Filed Pursuant to Rule 424(b)(5)
Registration No. 333-237213
(To the Prospectus dated May 22, 2020)
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1,325,000 Shares of Common Stock
Duos Technologies Group, Inc.
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duostech |
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We are offering 1,325,000 shares of our common stock pursuant
to this prospectus supplement and the accompanying prospectus.
Our common stock is listed on the NASDAQ Capital Market under the
symbol “DUOT.” On February 3, 2022, the last reported sale
price of our common stock on the NASDAQ Capital Market was $5.62
per share.
Our business and an investment in our securities involve a high
degree of risk. Before deciding whether to invest in our
securities, you should carefully review the information described
under the heading “Risk Factors” beginning on page S-5 of this
prospectus supplement and on page 8 of the accompanying
prospectus, and under “Risk Factors” in our Annual Report on Form
10-K for the year ended December 31, 2020 and our Form 10-Q for the
quarter ended September 30, 2021, each of which is
incorporated by reference in this prospectus supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities, or passed upon the adequacy or accuracy of this
prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
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Per
Share |
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Total |
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| Public offering
price |
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$ |
4.00 |
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$ |
5,300,000 |
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| Underwriting
discount(1) |
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$ |
0.28 |
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$ |
371,000 |
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| Proceeds, before expenses, to
us |
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$ |
3.72 |
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$ |
4,929,000 |
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(1) The underwriter will receive compensation in addition to the
underwriting discount. See “Underwriting” of this prospectus
supplement for a description of the compensation payable to the
underwriter.
We have granted a 30-day option to the underwriter to purchase up
to 198,750 additional shares of common stock from us at the
public offering price, less the underwriting discount, solely to
cover over-allotments, if any. See “Underwriting” of this
prospectus supplement for more information.
The underwriter expects to deliver our shares to purchasers in the
offering on or about February 8, 2022, subject to customary
closing conditions.
Northland Capital Markets
The date of this prospectus supplement is February 3, 2022.
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying prospectus of Duos
Technologies Group, Inc., a Florida corporation (the “Company,”
“we,” “us,” or “our”), form part of a “shelf” registration
statement on Form S-3 (File No. 333-237213) that we filed
with the Securities and Exchange Commission (the “SEC”) on
March 16, 2020, as amended on May 12, 2020, and that was
declared effective on May 22, 2020.
This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of this offering and
also adds to and updates information contained in the accompanying
prospectus and the documents incorporated by reference into this
prospectus supplement and the accompanying prospectus. The second
part, the accompanying prospectus, gives more general information
about securities we may offer from time to time, some of which does
not apply to this offering. Generally, when we refer to the
“prospectus,” we are referring to both parts of this document
combined together with all documents incorporated by reference. If
the description of the offering varies between this prospectus
supplement and the accompanying prospectus, you should rely on the
information contained in this prospectus supplement. However, if
any statement in one of these documents is inconsistent with a
statement in another document having a later date — for example, a
document incorporated by reference into this prospectus supplement
or the accompanying prospectus — the statement in the document
having the later date modifies or supersedes the earlier statement.
You should rely only on the information contained in or
incorporated by reference into this prospectus supplement or
contained in or incorporated by reference into the accompanying
prospectus to which we have referred you. We have not authorized
anyone to provide you with information that is different. If anyone
provides you with different or inconsistent information, you should
not rely on it. The information contained in, or incorporated by
reference into, this prospectus supplement and contained in, or
incorporated by reference into, the accompanying prospectus is
accurate only as of the respective dates thereof, regardless of the
time of delivery of this prospectus supplement and the accompanying
prospectus or of any sale of securities. It is important for you to
read and consider all information contained in this prospectus
supplement and the accompanying prospectus, including the documents
incorporated by reference herein and therein, in making your
investment decision. You should also read and consider the
information in the documents to which we have referred you under
the captions “Where You Can Find More Information” and
“Incorporation by Reference” in this prospectus supplement and in
the accompanying prospectus.
This prospectus supplement and the accompanying prospectus do not
contain all of the information included in the registration
statement, as permitted by the rules and regulations of the SEC.
For further information, we refer you to our registration statement
on Form S-3, including its exhibits, of which this prospectus
supplement and the accompanying prospectus form a part. We are
subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and
therefore file reports and other information with the SEC.
Statements contained in this prospectus supplement and the
accompanying prospectus about the provisions or contents of any
agreement or other document are only summaries. If SEC rules
require that any agreement or document be filed as an exhibit to
the registration statement, you should refer to that agreement or
document for its complete contents.
We are offering to sell, and are seeking offers to buy, securities
only in jurisdictions where such offers and sales are permitted.
The distribution of this prospectus supplement and the accompanying
prospectus and the offering of securities in certain jurisdictions
or to certain persons within such jurisdictions may be restricted
by law. Persons outside the United States who come into possession
of this prospectus supplement and the accompanying prospectus must
inform themselves about and observe any restrictions relating to
the offering of securities and the distribution of this prospectus
supplement and the accompanying prospectus outside the United
States. This prospectus supplement and the accompanying prospectus
do not constitute, and may not be used in connection with, an offer
to sell, or a solicitation of an offer to buy, any securities
offered by this prospectus supplement and the accompanying
prospectus by any person in any jurisdiction in which it is
unlawful for such person to make such an offer or solicitation.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus supplement and any accompanying prospectus,
including the documents that we incorporate by reference, contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Exchange Act. These forward-looking statements
are intended to be covered by the safe harbor for forward-looking
statements provided by the Private Securities Litigation Reform Act
of 1995. Forward-looking statements give our current expectations
or forecasts of future events. You can identify these statements by
the fact that they do not relate strictly to historical or current
facts. Forward-looking statements involve risks and uncertainties
and include statements regarding, among other things, our projected
revenue growth and profitability, our growth strategies and
opportunity, anticipated trends in our market and our anticipated
needs for working capital. They are generally identifiable by use
of the words “may,” “will,” “should,” “anticipate,” “estimate,”
“plans,” “potential,” “projects,” “continuing,” “ongoing,”
“expects,” “management believes,” “we believe,” “we intend” or the
negative of these words or other variations on these words or
comparable terminology. In particular, these include statements
relating to future actions, prospective products, market
acceptance, future performance or results of current and
anticipated products, sales efforts, expenses, and the outcome of
contingencies such as legal proceedings and financial results. Any
forward-looking statements are qualified in their entirety by
reference to the factors discussed throughout this prospectus
supplement.
