Q1 2026 Duos Technologies Group Inc Earnings Call

May 18, 2026

Operator: Good morning. Welcome to Duos Technologies' Q1 2026 earnings conference call. Joining us for today's call are Duos' CEO, Doug Recker, and CFO, Leah Brown. Following the remarks, we'll open the call for 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'll turn the call over to Mr. Doug Recker. Sir, please proceed.

Speaker #1: Following the remarks, we'll open the call for your questions. Then, before we conclude today's call, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call.

Speaker #1: Now, I'll turn the call over to Mr. Doug Recker. Sir, please proceed. Welcome, everyone, and thank you for joining us today. Earlier today, we issued our earnings press release and, at the end of last week, we filed our 10-Q for Q1 2026.

Doug Recker: Welcome, everyone, and thank you for joining us today. Earlier today, we issued our earnings press release, and at the end of last week, we filed our Form 10-Q for Q1 2026. Copies are available in the investor relations section of our website. I encourage all listeners to view press releases and our Form 10-Q filing to better understand some of the details we will be discussing during this morning's call. At a high level, our first quarter results reflect the continued execution of our strategic transformation towards a data center-focused platform with our Duos Edge AI Technology Solutions division emerging as our primary growth drivers. As expected, results from the quarter reflected our in-progress transition away from the legacy rail operation and the planned wind down of the new APR asset management agreement, which was the primary driver for the revenue in the period.

Doug Recker: Welcome, everyone, and thank you for joining us today. Earlier today, we issued our earnings press release, and at the end of last week, we filed our Form 10-Q for Q1 2026. Copies are available in the investor relations section of our website. I encourage all listeners to view press releases and our Form 10-Q filing to better understand some of the details we will be discussing during this morning's call. At a high level, our Q1 results reflect the continued execution of our strategic transformation towards a data center-focused platform with our Duos Edge AI Technology Solutions division emerging as our primary growth drivers. As expected, results from the quarter reflected our in-progress transition away from the legacy rail operation and the planned wind down of the new APR asset management agreement, which was the primary driver for the revenue in the period.

Speaker #1: Copies are available in the investor relations section of our website. I encourage all listeners to view press releases and our 10-Q filing to better understand some of the details we'll be discussing during this morning's call.

Speaker #1: At a high level, our first quarter results reflect the continued execution of our strategic transformation towards a data center-focused platform with our DUOS Edge AI technology solutions division emerging as our primary growth drivers.

Speaker #1: As expected, results from the quarter reflected our in-progress transition away from the legacy rail operation and the planned wind-down of the new APR asset management agreement.

Speaker #1: This was the primary driver for the revenue in the period. At the end of the same time, we remain on track to exceed our $50 million revenue target.

Doug Recker: At the end of the same time, we remain on track to exceed our $50 million revenue target for this year, supported by our strategic partnership with Hydra Host and our growing pipeline of AI infrastructure deployments. Before I get into the exciting updates on our Duos Edge AI and Technology Solutions divisions, I'd like to first update you on our rail technology and Duos Energy subsidiaries. Since our last call, we've continued to make progress on the rail division divestiture. The company is currently going through a fairness opinion on the value of the rail division. This process is expected to extend into Q2. As previously discussed, this was a thoughtful decision that will enable us to redeploy capital, reduce SG&A, and focus on higher growth opportunities. We will provide additional details as the progress moves forward.

Speaker #1: For this year, supported by our strategic partnership with Hydrohost and our growing pipeline of AI infrastructure deployments. Before I get into the exciting updates on our DUOS Edge AI and technology solutions divisions, I'd like to first update you on our rail technology and DUOS Energy subsidiaries.

Speaker #1: Since our last call, we've continued to make progress on the rail division divestiture. The company is currently going through a fairness opinion on the value of the rail division, and this process is expected to extend into the second quarter.

Speaker #1: As previously discussed, this was a thoughtful decision that will enable us to redeploy capital, reduce SG&A, and focus on higher growth opportunities. We will provide additional details as progress moves forward.

Speaker #1: Turning to the DUOS Energy Corporation, we saw a ramp-down with reduced reliance on DUOS services this quarter. As a reminder, in December 2024, 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.

Doug Recker: Turning to the Duos Energy Corporation, we saw a ramp down with reduced reliance on Duos services this quarter. As a reminder, in December 2024, 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. This was pivotal for us to make our data center business transition that is currently underway. As we previously discussed, the AMA will conclude later this year, but we will retain 5% equity stake in the parent of APR Energy. In Q1, the company reported $1.55 million in revenue with a cost of goods sold of approximately $544,000. This was a step down from the previous period, and we expect it to continue to wind down in the coming quarters.

Speaker #1: This was pivotal for us to make our data center business transition that is currently underway. As we previously discussed, the AMA will conclude later this year but will retain a 5% equity stake in the parent of APR Energy.

Speaker #1: In Q1, the company reported $1.55 million in revenue with a cost of goods sold of approximately $544,000. This was a step down from the previous period, and we expect it to continue to wind down in the coming quarters.

Speaker #1: Now, I'd like to discuss our data center strategy and our newer line of business, DUOS TECHNOLOGIES SOLUTIONS. As we build and deploy data centers at scale, controlling costs and optimizing procurement is critical given the capital-intense nature of this market.

Doug Recker: Now I'd like to discuss our data center strategy and our newer line of business, Duos Technology Solutions. As we build and deploy data centers at scale, controlling costs and optimizing procurement is critical given the capital-intense nature of this market. As a smaller buyer relative to hyperscalers and large colocation companies, we needed a more efficient way to procure equipment, which led to the creation of the Duos Technology Solutions. This division enables us to reduce procurement costs for our own deployments while creating a new asset-light revenue stream serving enterprise, hyperscalers, and contractor customers. I am pleased to report that Duos Technology Solutions experienced traction throughout Q1. We successfully signed eight new large data center operators and increased our backlog to approximately $14 million, all of which is expected to ship and be invoiced in 2026.

Speaker #1: As a smaller buyer relative to hyperscalers and large colocation companies, we needed a more efficient way to procure equipment, which led to the creation of the Duos Technologies Solutions.

Speaker #1: This division enables us to reduce procurement costs for our own deployments, while creating a new asset-light revenue stream, serving enterprise, hyperscalers, and contractor customers.

Speaker #1: I am pleased to report that Duos Technologies Solutions experienced traction throughout the first quarter. We successfully signed eight new large data center operators and increased our backlog to approximately $14 million, all of which is expected to ship and be invoiced in 2026.

Speaker #1: Our pipeline for the technology solutions is several orders of magnitude greater than the backlog as of today, giving us additional confidence in our outlook, specifically in the revenue ramp for the second half of the year.

Doug Recker: Our pipeline for the technology solutions is several orders of magnitude greater than the backlog as of today, giving us an additional confidence in our outlook, specifically in the revenue ramp for H2 of the year. This new line of business help low overhead is high scalable while also being supported by strong customer commitments. We expect the revenue generated by the technology solutions to not only replace the revenue from New APR Energy, but also provide better margins. 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 and AI infrastructure continues to grow rapidly, and we believe Duos is well-positioned to address this demand through our modular data center platform.

Speaker #1: This new line of business has low overhead and is highly scalable while also being supported by my strong customer commitments. We expect the revenue generated by the technology solutions to not only replace the revenue from the new APR AMA, but also provide better margins.

Speaker #1: Now, I want to shift our discussion to the core of our new data center focus organization. DUOS Edge AI. The demand for edge computing and AI infrastructure continues to grow rapidly, and we believe DUOS is well positioned.

Speaker #1: To address this demand, through our modular data center platform, and following our recent capital raises—including the $65 million in financing completed in March—we have significantly strengthened our balance sheet.

Doug Recker: Following our recent capital raises, including the $65 million in financing completed in March, we have significantly strengthened our balance sheet and are well-capitalized to support near-term deployments and future growth. Our focus for H1 2026 is to continue executing our sales strategy to acquire new customers in our markets to fully utilize capacity of each EDC. During the quarter, we made significant progress across two key revenue streams: the GPU-as-a-Service and high-power colocation. Under our GPU-as-a-Service agreement with Hydra Host, we expect to deploy 2,304 NVIDIA GPUs across our edge data center platform. This contract represents approximately $176 million in total revenue over a 36-month term, with total anticipated revenue of roughly $50 million, projected margins exceeding 80%, and approximately $40 million in expected EBITDA.

Speaker #1: And we are well-capitalized to support near-term deployments and future growth. 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.

Speaker #1: During the quarter, we made significant progress across two key revenue streams: GPU as a service and high-power colocation. Under our GPU as a service agreement with Hydrohost, we expect to deploy 2,304 NVIDIA GPUs across our edge data center platform.

Speaker #1: This contract represents approximately $176 million in total revenue over a 36-month term. With total anticipated revenue of roughly $50 million, projected margins exceeding 80%, and approximately $40 million in expected EBITDA.

Speaker #1: Importantly, in addition to the GPU-as-a-Service revenue, this partnership is expected to generate external colocation revenue of approximately $25 million over the term, further enhancing the overall economics of the relationship.

Doug Recker: Importantly, in addition to the GPU-as-a-Service revenue, this partnership is expected to generate incremental colocation revenue of approximately $25 million over the term, further enhancing the overall economics of the relationship. We have already received $15 million down payment with an additional $3 million deposit pending currently. We are actively executing on initial deployments. We continue to expect revenue from this agreement to begin ramping in the H2 of the year. Separately, we were awarded a high-power colocation contract to deliver 4.8 MW of critical compute capacity to support a leading hyperscaler high-density GPU cluster. Together, these agreements represent a significant commercial inflection point, establishing two complementary high-margin revenue stream and validating our edge data center platform at scale.

Speaker #1: We have already received a $15 million down payment, with an additional $3 million deposit currently pending. We are actively executing on initial deployments. We continue to expect revenue from this agreement to begin ramping in the second half of the year.

Speaker #1: Separately, we were awarded a high-power colocation contract to deliver 4.8 megawatts of critical compute capacity to support a leading hyperscaler high-density GPU cluster. Together, these agreements represent a significant commercial inflection point, establishing two complementary high-margin revenue stream and validating our edge data center platform at scale.

Speaker #1: At the same time, we are also seeing increasing demand for high-density data center capacity, driven by AI and advanced compute workloads, with demand now measured in megawatts rather than kilowatts.

Doug Recker: At the same time, we are also seeing increasing demand for high-density data center capacity driven by AI and advanced compute workloads, with demand now measured in megawatts rather than kilowatts. These higher power capacity EDCs should provide much higher monthly recurring revenue for Duos. Duos currently has 10 MW contracted and an additional 15 MW planned for deployment in 2026, and we continue to expand our pipeline of edge data center opportunities to support growing demand for our AI training, inference, and high-performance computing workloads.

Speaker #1: These higher power capacity EDCs should provide much higher monthly recurring revenue for DUOS. DUOS currently has 10 megawatt contracted. And an additional 15 megawatts planned for deployment in 2026.

Speaker #1: And we continue to expand our pipeline of edge data center opportunities to support growing demand for our AI training, inference, and high-performance computing workloads.

Speaker #1: Geographically, we're expanding into multiple regions across the country, including Maryland, Iowa, Georgia, and Texas, as we position the platform to serve both enterprise and hyperscale customers.

Doug Recker: Geographically, we're expanding into multiple regions across the country, including Maryland, Iowa, Georgia, and Texas, as we position the platform to serve both enterprise and hyperscale customers. Within our existing EDCs, we've also begun hosting open houses for the surrounding communities as well as prospective customers to provide an opportunity to explore how edge data centers enable faster connectivity, localized computing power, and AI readiness. We've recently announced a few of these communities initiatives and expect to host several more over the coming months. Since announcing our recent contracts, we have seen strong inbound interest from hyperscalers, neoclouds, and other large-scale compute customers. Supporting a growing backlog and pipeline, we are currently evaluating new power partnerships that will enable green solutions and faster deployments for our megawatt sites and expect to provide exciting updates in this area in the near future.

Speaker #1: Within our existing EDCs, we've also begun hosting open houses for the surrounding communities as well as prospective customers, to provide an opportunity to explore how edge data centers enable faster connectivity, localized computing power, and AI readiness.

Speaker #1: We've recently announced a few of these communities' initiatives and expect to host several more over the coming months. Since announcing our recent contracts, we have seen strong inbound interest from hyperscalers.

Speaker #1: Neocloud providers and other large-scale compute customers. Supporting a growing backlog and pipeline, we are currently evaluating new power partnerships that will enable green solutions and faster deployments for our megawatt sites, and expect to provide exciting updates in this area in the near future.

Speaker #1: In closing, we believe DUOS is at a pivotal inflection point. We are transitioning to a higher-growth, higher-margin business model, building strong visibility through contracted opportunities and pipeline.

Doug Recker: In closing, we believe Duos is at a pivotal inflection point. We are transitioning to a higher growth, higher margin business model, building strong visibility through contracted opportunities and pipeline, and positioning the company to deliver meaningful revenue and EBITDA growth as we move through 2026. Now, I would like to turn it over to our CFO, Leah Brown, who will go over our financials for Q1 of 2026. Leah.

Speaker #1: And positioning the company to deliver meaningful revenue and EBITDA growth as we move through 2026. Now, I would like to turn it over to our CFO, Leo Brown, who will go over our financials for the first quarter of 2026.

Speaker #1: Leo?

Speaker #2: Thank you, Doug. This has been an encouraging and productive start to 2026 for DUOS. The first quarter included several landmark announcements, strategic financing, strong backlog growth, strategic investment, and meaningful progress toward building a stronger, more scalable company.

Leah Brown: Thank you, Doug. This has been an encouraging and productive start to 2026 for Duos. The first quarter included several landmark announcements, strategic financing, strong backlog growth, strategic investment, and meaningful progress toward building a stronger, more scalable company. I will now walk through our Q1 2026 financial performance and highlight key operational drivers that shaped our results. For Q1 2026, total consolidated revenue was approximately $2.7 million, compared to $4.9 million in Q1 2025. Total revenue for Q1 2026 represents an aggregate of approximately $44,000 of technology systems revenue, $562,000 of Technology Solutions revenue, approximately $532,000 in services and consulting revenue, $1.5 million from related party services and consulting agreement, and approximately $30,000 of hosting revenue.

Leah Brown: Thank you, Doug. This has been an encouraging and productive start to 2026 for Duos. The Q1 included several landmark announcements, strategic financing, strong backlog growth, strategic investment, and meaningful progress toward building a stronger, more scalable company. I will now walk through our Q1 2026 financial performance and highlight key operational drivers that shaped our results. For Q1 2026, total consolidated revenue was approximately $2.7 million, compared to $4.9 million in Q1 2025. Total revenue for Q1 2026 represents an aggregate of approximately $44,000 of technology systems revenue, $562,000 of Technology Solutions revenue, approximately $532,000 in services and consulting revenue, $1.5 million from related party services and consulting agreement, and approximately $30,000 of hosting revenue.

Speaker #2: I will now walk through our first quarter 2026 financial performance and highlight key operational drivers that shaped our results. For Q1 2026, total consolidated revenue was approximately $2.7 million compared to $4.9 million in the first quarter of 2025.

Speaker #2: Total revenue for Q1 2026 represents an aggregate of approximately $44,00 of technology systems revenue. $562,000 of technology solutions revenue. Approximately $532,000 in services and consulting revenue.

Speaker #2: $1.5 million from related party services and consulting agreement. And approximately $30,000 of hosting revenue. The decrease in total revenues was primarily driven by the planned down draw from the DUOS energy and new APR asset management agreement, the AMA.

