Good afternoon and welcome to Duos Technologies First Quarter 2020 Earnings Conference Call.Joining us for today's call are Duos’ Chairman and CEO, Gianni Arcaini; and CFO Adrian Goldfarb. Following their remarks we will open up the call for your questions. Then before we conclude today's call, I will provide the necessary cautious regarding Forward-Looking Statements made by management during this call.Now, I would like to turn the call over to Duos’ Chairman and CEO Gianni Arcaini. Thank you. Please proceed.

Thank you operator. Welcome everyone and thank you for joining us. First and foremost, our heart goes out to the many families impacted by the devastating effects of the Corona virus. We hope you and your families remain safe and healthy during this challenging time.Given not much time as past since our last update call a little over a month ago my prepared remarks today will be brief. Early today we issued a press release announcing our financial results for the first quarter 2020 as well as other operational highlights. Copy of the press release is available in the Investor Relations section of our website.As I mentioned on our last call just a few weeks ago we began to view a significant operational momentum and in one of the strongest position in the company history. We had a record financial performance in 2019 and achieved a number of multi-year company milestones in the first few months of 2020. In February, we completed a successful capital raise of more than $9 million and up listed to the NASDAQ capital market. In better times we believe the added visibility from the [NASDAQ] listing will allow us to grow our profile within a more substantial investment pool.Additionally, our secured capital position will provide us with the necessary resources to continue growing our business over the long term. In the interim, we have the necessary reserves to face the current unprecedented market volatilities.Turning to our results for the first quarter like many business we were not immune to the effects of the ongoing global pandemic which caused business disruptions for most of our key customers and consequently impacted our operations and it completely impact us in our current quarter. As an essential business we were able to continue working uninterrupted allowing us to provide…

Thank you, Gianni. Now turning to our financial results for the first quarter. Total revenue for the first quarter decreased 77% to $991,000 compared to $4.35 million in the equivalent quarter in 2019. I would note that the original plan put in place before the current situation was for just $1.17 million for the quarter due to the cyclical nature of our business after a very strong Q4.Most of the decrease in total revenue for the quarter was due to delays and anticipated contract awards due to business interruptions affecting several customers. Such business interruptions have also caused delays in some project execution. We called the quarter to be slightly worse than anticipated. The current pandemic related to the Corona virus COVID-19 outbreak has temporarily impacted expected receipt of awards and caused delays in execution due to travel and other restrictions.Gross profit in Q1 was 103,000 or 10% of revenues which was a decrease of 95% from $2.13 million or 49% of revenues for the equivalent quarter in 2019. The overall decrease in gross profits reflects the lower revenues for the quarter and certain fixed costs related to project implementation which was not offset by revenues in the current quarter due to certain custom delays previously described.Turning to our costs. Operating expenses increased 5% in Q1 2020 to $2.19 million from $2.08 million in the same quarterly period last year. The increase in operating expense was primarily due to an increase in resources to support our anticipated growth including research and development, administration and artificial intelligence technologies expenses which were offset by decrease in engineering and sales and marketing expenses.We recorded a net loss in Q1 of $2.15 million or $0.80 loss per share compared to net income of $44,000 or $0.01 per share in the equivalent quarter in 2019.…

Thanks, Adrian. I will now highlight some of our major achievements and wins for the quarter as well as provide an update on our truevue360 activities before finishing with a brief outlook for the remainder of the year.Beginning first with our customer wins. As I mentioned on our last call in January of this year, we successfully implemented the first full-scale rail inspection portal in record time for CSX transportation, one of the seven class 1 railroad operators who owned an operator combined 140,000 miles of rail track. After completion, the portal was featured in a promotional video published by CSX hiring the renewed and expanded commitment to safety improvement and technological enhancements. As an existing customer by the first-time buyer of our next generation rail car inspection portal system, CSX has shown that they remain committed to working with cutting-edge technology providers like Duos to ensure the highest level of safety and efficiency.The next phase of this project includes the addition of an initial set of 20 Artificial Intelligence models which when installed over the coming month will mark the completion of the overall automation process. Next we're also substantially completed another rail inspection portal with a different customer which is scheduled for final acceptance at a site in Mexico as soon as COVID-19 travel restrictions are lifted.Moving to more recent awards, post Q1 in April we were awarded a $1.8 million contract for a turn-key Rail Inspection Portal which is expected to be completed by the end of the third quarter of this year. While we're happy to get this deal finalized, this is the contract we had initially planned on signing in the first quarter and it's emblematic of the delays in major decision making Adrian just mentioned earlier.Earlier this week, we were also awarded the $945,000…

Thank you. At this time we will conduct a question-and-answer session. [Operator Instructions] Our first question comes from a Ashok Kumar. Please state your question.