Examples of forward-looking statements in this prospectus include,
but are not limited to, our expectations regarding our business
strategy, business prospects, operating results, operating
expenses, working capital, liquidity and capital expenditure
requirements. Important assumptions relating to the forward-looking
statements include, among others, assumptions regarding demand for
our products, the cost, terms and availability of components,
pricing levels, the timing and cost of capital expenditures,
competitive conditions and general economic conditions. These
statements are based on our management’s current expectations,
beliefs and assumptions concerning future events affecting us,
which in turn are based on currently available information. These
assumptions could prove inaccurate. They are subject to risks and
uncertainties known and unknown that could cause actual results and
developments to differ materially from those expressed or implied
in such statements. Although we believe that the estimates and
projections reflected in the forward-looking statements are
reasonable, our expectations may prove to be incorrect.
You should read this prospectus supplement, the accompanying
prospectus and the documents that we incorporate by reference
herein and therein and have filed as exhibits to the registration
statement, of which this prospectus supplement is part, completely
and with the understanding that our actual future results may be
materially different from what we expect. You should assume that
the information appearing in this prospectus supplement and any
accompanying prospectus is accurate as of the date on the front
cover of this prospectus supplement. Because the risk factors
referred to above, as well as the risk factors included in this
prospectus supplement, the accompanying prospectus and those
incorporated herein by reference, could cause actual results or
outcomes to differ materially from those expressed in any
forward-looking statements made by us or on our behalf, you should
not place undue reliance on any forward-looking statements.
Further, any forward-looking statement speaks only as of the date
on which it is made, and except as may be required under applicable
securities laws, we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which the statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for us to predict which factors will
arise. In addition, we cannot assess the impact of each factor on
our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statements. We qualify all of the
information presented in this prospectus supplement and the
accompanying prospectus and the documents that we incorporate by
reference herein and therein, and particularly our forward-looking
statements, by these cautionary statements.
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information contained elsewhere or
incorporated by reference into this prospectus supplement and the
accompanying prospectus. This summary does not contain all of the
information that you should consider before deciding to invest in
our securities. You should read this entire prospectus supplement
and the accompanying prospectus carefully, including the “Risk
Factors” section contained in this prospectus supplement and our
consolidated financial statements and the related notes and the
other documents incorporated by reference into this prospectus
supplement and the accompanying prospectus.
Overview
Duos Technologies Group, Inc. (the “Company”), based in
Jacksonville, Florida, through its wholly owned subsidiary, Duos
Technologies, Inc., designs, develops, deploys and operates
intelligent vision-based technology solutions supporting rail,
logistics, intermodal and Government customers that streamline
operations, improve safety and reduce costs. The Company provides
cutting edge solutions that automate the mechanical and security
inspection of fast-moving trains, trucks and automobiles through a
broad range of proprietary hardware, software, information
technology and artificial intelligence.
The Company was incorporated in Florida on May 31, 1994 under the
original name of Information Systems Associates, Inc. (“ISA”).
Initially, our business operations consisted of consulting services
for asset management of large corporate data centers and the
development and licensing of information technology (“IT”) asset
management software. In late 2014, ISA entered negotiations with
Duos Technologies, Inc. (“Duos”), for the purposes of executing a
reverse triangular merger. This transaction was completed on April
1, 2015, whereby Duos became a wholly owned subsidiary of the
Company. Duos was incorporated under the laws of Florida on
November 30, 1990 for design, development and deployment of
proprietary technology applications and turn-key engineered
systems. The Company has a current staff of 65 people of which 57
are full time and is a technology and software applications company
with a strong portfolio of intellectual property. The Company’s
core competencies, including advanced intelligent technologies, are
delivered through its proprietary integrated enterprise command and
control platform, Centraco®.
The Company has developed the Railcar Inspection Portal (RIP) that
provides both freight and transit railroad customers and select
government agencies the ability to conduct fully remote railcar
inspections of trains while they are in transit. The system, which
incorporates a variety of sophisticated optical technologies,
illumination and other sensors, scans each passing railcar to
create an extremely high-resolution image set from a variety of
angles including the undercarriage. These images are then processed
through various methods of artificial intelligence algorithms to
identify specific defects and/or areas of interest on each railcar.
This is all accomplished within seconds of a railcar passing
through our portal. This solution has the potential to transform
the railroad industry immediately increasing safety, improving
efficiency and reducing costs. The Company has successfully
deployed this system with several Class 1 railroad customers and
anticipates an increased demand in the future. Government agencies
can conduct digital inspections combined with the incorporated
artificial intelligence (AI) to improve rail traffic flow across
borders which also directly benefits the Class 1 railroads through
increasing their velocity.