Leah Brown: The decrease in total revenues was primarily driven by the planned down draw from the Duos Energy Corporation and New APR Energy asset management agreement, the AMA, that Doug mentioned previously. The company delivered materially stronger gross margin in Q1 2026, generating $1.6 million in gross profit, achieving approximately 59% margin, a significant year-over-year improvement. This was driven by reduction of cost of goods sold, largely reflecting the impact of the transition of the AMA, the associated decline in related costs. The company also recognized approximately $900,000 of revenue during Q1 2026 and 2025 related to its 5% non-voting equity interest in the ultimate parent of New APR Energy. As this revenue has no associated cost of revenue, it contributed at a 100% gross margin.

Speaker #2: That Doug mentioned previously. The company delivered materially stronger gross margin in Q1 2026 generating $1.56 million in gross profit achieving approximately 59% margin. A significant year-over-year improvement.

Speaker #2: This was driven by a reduction of cost of goods sold, largely reflecting the impact of the transition of the AMA and the associated decline in related costs.

Speaker #2: The company also recognized approximately $900,000 of revenue during the first quarter of 2026 and 2025 related to its 5% non-voting equity interest in the ultimate parent of new APR.

Speaker #2: As this revenue has no associated cost of revenue, it contributed at a 100% gross margin. The company reported a net loss of approximately $3.5 million, compared to a net loss of $2.1 million for Q1 2025.

Leah Brown: The company reported net loss of approximately $3.5 million for Q1 2026, compared to a net loss of $2.1 million for Q1 2025. The year-over-year increase was primarily driven by lower revenues resulting from reduced scope of services Duos Energy provided under the AMA with New APR Energy, as well as higher operating expenses. As we discussed on previous earnings calls, achieving positive adjusted EBITDA in Q3 and Q4 last year were important milestones for the company, reflecting the early benefits of revenue scale and margin improvement. In Q1 2026, adjusted EBITDA was -$1.5 million. We did not report adjusted EBITDA in the prior year period. On a comparable basis, this reflects the impact of the items discussed earlier.

Speaker #2: The year-over-year increase was primarily driven by lower revenues resulting from the reduced scope of services DUOS Energy provided under the AMA with the new APR, as well as higher operating expenses.

Speaker #2: As we discussed on previous earnings calls, achieving positive adjusted EBITDA in Q3 and Q4 last year were important milestones for the company, reflecting the early benefits of revenue scale and margin improvement.

Speaker #2: In Q1 2026, adjusted EBITDA was negative 1.5 million. We did not report adjusted EBITDA in the prior year period but on a comparable basis this reflects the impact of the items discussed earlier.

Speaker #2: While we did not achieve positive adjusted EBITDA in the quarter, we expect improved profitability as revenue ramps in the coming quarters. Let's shift to the balance sheet.

Leah Brown: While we did not achieve positive adjusted EBITDA in the quarter, we expect improved profitability as revenue ramps in the coming quarters. Let's shift to the balance sheet. The company ended Q1 2026 with $33 million in cash and cash equivalents. Our cash increased significantly compared to 31 December 2025, as a result of our $65 million capital raise in March, which strengthened liquidity and enhanced our ability to support operations and fully fund our planned investments as part of our agreement with Hydra Host. As of 31 March 2026, Hydra Host has secured a customer for the company, and this customer provided a deposit of $15 million to the company in May 2026, with an additional $3 million currently pending. I'd like to turn to our 2026 outlook.

Speaker #2: The company ended Q1 2026 with $33 million in cash and cash equivalents. Our cash increased significantly compared to December 31, 2025 as a result of our $65 million capital raise in March.

Speaker #2: Which strengthened liquidity and enhanced our ability to support operations and fully fund our planned investments as part of our agreement with Hydrohost. As of March 31, 2026, Hydrohost has secured a customer for the company and this customer provided a deposit of $15 million.

Speaker #2: To the company in May 2026, with an additional $3 million currently pending. Now, I'd like to turn to our 2026 outlook. At the end of the first quarter, the company's bookings represented approximately $43.5 million in revenue.

Leah Brown: At the end of Q1, the company's bookings represented approximately $43.5 million in revenue, of which all is expected to be recognized during the year, included contracted backlog and near-term anticipated awards. In addition, approximately $1.1 million of the contracted Technology Solutions deferred revenue recorded in 2025 will be recorded as revenue in 2026, further supporting the company's performance. Based on these committed contracts and near-term pending orders that are already performing, are scheduled to be executed throughout the course of 2026. The company is reconfirming its expectation for the total revenue in 2026 to exceed $50 million. Let me briefly walk through how we bridge from approximately $2.7 million of Q1 revenue to our $50 million full year target, which we know is a key focus for our investors.

Speaker #2: Of which all is expected to be recognized during the year. Included are contracted backlog and near-term anticipated awards. In addition, approximately $1.1 million of the contracted technology solutions deferred revenue recorded in 2025 will be recorded as revenue in 2026.

Speaker #2: Further supporting the company's performance, based on these committed contracts and near-term pending orders that are already performing, are scheduled to be executed throughout the course of 2026.

Speaker #2: The company is reconfirming its expectation for total revenue in 2026 to exceed $50 million. Let me briefly walk through how we bridge from approximately $2.7 million of Q1 revenue to our $50 million full-year target.

Speaker #2: Which we know is a key focus for our investors. The primary driver is our GPU as a service business. Which we expect to contribute approximately $26 million largely recognized in the second half of the year.

Leah Brown: The primary driver is our GPU-as-a-Service business, which we expect to contribute approximately $26 million, largely recognized in H2 of the year as the project comes online and utilization ramps up. We expect to generate approximately $26 million from our technology solutions backlog, which provides a solid base of committed revenue. This includes $2.9 million currently recorded as deferred revenue that will be recognized in H2 of the year. We also remain on track to recognize $15 million of bookings as revenue in 2026, supported by an additional $25 million in backlog. We also anticipate the balance of guidance to be recognized due to incremental contributions from colocation and infrastructure services driven by customer expansions, new hosting deployments, and continued capacity build-out, along with new customer wins we are actively pursuing.

Speaker #2: As the project comes online, and utilization ramps up. In addition, we expect to generate approximately $26 million from our technology solutions backlog. Which provides a solid base of committed revenue.

Speaker #2: This includes $2.9 million currently recorded as deferred revenue that will be recognized in the second half of the year. We also remain on track to recognize $15 million of bookings as revenue in 2026, supported by an additional $25 million in backlog.

Speaker #2: We also anticipate the balance of guidance to be recognized due to incremental contributions from colocation and infrastructure services, driven by customer expansions, new hosting deployments, and continued capacity build-out.

Speaker #2: Along with new customer wins we are actively pursuing, together these visible drivers give us confidence in reaching our full-year target. To reiterate, due to the timing of revenue recognition, a significant portion of revenue is expected to be recognized in the second half of the year.

Leah Brown: Together, these visible drivers give us confidence in reaching our full year target. To reiterate, due to the timing of revenue recognition, a significant portion of revenue is expected to be recognized in H2, during which time we also expect to return to positive adjusted EBITDA. Doug, I'll now turn it back to you for final comments.

Speaker #2: During this time, we also expect to return to positive adjusted EBITDA. Doug, I'll now turn it back to you for final comments.

Speaker #1: Thank you, Leah. Our first quarter of 2026 reflects continued momentum as we execute on our AI infrastructure strategy and expand our edge data center footprint.

Doug Recker: Thank you, Leah. Our Q1 2026 reflects continued momentum as we execute on our AI infrastructure strategy and expand our edge data center footprint. The industry recognition we've received this year underscores the strength of our positioning and validates the path we're on. We believe our strategy is aligned with several powerful industry trends, including the rapid growth of AI-driven workloads, increasing demand for high density, and energy efficient infrastructure, the shift towards secondary markets with available power, and a broader move toward modular, faster deployed data center solutions. At the same time, evolving power, cooling, sustainability requirements are all reshaping the competitive landscape, further reinforcing the importance of the scalable, cost-efficient, and speed to market solution. We are entering the remainder of 2026 with a focus, discipline, and a growing pipeline of opportunities, and we believe we are well positioned to deliver capture the market opportunity.

Speaker #1: The industry recognition we've received this year underscores the strength of our positioning and validates the path we're on. We believe our strategy is aligned with several powerful industry trends, including the rapid growth of AI-driven workloads increasing demand for high-density and energy-efficient infrastructure.

Speaker #1: The shift towards secondary markets with available power and a broader move toward modular, faster-deployed data center solutions. At the same time, evolving power, cooling, sustainability requirements are all reshaping the competitive landscape further reinforcing the importance of the scalable, cost-efficient, and speed-to-market solution.

Speaker #1: We are entering the remainder of 2026 with a focused discipline and a growing pipeline of opportunities, and we believe we are well positioned to deliver and capture the market opportunity.

Speaker #1: And with that, I will open up to questions, everyone. Thank you. Operator?

Doug Recker: With that, I will open up to questions, everyone. Thank you. Operator?

Speaker #3: Thank you. We will now be conducting a question and answer session. If you would like to be placed into the question queue, please press star one on your telephone keypad.

Operator: Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, 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'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. Once again, that's star one to be placed in the question queue. Our first question today is coming from Rafay Khalid from Ascendiant Capital Markets. Your line is now live.

Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to move your question from the queue.

Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. Once again, that's star one to be placed in the question queue.

Speaker #3: Our first question today is coming from Rafay Khalid from Ascending Capital Markets. Your line is now live.

Speaker #4: Hi, this is Rafay for Edward Wu. With your progress in the US data center market, do you have any plans to expand internationally?

Rafay Khalid: Hi, this is Rafay for Edward Wu. With your progress in the US data center market, do you have any plans to expand internationally?

Speaker #1: Right now, good question, because we are getting a lot of inquiries internationally, especially from South America. I was actually in London last week. A lot of interest.

Doug Recker: Right now, good question, 'cause we are getting a lot of inquiries internationally, especially South America. I was actually in London last week. A lot of interest. Right now, our primary focus is to keep proving the model out here in the US and probably stick with doing our 25MW this year and our 50MW next year in the US.

Speaker #1: But right now, our primary focus is to keep proving the model out here in the U.S. and probably stick with doing our 25-megawatt this year and our 50 next year in the U.S.

Speaker #4: Great. And one more question. With such strong demand in the US, have you seen new competitors enter the market, or any change in the competitive landscape?

Rafay Khalid: Great. One more question. With such strong demand in the US, have you seen new competitors enter the market or any change in the competitive landscape?

Speaker #1: Actually, there has been some movement. Obviously, Armada is in the business with their—it's a different approach. They're more privatized, with Microsoft. But you're starting to see the need for inference.

Doug Recker: Actually, there has been some movement. Obviously, Armada is in the business, but it's a different approach. They're more privatized with Microsoft. You're starting to see the need for inference. You're starting to see the need to compute more locally, and the power, obviously, is an issue. You're starting to see a lot of movement going the modular way and going after that 5 to 10 MW range, so you can deploy quicker.

Speaker #1: You're starting to see the need to compute more locally, and the power obviously is an issue. So, you're starting to see a lot of movement going the modular way and going after that 5 to 10 megawatt range.

Speaker #1: So you can deploy quicker.

Speaker #4: Great. Thank you.

Rafay Khalid: Great. Thank you.

Speaker #3: Thank you. Next question is coming from Scott Buck from Titan Partners. Your line is now live.

Operator: Thank you. Next question is coming from Scott Buck from Titan Partners. Your line is now live.

Speaker #5: Hi, good morning, guys. I appreciate the time. Doug, on the Hydrohost GPU-as-a-Service agreement, can you provide the status of what hardware deployment and site readiness look like?

Scott Buck: Hi. Good morning, guys. I appreciate the time. Doug, on the Hydra Host GPU-as-a-Service agreement, can you provide the status of what hardware deployment and site readiness look like? Trying to understand whether we start to see some revenue in Q3 versus, you know, even later in the year.

Speaker #5: Trying to understand whether we start to see some revenue in the third quarter versus even later in the year.

Speaker #1: Yes, absolutely. So, as of Thursday of last week, Supermicro and NVIDIA have received everything they're doing—the rack and stack—at Supermicro. So the cabinets will be fully utilized and shipped on site.

Doug Recker: Yes, absolutely. As of, as of Thursday of last week, Supermicro and NVIDIA have received everything. They're doing the rack and stack at Supermicro, so the cabinets will be fully utilized and shipped on site. Actually, that brings us about a 3-week, takes about 3 weeks off of our lead time. Fingers crossed, we're looking in that, for it to start building, instead of August, 1 July. Everything is pointing that direction, so we should be a month ahead of schedule.

Speaker #1: So actually, that brings us about a three-week—it takes about three weeks off of our lead time. So, fingers crossed, we're looking at that for it to start building instead of August, July 1st.

Speaker #1: So, everything is pointing in that direction, so we should be a month ahead of schedule.

Speaker #5: That's great. And I'm curious.

Scott Buck: That's great. I'm curious.

Speaker #1: So that would be a $4.4 million in revenue starting. Sorry, go ahead.

Doug Recker: That would be a $4.4 million in revenue starting. Sorry, go ahead.

Speaker #5: Great, great. Do we potentially see this partnership expand to other locations?

Scott Buck: Great. Do we potentially see this partnership expand to other locations?

Speaker #1: The Hydrohost partnership?

Doug Recker: The Hydra Host partnership?

Speaker #5: Yeah. Yes.

Scott Buck: Ye-yes.

Speaker #1: Yes, yes. What we see with the Hydrohost partnership going forward is, obviously, on this first model, we deploy GPU as a service, right? We actually bought the GPU.

Doug Recker: Yes. Yes, what we see with the Hydra Host partnership going forward is, obviously on this first model, we deploy GPU-as-a-Service, right? We actually bought the GPU. That's not our model going forward, but they do have tons of customers. Actually, over 12 customers that are interested in 5 or 10 meg that other folks have bought the GPU that they need to deploy. Our partnership with Hydra Host will keep growing, and it will grow on the colocation side.

Speaker #1: That's not our model going forward, but they do have tons of customers—actually, over a dozen customers—that are interested in 5 or 10 meg. Other folks have bought the GPU that they need to deploy.

Speaker #1: So our partnership with Hydrohost will keep growing, and it will grow on the colocation side.

Speaker #5: Great. I appreciate that. And then, last one for me. You scaled up some costs during the quarter. Do we expect that to continue through the remainder of '26, or does the current kind of underlying cost infrastructure support the anticipated growth through the end of the year?

Scott Buck: Great. Appreciate that. Last one for me. You scaled up some costs during the quarter. Do we expect that to continue through the remainder of 2026, or does the current, you know, kind of underlying cost infrastructure support the anticipated growth through the end of the year?

Speaker #1: The cost of our infrastructure, are you referring to our $6.5 million per meg?

Doug Recker: The cost of our infrastructure, are you referring to, like, our $6.5 million per meg?

Scott Buck: No, that's why I mean, Sorry, Doug. You took up some sales and marketing costs, I think, in the quarter, and I think maybe a little bit of D&A.

Speaker #5: Sorry, Doug. You took up some sales and marketing costs, I think, in the quarter, and I think it may be a little bit of G&A.

Speaker #5: So I'm just curious whether you need to continue to add to OPEX to support the top line.

Doug Recker: Oh.

Scott Buck: I'm just, you know, curious whether you need to continue to add to OpEx to support the top line.

Speaker #1: Yeah, so let me talk about that real quick. Obviously, all the investors on the call today realize that we are moving the rail business out.

Doug Recker: Let me talk about that real quick. Obviously, all the investors on the call today realize that we are moving the rail business out. The challenge has been separating the two. A lot of folks look at us as a rail business, and then they dig in and they see what we're doing, and then they're extremely excited and happy. What we're doing is we put a lot of capital in the very beginning of the year, and we will do that going into Q2 to really distance and separate the two businesses. There's been a lot of marketing expense for that.

