Good afternoon. Welcome to Duos Technologies Fourth Quarter and Full Year 2022 Earnings Conference Call. Joining us for today's call are Duos' CEO, Chuck Ferry, and CFO, Andrew Murphy. Following their remarks, we will open the line for your questions. Then, before we conclude today's call, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call. Now, I'd like to turn the call over to Duos’ CEO, Chuck Ferry. Sir, please proceed.

Welcome everyone and thank you for joining us. We always appreciate your attendance by many of our long-term and current shareholders, and we can also see that we're joined today by a number of new shareholders. Welcome. Earlier today, we issued a press release announcing our financial results for the fourth quarter and full year as well as other operational highlights. A copy of the press release is available in the Investor Relations section of our website. I encourage all listeners to view that release as well as our 10-K filing with the SEC to better understand some of the details we'll be discussing during our call. Before I begin with my opening remarks, I would like to address some recent events that are likely to have an impact on our primary rail market and bring much more focus from stakeholders, including customers, unions, regulators and the rail industry on what Duos can offer. Due to the recent unfortunate derailment in East Palestine, Ohio, Duos has been contacted on many different levels to better understand what our technology does and the many years of investment in our railcar inspection portal and what that can offer. Very much of the first quarter into a greater since the derailment. Duos has been engaged in discussions regarding how our technology might be deployed on a greater scale in the United States to identify and reduce mechanical failures and derailments. More specifically, we have been requested to provide information on our railcar inspection portal capabilities to congressional leaders, regulators and unions, as well as current and potential customers as to the benefits of using technologies such as our railcar inspection portal, combined with artificial intelligence and human in the loop feedback processes that can augment currently mandated inspections. Later in the call, I will…

Thank you, Chuck. Before turning to the results, I would like to add my own commentary regarding the tremendous opportunity for Duos. As Chuck has just discussed, the recent events in Ohio have opened up channels of communication with many different stakeholders. From my perspective, as we chart the course for the company financially, we now have many different potential avenues for driving new sources of revenue, including sales of complex systems, which is our traditional business model, the [indiscernible] announced subscription program for which we plan to make significant investments in the next several years and other opportunities which may include other lines of business. I would also like to comment that we have a focus on target -- on driving growth with a target on achieving breakeven and profitability in the next 12 months to 14 months. As previously discussed, we have been upgrading and expanding our overall technology capabilities with a particular focus on artificial intelligence as a key component of our overall product portfolio. While supply chain issues have shown some signs of improvement, time between contract award and full revenue recognition remains longer than was the norm in prior years. We continue to focus on our revenue mix to support accelerating growth in our recurring revenue service and software, while opportunistically growing revenues from project-based work related to the portal installations. We have also diversified our revenue sources, which Chuck will speak to later in the call. On that point, we previously introduced an additional business line focused on subscription offerings in which Duos will 100% own and operate our railcar inspection portals as strategic locations within the North American rail network. We have begun procurement for equipment and components and have identified locations for the installation of our first Dual zone subscription RIPs. The…

Thanks, Andrew. Appreciate it. And before I get into my regular comments. I just want to clarify, I made a comment in the opening remarks where I said revenue was up 71%. In fact, I stand corrected because my CFO used the correct number. Revenue was up 60% in Q4 and 82% for the full year. So I just want to make that clarification as we go forward. Thanks, Andrew. Following on my opening comments and before addressing the specific performance metrics of the company, I'd like to spend some time addressing what the company is currently engaged in since the recent derailment that attracted so much national attention. Due to several highly publicized strange derailments the last several weeks, as I've said, has been pretty tumultuous period for the broader rail industry. These events have led to increased calls for widespread safety and compliance requirements for railcar owners and operators. In response, we initiated a strategic communications plan several weeks ago to respond to the incoming request for information. To date, we have successfully engaged approximately a dozen congressional leaders from both parties in the House and Senate, including senators from our home state of Florida and have been invited to provide our input on pending legislative actions, including the proposed Railway Safety Act of 2023. This bill, which was introduced by a number of senators, including Florida Senator Rubio. We were privileged to be invited to attend an all-day committee session recently, where the bill was discussed and had been asked to provide input related to our area of expertise. We've been equally engaged with our current Class 1 partners, the Federal Railroad Administration, the Association of American Railroads, Labor Union leadership and numerous other stakeholders to answer questions and support their respective action plans. As mentioned in…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from Michael Latimore with Northland Capital. Please proceed with your question.

Great. Yeah. Thanks a lot. Congrats on the strong growth this year and good to see the reiteration of guidance there. I guess you mentioned that you've contracted with your first subscription customer. I guess can you sort of mention what type of company that is? What industry verticals that in? And then, do they have some expectations of a certain number portals by year end?