The Company has also developed the Automated Logistics Information
System (ALIS) or Truck Inspection (Portal) which automates and
reduces/removes personnel from gatehouses where trucks enter and
exit large logistics and intermodal facilities. This solution also
incorporates sensors and data points as necessary for each
operation and directly interconnects with backend logistics
databases and processes to streamline operations, and significantly
improve operations and security and importantly dramatically
improves the vehicle throughput on each lane on which the
technology is deployed. The Company is also researching using its
inspection portal technology for other applications where
examination of moving vehicles is required. Examples of possible
future applications include trucks, cars and aircraft, and the
Company plans to expand into these applications based upon market
requirements and demand within certain industries such as
aviation.
The Company has built a portfolio of IP and patented solutions that
creates “actionable intelligence” using two core native platforms
called Centraco® and Praesidium™. All solutions provided include a
variant of both applications. Centraco is designed primarily as the
user interface to all our systems as well as the backend connection
to third-party applications and databases through both Application
Programming Interfaces (APIs) and Software Development Kits (SDKs).
This interface is browser based and hosted within each one of our
systems and solutions. It is typically also customized for each
unique customer and application. Praesidium typically resides as
middleware in our systems and manages the various image capture
devices and some sensors for input into the Centraco software.
The Company also developed a proprietary Artificial Intelligence
(AI) software platform, Truevue360™ with the objective of focusing
the Company’s advanced intelligent technologies in the areas of AI,
deep machine learning and advanced multi-layered algorithms to
further support our solutions. The Company is now delivering
advanced algorithms to the rail industry using expert driven
Artificial Intelligence with an experienced team of railroad
mechanical car inspectors, imagery experts and data scientists.
Through September 30, 2021, the Company also provided professional
and consulting services for large data centers and had developed a
system for the automation of asset information marketed as DcVue™.
The Company had deployed its DcVue software at one beta site. This
software was used by Duos’ consulting auditing teams. DcVue was
based upon the Company’s OSPI patent which was awarded in 2010. The
Company offered DcVue available for license to our customers as a
licensed software product. As of October 1, 2021, the Company sold
its assets related to DcVue to the general manager of that business
line and no longer operates in that space.
The Company’s strategy is to deliver operational and technical
excellence to our customers; expand our RIP and ALIS solutions into
current and new customers focused in the Transportation, Logistics
and U.S. Government Sectors; offer both CAPEX and OPEX pricing
models to customers that increases recurring revenue, grows backlog
and improves profitability; responsibly grow the business both
organically and through selective acquisitions; and promote a
performance-based work force where employees enjoy their work and
are incentivized to excel and remain with the Company.
Our principal executive office is located at 7660 Centurion
Parkway, Suite 100, Jacksonville, Florida 32256, and our telephone
number is (904) 287-5409. Our website address is
www.duostechnologies.com. The information available on or
accessible through our website does not constitute a part of this
prospectus supplement or the accompanying prospectus and should not
be relied upon.
For a further description of our business, financial condition,
results of operations and other important information regarding us,
we refer you to our filings with the SEC incorporated by reference
in this prospectus supplement and the accompanying prospectus. For
information on how to find copies of these documents, see “Where
You Can Find More Information” and “Incorporation of Documents by
Reference.”
Recent Developments
Our financial statements for the fiscal year ended December 31,
2021 will not be available until after this offering is completed
and consequently will not be available to you prior to investing in
this offering. This is not a comprehensive statement of our
financial results and is subject to change. These estimates should
not be viewed as a substitute for our full year financial
statements prepared in accordance with generally accepted
accounting principles in the United States (“GAAP”).
Based on our preliminary unaudited estimates and information
available to us as of the date of this prospectus supplement, we
expect total revenue for the fourth quarter of 2021 to be $3.75
million, in line with the same period one year ago. Management also
estimates that the Company’s fourth quarter net loss will be in the
range of $250,000 to $295,000 compared with a net loss of $426,000
for the fourth quarter in fiscal year 2020, an improvement of at
least 31%. This improvement in operating results is expected to
continue in 2022 for the full year. Based on preliminary fourth
quarter results, the Company expects total revenue for the fiscal
year ended December 31, 2021 to be approximately $8.29 million.
Duos is entering 2022 with a strong backlog of business. During the
last quarter, the Company was successful in closing several
high-value contracts in the rail segment and is now developing
offerings to inspect other types of moving vehicles, such as
trucks.
These preliminary estimates are not necessarily indicative of any
future period and should be read together with the sections titled
“Cautionary Note Regarding Forward-Looking Statements” and “Risk
Factors” and under similar headings in the documents incorporated
by reference into this prospectus supplement and the accompanying
prospectus as well as our financial statements, related notes and
other financial information incorporated by reference into this
prospectus supplement.
The Offering
The following summary is provided solely for your convenience
and is not intended to be complete. You should read the full text
and more specific details contained elsewhere in this prospectus
supplement and the accompanying prospectus. For a more detailed
description of the common stock, see “Description of Capital Stock”
in the accompanying prospectus.