Speaker #1: So the challenge has been separating the two. A lot of folks look at us as a rail business, and then they dig in and they see what we're doing, and then they're extremely excited and happy.

Speaker #1: So, what we're doing is we put a lot of capital in at the very beginning of the year, and we will do that going into the second quarter to really distance and separate the two businesses.

Speaker #1: So, there's been a lot of marketing expense for that. And obviously, Gateway, we've hired, who's doing an excellent job for us, and we can already see the calls coming in correctly and the investors having the right pitch and having the right expectation of what we're doing.

Doug Recker: Obviously, Gateway we've hired, who's doing an excellent job for us, and we can already see the calls coming in correctly, and the investors having the right pitch and having the right expectation of what we're doing. It, it'll fall off around July, August timeframe because we're making great progress. I think we'll slim that down. That definitely was a need that we had to do.

Speaker #1: So, it'll fall off around the July or August timeframe because we're making great progress. So, I think we'll slim that down, but that definitely was a need that we had to do.

Speaker #5: Great. Well, I appreciate the added color. This is very helpful.

Scott Buck: Great. Well, I appreciate the added color. This is very helpful.

Speaker #1: Thank you.

Doug Recker: Thank you.

Speaker #3: Thank you. As a reminder, that's star one to be placed in the question queue. Our next question is coming from Alan Klee from Maxim Group.

Operator: Thank you. Our next question is coming from Allen Klee from Maxim Group.

Speaker #3: Your line is now live.

Speaker #6: Yes. Hi. How do you think about the CAPEX, your CAPEX spend, over the next 12 months?

Allen Klee: Yes. Hi. How do you think about the CapEx, your CapEx spend over the next 12 months?

Speaker #1: So, the CAPEX spend over the next 12 months—we're looking at deploying our first another 5-meg site in, roughly, we're at $6.5 million.

Doug Recker: The CapEx spend over the next 12 months, we're looking at deploying another 5-meg site. Roughly, we're at $6 to 6.5 million. Roughly $30 million is what we're anticipating in the next 2 quarters to deploy to meet our goal. We'll probably deploy another $30 million towards the end of the year to stay on track. We will obviously procure more product for next year to make sure we hit our number for next year. We are on track. We're well funded to hit our number of the 25 MW this year, and we can do that with the funding that we have.

Speaker #1: So, roughly $30 million is what we're anticipating in the next two quarters to deploy, to meet our goal. And then we'll probably deploy another $30 million towards the end of the year.

Speaker #1: To stay on track, we will obviously procure more product for next year to make sure we hit our number for next year. But we are on track.

Speaker #1: We're well funded to hit our number of the 25 megawatt this year, and we can do that with the funding that we have.

Speaker #6: Yeah, that's clearly a competitive advantage. And then strategically, it looks like your contract that comes on later this year is a three-year contract. How do you think about what you do with the GPUs after that contract is over?

Rafay Khalid: Yeah. That's clearly a competitive advantage. Strategically, it looks like your contract that comes on later this year, it's a three-year contract. How do you think about what you do with the GPUs after that contract is over? Do you think there's an option that they could get renewed?

Allen Klee: Yeah. That's clearly a competitive advantage. Strategically, it looks like your contract that comes on later this year, it's a three-year contract. How do you think about what you do with the GPUs after that contract is over? Do you think there's an option that they could get renewed?

Speaker #6: Do you think there's an option that they could get renewed?

Speaker #1: Yes, there are two options there that we're actually looking at. So, one, the market is saying—right, and it can change—but the market is saying that those GPUs are going to be worth $50 to $58 million, in that range, after the contract is finished.

Doug Recker: Yes. There's two options there that we're actually looking at. One, the market is saying, right, and it can change, but the market is saying that those GPUs are going to be worth $50 to $58 million, in that range, after the contract is finished. We have two options. One, we can turn around and sell those GPUs and go back to a straight colo play, and then we're out of the GPU business. We can actually go back to that customer, which is common from what we understand. We go back to that customer, and we're not getting 100% of the revenue that we did on the first term, but probably anywhere from 40% to 60% of that normal revenue. We'll look at both applications. It just depends. If we want the capital to expand, we'll probably sell those GPUs.

Doug Recker: Yes. There's two options there that we're actually looking at. One, the market is saying, right, and it can change, but the market is saying that those GPUs are going to be worth $50 to 58 million, in that range, after the contract is finished. We have two options. One, we can turn around and sell those GPUs and go back to a straight colo play, and then we're out of the GPU business. We can actually go back to that customer, which is common from what we understand. We go back to that customer, and we're not getting 100% of the revenue that we did on the first term, but probably anywhere from 40% to 60% of that normal revenue. We'll look at both applications. It just depends. If we want the capital to expand, we'll probably sell those GPUs.

Speaker #1: So, we have two options. One, we can turn around and sell those GPUs and go back to a straight colo play, and then we're out of the GPU business.

Speaker #1: Or we can actually go back to that customer, which is common from what we understand. We go back to that customer, and we're not getting 100% of the revenue that we did on the first term, but probably anywhere from 40% to 60% of that normal revenue.

Speaker #1: So we'll look at both applications. It just depends. If we want the capital to expand, we'll probably sell those GPUs, so we can use that capital to put back into infrastructure.

Doug Recker: you know, we can use that capital to put back into infrastructure.

Speaker #6: That's helpful. And you did mention you also have colo opportunities and, with the Hydra partnership, it started out with you buying the GPUs, but going forward you could be getting customers that already have GPUs to deploy.

Allen Klee: That's helpful. You did mention you also have colo opportunities then with the Hydra partnership. It started out with you buying the GPUs, but going forward, you could be getting customers that already have GPUs to deploy. In those type of situations, what would your responsibilities be?

Speaker #6: In those types of situations, what would your responsibilities be?

Speaker #1: Sure. Actually, so when we build a 5-megawatt site, a modular 5-megawatt site, say in Iowa, our responsibility is to bring power, cooling, and connectivity.

Doug Recker: Sure. Actually, when we build a 5 MW site, a modular 5 MW site, say in Iowa, our responsibility is to bring power, cooling, and connectivity. We are basically a colo, just like a QTS or an Equinix. Anybody, the big brick-and-mortars, we're just very small, and we provide all the services. They bring their own gear, they bring rack and stack, they bring the infrastructure as far as the compute. We provide the infrastructure as far as the power, cooling, and the reliability of the five nines, the backup power, the generators. That's our core business.

Speaker #1: So we are basically a colo, just like a QTS or an Equinix—any of the big brick-and-mortars. We're just very small, and we provide all the services.

Speaker #1: They bring their own gear. They bring rack and stack. They bring the infrastructure as far as the compute. We provide the infrastructure as far as the power, cooling, and the reliability of the five-nines, the backup power, the generators—that's our core business.

Speaker #6: Okay, and then for those opportunities, do you view them and then, I guess, you would sign on with potential customers? Is that the way to think of it?

Allen Klee: Okay. For those opportunities, I guess you would signed on to longer-term leases with potential customers. Is that the way to think of it?

Doug Recker: Correct. Those are typically 5 to 10-year terms. Obviously we like those terms a lot better.

Speaker #1: Correct. Those are typically 5- to 10-year terms. So, obviously, we like those terms a lot better.

Speaker #6: Okay, great. Now, this is impressive, what you're doing. Maybe one other question—just since I'm a little newer to the story, could you go through a little bit of what HydraHost is bringing to the table?

Allen Klee: Okay, great. No, this is impressive what you're doing. Maybe one other question, just since I'm a little newer to the story. For Hydra, could you go through a little bit of what Hydra Host is bringing to the table?

Speaker #6: What expertise?

Doug Recker: Sure.

Allen Klee: what their expertise is? Thank you.

Allen Klee: What their expertise is? Thank you.

Speaker #1: Sure. Yes, absolutely. So, HydraHost is basically a GPU-as-a-service company. They do not own the GPU—their specialty is selling and supporting the GPU.

Doug Recker: Yes. Absolutely. Hydra Host is basically a GPU-as-a-service company. They do not own the GPU. Their specialty is selling and supporting the GPU. Basically, they have the, let's say, the hyperscalers as a customer. They basically go to companies like myself or investors or data center operators that want that GPU revenue. They'll go and buy the GPU, so the customer owns the GPU. Hydra Host just manages the GPU. They do the install, they manage the sales. Basically, they bring you revenue, and they support the GPU. You take the hit on buying all the GPU, but in return, you get the revenue, and it's a revenue share. They get a small portion of the revenue.

Speaker #1: So basically, they have the, let's say, the hyperscalers as a customer. They basically go to companies like myself or investors, or data center operators, that want that GPU revenue.

Speaker #1: So they'll go and buy the GPU. So the customer owns the GPU. HydraHost just manages the GPU—the install, they manage the sales. So basically, they bring you revenue, and they support the GPU.

Speaker #1: You own the—you take the hit on buying all the GPU, but in return, you get the revenue. And it's a revenue share; they get a small portion of the revenue.

Allen Klee: Okay.

Speaker #1: So it's for people that aren't in the GPU business, that want to be in the GPU revenue business, basically.

Doug Recker: It's for people that aren't in the GPU business that want to be in the GPU revenue business, basically.

Speaker #6: Makes sense. And then, in terms of what you said your responsibilities are with colo, with power, and interconnect, and all that, explain also who you partner with to do those things and what their background is.

Allen Klee: Makes sense. Then in terms of what you said your responsibilities are with colo, with power and internet, interconnect and all that, Explain also, like, who you partnered with to do those things and what their background is.

Speaker #1: Sure. So basically, our equipment is backed—obviously, it's Schneider Electric. We use a lot of Schneider Electric equipment. We use Vertiv. And then, in-house, our team—our in-house team—we have roughly 22 folks that, what we do is, we monitor with our NOX.

Doug Recker: Sure. Basically our equipment is backed. Obviously it's Schneider Electric. We use a lot of Schneider Electric equipment. We use Vertiv. In-house, our team in-house, we have roughly 22 folks that what we do is we monitor with our NOCs. We have 2 NOCs. We have one in Jacksonville and one in Amarillo, Texas. Those NOCs monitor the pods 24 hours a day. That's break-fix. That's AC unit goes down. We dispatch within 2 hours. Everything that's built with our pods is just like a tier 3 data center. It's what's called N+1. Everything has a redundancy factor to it, so you have time to fix it. If something does go down, it's not hurting the business. You're still delivering the five nines. You have time to fix it. That's why we have dual generators.

Speaker #1: We have two NOX. We have one in Jacksonville and one in Amarillo, Texas. Those NOX monitor the pods 24 hours a day, so that's break/fix.

Speaker #1: If that AC unit goes down, we dispatch within two hours. Everything that's built with our pods is just like a Tier 3 data center. It's what's called N+1.

Speaker #1: So, everything has a redundancy factor to it, so you have time to fix it. So, if something does go down, it's not hurting the business.

Speaker #1: You're still delivering the 5.9s. You have time to fix it; that's why we have dual generators. Everything you see is what we call an A and a B feed.

Doug Recker: Everything you see is what we call an A and a B feed, and we maintain all that. Now we do sub it out, obviously, to contractors that are in those markets, but we control the dispatch, we control the contracts, we control all the servicing.

Speaker #1: And we maintain all that. Now, we do sub it out, obviously, to contractors that are in this market, but we control the dispatch. We control the contracts.

Speaker #1: We control all the servicing.

Speaker #6: Right. And as you go forward and are looking at colo opportunities or building out, how are you—this is my list—how are you strategically thinking about finding power opportunities?

Allen Klee: Right. As you go forward and are looking at colo opportunities, or building out, This is my last. How are you strategically thinking about, like, finding power opportunities?

Speaker #1: So when we look for power, we're a different breed, right? So we're not going into a community looking at a 100 megawatt. We're going to where power is what we call stranded.

Doug Recker: When we look for power, we're a different breed, right? We're not going into a community looking at 100 MW. We're going to where power is, what we call, stranded. When they build a substation in, say, a city in Iowa, right? That they build a substation, they build it to 20 MW because they know that community is going to grow. There is actually extra power there. Our team goes out and finds where there's 5 to 10 MW stranded power, and then we go contract it and move quickly. A lot of times on our 2 sites that we have, basically they were old bit mining sites, so the power is actually there. They thought they would use a lot of power. They never did. There's 10 MW available at the site.

Speaker #1: So when they build a substation, in, say, a city in Iowa—right—they build a substation. They build it to 20 megawatts because they know that community is going to grow.

Speaker #1: There is actually extra power there. Our team goes out and finds where there's 5 to 10 megs of stranded power, and then we go contract it and move quickly.

Speaker #1: A lot of times on our two sites that we have—basically, they were old bit mining sites. So the power is actually there; they thought they would use a lot of power.

Speaker #1: They never did. So, there's 10 megawatts available at the site. What we do is, we do a lease with the actual landowner, and we'll take that over for 20 years, and the landowner makes money on the power as well.

Doug Recker: What we do is we do a lease with the actual landowner, and we'll take that over for 20 years, the landowner makes money on the power as well, so it's to their benefit to bring somebody like us, who actually is going to use the 5 MW to 10 MW than a bit miner who goes up and down. One month it's a meg, 2 months it's, you know. It's not consistent load. They wanna make money off of power, they like our model.

Speaker #1: So it's to their benefit to bring somebody like us who actually is going to use the 5 megawatt to 10 megawatt, rather than a bit miner who goes up and down—one month, it's a megawatt, two months, it's not consistent load.

Speaker #1: They want to make money off of power, so they like our model.

Speaker #6: Thank you so much.

Allen Klee: Thank you so much.

Doug Recker: Yes, sir.

Speaker #1: Yes, sir.

Allen Klee: Appreciate it.

Speaker #7: Thank you. Next question today is coming from Justin Tapper from Shea Capital. Your line is now live.

Operator: Thank you. Next question today is coming from Justin Tapper from Shay Capital. Your line is now live.

Speaker #8: Hi, Doug. So, question on the 10 megawatts on the colocation business. So the 10 you've signed, you've got it to 25 this year, so you'll do another 15.

Operator: Hi, Doug. Question really the 10 megawatts on the colocation business, the 10 you've signed, you've guided to 25 this year, so you'll do another 15, and then next year, I think you said 40. Maybe can you just talk about the demand out there? What type of customers want this? Do the same customers that would want, like you mentioned before, the 100-megawatt sites, why would they want something like a 5 or 10 megawatt from you? Maybe you could just help us to bridge the gap of demand there.

Justin Tapper: Hi, Doug. Question really the 10 megawatts on the colocation business, the 10 you've signed, you've guided to 25 this year, so you'll do another 15, and then next year, I think you said 40. Maybe can you just talk about the demand out there? What type of customers want this? Do the same customers that would want, like you mentioned before, the 100-megawatt sites, why would they want something like a 5 or 10 megawatt from you? Maybe you could just help us to bridge the gap of demand there.

Speaker #8: And then next year, I think you said 40. Maybe, can you just talk about the demand out there? What type of customers want this?

Speaker #8: Do the same customers that would want, like you mentioned before, the 100-megawatt sites? Why would they want something like a 5 or 10 megawatt from you?

Speaker #8: Maybe you could just help us to bridge the gap of demand there.

Speaker #1: Absolutely. Great question. Thanks, Justin. So yeah. So what we're looking at in markets right now, let's back up. So when we deployed the first one with HydraHost, we were starting to get tons of calls for 5 to 10 megs.

Doug Recker: Yeah, absolutely. Great question. Thanks, Justin. Yeah, what we're looking at in markets right now. Let's back up. When we deployed the first one with Hydra Host, we started to get tons of calls for 5 to 10 meg. I've been in this business 30 years, and I'm thinking, why all of a sudden does somebody want 5 or 10 meg when everybody else is looking at gigawatt and 100 meg? You know, it's just, it's crazy the power they need. What's going on is the 5 to 10 to even 20 meg sector is going to be the hot new sector. That is for training or for inference models. What's happening is they need to deploy their GPU, they need to deploy it quickly. Everybody knows that people are sitting on GPU. They've bought them. They've invested.