Thank you very much. Thank you Gianni and Adrian. Could you comment on the bookings -- 25 million, 30 million you had for the year? Is that still intact and is the delivery timeline is stretched out and two is could you also talk about expanding average selling prices given increasing functionality in your product line including embedding AI? Thank you very much.

Yes. I will address the question. So the bookings that you're referring to is the orders or anticipated orders and obviously with the current situation that has been delay in that mainly because our customers as Gianni referenced earlier have been delayed in that. However, the good news is that we have not seeing any speculations at this time or the timeframe for implementation and remember our projects are typically long term but we are still quite comfortable with the booking situations.

Yes. As to the implementation of new technologies we are at the fast pace in developing these new technologies. Number one, we were about to complete the installation of our first 3D automated pantograph system. Unfortunately, Chicago metro labor has been recalled during the COVID crisis but we understand that that's going to resume rather soon. And so we are at the final stages, soon we can start beta testing. On the AI side, as recorded previously we're making great progress in developing and implementing the AI into the novels for the rail and for our retail customers.We are in the process of upgrading our hardware infrastructure so that we can quadruple the learning process of the models. Right now we can only process a limited number but we already are in the process of expanding our hardware platform. So we can quadruple that process.

Okay. Thank you very much and all the best.

Thank you.

Thank you Ashok.

Our next question comes from Michael Legg with Benchmark. Please state your question.

Could you guys talk a little bit about more of your conversations with your client specifically CSX? And you mentioned you have an open dialogue with them. Can you talk a little bit originally we thought you might have more access to the tracks given the pandemic and now we're hearing the travel is kind of slowing it. What are you hearing from the customers as far as are they putting these on hold are they in active dialogues trying to figure out a way to get them going?

Yes. I would say the latter is the fact. So the best example and confirmation is that CSX just gave us an order for the next rail inspection portal. We were hoping to get two in this year but one of the delays that they essentially instilled upon us is that they gave us one inspection portal for the $1.8 million revenue that we will complete before the end of the third quarter.We are hoping that the second one is still going to happen later this year but I don't think there is a slowdown. Remember that our technology helps our customers to essentially economize on the cost of maintenance. So I would think that especially now in these days where there is a distance, social distance process and there's also a cost cutting process within our large customers, I think that there will be a continuous pressure on them to replace manual processes with technology. So we feel quite bullish that our process won't go away. It may be slowed down because of prudent capital allocation among those larger customers but we don't see any risk, downside risk when we lose this revenue.

Okay. Great. Now and one of those lines when you look at the pipeline that you have or you had at the beginning of the year and obviously you said there's no cancellations, what can you do as far as getting those systems up and ready for installation? Do you need access for the site? How much can you complete ahead? And are you?

Actually, the good news is that we over the past year and a half have adjusted our deployment strategies and so when we needed two months for site installation that's been cut down to one month. So we are pre-assembling pretty much everything before it gets installed so we minimized the loss track time we need from the customer. The limitations right now really are more the logistics within our customers than the logistics within our organization. We are fully operational but most of the large customers especially on the rail side, they are limiting the free mobility of their staff. So I think it's really a question of a couple of more months until we see going back to normal operation among the customers.

Okay. Great. And then just one last or two actually one, [arranging] the segments more of a focus for you now or they're also going from the RIP termed also the command and control? Any area that you can proceed more so during this environment?

No, we really, from our standpoint we are not really limited by it. I think that we just push you right now to complete the projects that are on the drawing board. We have, we expect a couple of follow on orders from another customer in Canada. I don't like to say the name but those should be forthcoming very-very soon. It's a matter of days I believe and then we will be able to install everything. Those we are not dependent on our travel capability because the physical installations done by our subcontractors which are local. So again I think going forward we continue to be quite bullish.

And this is the last question, I mean obviously this is impacting everyone's balance sheet, now your balance sheet is very strong and you're well-positioned for the rest of the year, obviously with the delay in the business model going forward from the COVID, how far do you speak to -- will this cash they'll get you through breakeven or do you not know at this point?

Yes. At this time I've done considerable analysis for this and this cash will get us through [breakeven]. There is no plan for any capital raises.

Okay. Great. Thanks guys.

No problem.