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Issuer |
Duos Technologies Group, Inc. |
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Common stock offered by us |
1,325,000 shares of common
stock (or 1,523,750 shares if the underwriter exercises its option
to purchase additional shares in full). |
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Over-allotment option |
We have granted the underwriter a
30-day option from the date of this prospectus supplement to
purchase up to 198,750 additional shares from us at the public
offering price less the underwriting discount to cover
over-allotments, if any. |
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Common stock to be outstanding
immediately after this offering |
5,881,033 shares of common
stock (or 6,079,783 shares if the underwriter exercises
its option to purchase additional shares in full). |
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Use of Proceeds |
We intend to use the net proceeds
of this offering for general corporate purposes and working
capital. See “Use of Proceeds” for further information. |
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Risk Factors |
See “Risk Factors” of this
prospectus supplement and other information included or
incorporated by reference into this prospectus supplement and the
accompanying prospectus for a discussion of factors you should
carefully consider before investing in our securities. |
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NASDAQ Capital Market trading symbol |
DUOT |
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Unless we indicate otherwise, all information in this prospectus
supplement (i) assumes no exercise by the underwriter of its
option to purchase up to an additional 198,750 shares of
common stock to cover over-allotments, if any, and (ii) is
based on 4,556,033 shares of common stock outstanding as of
February 1, 2022 and excludes as of such date:
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121,572 shares of our
common stock issuable upon conversion of all outstanding shares of
our preferred stock; |
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944,838 shares of our common stock
issuable upon exercise of outstanding stock options under our
equity incentive plans at a weighted-average exercise price of
$6.13 per share, with 335,000 additional shares reserved for future
issuance under such plans; |
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160,000 shares of our common stock
issuable upon exercise of outstanding stock options issued outside
of our equity incentive plans at a weighted average exercise price
of $4.22 per share; and |
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1,376,466 shares of our common
stock issuable upon exercise of warrants with a weighted average
exercise price of $8.18 per share. |
RISK FACTORS
You should carefully consider the risks described below before
making an investment decision. The risks described below are not
the only ones we face. Additional risks we are not presently aware
of or that we currently believe are immaterial may also impair our
business operations. Our business could be harmed by any of these
risks. The trading price of our common stock could decline due to
any of these risks, and you may lose all or part of your
investment. In assessing these risks, you should also refer to the
risk factors and other information contained or incorporated by
reference into this prospectus supplement and the accompanying
prospectus, specifically including the risk factors contained in
our Quarterly Report on Form 10-Q for the period ended
September 30, 2021 filed with the SEC on November 15,
2021 and our Annual Report on Form 10-K for the year ended
December 31, 2020 filed with the SEC on March 30, 2021
and the financial statements and related notes filed
therewith.
Risks Relating to this Offering
Management will have broad discretion as to the use of the
proceeds from this offering, and we may not use the proceeds
effectively.
Our management will have broad discretion in the application of the
net proceeds from this offering and could spend the proceeds in
ways that you do not agree with or that do not improve our results
of operations or enhance the value of our common stock – see the
section entitled “Use of Proceeds” in this prospectus supplement.
Our failure to apply these funds effectively could have a material
adverse effect on our business and cause the price of our common
stock to decline.
You will experience immediate and substantial dilution in the
net tangible book value per share of the common stock you
purchase.
Since the price per share of our common stock being offered is
higher than the net tangible book value per share of our common
stock, you will suffer substantial dilution in the net tangible
book value of the common stock you purchase in this offering. Based
on the public offering price of $4.00 per share, and after
deducting the underwriting discount and estimated offering expenses
payable by us, if you purchase shares of common stock in this
offering, you will suffer immediate and substantial dilution of
$2.88 per share in the net tangible book value of the common stock
or $2.78 per share if the underwriter exercises in full its option
to purchase additional shares to cover over-allotments, if any. See
the section entitled “Dilution” in this prospectus supplement for a
more detailed discussion of the dilution you will incur if you
purchase common stock in this offering.
Our outstanding options, warrants and preferred stock and the
availability for resale of the underlying shares may adversely
affect the trading price of our common stock.
As of February 1, 2022, there were outstanding stock options
to purchase 1,104,838 shares of our common stock at a
weighted-average exercise price of $5.85 per share, warrants to
purchase 1,376,466 shares of our common stock at a weighted-average
exercise price of $8.18 per share and shares of preferred stock
convertible into 121,572 shares of our common stock at a
weighted-average conversion price of $7.00 per share. Our
outstanding options, warrants and preferred stock could adversely
affect our ability to obtain future financing or engage in certain
mergers or other transactions, since the holders of options,
warrants and preferred stock can be expected to exercise or convert
them at a time when we may be able to obtain additional capital
through a new offering of securities on terms more favorable to us
than the terms of outstanding options, warrants or preferred stock.
The issuance of shares upon the exercise or conversion of
outstanding options, warrants or preferred stock will also dilute
the ownership interests of our existing stockholders.
The rights of the holders of common stock may be impaired by the
potential issuance of preferred stock.
Our board of directors has the right, without stockholder approval,
to issue preferred stock with voting, dividend, conversion,
liquidation or other rights which could adversely affect the voting
power and equity interest of the holders of common stock, which
could be issued with the right to more than one vote per share, and
could be utilized as a method of discouraging, delaying or
preventing a change of control. The possible negative impact on
takeover attempts could adversely affect the price of our common
stock. Although we have no present intention to issue any shares of
preferred stock or to create any new series of preferred stock, we
may issue such shares in the future.
Because we do not intend to pay dividends on our common stock,
stockholders will benefit from an investment in our stock only if
it appreciates in value.
We have never declared or paid any cash dividends on our shares of
common stock. We currently intend to retain all future earnings, if
any, for use in the operations and expansion of the business. As a
result, we do not anticipate paying cash dividends in the
foreseeable future. Any future determination as to the declaration
and payment of cash dividends will be at the discretion of our
Board of Directors and will depend on factors the Board of
Directors deems relevant, including, among others, our results of
operations, financial condition and cash requirements, business
prospects, and the terms of our financing arrangements, if any.
Accordingly, realization of a gain on stockholders’ investments
will depend on the appreciation of the price of our common stock.
There is no guarantee that our common stock will appreciate in
value.
Our common stock may be delisted from the Nasdaq Capital
Market.
On November 23, 2021, the Company received from The Nasdaq Stock
Market LLC (“Nasdaq”) a letter indicating that we are not in
compliance with Nasdaq Marketplace Rule 5550(b)(1), which
requires companies listed on the Nasdaq Capital Market to maintain
a minimum of $2,500,000 in stockholders’ equity for continued
listing. On our Form 10-Q for the quarter ended September 30,
2021, the Company reported stockholders’ equity of $865,221, and,
as a result, does not currently satisfy Nasdaq Marketplace
Rule 5550(b)(1).