Speaker #1: I've been in this business 30 years, and I'm thinking, why all of a sudden does somebody want 5 or 10 megs when everybody else is looking at gigawatt and 100 megs?

Speaker #1: It's crazy, the power they need. So what's going on is that the 5 to 10, to even 20 megs sector, is going to be the hot new sector.

Speaker #1: That is for training or for inference models. So what's happening is they need to deploy their GPU. They need to deploy it quickly. Everybody knows that people are sitting on GPU.

Speaker #1: They've bought them. They've invested. Now they need to burn them. So to actually get 5 to 10 megs up quickly, we can do that under six months.

Doug Recker: Now they need to burn them. To actually get 5 to 10 meg up quickly, we can do that under 6 months. You can't do that in the other models that people are deploying. The Microsofts, the Googles of the world, all them, they're all getting into inference, and they know they need to capture these pockets to do their inferencing. The 5 to 10 meg range, I can tell you right now, I look on my wall right here, I have 21 neoclouds. If I had 5 or 10 meg, they would take it. The need is there. They're trying to build their networks out now for inferencing. It's finally there. People have talked about it for a while. Now they're doing it.

Speaker #1: You can't do that in the other models that people are deploying. So the Microsofts, the Googles of the world, all of them, they're all getting in the inference, and they know they need to capture these pockets to do their inferencing.

Speaker #1: So, the 5 to 10 megs range—I can tell you right now, I look on my wall right here. I have 21 NeoClouds. If I had 5 or 10 megs, they would take it.

Speaker #1: So the need is there. They're trying to build their networks out now for inferencing. It's finally there. People have talked about it for a while.

Speaker #1: Now they're doing it. You can see press releases from Google, how they're looking at doing 20 sites right now—the same thing. So it's time, and they can deploy quicker.

Doug Recker: You can see press releases from Google, how they're looking at doing 20 sites right now, the same thing. It's time, and they can deploy quicker. Obviously, speed is of the essence right now.

Speaker #1: And, obviously, speed is of the essence right now.

Speaker #9: Got it. Great. And then just a follow-up from me, just on the balance sheet. So the 33 million in cash, I think Leah mentioned the 15 million received prepayment with another 3 on the way.

Doug Recker: Got it. Great. Just a follow-up from me, just on the balance sheet. The $33 million in cash, I think Leah mentioned the $15 million received prepayment with another $3 million on the way. That was in May, that's additional cash to the $33 million you filed as of March 31?

Justin Tapper: Got it. Great. Just a follow-up from me, just on the balance sheet. The $33 million in cash, I think Leah mentioned the $15 million received prepayment with another $3 million on the way. That was in May, that's additional cash to the $33 million you filed as of March 31?

Speaker #9: So if we that was in May, so then that's additional cash. To the 33 you filed as of March 31st?

Speaker #1: Correct.

Doug Recker: Correct.

Speaker #9: Correct. And then just one also, too. So, a question. So the 'F' on the FTC website over the weekend—there's a filing that Elon Musk purchased APR Energy.

Doug Recker: Correct. Just one also too. A question. On the FTC website over the weekend, there's a filing that Elon Musk purchased APR Energy. One, just can you confirm, is that the APR Energy you have the 5% stake in? If there's any details you can provide us there, would be great. Thanks.

Justin Tapper: Correct. Just one also too. A question. On the FTC website over the weekend, there's a filing that Elon Musk purchased APR Energy. One, just can you confirm, is that the APR Energy you have the 5% stake in? If there's any details you can provide us there, would be great. Thanks.

Speaker #9: Juan, just can you confirm, is that the APR Energy you have the 5% stake in? If there are any details you can provide us there, it would be great.

Speaker #9: Thanks.

Speaker #1: Yes. I'm not at liberty to say that today, but it is, obviously, the same company. But I can't discuss that today. Hopefully, we'll have some news from them shortly.

Doug Recker: Yes. I'm not at liberty to say that today, but it is the same, obviously the same company. I can't discuss that today. Hopefully, we'll have some news from them shortly.

Speaker #9: Got it. Thanks.

Doug Recker: Got it. Thanks.

Justin Tapper: Got it. Thanks.

Speaker #7: Thank you. Next question is coming from Nico Suchetty from RBC. Your line is now live.

Operator: Thank you. Next question is coming from Nico Sacchetti from RBC. Your line is now live.

Speaker #10: Hey, Doug. Can you hear me this time?

Nico Sacchetti: Hey, Doug, can you hear me this time?

Speaker #1: Yes, sir. How are you?

Doug Recker: Yes, sir. How are you?

Speaker #10: I'm doing well. Yeah, that last question was my first question. I read about it—there's no details released. But it looks like that will capitalize for you.

Nico Sacchetti: I'm doing well. Yeah, that last question was my first question. There's no details released.

Doug Recker: Yeah.

Nico Sacchetti: It looks like that will capitalize for you. Whatever the details are, if this goes through, your 5% of whatever the number is going to come into Duos, correct?

Speaker #10: Whatever the details are, if this goes through, your 5% of whatever the number is is going to come into DUOS, correct? If the sale takes place.

Doug Recker: Yes, sir.

Nico Sacchetti: Like, if the sale takes place, is that going to be taxed? Is the number that we just do 5% of whatever the number is, the number that's going to show up on your balance sheet? Do you have any idea? Do you have any carry forward? Like, what will that look like?

Speaker #10: Is that going to be taxed? Is the number that we just do 5% of whatever the number is, the number that's going to show up on your balance sheet?

Speaker #10: Do you have any idea? Do you have any carry forward? What will that look like?

Speaker #11: So just looking at the funds that we would receive, the agreement has a waterfall effect. So it's not a straight calculation. I'm just doing a 5% on the transaction.

Leah Brown: Just looking at the funds that we would receive, the agreement has a waterfall effect, it's not a straight calculation, just doing a 5%.

Nico Sacchetti: Okay

Leah Brown: on the transaction.

Nico Sacchetti: Okay.

Leah Brown: On the transaction.

Speaker #10: Yeah, sure. I just meant, is it—from a tax standpoint—not what is the number, but let's just say he buys it for $100 million. Understanding we don't know exactly what the 5% is, but the 5%—is it going to be taxed as a long-term capital gain where you're going to net out an amount of it?

Nico Sacchetti: Yeah. Sure. I just meant is it from a tax standpoint, not what is the number.

Doug Recker: Right

Nico Sacchetti: he buys it for $100 million.

Nico Sacchetti: He buys it for $100 million.

Doug Recker: Right.

Nico Sacchetti: Understand we don't know exactly what the 5% is, but the 5%, is it going to be taxed as like a long-term capital gain where you're going to net out an amount of it? That's my question is just to speculate on the number. Obviously, we don't know.

Speaker #10: That's my question, is just to speculate on the number. Obviously, we don't know. I'm saying if it goes through, what would the tax look like?

Doug Recker: Yeah.

Nico Sacchetti: I'm saying if it goes through, what would the tax look like?

Nico Sacchetti: I'm saying if it goes through, what would the tax look like? Would it be a gross,

Speaker #10: Would it be a gross or a net number? That's what I'm asking.

Doug Recker: Yeah

Nico Sacchetti: or a net number? That's what I'm asking.

Nico Sacchetti: Or a net number? That's what I'm asking.

Speaker #11: So I would say, at a high level, we do understand that that is a capital gain. But we don't want to divulge any definite calculation around that transaction at this time.

Leah Brown: I would say at a high level, we do understand that that is a capital gain. You know, we don't want to divulge any.

Nico Sacchetti: Yeah

Leah Brown: you know,

Leah Brown: you know, definite

Nico Sacchetti: Yeah

Leah Brown: Calculation around that transaction at this time.

Speaker #1: But I think I can answer your question a little bit better, Nico. With this movement of the rail business that we're doing, I think we'll have a substantial amount of NOL.

Doug Recker: I think I can answer your question a little bit better, Nico. You know, with this movement of the rail business that we're doing.

Nico Sacchetti: Yeah

Doug Recker: I think we'll have a substantial amount of NOL. I think we'll be in good shape, but we'll report to you as soon as we know.

Speaker #1: So, I think we'll be in good shape, but we'll report to you as soon as we know.

Speaker #10: Sorry, a substantial amount of what? I just didn't catch that.

Nico Sacchetti: Sorry, a substantial amount of what? I just didn't catch that.

Doug Recker: With the movement of the rail.

Speaker #1: With the movement of the rail. Yeah.

Speaker #10: Yeah. I just didn't hear what you said, substantial amount of what?

Nico Sacchetti: Yeah.

Doug Recker: Yeah, yeah.

Nico Sacchetti: I just didn't hear what you said. A substantial amount of what?

Speaker #1: Well, NOLs. I mean, we—we've lost a lot of money in that division, so we should be able to back that up. Yeah.

Doug Recker: Well, NOLs. I mean, we.

Nico Sacchetti: Oh, NOL, okay. Got it.

Doug Recker: We've lost a lot of money in that division.

Nico Sacchetti: Right

Doug Recker: We'll.

Nico Sacchetti: No, I know. That's gotta be it.

Doug Recker: Yeah.

Speaker #10: I mean, behind the scenes, I'm sure you're excited, right? Because this is getting the company into the actual company that you want moving forward, correct?

Nico Sacchetti: I mean, behind the scenes, I'm sure you're excited, right? This is getting the company into the actual company that you want moving forward, correct, focused on what you wanna be doing on the data center?

Speaker #10: Focused on what you want to be doing on the data center.

Speaker #1: That's exactly correct. And if you look at our business, obviously, I came into this role and I brought this product to this business for our shareholders.

Doug Recker: That's exactly correct. If you look at our business, obviously I came into this role and I brought this product to this business for our shareholders. It's the best thing going in the market right now. We just need to separate and focus. Like, prime example, Everybody knows this on the call. It's been a challenge, right? We've burned through $900,000 on that division. We need to exercise that, and we're doing that here, and I would like to commit to you I'll have that done as soon as possible. We're almost at the finish line with that, we're excited about that. We're excited about a bunch of stuff this week.

Speaker #1: It's the best thing going in the market right now. We just need to separate and focus. Prime example—and everybody knows this on the call.

Speaker #1: It's been a challenge, right? So we burned through $900,000 on that division. We need to exercise that, and we're doing that here, and I would like to commit to you.

Speaker #1: I'll have that done as soon as possible. We're almost at the finish line with that. So we're excited about that. We're excited about a bunch of stuff this week.

Speaker #1: So we're extremely excited about where the company is going, and things like this are just another arrow in our quiver.

Doug Recker: We're extremely excited about where the company is going, and this just, you know, things like this just, you know, another quiver, another arrow in our quiver. This is good stuff.

Speaker #1: This is good stuff.

Speaker #10: That rolls into my next question. Usually, you're really fired up on these calls and it seems like it's a little more dampened this call.

Nico Sacchetti: That rolls into my next question. You know, you're usually, you're really fired up on these calls, and it seems like it's a little more dampened this call, and that's with the $2.7 million of revenue for the quarter. Obviously, that's not what I think anybody is looking to own the company for is a number like that. I'm curious, do you think that this is Understanding this pivot is happening, the work that you're doing is maybe you're booking it now, but the revenue isn't recognized yet. Is this like the pivot quarter or quarters? Is this something that we should expect or should have expected?

Speaker #10: And that's with the $2.7 million of revenue for the quarter. Obviously, that's not what I think anybody is looking to own the company for, is a number like that.

Speaker #10: So I'm curious, do you think that this is understanding this pivot is happening, the work that you're doing, is maybe you're booking it now, but the revenue isn't recognized yet?

Speaker #10: Is this the pivot quarter or quarters? Is this something that we should expect, or should have expected, or was it something that you were expecting where you've booked all of this, you've got the tech solutions backlogged, we just aren't recognizing it in this quarter, so we shouldn't look at $2 million as like, "Wow, what a flop of a quarter." You are doing work that's going to get paid in the next couple of quarters and moving forward, where, if anything, this number—is it immaterial or is it worth questioning this quarter?

Doug Recker: Yeah

Doug Recker: Yeah.

Nico Sacchetti: you were expecting where-

Doug Recker: Yeah

Doug Recker: Yeah.

Nico Sacchetti: You know, you've booked all of this. You've got this, the Technology Solutions backlogged.

Doug Recker: Yeah

Doug Recker: Yeah.

Nico Sacchetti: aren't recognizing it in this quarter, so we shouldn't look at $2 million as like, Wow, what a flop of a quarter. You are doing work that's going to get paid.

Nico Sacchetti: Aren't recognizing it in this quarter, so we shouldn't look at $2 million as like, Wow, what a flop of a quarter. You are doing work that's going to get paid.

Doug Recker: Yeah

Nico Sacchetti: in the next couple of quarters and moving forward, where if anything, this number is it immaterial or should is it worth, like, questioning this quarter, is my question?

Speaker #10: Is my question.

Speaker #1: Yeah. Prime example, if I could have shipped all that stuff because that business, you have to ship it, right, to recognize the revenue. I could have booked 14 million.

Doug Recker: Yeah, that, prime example, if I could have shipped all that stuff, 'cause that business you have to ship it, right? To recognize the revenue.

Nico Sacchetti: Yeah

Speaker #1: I could have booked 14 million dollars this quarter, right? But I made it clear on the last earnings call that we're going to see this revenue start kicking end of second, third, and fourth.

Doug Recker: I could have booked $14 million this quarter, right?

Nico Sacchetti: Okay.

Doug Recker: I made it clear on the last earnings call that we're going to see this revenue start kicking end of Q2, Q3, and Q4. That's always been our model. Our model right now obviously is keep going, keep doing what we're doing, get these other sites up. You know, once I light that Iowa site, that's another 5 MW at $2 million a MW, right?

Speaker #1: And that's always been our model. Our model right now, obviously, is keep going, keep doing what we're doing, get these other sites up because once I'd like that Iowa site, that's another five megawatts at $2 million a megawatt, right?

Speaker #1: So 10 years really start seeing this kick. What we're doing is exactly what I wanted the team to do, is build these, deploy them, keep focused, stay, keep your head down.

Nico Sacchetti: Yeah

Doug Recker: You really start seeing this kick. What we're doing is exactly what I wanted the team to do, is build these, deploy them, keep focused, stay, keep your head down. The infrastructure division, keep running. I'm telling I apologize if I'm not excited, but we are working 24/7, and it is good stuff. I'm sorry I did that.

Speaker #1: The infrastructure division, keep running. I'm telling you, I apologize if I'm not excited, but we are working 24/7 and it is good stuff. I'm sorry I did that, but we are extremely pumped.

Nico Sacchetti: No, no.

Doug Recker: We are extremely pumped. Yeah.

Speaker #1: Yeah.

Speaker #10: I just, that with the 2 million, I just want to ask the question. You mentioned Iowa. Where in Iowa is that work happening?

Nico Sacchetti: I just That with the $2 million, I just wanted to ask the question?

Doug Recker: Oh, yeah. No, no.

Nico Sacchetti: You mentioned Iowa. Where in Iowa is that work happening?

Speaker #1: It's—the name of it is called Muscatine. I always say it wrong. Muscatine in Iowa. I'll put it out there. We have a press release coming here in the next day or two.

Doug Recker: It's The name of It's called Muscatine. I always say it wrong. Muscatine, Iowa. I'll put it out there. We have a press release coming here in the next day or two. It's right outside of Illinois, so I still get that low latency down to Cermak, which is important. Our hyperscale customer wants that location, and they want the one in Texas as well. The one in Texas is right outside of Amarillo.

