25MW. Now, that can be through, you know, 300kW pods that we deploy. Right now we have 15 of them on the ground at 300kW. The total megawatt, 'cause that's what we're being judged by right now. Everybody's being judged by megawatts, not by kilowatts or cabinets. The plan is 25MW. When we look at the GPU model, for every megawatt, we're looking at $2 million a year in revenue. That's right on the head. That's what they're billing. That's what the industry shows, and that's what we're building to. It obviously is a very strong model to house GPU for customers.

You know, leasing and GPUs that you purchased.

Sure, on the GPU model, let me back up. What the goal for this year is to deploy 25 megawatt. Now, that that can be through, you know, 300 KW pods that we deployed. Right? Right now. We have 15 of them on the ground at 300 KW, but the total megawatt because that's what we're being judged by. Right now, everybody's being judged by megawatts not by kilowatts or cabinets. So the plan is 25 megawatt. And when we look at that, the GPU model for every megawatt, we're looking at 2 million dollars a year in Revenue,

That that's that's that's right on the head. That's what that's what they're billing, that's what the industry shows and that's what we're building to.

So it obviously is a very strong model to house GPU for customers.

Operator: Thank you. With that concludes today's question and answer session. I'd like to pass the call back over to Doug for any closing remarks.

Thank you. And with that, that concludes today's question-and-answer session. I'd like to pass the call back over to Doug for any closing remarks.

Doug Recker: Well, I'd like to thank everybody for joining today, and we look forward to speaking with you in Q1 earnings. Thank you so much for your time.

Well, I'd like to thank everybody for joining today and uh, we look forward to speaking with you and 21. Earrings. Thank you so much for your time.

Operator: Before we conclude today's call, I would like to provide Duos' Safe Harbor statement that includes important cautions regarding forward-looking statements made during this call. The earnings call contains forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Forward-looking terminology such as believe, 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.

Before we conclude today's call, I would like to provide the Duos Safe Harbor statement, which includes important cautions regarding forward-looking statements made during this call. This call contains forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking terminology such as 'believe,' 'expects,' 'may,' 'will,' 'should,' 'anticipate,' 'plans,' and their opposites or similar expressions are intended to identify forward-looking statements.

Operator: These risks and uncertainties include, but are not limited to, those described in the 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 Q4 and full year 2025 earnings call. You may now disconnect.

Materially from those anticipated by the forward-looking statements.

These risks and uncertainties include but are not limited to those described in the item 1A and Duos on annual report on form 10K, which is expressed 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 fourth quarter and full year 2025 earnings call. You may now disconnect.

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