Nasdaq’s letter has no immediate impact on the listing of the
Company’s common stock, which will continue to be listed and traded
on Nasdaq, subject to the Company’s compliance with the other
continued listing requirements. Nasdaq’s letter provides the
Company 45 calendar days, or until January 17, 2022, to submit
a plan to regain compliance, which the Company has done. If the
plan is accepted, the Company can be granted up to 180 calendar
days from November 23, 2021 to evidence compliance. There can
be no guarantee that the plan will be accepted by Nasdaq.
The Company intends to take all reasonable measures available to
regain compliance under the Nasdaq Listing Rules and remain listed
on the Nasdaq. The Company is currently evaluating its available
options to resolve the deficiency and regain compliance with the
Nasdaq minimum stockholders’ equity requirement. The Company
expects that if all of the shares of common stock offered by this
prospectus supplement are sold we will regain compliance with the
Nasdaq Listing Rules but there can be no guarantee that we will do
so.
USE OF PROCEEDS
We estimate that our net proceeds from the sale of the common stock
offered pursuant to this prospectus supplement will be
approximately $4.7 million or approximately $5.4 million if
the underwriter exercises in full its option to purchase additional
shares to cover over-allotments, if any, in each case after
deducting the underwriting discount and the estimated offering
expenses that are payable by us.
We currently intend to use the net proceeds from this offering for
potential acquisitions, general corporate purposes and working
capital.
The timing and amount of our actual expenditures will be based on
many factors, including cash flows from operations and the
anticipated growth of our business. As of the date of this
prospectus supplement, we have not yet determined the amount of net
proceeds to be used specifically for any specific purpose.
Accordingly, our management will have significant discretion and
flexibility in applying the net proceeds from this offering.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock.
We currently intend to retain our future earnings, if any, for use
in our business and therefore do not anticipate paying cash
dividends in the foreseeable future. Payment of future dividends,
if any, will be at the discretion of our Board of Directors after
taking into account various factors, including our financial
condition, operating results, current and anticipated cash needs
and plans for expansion.
CAPITALIZATION
The following table sets forth our capitalization as of
September 30, 2021:
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on an actual basis;
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on an as adjusted basis to give
effect to the receipt of the estimated net proceeds of
approximately $4.7 million from the sale of the common stock
in this offering, after deducting the underwriting discount and
estimated offering expenses payable by us. |
This table should be read with “Use of Proceeds” in this prospectus
supplement as well as (a) “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and our financial
statements and notes thereto included in our Annual Report on Form
10-K for the year ended December 31, 2020 and
(b) “Management’s Discussion and Analysis of Financial
Condition and Results of Operation” and our condensed financial
statements and notes thereto included in our Quarterly Report on
Form 10-Q for the quarter ended September 30, 2021, which are
incorporated by reference in this prospectus supplement and the
accompanying prospectus.
| |
|
September 30, 2021 |
|
| |
|
Actual |
|
|
As
adjusted |
|
| |
|
(Unaudited) |
|
| Cash |
|
$ |
2,257,971 |
|
|
$ |
6,953,171 |
|
| |
|
|
|
|
|
|
|
|
| Long-term liabilities |
|
|
33,860 |
|
|
|
33,860 |
|
| Stockholders’ equity: |
|
|
|
|
|
|
|
|
| Preferred stock: $0.001
par value, 10,000,000 authorized, 9,480,000 shares available to be
designated. |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Series A redeemable convertible
preferred stock, $10 stated value per share; 500,000 shares
designated; 0 issued and outstanding at September 30, 2021,
convertible into common stock at $6.30 per share |
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Series B convertible preferred
stock, $1,000 stated value per share; 15,000 shares designated;
1,705 shares issued and outstanding at September 30, 2021,
convertible into common stock at $7.00 per share |
|
|
1,705,000 |
|
|
|
1,705,000 |
|
| |
|
|
|
|
|
|
|
|
| Series C convertible preferred
stock, $1,000 stated value per share; 5,000 shares designated;
4,500 shares issued and outstanding at September 30, 2021,
convertible into common stock at $5.50 per share |
|
|
4,500,000 |
|
|
|
4,500,000 |
|
| |
|
|
|
|
|
|
|
|
| Common stock: $0.001 par
value; 500,000,000 shares authorized, 3,612,125 shares issued,
3,610,801 shares outstanding at September 30, 2021 (actual);
4,935,801 shares outstanding (as adjusted) |
|
|
3,612 |
|
|
|
4,937 |
|
| |
|
|
|
|
|
|
|
|
| Additional paid-in-capital |
|
|
39,954,099 |
|
|
|
44,805,426 |
|
| Accumulated deficit |
|
|
(45,297,490 |
) |
|
|
(45,297,490 |
) |
| Treasury stock |
|
|
(157,452 |
) |
|
|
(157,452 |
) |
| |
|
|
|
|
|
|
|
|
| Total stockholders’ equity |
|
|
865,221 |
|
|
|
5,560,421 |
|
| |
|
|
|
|
|
|
|
|
| Total capitalization |
|
$ |
899,081 |
|
|
$ |
5,594,281 |
|
All information above (i) assumes no exercise by the
underwriter of its option to purchase up to an additional
198,750 shares of common stock to cover over-allotments, if
any, and (ii) the number of shares of common stock outstanding
as of September 30, 2021 is 3,610,801 and excludes as of such
date:
| |
● |
1,061,753 shares of our
common stock issuable upon conversion of all outstanding shares of
our preferred stock (between October 1, 2021 and February 1, 2022,
940,181 shares of common stock were issued upon conversion of
shares of our preferred stock); |
|
| |
|
|
|
| |
● |
431,266 shares of our common stock
issuable upon exercise of outstanding stock options under our
equity incentive plans at a weighted-average exercise price of
$5.32 per share, with 1,000,000 additional shares reserved for
future issuance under such plans; |
|
| |
|
|
|
| |
● |
160,000 shares of our common stock
issuable upon exercise of outstanding stock options issued outside
of our equity incentive plans at a weighted-average exercise price
of $4.22 per share; and |
|
| |
|
|
|
| |
● |
1,376,466 shares of our common
stock issuable upon exercise of warrants with a weighted-average
exercise price of $8.18 per share. |
|
DILUTION
If you purchase our securities in this offering, your interest will
be diluted to the extent of the difference between the public
offering price per share of our common stock and the net tangible
book value per share of our common stock after this offering. We
calculate net tangible book value per share by dividing our net
tangible assets (tangible assets less total liabilities) by the
number of shares of our common stock issued and outstanding as of
September 30, 2021.