Speaker #1: It's right outside of Illinois. So I still get that low latency down to the Surmac, which is important. And our hyperscale customer, once that location and they want the one in Texas as well, the one in Texas is right outside of Amarillo.

Nico Sacchetti: Okay

Speaker #1: So we're partnering now with somebody that is going to be a great partner of ours moving forward. They're already a partner, so.

Doug Recker: We're partnering now with somebody that is going to be a great partner of ours moving forward. They're already a partner.

Speaker #10: It's not a major metro area in Iowa, I take it.

Nico Sacchetti: It's not a major metro area in Iowa, I take it.

Speaker #1: No, no. But yeah, but you're only 20 miles out of a major market area. Yeah. And that's where the power was stranded. That's where the power is there.

Doug Recker: No, no. Yeah. You're only, you know, 20 miles out of a major market area.

Nico Sacchetti: Sure.

Doug Recker: And that-

Nico Sacchetti: Sure

Doug Recker: that's where the power was stranded. That's where the power is there. I literally, if I had 10MW worth of infrastructure, like coming off the line, I could light 10MW there today. It's there.

Speaker #1: I literally—if I had 10 megawatts worth of infrastructure, like coming off the line—I could light 10 megawatts there today. It's there. It's transmission down.

Nico Sacchetti: Okay.

Doug Recker: It's transmission down. It's beautiful.

Speaker #1: It's beautiful.

Speaker #10: Okay, okay. I think I have two more questions.

Nico Sacchetti: Okay. Okay. I think I have two more questions.

Speaker #1: Sure.

Doug Recker: Sure.

Speaker #10: So just around this whole backlog—like revenue, the fact that you do the work now, but it's not showing up. And then I saw some backlog things.

Nico Sacchetti: Just around this whole backlog, like revenue, the fact that you do the work now, but it's not showing up. Then, you know, I saw some backlog things. Even earlier in the Q&A, you were talking about deploying 30 megs. You know, there's a lot of like language barrier for like, are we deploying something? What does that translate into revenue? Just to try to, for the sake of getting things like understandable.

Speaker #10: Even earlier in the Q&A, you were talking about deploying 30 megs. There's a lot of language barrier for, like, are we deploying something? What does that translate into revenue?

Speaker #10: So just to try to, for the sake of getting things understandable—and even in the release—it said after the quarter, you received a $15 million prepayment from a customer.

Doug Recker: Yeah

Nico Sacchetti: even like in the release, it said after the quarter, you received a $15 million prepayment from a customer.

Speaker #10: So it's just trying to make sense of the different wording and what numbers are what. I am hopeful the backlog numbers looked like they were broken down into booked backlog—data center was $43.5 million, tech solutions looked like it was $14 million.

Doug Recker: Yeah.

Nico Sacchetti: like, I, it just Trying to make sense of the different wording and what.

Nico Sacchetti: like, I, it just Trying to make sense of the different wording and what numbers.

Doug Recker: Yeah

Nico Sacchetti: are what. I am hopeful, like the backlog numbers looked like they were broken down into booked backlog. Data center was $43.5 million. Duos Technology Solutions looked like it was $14 million. Are those numbers the right? That sounds right?

Speaker #10: Are those numbers right? That sounds right.

Speaker #1: Yes. Absolutely.

Doug Recker: Yes, absolutely.

Speaker #10: So that just means that the $43.5 and the $14 are booked business for what type of timeframe, or is there a timeframe?

Nico Sacchetti: That just means that the $43.5 and the $14 are booked business for what type of timeframe, or is there a timeframe?

Doug Recker: It's this year.

Speaker #1: Is this your this year.

Speaker #10: That's this year. Okay. Is that something that you will start to report moving forward, as a broken-down backlog of those two?

Nico Sacchetti: Or

Doug Recker: This year.

Nico Sacchetti: Or

Doug Recker: This year.

Nico Sacchetti: That's this year.

Doug Recker: This year. Yep.

Nico Sacchetti: Okay.

Doug Recker: Yeah. This year.

Nico Sacchetti: Is that something that you will start to report moving forward as like a broken down, like backlog?

Doug Recker: Yeah.

Nico Sacchetti: from those two pieces?

Speaker #1: Yeah.

Speaker #10: Yeah. It'd be very helpful if you did. So if you would, this really helps clear up the story. So then the 43.5 million in backlog, is that inclusive of the 15 million dollar prepayment?

Doug Recker: Yeah.

Nico Sacchetti: Yeah. It would be very helpful if you did. If you would, this really helps clear up the story.

Doug Recker: Sure. Yeah.

Nico Sacchetti: So then-

Doug Recker: Yeah

Nico Sacchetti: The $43.5 million in backlog, is that inclusive of the $15 million prepayment?

Speaker #2: So the 15 million prepayment, which there's going to be an additional 3 million that is pending right now, we will recognize that over the life of the contract.

Leah Brown: The $15 million prepayment, which there's going to be an additional $3 million that is pending right now, we will recognize that over the life of the contract. The 3-year customer contract. You won't see $18 million being booked immediately. That will be over the life of the customer contract.

Speaker #2: So the three-year customer contract, you won't see 18 million being booked immediately. That will be over the life of the customer contract.

Speaker #10: So my question is: the $15 million prepayment that you highlighted in that release, is that cash flow coming in, and is that included in—so is that different than your reported booked backlog?

Nico Sacchetti: My question is, the $15 million dollar prepayment that you highlighted in that release, is that like cash flow coming in? And is that-

Leah Brown: Yes

Nico Sacchetti: included in, is that different than your reported booked backlog?

Speaker #2: That isn't included in our reported backlog. But that will not be recognized until the life of the contract, which is three years.

Leah Brown: That is included in our reported backlog.

Nico Sacchetti: Okay.

Leah Brown: That will not be recognized until for the life of the contract, which is 3 years.

Speaker #10: So yes, you get what I'm saying, right? It's just to try to make sense and get the clearest picture, and you highlighted the $15 million prepayment in the call.

Nico Sacchetti: Yeah, you get what I'm saying, right? It's just to try to make sense and get the clearest picture and you highlighted the $15 million prepayment in the call, and then I'm just not sure where that fit in with some of the other numbers.

Speaker #10: And then I'm just not sure where that fit in with some of the other numbers. And then the guide is Doug—he's on the megawatts.

Leah Brown: Sure.

Nico Sacchetti: And then, you know-

Leah Brown: Right

Nico Sacchetti: The guide, the guide is like Doug is on the megawatts. There's a megawatt guide, and then there's also a revenue guide. I just wanna make sure that we're always talking about the same things, and it's not we're not talking about megawatts booked and built versus revenue because that, I feel like that pendulum kind of swings back and forth with the conversation.

Speaker #10: And so there's a megawatt guide, and then there's also a revenue guide. And so I just want to make sure that we're always talking about the same things and we're not talking about megawatts booked and built versus revenue, because I feel like that pendulum kind of swings back and forth with the conversation.

Speaker #10: So obviously, for the sake of getting everyone on the same page to get your stock to be valued with all of these good things that you're doing, to try to just get the picture as clear as possible.

Doug Recker: Right

Nico Sacchetti: for the sake of getting everyone on the same page to get your stock to be valued with all of these good things that you're doing to try to just get the picture as clear as possible, and it sounds like we're on the cusp of maybe this rail car and this gas-powered turbine business being removed, and I think that will only help, you know, clean up the situation, so.

Speaker #10: And it sounds like we're on the cusp of maybe this rail car. And this gas-powered turbine business being removed. And I think that will only help clean up the situation, so.

Speaker #1: Absolutely. Absolutely.

Doug Recker: Absolutely.

Speaker #10: Okay. Last one is just around the actual unit. So you mentioned competition. More competition. You mentioned Armada on this call. You mentioned there's a lot of interest in this 5 to 10 megawatt range.

Nico Sacchetti: Okay. Last one is just around, like, the actual unit. You mentioned competition, more competition. You mentioned Armada on this call.

Nico Sacchetti: You mentioned there's a lot of, like, interest in this 5 to 10MW range.

Speaker #10: And that, to me, is semi-new information just from the standpoint of you guys are the only ones really doing it. The clean room is this huge competitive advantage.

Nico Sacchetti: That to me is semi-new information just from the standpoint of, you know, you guys are the only ones really doing it. The clean room is this huge competitive advantage. I just wanna clear up, like, what I You know, I watch a video of them with a, with a semi-mobile data center, you know, and someone is lowering one onto a Navy ship. Like, is that a PR thing?

Speaker #10: So I just want to clear up what I watch a video of them with a semi-mobile data center. And someone is lowering one onto a Navy ship.

Speaker #10: Is that a PR thing? Is it real?

Doug Recker: Yes. Yeah.

Nico Sacchetti: Is it real?

Speaker #1: So yeah. Nico is real? It's a totally different application. Yeah. It's a totally different application that we're doing. Yeah. So when I say there's people going in the market, I was just talking more modular, right?

Doug Recker: It-

Nico Sacchetti: So, so-

Doug Recker: No, it Yeah.

Nico Sacchetti: Who's real?

Doug Recker: Nico, it's real.

Nico Sacchetti: Who's real?

Doug Recker: It's a totally different application. Yeah.

Nico Sacchetti: Sure. Sure.

Doug Recker: It's a totally different application that we're doing. Yeah. They're really when I say there's people going in the market, I was just talking more, you know, modular, right?

Speaker #1: So they're not going to deploy 3 meg, 4 meg, 5 meg. They're not doing that. And they're not for multi-customer, right? They're just for one privatized customer.

Nico Sacchetti: Sure.

Doug Recker: They're not going to deploy 3 meg, 4 meg, 5 meg. They're not doing that. They're not for multi-customer, right?

Nico Sacchetti: Okay.

Doug Recker: They're just for one privatized customer. Do a lot for the government. I was just using that as an example. You see a lot now, if you go out in the industry.

Speaker #1: They do a lot for the government, so I was just using that as an example. But you see a lot now if you go out in the industry and you're in it like us—you'll see a lot of 3D renderings.

Nico Sacchetti: Right

Doug Recker: You're in it like us, you'll see a lot of 3D renderings. You'll see a lot of people saying, Look, we're doing inference. We're doing this. No one's actually done it, that's why the two main hyperscalers that came to our facility, they toured last week, Corpus Christi, and they went down there to physically see it. Now, that pod is not the high-density pod.

Speaker #1: You'll see a lot of people saying, 'Look, we're doing inference. We're doing this.' No one's actually done it. And that's why the two main hyperscalers that came to our facility, they toured last week—Corpus Christi.

Speaker #1: And they went down there to physically see it. Now, that pod is not the high-density pod. They wanted to see physical work done, and they wanted to see how we do—how we build—the quality of work.

Nico Sacchetti: Sure

Doug Recker: physical work done, and they wanted to see how we do, how we build the quality of work, and they both signed off on it.

Speaker #1: And they both signed off on it. So that's how we're winning the market is we've done this. I've done this nine years, 10 years now.

Nico Sacchetti: Okay

Doug Recker: That's how we're winning the market is, we've done this. I've done this 9 years, 10 years now. I've put over 30 of them on the ground in my career. You can go look at the first one. You can look at the one we just put down 3 weeks ago. We do know what we're doing and it's not rocket science, but we've got it down, right? We've got it down.

Speaker #1: I've put over 30 of them on the ground in my career. You can go look at the first one. You can look at the one we just put down three weeks ago.

Speaker #1: So, we do know what we're doing. And it's not rocket science, but we've got it down, right? We've got it down.

Speaker #10: So what your comment was more of a positive, that there's a lot more interest in this modular type of idea, rather than there's a lot more competition coming.

Nico Sacchetti: Your comment was more of a positive that there's a lot more interest in this modular type of idea rather than.

Doug Recker: Yeah

Nico Sacchetti: There's a lot more, like, competition coming.

Speaker #1: Yeah, I'm positive. The reason why I'm positive, Nico, is because of this. One, it brings hype to the industry, right? Everybody's starting to look at it.

Doug Recker: Yeah.

Nico Sacchetti: Okay.

Doug Recker: I'm positive. The reason why I'm positive, Nico, is because of this. One, it brings hype to the industry, right? Everybody's starting to look at it. People are starting to make moves. The second is, I'll go up against any of them every day. If you're a part of my sales organization, I have one trick. Here's my trick. When we go to sell somebody, like this is how we won our first hyper, I said, Look, I'll pay for you to go see their pod. I'll fly you there. We'll take a tour together, and then we'll go see mine. If there's no pod to see, you have to sign with me. I haven't lost yet.

Speaker #1: People are starting to make moves. The second is I'll go up against any of them every day. And if you were part of my sales organization, I have one trick.

Speaker #1: Here's my trick. When we go to sell somebody, this is how we won our first Hyper. I said, 'Look, I'll pay for you to go see their pod.'

Speaker #1: I'll fly you there. We'll take a tour together, and then we'll go see mine. And if there's no pod to see, you have to sign with me.

Speaker #1: And I haven't lost yet.

Speaker #10: This is what I meant by the fired up. This is what I'm this is what I'm talking about.

Nico Sacchetti: This is what I meant by the fired up. This is what I'm talking about.

Speaker #1: Oh, sorry.

Doug Recker: Oh, sorry.

Speaker #10: No, no. You know what I mean? I'll go up against anybody who tells me that you're competent and you're unit. And so what I meant by who's real is what you just said.

Nico Sacchetti: You know what I mean? Like, I'll go up against anybody tells me that you're confident in your, your unit. What I meant by who's real is like what you just said, like there's a lot of prototypes, but who can actually manufacture this at scale? Like, is it-

Speaker #10: There's a lot of prototypes. But who can actually make who can manufacture this at scale? Is it you and Armada? Is that really the only ones for this place where you would compete?

Doug Recker: Yeah

Nico Sacchetti: Is it you and Armada? Is that really the only ones for this place where you would compete? What is there any difference between you and Armada? Is it the clean room? You know, is that?

Speaker #10: And then, is there any difference between you and Armada? Is it the clean room? Is that enough to protect you if there's not really barriers to making a rectangular box and there's all this interest?

Doug Recker: Yeah

Nico Sacchetti: enough to protect you if this, you know, if there's not really barriers.

Doug Recker: Yeah

Nico Sacchetti: to making a rectangular box, like. There's all this interest. Is that clean room enough to protect you?

Speaker #10: Is that clean room enough to protect you?

Speaker #1: Yeah. Clean room is enough to protect. But they're using more of a ship and container. And I started my career with those 10 years ago.

Doug Recker: Yeah, clean room is enough to protect, but they're using more of a shipping container, and I started my career with those 10 years ago. You can't do high density in there.

Speaker #1: You can't do high density in there. So what they're doing is one customer, one to two cabinets. My customers—nobody wants that.

Nico Sacchetti: Okay.

Doug Recker: What they're doing is 1 customer, 1 to 2 cabinets. My customers, nobody wants that.

Speaker #1: It's really for, let's just say, Johnson & Johnson, or a hospital, or a manufacturing plant. They just need a small one for their own privatized compute and AI.

Nico Sacchetti: Right

Doug Recker: Let's just say Johnson & Johnson, or a, or a hospital, or a manufacturing plant. They just need a small one for their own privatized compute and AI. That's what they do. They're in a different market, but they are deploying modular. That's it. We're not even apples to apples. I just wanted to mention that there's somebody doing modular.

Speaker #1: That's what they do. So they're in a different market, but they are deploying modular—that's it. So we're not even comparing apples to apples. I just wanted to mention that there's somebody doing modular.

Speaker #1: There’s a lot of people who see, oh, somebody else is doing it. It’s not the same thing at all. And it’s more privatized. But it does give hype out there, right?

Nico Sacchetti: Okay.

Doug Recker: A lot of people see, oh, somebody else is doing it. It's not the same thing at all, and it's more privatized. It does give hype out there, right? I like that.