Thank you. [Operator Instructions] Our next question comes from Bill Chapman. Please state your question. Bill Chapman your line is open.

Okay. Thank you very much. Good morning guys.Q - Bill ChapmanGood morning Bill.

Good morning.

I was curious on your correctional automation system. Will you be marketing that directly or will it be through Biltmore Constructions or anyone else to help you market it?

So the dialogue with the end users the customer Sheriff's office has been direct. However, they are building a new courthouse in the new jail and the general contract is with Biltmore. That's why the contract itself was done through Biltmore, but we talked to the end user directly. One of the things that this interesting on the correctional market is that almost the entire market is controlled by engineering firms which are essentially specialized on correctional facilities. So yes, that's the answer to it.

Okay. Well, so I'm assuming this is really, this will be a slow growth initiative for you guys I presume?

Yes. The correctional automation is in slow because of the budget cycle -- mainly because of the budget cycle. Typically the life cycle for contract is about a year, year and half but the interesting thing is that we believe we have the only modern technology for correction facilities. The one thing we did last time in the first phase was that we were able to upgrade their technology while the population was still inside the jail. So we didn't have to evacuate anything and that's a very unique capability because typically most technologies require shutdown of one and installation of the other. We were able to develop the process in a way that we can really in parallel upgrade our technology without affecting the population of the jail.

Okay. You mention the substantial cost savings. Is this more with less personnel in the facility?

Yes. It's less personnel and much more accurate information flow directly to the Sheriff's office. So I got to say one thing that we are going to slow down the hiring process and we're going to try to revisit the resources we add to our organization and since this is a longer lead item, we are most likely not going to proceed with hiring a dedicated business development team for that. We haven't included in our projections any income for additional jails at this point. So that would be the prudent thing to do to postpone hiring dedicated team. But as long as we don't hire a dedicated team, the business development obviously is not going to come by itself. But that's one of the things I don't want to [mislead] you and thinking that we said we're going to have 5 to 10 jails a year because we don't have the infrastructure and the staffing to do that right now.

Okay. That's really, that's where I was heading with this. Thanks for clarifying.

Thanks.

Okay. Good bye.

Good bye.

Our next question comes from Richard Jackson with TrueNorth Financial Solutions. Please state your questions.

Good morning, gentlemen. I'm fairly new to the story here but I thought I read in the past press release that you're doing some beta tests with both the MTA and on a few banks involving their security systems. Can we get updates on those? And is the banks solution similar to the present solution or is it a different platform?

So with the banks, particularly a big customer, Texas Capital Bank in the last year we provided a security infrastructure to 36 subsidiaries where we did the entire soup-to-nuts from digital video to access control in a calm digitally in the [common support]. What that's been our legacy bread-and-butter and so we have an infrastructure which can handle these things. We expect that the bank who is in the process of merging and adding hundreds additional branches we expect some business flow. Again we have been very conservative in our projections, we have only projected a modest increase in that business but most likely we will be pleasantly surprised.On the MTA and New York transit I presume you talk about that, we have matured our product and it's now branded as [tracker wheel] where we are using artificial intelligence not only to detect objects of people falling on the track but we also can now classify what the objects are. For instance we can classify if someone's wearing a hard hat and safety vest and we can then decide this is an allowed intrusion. We can look at other classification. So that product is matured and we are talking to a variety of potential customers to apply that technology.We are also in discussions with the Florida DOT and hopefully will be able to have a [indiscernible] technology grade crossings throughout the state of Florida. This same technology can be applied not only to the tracks of a passenger rail but also can be applied by railroad crossings and any other similar conditions where you have people including the safety space. So that's part of our this year's initiative. I discussed that truevue360 added the business development capability and that will be one of the major targets that we're going to pursue this year.

Thank you.

Welcome.

At this time this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Gianni Arcaini for his closing remarks.

Well. thank you for joining us today. I especially want to thank our employees and partners and investors for their continued support. We look forward to updating you on our next call. Operator?

Thank you. Before we conclude today's call, I would like to provide to you do a safeharbor statement that includes important cautions regarding forward-looking statements made during this call. This earnings call contains forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. forward-looking terminology such as “believes”, “expects”, “may”, “will”, “should”, “anticipate” “plans” and their opposites are 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 Groups Incorporated 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 item 1-A in Duos's annual report on Form 10-K which is expressly incorporated here and by reference and other factors as may periodically be described in Duos filings with the SEC.Thank you for joining us today for Duos Technology Groups 2020 first quarter earnings conference call. You may not disconnect.