Our net tangible book value at September 30, 2021 was
$854,590, or $0.24 per share, based on 3,610,801 shares of our
common stock outstanding. After giving effect to the issuance and
sale of all the shares in this offering at the public offering
price of $4.00 per share less the estimated offering expenses, our
pro forma as adjusted pro forma net tangible book value at
September 30, 2021 would have been $5,494,140 or $1.12 per
share. This represents an immediate increase in pro forma net
tangible book value of $0.88 per share to existing stockholders and
an immediate dilution of $(2.88) per share to investors in this
offering. The following table illustrates this per share
dilution:
| Public offering price per share of common
stock |
|
$ |
4.00 |
|
| Net tangible book value per share as of September 30,
2021 |
|
$ |
0.24 |
|
| Increase per share attributable to this offering |
|
$ |
0.88 |
|
| As adjusted net tangible book value per share as of
September 30, 2021 after this offering |
|
$ |
1.12 |
|
| Dilution per share to new investors participating in this
offering |
|
$ |
(2.88 |
) |
If the underwriter exercises in full its option to purchase
additional shares of common stock at the public offering price of
$4.00 per share, the as adjusted net tangible book value after this
offering would be $1.22 per share, representing an increase in net
tangible book value of $0.98 per share to existing stockholders and
immediate dilution in net tangible book value of $(2.78) per
share to purchasers in this offering at the public offering
price.
To the extent that outstanding options or warrants are exercised or
shares of preferred stock are converted, or any additional options,
warrants or other equity awards are granted and exercised or become
vested or other issuances of shares of our common stock are made,
you will experience further dilution. In addition, we may choose to
raise additional capital due to market conditions or strategic
considerations even if we believe we have sufficient funds for our
current or future operating plans. To the extent that additional
capital is raised through the sale of common stock or securities
exercisable, convertible or exchangeable into common stock, such
issuance could result in further dilution to our stockholders.
The above information is based on 3,610,801 shares of common stock
outstanding as of September 30, 2021, and excludes as of such
date:
| |
● |
1,061,753 shares of our
common stock issuable upon conversion of all outstanding shares of
our preferred stock (between October 1, 2021 and February 1, 2022,
940,181 shares of common stock were issued upon conversion of
shares of our preferred stock); |
| |
|
|
| |
● |
431,266 shares of our common stock
issuable upon exercise of outstanding stock options under our
equity incentive plans at a weighted-average exercise price of
$5.32 per share, with 1,000,000 additional shares reserved for
future issuance under such plans; |
| |
|
|
| |
● |
160,000 shares of our common stock
issuable upon exercise of outstanding stock options issued outside
of our equity incentive plans at a weighted average exercise price
of $4.22; and |
| |
|
|
| |
● |
1,376,466 shares of our common
stock issuable upon exercise of warrants with a weighted-average
exercise price of $8.18 per share. |
DESCRIPTION OF THE SECURITIES WE ARE OFFERING
In this offering, we are offering 1,325,000 shares of our
common stock at the public offering price of $4.00 per share. The
material terms and provisions of our common stock are described
under the captions “Description of Capital Stock” and “Common
Stock” of the accompanying prospectus.
UNDERWRITING
We are offering the shares of common stock described in this
prospectus supplement through Northland Securities, Inc.
(“Northland”) as the sole book-running manager. We have entered
into a firm commitment underwriting agreement with Northland.
The underwriting agreement provides that the obligations of
Northland are subject to certain conditions precedent, including
approval of legal matters by its counsel. Northland has the right
to withdraw, cancel or modify offers to the public and to reject
orders in whole or in part. Subject to the terms and conditions set
forth in the underwriting agreement, we have agreed to sell to
Northland, and Northland has agreed to purchase from us, the number
of shares of our common stock listed opposite its name below.
|
Underwriter |
|
Number
of Shares
|
|
| Northland Securities,
Inc. |
|
|
1,325,000 |
|
| |
|
|
|
|
| Total |
|
|
1,325,000 |
|
The shares sold in this offering are expected to be ready for
delivery on or about February 8, 2022, against payment in
immediately available funds.
Option to Purchase Additional Shares
We have granted Northland an option to buy up to an additional
198,750 shares of common stock from us. Northland may exercise this
option at any time and from time to time during the 30-day period
from the date of this prospectus supplement. If any additional
shares of common stock are purchased, Northland will offer the
additional shares on the same terms as those on which the shares
are being offered.
Discounts and Commissions
Northland has advised us that it proposes to offer the common stock
directly to the public at the offering price set forth on the cover
page of this prospectus supplement. Northland proposes to offer the
shares to certain dealers at the same price less a concession of
not more than $0.1680 per share. After the offering, these figures
may be changed by Northland.