Yes. I'm going to shy away from naming the customer outright. I will tell you it's one of our four major centers that I've been talking about. And we're pretty excited that it'll -- it's kind of gotten the ball rolling here on the subscriptions.

Great. It sounds like, the plan is to build these your own or are there some buyback options too?

Yeah. Our primary plan right now is to -- on a go forward basis, we have a plan in place right now and we're going to execute it here, second half of this year where we plan to build anywhere from three to five of our own railcar inspection portals. It will be on key right way locations that we're already in discussions with some rail, track owners with. Those locations will be on the critical focal (ph) points, as well as high traffic areas -- that have high traffic of hazmat on them and with that, we've got a number of interested subscribing customers that are our employees to kind of take advantage of that. So that's primarily what we're looking at. In terms of buyback, we have entered into some discussions with a couple of our customers about potentially buying back some of our existing portals, but continuing to operate those portals kind of in a lease format if you will or subscription format for those customers for probably the next 10 to 15 years. So that's in discussion right now and don't want to get too much further into details in respect for those negotiations that are ongoing.

Got it. And maybe can you -- with some of these sorts of visible derailments recently there's been some discussions about just sort of throwing more of these hot box detectors at the problem. I guess, can you talk about the value of your technology relative to that option?

Yeah. Part of our discussions with the congressional leaders and regulators and union members, I think collectively those industry experts would say that hot box detectors are really just one type of wayside detectors. There are heat detectors. The hot boxes are one of them. There are acoustic detectors. There are -- what they call geometry detectors. And then we are in the space what we would call machine vision AI or camera detectors, visual detectors. So I think the discussions that I've been allowed to participate in, I think there is an effort to include all categories of wayside detectors would likely be considered in this incoming Rail Safety Act, but we'll have to see how that works its way through Congress.

And you mentioned hiring of a senior salesperson here. I guess as you look at the pipeline over the next or just the pipeline going forward. What sort of the mix of potential subscription customers versus just getting more customers buying your kind of complex systems?

Yeah. Tom comes with a great, great experience, not just technology, but also in and amongst primarily the Class 1 railroads. So, we're glad to have him. I would say the mix of our pipeline as it stands now since we've introduced the subscription concept probably now about eight months ago. I would assess that probably at least a third if not half of our pipeline of opportunities is in that recurring or subscription format. We still do have a number of opportunities in our pipeline that are still interested in actually purchasing the equipment. Some of those customers continue to be Class 1 customers. Although, we have had interest by Class 1 customers to also allow us right of way access and operate in a subscription format. But then you also have car owners and sometimes shippers. They are interested in having portals at, if you will, the entry and exit point of their large maintenance yards or areas where they load and offload cargo. So for example, there are chemical companies that have large onloading and offloading yards and they're interested in having their cars kind of scanned as they come in empty and scanned as they go heavy to increase the overall safety of that hazmat and cargo movement.

Got it. And then I guess just last -- I know it's still early days, but on the subscription model, what kind of contract lengths do you think are reasonable here and gross margins?

Yeah. We kind of started with -- most of the customers or the car owner customers were talking about probably a minimum of three, but mostly around the five year period. With some of our Class 1 customers, they're more interested in the longer term, maybe even 10 to 15 years. So, I think more work needs to be done this year. Another question you probably should ask me is, what does the pricing look like? We're still working on that. I would tell you that we're probably going to end up where a portion of it will be a fixed fee to kind of gain access or license to individual portals. And then some sort of a per car fee basis and then we may actually separate out different types of cars in that format. So, that's something that we're still working with our railroad SMEs, we have in our company as well as some of the initial subscribers that we're talking with.

Okay. Sounds good. Thank you. Best of luck.

Thanks, Mike. Appreciate it.

[Operator Instructions] Our next question is from Christopher Penn with Penn [indiscernible]. Please proceed with your question.

How are you guys doing?

Very good. How are you, Chris?

Doing well. Couple of questions. How do you guys sit and say, well, back story, talk about the derailments, derailments happen all the time, but they're very popular in the media now. If you guys get in a situation where there's explosive demand for your guys project, not project with the products? How quick can you guys gear up manufacturing to meet the needs?

Yeah. No, that is a good question and is an excellent problem for a company like us to have. Look, I've led other companies that have scaled up very rapidly. Part of my military service, I was involved with exercised where we had to scale it very rapidly for certain things. So internally geared to the company and in close to work nation with our Board of Directors and some of our shareholders. We have plans in place where we can very rapidly scale up. In terms of manufacturing, we've developed a good solid network of vendors, suppliers and local manufacturers and fabricators, largely here in the United States and then heavily centered here in the State of Florida. And so those plans are in place to scale up. Likewise, I think we have a good solid plan to scale up with additional capital if that demand does in fact present itself for us.