Speaker #1: And I like that.

Speaker #10: Right. No, you're right. If you Google it, this stuff's everywhere. So yeah. So you mentioned that you've done 30 of these. You also mentioned being able to sell these GPUs at the end of the contract if needed.

Nico Sacchetti: Right. No, you're right. If you Google it, this stuff's everywhere.

Doug Recker: Yeah.

Nico Sacchetti: You mentioned that you've done 30 of these. You also mentioned being able to sell these GPUs at the end of the contract if needed. I'm pretty sure somewhere over the in the last year and a half of talking to you mentioned that the first data center you ever built with one of these is still packed with that older technology. It's still fully leased out. Do you really?

Speaker #10: And I'm pretty sure somewhere in the last year and a half of talking to you, you mentioned that the first data center you ever built with one of these is still packed with that older technology.

Speaker #10: It's still fully leased out. Do you really think that you would ever sell the GPUs? I mean, unless something goofy happened with AI, I mean, someone would want that based on the comment about your first one built 20 years ago or whatever it was.

Doug Recker: Yep

Nico Sacchetti: think that you would ever sell the GPUs? I mean, unless something goofy happened with AI. I mean, someone would want that, based on the comment about your first one built 20 years ago-

Doug Recker: Abso-

Nico Sacchetti: or whatever it was.

Speaker #1: Absolutely. Somebody's going to want it. So, in full disclosure, there are people that are trying to buy our hydro hose contract right now.

Doug Recker: Absolutely somebody's gonna want it. You know, in full disclosure, you know, there's people wanting they're trying to buy our Hydra Host contract right now.

Speaker #10: Oh, really?

Nico Sacchetti: Oh, really?

Doug Recker: Just because we. Oh, yeah. Are you kidding me? We could call. I'm telling you right now, gentlemen, if I had enough capital to deploy 10 10-meg sites, they would be full. I would put them up for auction on a Tuesday, they would all be gone by Thursday.

Speaker #1: Oh, yeah. Oh, are you kidding me? We get calls—I'm telling you right now, gentlemen—if I had enough capital to deploy ten 10-meg sites—ten 10-meg sites—they would be full.

Speaker #1: I would put them up for auction on a Tuesday, and they would all be gone by Thursday.

Speaker #10: Well, that's got to be—there's got to be someone that's hearing that and understanding that a 10-megawatt unit produces revenue that would be worth putting up, what, three years' worth of that capital to borrow it to you, or however that's structured.

Nico Sacchetti: Well, there's gotta be someone that's hearing that and understanding that a 10-megawatt unit produces revenue that would be worth, you know, putting up, what, 3 years worth of that capital to borrow it to you or however that's structured.

Doug Recker: That's right.

Speaker #10: Anyways, you don't need to answer that. That's more of a thought.

Nico Sacchetti: You don't need to answer that. That's more of a thought.

Doug Recker: No.

Speaker #1: No. Last one is just, yeah.

Nico Sacchetti: Last one is just.

Doug Recker: Yeah.

Nico Sacchetti: Yeah, go ahead if you want.

Speaker #10: Go ahead if you want to.

Doug Recker: Yeah, yeah. Remember our strategy. Our strategy was to do this and to show that we can do this, number one, and we can house GPU, and we can deploy quickly. Whose eyes did we wanna get on this? We wanna get the NVIDIA, Supermicro, those folks. To be honest with you, I don't wanna go out for any more equity. I don't. If I can have somebody backstop me like an NVIDIA or a Dell or somebody like that, which they see the need, number one, they're seeing it now, and you're gonna start seeing them do this. I wanna be first in line because we're the first guys out there holding a flag saying, Look, come look at our stuff. It's real. We're doing it. You can talk to our customer.

Speaker #1: Yeah, yeah. Remember our strategy. Our strategy was to do this, and to show that we can do this—number one—and we can house GPU, and we can deploy quickly.

Speaker #1: And whose eyes did we want to get on this? We want to get the NVIDIA's Supermicro, those folks, because to be honest with you, I'm not going out for any I don't want to go out for any more equity.

Speaker #1: I don't. If I can't have somebody backstop me, like an NVIDIA or a Dell or somebody like that—which, they see the need, number one, they're seeing it now, and you're going to start seeing them do this.

Speaker #1: I want to be first in line because we're the first guys out there holding a flag, saying, 'Look, come look at our stuff. It's real.'

Speaker #1: We're doing it. You can talk to our customer. We have $144 million worth of GPU, so we're in.

Doug Recker: We have $144 million worth of GPU, so we're in.

Speaker #10: Well, if anything—if I look at you and think, 'Why would you be talking to NVIDIA?'—it would be, would it be correct to say you would help NVIDIA because they have this backlog of GPUs that their customers have bought but can't take delivery of because they have nowhere to put them?

Nico Sacchetti: Well, if anything.

Doug Recker: We, we-

Nico Sacchetti: you know, what would if I look at you and think, why would you be talking to NVIDIA? Is it, would it be correct to say you would help NVIDIA because they have this backlog of GPUs that their customers have bought but can't take delivery of because they have nowhere to put them, and you can do these things in 120 days, where these things are being pushed back on being built in these rural areas, the big data centers? If anything, they're incentivized to help you get these things built because it actually releases their own backlog to them to recognize.

Speaker #10: And you can do these things in 120 days, where these things are being pushed back on being built in these rural areas—the big data centers?

Speaker #10: If anything, they're incentivized to help you get these things built because it actually releases their own backlog to them to recognize.

Speaker #1: You got it. You've been sneaking in my office reading my playbook. But yeah, that's it. That's exactly right.

Doug Recker: You got it.

Nico Sacchetti: Okay.

Doug Recker: You've been sneaking in my office reading my playbook. Yeah, that's it. That's exactly right.

Speaker #10: No, it just logically makes sense. These big data centers are getting pushed back, and so you guys can do them quicker anyway. There's an advantage to an NVIDIA or someone like that, is the reality.

Nico Sacchetti: No, it just, like, it just logically makes sense. These big data centers-

Doug Recker: Of course.

Nico Sacchetti: are getting pushed back, and so you guys can do them quicker anyways.

Doug Recker: Yeah

Nico Sacchetti: to an NVIDIA or someone like that, you know.

Doug Recker: Yeah

Nico Sacchetti: is the reality. Okay, last question is on power. At some point, with all this stuff being built, we're going to hit the capacity of our electrical grid. I'm sure you know more about this than I do. I'm hoping that you do. What something has to happen if this really is gonna go to continue at the pace that they're saying it will for a power. Like, I've heard a lot of ideas out there. One of them-

Speaker #10: Okay. Last question is on power. At some point, with all this stuff being built, we're going to hit the capacity of our electrical grid.

Speaker #10: I'm sure you know more about this than I do. I'm hoping that you do. What would something has to happen if this really is going to continue at the pace that they're saying it will for a power?

Speaker #10: And so, I've heard a lot of ideas out there. One of them that's this holy grail, but has a lot of skepticism, is nuclear.

Doug Recker: Yeah

Nico Sacchetti: that's like this holy grail but has a lot of, like, skepticism is nuclear with, like, this nuclear SMR, whatever they call it, that's like a power source.

Speaker #10: With this nuclear SMR—whatever they call it—that's a power source. Number one, is that even a reality? Number two, what do you think will happen when we hit the electrical grid capacity?

Doug Recker: Yes. Yes.

Nico Sacchetti: You know, number 1, is that even a reality? Number 2, what do you think will happen when we hit the electrical grid capacity? You know, number 3 is, like, my understanding of these things is like, yeah, it's great energy and efficient and low power, but it's also like a bomb that would be sitting.

Speaker #10: And then number three is my understanding of these things is like, "Yeah, it's great energy and efficient and low power, but it's also a bomb." That would be sitting next to your hardware, like the most important stuff you want saved.

Doug Recker: Yeah

Nico Sacchetti: to your hardware, like the most important stuff you want to save. even if it works-

Speaker #10: So, even if it works, in practice, would people even use it?

Doug Recker: Yeah

Nico Sacchetti: In practice, would people even use it?

Speaker #1: Yeah, so here's our secret, right? The SMRs are going to take a long time, right? I don't see a lot of communities allowing a nuclear or mini plant coming in.

Doug Recker: Yeah. Here's our secret, right? The SMRs are gonna take a long time, right? I don't see a lot of communities allowing a nuclear mini plant coming in. I think that's years out.

Speaker #1: I think that's years out. It would be a good idea if it happens years out. We're not looking that far out. We're looking for today.

Nico Sacchetti: Okay

Doug Recker: It would be a good idea if it happens years out. We're not looking that far out. We're looking for today. If you noticed and you heard on my earnings call, I talked about an alternative green company, right? Well, you've seen the guys like Ed Bloom that have done this for Google, just basically bought out their production for the next 2 years. Those were fired on natural gas. They can deploy on our side probably 6 months, 6 to 7 months. They can bring 10 MW up where you're not touching the grid at all, and it's somewhat green. It's good on the environment. It's not bad for the environment. It doesn't use water. It's all natural gas.

Speaker #1: So, if you noticed—and you heard on my earnings call—I talked about it in an alternative green company, right? Well, you've seen the guys like Ed Bloom that have done this for Google, just basically bought out their production for the next two years.

Speaker #1: Those were fired on natural gas. They can deploy on our side in probably six months, six to seven months. They can bring 10 megawatts up where you're not touching the grid at all.

Speaker #1: And it's somewhat green. It's good on the environment. It's not bad for the environment. It doesn't use water. It's all natural gas. Those are the type of partnerships and things that we're pushing to go down those paths.

Doug Recker: Those are the type of partnerships and things that, we're pushing to go down those paths, and hopefully you'll hear something soon. That's the way to go, I'm telling you right now.

Speaker #1: And hopefully, you'll hear something soon. But that's the way to go, I'm telling you right now. Because it doesn't touch the local community. And you can deploy those, and it takes natural gas.

Nico Sacchetti: Yeah.

Nico Sacchetti: Because it doesn't touch the local community, and you can deploy those, and it takes natural gas.

Speaker #10: Sure. Well, that's your next idea after this clean room—you should patent this building with an electrical windmill on top of the unit and solar panels.

Nico Sacchetti: Sure. Well, that's your next, that's your next idea after this clean room is you should patent this building with a, with a electrical windmill on top.

Doug Recker: Yeah, gotcha.

Nico Sacchetti: of the unit.

Nico Sacchetti: Yeah.

Doug Recker: Yeah.

Nico Sacchetti: Solar, solar panels.

Speaker #10: And then, I mean, even the pushback on the nuclear—even if it worked—it's like, I think it's just new. That's what I was asking you.

Nico Sacchetti: Yep.

Nico Sacchetti: And then, uh-

Doug Recker: Well-

Nico Sacchetti: I mean, even the pushback on the nuclear, even if it worked, it's like.

Nico Sacchetti: Yeah

Nico Sacchetti: I think it's just new.

Nico Sacchetti: But it-

Doug Recker: But it-

Nico Sacchetti: That's what I was asking you, is just like public perception.

Speaker #10: It's just like public perception, where you hear 'boiler,' and they think, 'Well, that's safe,' or, 'Boilers blow up all the time.' So, anyways, I appreciate you.

Nico Sacchetti: Yeah, yep.

Doug Recker: Yeah, yep.

Nico Sacchetti: Where, like-

Nico Sacchetti: You got it.

Doug Recker: You got it.

Nico Sacchetti: you have your B feed and they think, Well, that's safe.

Nico Sacchetti: you have your boiler and they think, Well, that's safe.

Nico Sacchetti: Yeah.

Nico Sacchetti: Where that You know, boilers blow up all the time, so.

Nico Sacchetti: Yeah.

Nico Sacchetti: Anyways.

Nico Sacchetti: Anyways, I appreciate your time on questions.

Doug Recker: Well, yeah, I can take that offline.

Speaker #1: Yeah, I can take that offline. Yeah, I'll call you, okay? Thanks, Nico. Thank you so much, sir.

Nico Sacchetti: understanding the question.

Doug Recker: I'll Yeah, I'll call you.

Nico Sacchetti: I appreciate it, Doug.

Nico Sacchetti: I'll

Doug Recker: I'll

Nico Sacchetti: Yeah.

Doug Recker: Okay. Thanks, Nico. Thank you so much, sir.

Speaker #10: Yep. I'll.

Nico Sacchetti: Yep.

Speaker #11: Thank you. Our next question is coming from Richard Jackson from Strategic Assets. Your line is now live.

Operator: Thank you. Our next question is coming from Richard Jackson from Strategic Assets. Your line is now live.

Speaker #12: Thank you. That last conversation was extremely helpful. Most of my questions were covered, but I have two more here—one short, one long. You said that when the client owns the NVIDIA chips, your responsibility is the maintenance, the power, and the connection.

Operator: Thank you. That last conversation was extremely helpful. Most of my questions were covered, but I got two more here, one short, one long.

Richard Jackson: Thank you. That last conversation was extremely helpful. Most of my questions were covered, but I got two more here, one short, one long.

Doug Recker: Sure thing.

Doug Recker: You said that when the client owns the NVIDIA chips, your responsibility is the maintenance, the power, and the connection. I'm assuming that means it's your financial responsibility to connect these new centers with fiber?

Richard Jackson: You said that when the client owns the NVIDIA chips, your responsibility is the maintenance, the power, and the connection. I'm assuming that means it's your financial responsibility to connect these new centers with fiber?

Speaker #12: I'm assuming that means it's your financial responsibility to connect these new centers with fiber?

Speaker #1: Yes. Yeah. So the fiber carriers come. So when we find a site, we make sure that it's rich in fiber around there. Traditionally, long-haul fiber, we're by a highway where all the fiber runs down.

Doug Recker: The fiber carriers come. When we find a site, we make sure that it's rich in fiber around there. Traditionally, long-haul fiber, we're by a highway where that's where all the fiber runs down, and then the carrier actually brings it in. Once the customer says he's there, the carriers come because they use so much bandwidth. It's worth them to build into the infrastructure, and they need multiple paths. We actually don't own the fiber. We don't own the connectivity. The carrier does, and they sell directly to the customer, but that's what brings them in. Once you build power and the customer signs, that's when they come in.

Speaker #1: And then the carrier actually brings it in. Because once the customer says he's there, the carriers come. Because they use so much bandwidth, it's worth them to build into the infrastructure.

Speaker #1: And they need multiple paths. So we actually don't own the fiber. We don't own the connectivity. The carrier does, and they sell directly to the customer.

Speaker #1: But that's what brings them in. Once you build power and the customer signs, that's when they come in.

Speaker #12: Okay. So the fibers are your responsibility, but you obviously strategically place these places where the cost of the carrier is minimal to the contract, correct?

Doug Recker: Okay. The fiber's not your responsibility, but you obviously strategically place these places where the cost to the carrier is minimal to the contract, correct?

Richard Jackson: Okay. The fiber's not your responsibility, but you obviously strategically place these places where the cost to the carrier is minimal to the contract, correct?

Speaker #1: Exactly. Exactly correct.

Doug Recker: Exactly. Exactly correct.

Speaker #12: Okay, that's helpful. By the way, I was asking about Corpus Christi at the house, and that really helped me crystallize what's going on here. Bill Radford is a treasured employee you've got there.

Doug Recker: Okay, that's helpful. By the way, I was out in-

Richard Jackson: Okay, that's helpful. By the way, I was out in-

Doug Recker: Yeah.

Doug Recker: Corpus Christi at the plants, and that really helped me crystallize what's going on here. Bill Radford's a treasured employee you got there. He's awesome.

Richard Jackson: Corpus Christi at the plants, and that really helped me crystallize what's going on here. Bill Radford's a treasured employee you got there. He's awesome.

Speaker #12: He's awesome.