The underwriting fee is equal to the public offering price per
share of common stock less the amount paid by Northland to us per
share of common stock. The following table shows the per share and
total underwriting discount to be paid by Northland in connection
with this offering, assuming either no exercise and full exercise
of the option to purchase additional shares:
| |
|
|
|
|
Total |
|
| |
|
Per Share |
|
|
Without Option |
|
|
With Option |
|
| Public offering price |
|
$ |
4.00 |
|
|
$ |
5,300,000 |
|
|
$ |
6,100,000 |
|
| Underwriting discounts |
|
$ |
0.28 |
|
|
$ |
371,000 |
|
|
$ |
426,650 |
|
| Proceeds, before expenses, to us |
|
$ |
3.72 |
|
|
$ |
4,929,000 |
|
|
$ |
5,668,350 |
|
We estimate that the total fees and expenses payable by us,
excluding the underwriting discount, will be approximately
$235,000, which includes $150,000 that we have agreed to reimburse
Northland for the fees incurred by it in connection with the
offering. The fees and expenses of the underwriter that we have
agreed to reimburse are not included in the underwriting discounts
in the table above.
Except as disclosed in this prospectus supplement, Northland has
not received and will not receive from us any other item of
compensation or expense in connection with this offering considered
by FINRA to be underwriting compensation under FINRA
Rule 5110. The underwriting discount and reimbursable expenses
Northland will receive were determined through arms’ length
negotiations between us and Northland.
Indemnification of Underwriter
We have agreed to indemnify Northland against certain liabilities,
including liabilities under the Securities Act or to contribute to
payments that Northland may be required to make in respect of those
liabilities.
No Sales of Similar Securities
We and each of our directors and executive officers and certain of
our stockholders are subject to lock-up agreements that prohibit us
and them from offering, selling, contracting to sell, granting any
option or contract to purchase, purchasing any option or contract
to sell, granting any option, right or warrant to purchase, lending
or otherwise transferring or disposing of any shares of our common
stock or any securities convertible into or exercisable or
exchangeable for shares of our common stock or other capital stock
for a period of 90 days following the date of this prospectus
supplement without the prior written consent of Northland.
The lock-up agreements do not prohibit our directors and executive
officers and those stockholders party to such agreements from
transferring shares of our common stock for bona fide gifts or by
will, or for estate or tax planning purposes, subject to certain
requirements, including that the transferee be subject to the same
lock-up terms. The lock-up provisions do not prohibit us from
issuing shares upon the exercise or conversion of securities
outstanding on the date of this prospectus supplement. The lock-up
provisions do not prevent us from selling shares to Northland
pursuant to the underwriting agreement, or from granting options to
acquire securities under our existing stock option plans or issuing
shares upon the exercise or conversion of securities outstanding on
the date of this prospectus supplement.
Listing
Our common stock is listed on the Nasdaq Capital Market under the
symbol “DUOT.”
Price Stabilization, Short Positions and Penalty Bids
To facilitate the offering, Northland may engage in transactions
that stabilize, maintain or otherwise affect the price of our
common stock during and after the offering. Specifically, Northland
may over-allot or otherwise create a short position in the common
stock for its own account by selling more shares of common stock
than we have sold to it. Short sales involve the sale by Northland
of a greater number of shares than Northland is required to
purchase in the offering. Northland may close out any short
position by either exercising its option to purchase additional
shares or purchasing shares in the open market.
In addition, Northland may stabilize or maintain the price of the
common stock by bidding for or purchasing shares of common stock in
the open market and may impose penalty bids. If penalty bids are
imposed, selling concessions allowed to syndicate members or other
broker-dealers participating in the offering are reclaimed if
shares of common stock previously distributed in the offering are
repurchased, whether in connection with stabilization transactions
or otherwise. The effect of these transactions may be to stabilize
or maintain the market price of the common stock at a level above
that which might otherwise prevail in the open market. The
imposition of a penalty bid may also affect the price of the common
stock to the extent that it discourages resales of the common
stock. The magnitude or effect of any stabilization or other
transactions is uncertain. These transactions may be effected on
the Nasdaq Capital Market or otherwise and, if commenced, may be
discontinued at any time. Northland may also engage in passive
market making transactions in our common stock. Passive market
making consists of displaying bids on the Nasdaq Capital Market
limited by the prices of independent market makers and effecting
purchases limited by those prices in response to order flow. Rule
103 of Regulation M promulgated by the SEC limits the amount of net
purchases that each passive market maker may make and the displayed
size of each bid. Passive market making may stabilize the market
price of the common stock at a level above that which might
otherwise prevail in the open market and, if commenced, may be
discontinued at any time.
Neither we nor the underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of our common
stock. In addition, neither we nor the underwrites makes any
representation that the underwriter will engage in these
transactions or that any transaction, if commenced, will not be
discontinued without notice.
Electronic Distribution
This prospectus supplement and the accompanying base prospectus in
electronic format may be made available on the website maintained
by Northland and Northland may distribute prospectuses and
prospectus supplements electronically. In addition, Northland may
facilitate Internet distribution for this offering to certain of
its Internet subscription customers. Northland may allocate a
limited number of securities for sale to its online brokerage
customers. An electronic prospectus supplement and accompanying
prospectus is available on the Internet on the website maintained
by Northland. Other than the prospectus supplement and accompanying
prospectus in electronic format, the information on Northland’s
website is not part of this prospectus supplement or the
accompanying prospectus.
Affiliations
Northland and its affiliates are full service financial
institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial
advisory, investment management, investment research, principal
investment, hedging, financing and brokerage activities. Northland
may in the future engage in investment banking and other commercial
dealings in the ordinary course of business with us or our
affiliates. Northland may in the future receive customary fees and
commissions for these transactions.