Good. And then what about new business in different applications? I know you guys focused a lot on the Class 1 stuff, but what about like in coal mine detecting open doors on cars? I don't think they need a full RIP system. But I guess, I have first seen experience with the industry railroads and I know that's a common issue that can lead to derailments that something you guys have thought about?

It is. Our system certainly can see doors of any kind on the sides of the cars being opened or not properly occurred and then also [Technical Difficulty] sees any of the undersized, any of those hopper cars if they're open and it can also detect all that. Inside our pipeline, we have -- we are in active conversations with three or four large mining companies. And obviously they're moving large, large amounts and they use railcars. And so a couple of them in fact are looking at potentially purchasing our portal. And part of the question is, they may actually want some of the sub components, maybe not the entire thing, right? Some of those mining companies have also asked us to see if we couldn't inspect their very, very large real based mining trucks that they have. I call them the large tanker trucks just because that's where I remember as a kid. We realized they're massive and they're huge. Those operators, I guess, have to get in and out of those trucks to inspect quite regularly and it's kind of a big deal. So that's another interesting development that we've had here in the last couple of months.

Interesting. I appreciate all. I'll get my time back here. Thank you.

Thank you. At this time, I'd like to hand the floor back over to management to answer any additional questions.

Yeah. Thanks. We have a couple of questions that we're sending. I think by some of our retail shareholders. Thank you. And I'll read one or two of them off and try to respond. Some of them are pretty good. A good one here is, it references the Rail Safety Act of 2023 and the question is, “should the above act pass or something similar does Duos expect to benefit as more thermal inspections are part of the act in its current form. Again, part of the conversations we've been part of is that there are a number of different types of wayside detection systems. There is a push by I think the regulators as well as the unions to include the different -- several of the different types of wayside detection systems into a legislation that would be acoustic heat as well as machine vision or camera type technology. Obviously, we're in the machine vision AI camera technology and those regulators, union members and congressional leaders are keenly aware of the technology that we have and we think it will be an important part of any rollouts if that were to come as a result of this bill. We had another -- and that probably another good question from another investor that asked. Firstly, I was hoping you could provide some insight into your competition, full year (ph) main competitors and what sets you apart from them in the industry? We have two kinds of, I would say main competitors. The first one largely is from our good friends over at Wabtec. Wabtec is a very large company and well known inside the rail space. In the last few years, they've acquired a smaller company called Venevision, as well as another company out of Australia, which is called Track…

Our next question is from Ed Woo with Ascendiant Capital. Please proceed with your question.

Yeah. Congratulations on the quarter and the year. My question is, there's a lot of emphasis on train safety in the U.S. Have you seen that in other parts of the world, especially Canada and Mexico where you do business and maybe outside of North America?

No. Thanks, Ed. It's a great question. The answer is yes. Certainly, in Canada, Transport Canada or TC is the equivalent of the Federal Rail Administration in Canada has an equally rigorous set of regulations at the FRA currently has. And they work closely with the FRA to cross talk on those regulations as many of the trains that are in the United States travel into Canada and vice versa. I know the two Canadian freight railroads are extremely focused on safety. They have a particular challenge where the Canadian winners are equally even more challenging up in Canada. And those freight railroads, those Class 1 railroads go to great lengths (ph) to publish winter safety plans along with their normal safety plans. So -- and we have at least five of our systems are currently supporting one of our Class 1 Canadian customers up in Canada in those conditions. Equally in Mexico, we service both of the large railroads, one of them being a Class 1, that hauls large quantities of commerce from Mexico by railcar into the United States. Safety is again, first and foremost in their minds both of those railroads also have to deal with special and unique challenge of the illegal immigration that unfortunately uses the rail -- those railroads to move across the border. So both those railroads work very, very closely, obviously with Mexican officials south of the border, but also with United States customs and border protection as well as DHS. They work very closely and we assist in that. Our technology allows the capability of providing information to those law enforcement officials to assist them in controlling our southern border.

Great. Well, thanks for that answer, and I really wish you guys good luck. Thank you.

I appreciate it. Thanks, Ed.

Thank you. At this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Ferry for any closing remarks.

Now again, we always appreciate our current and long-term shareholders joining us and supporting us. And can see a number of new shareholders that joined us and we appreciate your support. Thank you very much.

Before we conclude today's call, I would like to provide Duos’ Safe Harbor statement that includes important cautions regarding forward-looking statements made during this call. This earnings call contains forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Forward-looking terminology such as believes, expects, may, will, should, anticipates, plans and their opposites or similar expressions are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based and could cause Duos Technologies Group's Inc. actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to those described in the item 1A in Duos Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Duos filing with the SEC. Thank you for joining us today for Duos Technologies Group fourth quarter 2022 and full year conference call. You may now disconnect.