Speaker #1: Oh, so you actually went to the site?

Doug Recker: Oh, you actually went-

Doug Recker: Um, but-

Richard Jackson: Um, but-

Doug Recker: You actually went to the site?

Speaker #12: I did. I did. It was very helpful to me, trying to understand what the hell you're doing here.

Doug Recker: I did. I did.

Richard Jackson: I did. I did.

Doug Recker: Oh, excellent.

Doug Recker: Oh, excellent. Thank you.

Doug Recker: He was very helpful, helping me try to understand what the hell you're doing here.

Richard Jackson: It was very helpful, helping me try to understand what the hell you're doing here.

Speaker #1: So what was your what were your thoughts? And a lot of our investors don't get the opportunity to go to see the actual pods.

Doug Recker: What was your, what were your thoughts? A lot of our investors don't get the opportunity to go to see the actual pods. What was your impression?

Speaker #1: What was your impression?

Speaker #12: The two things that I found most enlightening were, number one, you don't use water.

Doug Recker: The two things that I found most enlightening was, number 1, you don't use water.

Richard Jackson: The two things that I found most enlightening was, number 1, you don't use water.

Speaker #1: That's correct.

Doug Recker: That's correct.

Speaker #12: It's a pure air-cooling system. But the way Bill structures the stacks, he's explaining that air can do what it typically can't in other centers because of the way he has the airflow.

Doug Recker: It's a pure air cooling system, but the way Bill structures the stacks, he's explaining that air can do what it typically can't in other centers because of the way he has the airflow.

Richard Jackson: It's a pure air cooling system, but the way Bill structures the stacks, he's explaining that air can do what it typically can't in other centers because of the way he has the airflow.

Speaker #1: That's right. Cold-out and hot-out containment.

Doug Recker: That's right.

Doug Recker: how to do it.

Richard Jackson: how to do it.

Doug Recker: Cold aisle and hot aisle containment.

Speaker #12: But it helped me understand how you get away with that and still provide 100% availability. And I understood why the marginal costs are so low.

Doug Recker: It helped me understand how you get away with that and still provide 100% availability, and I understood why the marginal costs are so low. The center pretty much runs itself. You just gotta react to problems.

Richard Jackson: It helped me understand how you get away with that and still provide 100% availability, and I understood why the marginal costs are so low. The center pretty much runs itself. You just gotta react to problems.

Speaker #12: The center pretty much runs itself. You just have to react to problems. Anyway, that was very helpful for me. But I'm having a tough time modeling all this.

Doug Recker: Yep. Agreed.

Doug Recker: Anyway, that was very helpful for me.

Richard Jackson: Anyway, that was very helpful for me.

Doug Recker: Oh

Doug Recker: I'm having a tough time modeling all this, so maybe a phone call offline would be better.

Richard Jackson: I'm having a tough time modeling all this, so maybe a phone call offline would be better.

Speaker #12: And maybe a phone call offline would be better. But.

Speaker #1: Yes. Call me anytime. That way, we can take our time and go through it. But that would be great. We'd love to have that call.

Doug Recker: Yes

Doug Recker: let me just throw out there-

Richard Jackson: let me just throw out there-

Doug Recker: Call me anytime. That way we can take our time and go through it. That would be great. We'd love to have that call.

Speaker #12: Okay. Great. Let me just throw out three assumptions I got. You tell me if I'm way off on these, all right?

Doug Recker: Okay, great. Let me just throw out three assumptions I got. You tell me if I'm way off on these, all right?

Richard Jackson: Okay, great. Let me just throw out three assumptions I got. You tell me if I'm way off on these, all right?

Speaker #1: Sure.

Doug Recker: Sure.

Speaker #12: So it costs somewhere between a million to 1.4 million to build these 10-megawatt centers, correct?

Doug Recker: It costs somewhere between $1 million to 1.4 million to build these 10 MW centers, correct?

Richard Jackson: It costs somewhere between $1 million to 1.4 million to build these 10 MW centers, correct?

Speaker #1: No, no. Per megawatt, it's about $6.5 million per megawatt. The 1.4s are for the 300 kW ones, just so you're clear.

Doug Recker: No. No. Per megawatt, it's about $6.5 million per megawatt. The 1.4s are for the 300 kW ones, just so you're clear.

Speaker #12: Okay, so $5 million per megawatt. Okay. You're trying to lease these out, and it doesn't seem like it's too difficult to do it within a reasonable amount of time.

Doug Recker: Okay.

Richard Jackson: Okay.

Doug Recker: Yeah.

Doug Recker: $6.5 million per MW. Okay.

Richard Jackson: $6.5 million per MW. Okay.

Doug Recker: Yep. Six. Yeah.

Doug Recker: You're trying to lease these out, and doesn't seem like it's too difficult to do it within a reasonable amount of time, a lease rate that's in the ballpark of 30% to 50% of that construction cost. Is that about right?

Richard Jackson: You're trying to lease these out, and doesn't seem like it's too difficult to do it within a reasonable amount of time, a lease rate that's in the ballpark of 30% to 50% of that construction cost. Is that about right?

Speaker #12: A lease rate that's in the ballpark of 30% to 50% of that construction cost. Is that about right?

Speaker #2: A million per megawatt.

Leah Brown: $2 million per MW.

Speaker #1: Yeah. It's a little under 2 million. Per megawatt in revenue.

Doug Recker: Yeah. It is a little under $2 million per megawatt in revenue.

Speaker #12: Okay. Okay. Okay. So it's costing you 6.5. You're generating 2. Okay. And that equivalent looked pretty sturdy. I mean, how long do you think those things are good for, ballpark?

Doug Recker: Okay. Okay. Okay, it's costing you $6.5. You're generating $2. Okay. That equipment looked pretty sturdy. I mean, how long do you think those things are good for, ballpark?

Richard Jackson: Okay. Okay. Okay, it's costing you $6.5. You're generating $2. Okay. That equipment looked pretty sturdy. I mean, how long do you think those things are good for, ballpark?

Speaker #1: Oh, they're good. Your generators, everything else, is good for 20 years. The only thing that you're going to swap out are your batteries, right?

Doug Recker: Oh, the, the-

Doug Recker: They got a box.

Richard Jackson: They got a box.

Doug Recker: They're good. Your generators, everything else is good for 20 years. The only thing that you're gonna swap out are your batteries, right? Your UPS, those batteries are got a eight to 10-year life. When you swap those out, you're looking at another infusion of probably, let's say high side, $80,000.

Speaker #1: Your UPS, those batteries have an 8 to 10-year life. So when you swap those out, you're looking at another infusion of probably, let's say on the high side, $80,000.

Speaker #12: Okay. Okay. Okay. Now, I'm getting excited. Okay. Now, on the revenues that you're posting, are these revenues people paid you to build your centers, or are these monthly lease revenues?

Doug Recker: Okay. Okay. Okay, now I'm getting excited. Okay. Now, on the revenues that you're posting. Are these revenues people paid you to build your centers or are these monthly lease revenues? Is it all mixed up and I should probably go over it line by line?

Richard Jackson: Okay. Okay. Okay, now I'm getting excited. Okay. Now, on the revenues that you're posting. Are these revenues people paid you to build your centers or are these monthly lease revenues? Is it all mixed up and I should probably go over it line by line?

Speaker #12: Or is it all mixed up, and I should probably go over it line by line?

Speaker #1: No, no. What they pay us to lease—traditionally, there's a one-time install charge that we charge a customer to move them in. But our model, our revenue comes from recurring.

Doug Recker: No, no. It's what they pay us to lease. Traditionally, there's a one-time install charge that we charge a customer to move them in. Our model, our revenue comes from recurring. That's what the customer pays to be in that facility a month. They pay based on power. How much power they use is how much you can base their revenue on.

Speaker #1: So that's what the customer pays to be in that facility, per month. And they pay based on power. So how much power they use is how much you can base their revenue on.

Speaker #12: So the revenue you're targeting at the end of the year, how much of that's going to be repeated every year? Half? 80%? I mean, it's at least as many as comes in every month, right?

Doug Recker: The revenue you're targeting at the end of the year, how much that's gonna be repeated every year? Half? 80%? I mean, it's a lease.

Richard Jackson: The revenue you're targeting at the end of the year, how much that's gonna be repeated every year? Half? 80%? I mean, it's a lease.

Leah Brown: So the recurring-

Leah Brown: This is money that comes in every month, right?

Richard Jackson: This is money that comes in every month, right?

Speaker #1: Yeah. Yeah. Go ahead.

Doug Recker: Yeah.

Doug Recker: Okay.

Richard Jackson: Okay.

Doug Recker: Yeah. Go ahead.

Speaker #2: Yeah, the recurring revenue is going to be through the life of the contract. So for our GPU as a service, that's a three-year contract.

Leah Brown: Yeah. The recurring revenue is gonna be through the life of the contract. For our GPU-as-a-Service, that's a three-year contract. Most of our colocation contracts are anywhere from five to seven years.

Speaker #2: And then most of our colocation contracts are anywhere from five to seven years, so that's recurring.

Doug Recker: Yeah

Leah Brown: years. That's recurring.

Speaker #1: Yeah. So the ones that aren't recurring are obviously the infrastructure division side. That's the equipment side where we sell equipment to data center operators like ourselves.

Doug Recker: Yeah. The only ones that aren't recurring are obviously the infrastructure division side. That's the equipment side, where we sell equipment to data center operators like ourselves. You'll see that.

Speaker #1: And you'll see that.

Speaker #12: I love that you said I love that you said you're hoping to not go to equity anymore to finance this. And I understand things happen.

Doug Recker: I love that you said you're hoping to not go to equity anymore to finance this, and I understand things happen. In your mind, when do you think the monthly free cash flow self-finances this growth? Two years out? Four years out?

Richard Jackson: I love that you said you're hoping to not go to equity anymore to finance this, and I understand things happen. In your mind, when do you think the monthly free cash flow self-finances this growth? Two years out? Four years out?

Speaker #12: But in your mind, when do you think the monthly free cash flow self-finances this growth? Two years out? Four years out?

Speaker #1: Well, in our business, it's very CapEx. And when you're in the data center business, it's a very CapEx-sensed business, right? So it just depends on your model.

Doug Recker: Well, in our business is a very CapEx. When you're in the data center business, it's a very CapEx-intensive business, right? It just depends on your model. My model is to keep growing. What we're going to do, and that's this is why we're doing what we're doing. We're gonna go after debt finance. We're almost there as a company. After we get another one of these on the ground, we should be able to do that all day long. With our model and the customers we're bringing on, that shouldn't be an issue. That's how we're gonna fund this business going forward, because we're always going to be building facilities, 'cause you want to. We're like a REIT, right?

Speaker #1: My model is to keep growing. So what we're going to do, and this is why we're doing what we're doing, we're going to go after debt finance.

Speaker #1: We're almost there. As a company, after we get another one of these on the ground, we should be able to do that all day long with our model and the customers we're bringing on.

Speaker #1: That shouldn't be an issue. So that's how we're going to fund this business going forward. Because we're always going to be building facilities. Because you want to.

Speaker #1: We're like a REIT, right? We want to have as much assets out there as possible because the value there prime example, I build that site in Iowa, and I build 10 meg there.

Doug Recker: We wanna have as much assets out there as possible, 'cause the value there. Prime example, I build that site in Iowa and I build 10MW there. In 4 years, 3 years, say those contracts are 5-year deals. In 5 years, say that customer moves out. I've got 10MW available there. Every data center, big brick-and-mortar data center that I've owned and sold over the years, not one of them have gone the other way, and every one of them is at capacity. Once you own the power and the infrastructure, it's golden.

Speaker #1: In four years, three years, say those contracts are five-year deals. In five years, say that customer moves out. I've got 10 megawatt available there.

Speaker #1: Every data center big brick-and-mortar data center that I've owned and sold over the years, not one of them have gone the other way. And every one of them is at capacity.

Speaker #1: So once you own the power and the infrastructure, it's golden.

Speaker #12: Okay, that's very reassuring. So I'm walking away from this thinking, and I would like to take your offer up on just looking at three or four different forecasts.

Doug Recker: Okay. That's very reassuring. I'm walking away from this thinking, and I would like to take your offer up on just, you know, looking at three or four different forecasts.

Richard Jackson: Okay. That's very reassuring. I'm walking away from this thinking, and I would like to take your offer up on just, you know, looking at three or four different forecasts.

Speaker #1: That's what we do, sir. You can call us anytime.

Doug Recker: That's what we do, sir. You call us anytime.

Speaker #12: Within a year or two, you're generating enough cash flow where you're making a margin of, let's say, at least 15, and you're financing, hopefully, under 10 debt.

Doug Recker: Within a year or two, you're generating enough cash flow where you're making a margin of, let's say, at least 15, and you're financing.

Richard Jackson: Within a year or two, you're generating enough cash flow where you're making a margin of, let's say, at least 15, and you're financing.

Doug Recker: Oh

Doug Recker: hopefully under 10 with debt. Am I in the ballpark on that?

Richard Jackson: hopefully under 10 with debt. Am I in the ballpark on that?

Speaker #12: Am I in the ballpark on that?

Speaker #1: Yeah. For 15, we're in the wrong business. But yeah.

Doug Recker: If we're at 15, we're in the wrong business. Yeah.

Speaker #12: Okay, good. I'm glad to hear that. So I'm thinking more, it should be 25 or better, right?

Doug Recker: Okay, good. I'm glad to hear that. I'm thinking more it should be 25 or better, right?

Richard Jackson: Okay, good. I'm glad to hear that. I'm thinking more it should be 25 or better, right?

Speaker #1: At 9%, we're financing at. But we should be in the 70% range—the margin.

Doug Recker: At 9%, we're financing at, we should be in the 70% range of margins.

Speaker #12: Okay, great. That's all very helpful, Doug. And thank you for the offer—I'll follow up with you.

Doug Recker: Okay, great. That's all very helpful, Doug, and thank you for the offer.

Richard Jackson: Okay, great. That's all very helpful, Doug, and thank you for the offer.

Doug Recker: Yes, sir.

Doug Recker: I'll follow up with you.

Richard Jackson: I'll follow up with you.

Speaker #1: Yeah. We look forward to your call. Thank you, sir.

Doug Recker: Yeah. We look forward to your call. Thank you, sir.

Speaker #12: Thank you. Our next question is coming from Nathan Frankowitz from Cancer Procurement. Your line is now live.

Operator: Thank you. Our next question is coming from Nathan Frankovitz from Cantor Fitzgerald. Your line is now live.

Speaker #13: Hey. Good morning, guys. Thank you for taking my question. I think you touched on this a bit earlier, but if you could just add a bit more color.

Operator: Hey, good morning, guys. Thank you for taking my question. I think you touched on this a bit earlier, but if you could just add a bit more color on the success of the high power 1 to 2.5 EDCs. Can you just talk a bit more about why customers would want these versus what we see a lot of other companies talking about with the mega data centers at 100 MW plus? you know, like, what kind of companies would want these and what the end use is for?

Nathan Frankovitz: Hey, good morning, guys. Thank you for taking my question. I think you touched on this a bit earlier, but if you could just add a bit more color on the success of the high power 1 to 2.5 EDCs. Can you just talk a bit more about why customers would want these versus what we see a lot of other companies talking about with the mega data centers at 100 MW plus? you know, like, what kind of companies would want these and what the end use is for?

Speaker #13: On the success of the high-power 1 to 2 and a half EDCs, can you just talk a bit more about why customers would want these versus what we see a lot of other companies talking about with the mega data centers at 100 megawatts plus?

Speaker #13: What kind of companies would want these, and what the end use is for?

Speaker #1: Sure. So obviously, number one, these big facilities you see are these big, huge training facilities, right, that you're building. These are huge facilities that are way out there, right?

Doug Recker: Sure. Obviously, number 1, these big facilities you see are these big, huge training facilities that you're building. These are huge facilities that are out, way out there. Now with inference, you have to be where the data is. These aren't training, these are inference. They have to compute where the what we call the eyeballs are. Where the data is forming and transmitting, it's gotta be close to that. That's why you're starting to see the Googles of the world and the CoreWeave and everybody else deploying these inference sites. You have to do that somewhat close to the data. That's why you'll see us going into these tier 3 markets. Prime example, Corpus Christi. Corpus Christi, I can still get 5 milliseconds to Houston. Amarillo, the same thing. Waco.

Speaker #1: So now, with inference, you have to be where the data is, right? These aren't training. These are inference, right? So they have to compute where what we call the eyeballs are.

Speaker #1: So where the data is forming and transmitting, it's got to be close to that. So that's why you're starting to see the Googles of the world and the Carusos and everybody else deploying these inference sites.

Speaker #1: And you have to do that somewhat close to the data. So that's why you'll see us going into these Tier 3 markets, prime example, Corpus Christi.

Speaker #1: Corpus Christi, I can still get 5 milliseconds to Houston. So Amarillo, the same thing. Waco. Those markets, you can still get that. And in those markets, they need inference as well.

Doug Recker: Those markets, you can still get that. In those markets, they need inference as well. The local hospital, the local government, gaming, all that stuff, that you're starting to see that the data needs to be where the eyeballs are. We've seen it for years, but now it's really starting to kick in, where the amounts of massive data and compute have to be done localized. That's why before, back in the day, a cabinet was 10, you know, max 10 kW. Well, the type of compute you have now, it's 100 kW a cabinet. You can't put that in a normal data center. You have to build for that category. That's why you see all these new builds going up for this new inference. You're gonna see it. You're gonna see a lot.

Speaker #1: So, the local hospital, the local government, gaming—all that stuff—you’re starting to see that the data needs to be where the eyeballs are.

Speaker #1: And we've seen it for years, but now it's really starting to kick in where the amounts of massive data and compute have to be done localized.

Speaker #1: And that's why, before—back in the day—a cabinet was max 10 kW. Well, with the type of compute you have now, it's 100 kW a cabinet.

Speaker #1: You can't put that in a normal data center. So you have to build for that category. So that's why you see all these new builds going up for this new inference.

Speaker #1: And you're going to see it. You're going to see a lot. And I'm keeping my eye close on Google, because I would like to get into Google and say, 'Look, we can do this for you.'

Doug Recker: I'm keeping my eye close on Google because I would like to get into Google and say, Look, we can do this for you. You're doing it anyway. You don't wanna be in this game. We do it. We do it well. You just wanna be an OpEx model, not a CapEx model. We can do that. They just wanna compute. They don't wanna have to maintain facilities. Obviously, it's gonna grow and everything. You know, you guys are one of the best at it. Obviously, you guys know this business better than most, and you see where it's going as far as inference and how you can deploy a lot quicker. The NeoClouds of the world are wanting to get their GPU out burning, and this is an even faster way for them to do that as well.

Speaker #1: You're doing it anyway. You don't want to be in this game. We do it. We do it well. You just want to be an OpEx model, not a CapEx model.

Speaker #1: We can do that. They just want to compute. They don't want to have to maintain facilities. So obviously, it's going to grow, and you guys are one of the best at it, obviously.

Speaker #1: You guys know this business better than most, and you see where it's going as far as inference and how you can deploy a lot quicker.

Speaker #1: So the NeoClouds of the world are wanting to get their GPU out burning, and this is an even faster way for them to do that as well.

Speaker #1: If that makes sense.

Doug Recker: If that makes sense.

Speaker #12: Yes, thank you. That's helpful, and I appreciate that. I think you already spoke to the revenue per megawatt on colo, but in terms of the economics of scaling, can you just touch again on EBITDA margins?

Doug Recker: Yes. Thank you. That's helpful, and appreciate that. I guess, I think you already spoke to the revenue per megawatt on co-lo, but in terms of the economics of scaling, can you touch again on EBITDA margins, you know, based on that CapEx and revenue? EBITDA margin per megawatt.

Nathan Frankovitz: Yes. Thank you. That's helpful, and appreciate that. I guess, I think you already spoke to the revenue per megawatt on co-lo, but in terms of the economics of scaling, can you touch again on EBITDA margins, you know, based on that CapEx and revenue? EBITDA margin per megawatt.

Speaker #12: Based on that CapEx and revenue? EBITDA margin per megawatt.

Speaker #1: Sure.

Doug Recker: Sure.

Speaker #13: Sure. So, our EBITDA margins for the full year are 17%. And adjusted EBITDA is 27% for the full year, consolidated.

Leah Brown: Sure. Our EBITDA margins for full year is 17% and adjusted EBITDA is 27% full year consolidated.

Speaker #12: Great. But then, specifically to the colocation business, do you have that broken out?

Leah Brown: Great. Specifically to the colocation business, do you have that broken out?

Nathan Frankovitz: Great. Specifically to the colocation business, do you have that broken out?

Speaker #13: Yeah. For a high-powered colocation, our EBITDA margins are about 80%. GPU as a service is around there as well.

Leah Brown: Yeah. For a high-powered colocation, our EBITDA margins are about 80%. GPU-as-a-Service is around there as well.

Speaker #12: Fantastic. All right. Thank you so much.

Leah Brown: Fantastic. All right. Thank you so much.

Nathan Frankovitz: Fantastic. All right. Thank you so much.

Speaker #1: Thank you.

Doug Recker: Thank you.

Speaker #12: Thank you. Next question is coming from Caroline Gandy from Aramis. Your line is now live.

Operator: Thank you. Next question is coming from Caroline Gangi from Atalanta. Your line is now live.

Operator: Thank you. Next question is coming from Caroline Denbigh from Paribas. Your line is now live.

Speaker #14: Hi. Thank you. Most of my questions were answered. Congratulations on the quarter. So it sounds like, just to kind of sum this up—

Caroline Gangi: Hi. Thank you. Most of my questions have been answered. Congratulations on the quarter. It sounds just like, just to kind of sum this up so in my head, you're going to be going from 25 to 40MW this year to the next year. You made the comment that you can sell significantly more systems if you had capital, and you mentioned you would hit the debt markets for that. Do you think that you would be able to find a strategic investor? Then finally, I think, you know, part of the confusion with the stock is that the company is kind of misunderstood. It's a lot of moving parts. You're, you know, changing business models, divesting certain businesses. When do you think you'll get coverage for the stock, equity coverage? Thank you.

Caroline Denbigh: Hi. Thank you. Most of my questions have been answered. Congratulations on the quarter. It sounds just like, just to kind of sum this up so in my head, you're going to be going from 25 to 40MW this year to the next year. You made the comment that you can sell significantly more systems if you had capital, and you mentioned you would hit the debt markets for that. Do you think that you would be able to find a strategic investor? Then finally, I think, you know, part of the confusion with the stock is that the company is kind of misunderstood. It's a lot of moving parts. You're, you know, changing business models, divesting certain businesses. When do you think you'll get coverage for the stock, equity coverage? Thank you.

Speaker #14: So, in my head, you're going to be going from 25 to 40 megawatts this year to the next year. And you made the comment that you could sell significantly more systems if you had capital.

Speaker #14: And you mentioned you would hit the debt markets for that. Do you think that you would be able to find a strategic investor? And then, finally, I think part of the confusion with the stock is that the company is kind of misunderstood.

Speaker #14: It's a lot of moving parts. You're changing business models, divesting certain businesses. When do you think you'll get coverage for the stock, equity coverage?

Speaker #14: Thank you.

Speaker #1: Absolutely. Thank you for the questions. To answer that last question quickly, I think soon, because what's going on now is people are actually starting to see our deployments.

Doug Recker: Thank you for the questions. To answer that last question quickly, I think soon because what's going on now is people are actually starting to see our deployments. They're starting to see the revenue come in. Obviously once this Hydra Host deal hits, hopefully in the next 30, 40 business days, that'll really drive. We have talked to a bunch of analysts that we're in the middle of with right now that have come in and they've done a deep dive, and now they understand. Even the analysts didn't understand what we do. They're helping us get the story out. I would predict, hopefully, we see something in the next 30 days. There's gonna be some other drivers that are coming up that are gonna push them to come see us.

Speaker #1: They're starting to see the revenue come in. And obviously, once this Hydrohost deal hits—hopefully in the next 30 or 40 business days—that'll really drive it.

Speaker #1: We have talked to a bunch of analysts that we’re in the middle of with right now, that have come in and they've done a deep dive.

Speaker #1: And now they understand. Even the analysts didn’t understand what we do. And they’re helping us get the story out. So I would predict, hopefully, we see something in the next 30 days.

Speaker #1: And there's going to be some other drivers that are coming up that are going to push them to come see us, so I'm looking forward to that as well.

Doug Recker: I'm looking forward to that as well.

Speaker #14: Okay. Got it. And then my other investor, is that something that's possible instead of having to raise money?

Caroline Gangi: Okay, got it. You know, my other question about a strategic investor. Is that something that's possible?

Caroline Denbigh: Okay, got it. You know, my other question about a strategic investor. Is that something that's possible?

Caroline Gangi: Yeah.

Caroline Denbigh: Yeah.

Caroline Gangi: Instead of having to raise money?

Caroline Denbigh: Instead of having to raise money?

Speaker #1: Absolutely. So that's why I want to say we're still in our proof-of-concept model, but we're really not, right? We're executing now.

Doug Recker: Absolutely. That's why we're, I wanna say we're still in our proof of concept model, but we're really not, right? We're executing now. Now is the time, and this has been my job, to get in front of the NVIDIA of the world that could backstop us on something like this because they like what we're doing. They see that inference obviously is the way to go. They want to sell their GPU. They also have a lot of GPU customers that are sitting on. They wanna move those so they can buy more. That would be one of my strategic partners, but also these folks that back the big data centers, right? Blackstone and all the big guys, that DigitalBridge. They all have stakes in these big data centers, right?

Speaker #1: So now's the time, and this has been my job, to get in front of the NVIDIAs of the world that could backstop us on something like this.

Speaker #1: Because they like what we're doing. They see that inference, obviously, is the way to go. They want to sell their GPUs. They also have a lot of GPU customers that they are sitting on.

Speaker #1: They want to move those so they can buy more. So that would be one of my strategic partners, but also these folks that back that big data centers, right?

Speaker #1: Blackstone and all the big guys, like DigitalBridge—they all have stakes in these big data centers, right? Vantage and DataBank. Well, what's going to happen with those data centers?

Doug Recker: Vantage and DataBank. Well, what's gonna happen with those data centers? They're gonna look at us as a hub and spoke. They obviously are doing training modules, but they are gonna want those inference modules out there. When I say hub and spoke, you've got the main data centers in Dallas, but you don't have anything in Corpus Christi, you don't have anything in Waco, in these suburbs, in these outer, smaller Tier 3 markets, Tier 2 markets. You put these out there, and they're gonna buy them because now they have their hub and spoke model where they can sell their services there. That customer, 90% of the time that customer is in that pod is in their core data center. I see, just like my first company, you know, EdgePresence, we did this before and DataBank funded us.

Speaker #1: They're going to look at us as a hub and spoke. They obviously are doing training modules, but they are going to want those inference modules out there.

Speaker #1: So, when I say hub and spoke, you've got the main data centers in Dallas, but you don't have anything in Corpus Christi. You don't have anything in Waco.

Speaker #1: And these suburbs, and these outer, smaller tier-three markets, tier-two markets—so you put these out there, and they're going to buy them because now they have their hub-and-spoke model where they can sell their services there. And that customer, 90% of the time, that customer is in that pod, is in their core data center.

Speaker #1: So I see, just like my first company, Edge Presence, we did this before. And Data Bank funded us. Data Bank funded us $35 million to prove that concept out.

Doug Recker: DataBank funded us $35 million to prove that concept out. Unfortunately, we were bought before we could prove that out. That's where I see this partnership coming, and it makes complete sense, and it would make complete sense to do it that way.

Speaker #1: Unfortunately, we were bought before we could prove that out. But that's where I see this partnership coming. And it makes complete sense, and it's it would make complete sense to do it that way.

Speaker #14: Great. Thank you. I'm looking forward to that coverage, just so I can understand it better—and so can the Street. Thank you again.

Caroline Gangi: Great. Thank you. I'm looking forward to that coverage just so I can understand it better and so can the street.

Caroline Denbigh: Great. Thank you. I'm looking forward to that coverage just so I can understand it better and so can the street.

Caroline Gangi: Yes.

Doug Recker: Yes.

Caroline Gangi: Thank you again.

Caroline Denbigh: Thank you again.

Speaker #1: Yes, me too. Me too. Trust me, there's only so many calls I can do a day, and I still got to sell.

Doug Recker: Me too. Me too. Trust me. There's only so many calls I can do a day, and I still gotta sell.

Speaker #14: Yep.

Caroline Gangi: Yep.

Caroline Denbigh: Yep.

Speaker #1: Thank you for your questions. Thank you.

Doug Recker: Thank you for your question.

Doug Recker: More important to get out there and sell. Thank you.

Caroline Denbigh: More important to get out there and sell. Thank you.

Doug Recker: Thank you.

Caroline Gangi: Okay.

Caroline Denbigh: Okay.

Speaker #12: Thank you. We have reached the end of our question-and-answer session. I'd like to turn the floor back over to Mr. Recker for any further closing comments.

Operator: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Mr. Recker for any further closing comments.

Speaker #1: Well, I want to thank everybody. And hopefully, you got a good vision of where we're going, and we are running at 150%. I think you should be proud of us.

Doug Recker: Well, I wanna thank everybody, hopefully you got a good vision of where we're going and we are running 150%. I think you should be proud of us. We'll keep going, and we're excited to see some good announcements this week as well. I look forward to talking to each one of you. Please call me anytime with questions. I'm here all the time. Thank you so much for your support. We look forward to talking to you soon. Thank you so much.

Speaker #1: We'll keep going, and we're excited to see some good announcements this week as well. So I look forward to talking to each one of you.

Speaker #1: Please call me anytime with questions. I'm here all the time. Thank you so much for your support. We look forward to talking to you soon.

Speaker #1: Thank you so much.

Speaker #12: Thank you. Before we conclude today's call, I'd like to provide the DUOS Safe Harbor statement, which includes important cautions regarding forward-looking statements made during this call.

Operator: Thank you. Before we conclude today's call, I'd like to provide Duos' Safe Harbor statement that includes important cautions regarding forward-looking statements made during this call. This earnings call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking terminology such as believes, expects, may, will, should, anticipates, plans, and their opposites or similar expressions are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties and 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, Inc.'s actual results to differ materially from those anticipated by the forward-looking statements.

Speaker #12: This earnings call contains forward-looking statements within the meaning of the private securities litigation reform act of 1995. Forward-looking terminology such as believes, expects, may, will, should, anticipates, plans, and their opposites or similar expressions are intended to identify forward-looking statements.

Speaker #12: We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks, and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based, and could cause Duos Technologies Group's actual results to differ materially from those anticipated by the forward-looking statements.

Speaker #12: These risks and uncertainties include, but are not limited to, those described in Item 1A in DUOS' annual report on Form 10-K, which is expressly incorporated herein by reference.

Operator: These risks and uncertainties include, but are not limited to, those described in Item 1A in Duos' annual report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described as Duos' filings with the SEC. Thank you for joining us today for Duos Technologies Group's Q1 2026 earnings call. You may now disconnect.

Speaker #12: And other factors as may periodically be described in Duos filings with the SEC. Thank you for joining us today for Duos Technologies Group's first quarter 2026 earnings call.

Speaker #12: You may now disconnect.

Doug Recker: Thank you.