In the ordinary course of their various business activities,
Northland and its affiliates may make or hold a broad array of
investments and actively trade debt and equity securities (or
related derivative securities) and financial instruments (including
bank loans) for their own accounts and for the accounts of their
customers and such investment and securities activities may involve
our securities and/or instruments. Northland and its affiliates may
also make investment recommendations and/or publish or express
independent research views in respect of such securities or
instruments and may at any time hold, or recommend to clients that
they acquire, long and/or short positions in such securities and
instruments.
Northland may facilitate the marketing of this offering online
directly or through one of its affiliates. In those cases,
prospective investors may view offering terms and the prospectus
supplement and accompanying prospectus online and place orders
online or through their financial advisors.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is
Continental Stock Transfer & Trust Company, One State Street,
30th Floor, New York, New York 10004.
Selling Restrictions
European Economic Area
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a “Relevant
Member State”) an offer to the public of any shares of our common
stock may not be made in that Relevant Member State, except that an
offer to the public in that Relevant Member State of any shares of
our common stock may be made at any time under the following
exemptions under the Prospectus Directive, if they have been
implemented in that Relevant Member State:
| |
(a) |
to any legal entity
that is a qualified investor as defined in the Prospectus
Directive; |
| |
|
|
| |
(b) |
to fewer than 100 or, if the
Relevant Member State has implemented the relevant provision of the
2010 PD Amending Directive, 150, natural or legal persons (other
than qualified investors as defined in the Prospectus Directive),
as permitted under the Prospectus Directive, subject to obtaining
the prior consent of the representatives for any such offer;
or |
| |
|
|
| |
(c) |
in any other circumstances falling
within Article 3(2) of the Prospectus Directive, provided that no
such offer of shares of our common stock shall result in a
requirement for the publication by us or any underwriter of a
prospectus pursuant to Article 3 of the Prospectus Directive. |
For the purposes of this provision, the expression an “offer to the
public” in relation to any shares of our common stock in any
Relevant Member State means the communication in any form and by
any means of sufficient information on the terms of the offer and
any shares of our common stock to be offered so as to enable an
investor to decide to purchase any shares of our common stock, as
the same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State, the
expression “Prospectus Directive” means Directive 2003/71/EC (and
amendments thereto, including the 2010 PD Amending Directive, to
the extent implemented in the Relevant Member State), and includes
any relevant implementing measure in the Relevant Member State, and
the expression “2010 PD Amending Directive” means Directive
2010/73/EU.
United Kingdom
Northland has represented and agreed that:
| |
(a) |
it has only
communicated or caused to be communicated and will only communicate
or cause to be communicated an invitation or inducement to engage
in investment activity (within the meaning of Section 21 of the
Financial Services and Markets Act 2000 (the “FSMA”)) received by
it in connection with the issue or sale of the shares of our common
stock in circumstances in which Section 21(1) of the FSMA does not
apply to us; and |
| |
|
|
| |
(b) |
it has complied and will comply
with all applicable provisions of the FSMA with respect to anything
done by it in relation to the shares of our common stock in, from
or otherwise involving the United Kingdom. |
Canada
The securities may be sold in Canada only to purchasers purchasing,
or deemed to be purchasing, as principal that are accredited
investors, as defined in National Instrument 45 106 Prospectus
Exemptions or subsection 73.3(1) of the Securities Act (Ontario),
and are permitted clients, as defined in National Instrument 31 103
Registration Requirements, Exemptions and Ongoing Registrant
Obligations. Any resale of the securities must be made in
accordance with an exemption from, or in a transaction not subject
to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of
Canada may provide a purchaser with remedies for rescission or
damages if this prospectus supplement or the accompanying
prospectus (including any amendment thereto) contains a
misrepresentation, provided that the remedies for rescission or
damages are exercised by the purchaser within the time limit
prescribed by the securities legislation of the purchaser’s
province or territory. The purchaser should refer to any applicable
provisions of the securities legislation of the purchaser’s
province or territory for particulars of these rights or consult
with a legal advisor.
Pursuant to section 3A.3 of the National Instrument 33 105
Underwriting Conflicts (NI 33 105), the underwriters are not
required to comply with the disclosure requirements of NI 33 105
regarding underwriter conflicts of interest in connection with this
offering.
Germany
Each person who is in possession of this prospectus is aware of the
fact that no German securities prospectus (wertpapierprospekt)
within the meaning of the German Securities Prospectus Act
(Wertpapier-prospektgesetz, or the “German Act”) of the Federal
Republic of Germany has been or will be published with respect to
the shares of our common stock. In particular, each underwriter has
represented that it has not engaged and has agreed that it will not
engage in a public offering in the Federal Republic of Germany
within the meaning of the German Act with respect to any of the
shares of our common stock otherwise than in accordance with the
German Act and all other applicable legal and regulatory
requirements.
Hong Kong
The common shares may not be offered or sold in Hong Kong by means
of any document other than (i) in circumstances which do not
constitute an offer to the public within the meaning of the
Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to
“professional investors” within the meaning of the Securities and
Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made
thereunder, or (iii) in other circumstances which do not result in
the document being a “prospectus” within the meaning of the
Companies Ordinance (Cap. 32, Laws of Hong Kong) and no
advertisement, invitation or document relating to the shares may be
issued or may be in the possession of any person for the purpose of
issue (in each case whether in Hong Kong or elsewhere), which is
directed at, or the contents of which are likely to be accessed or
read by, the public in Hong Kong (except if permitted to do so
under the laws of Hong Kong) other than with respect to common
shares which are or are intended to be disposed of only to persons
outside Hong Kong or only to “professional investors” within the
meaning of the Securities and Futures Ordinance (Cap. 571, Laws of
Hong Kong) and any rules made thereunder.
Singapore
This prospectus has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, this prospectus and
any other document or material in connection with the offer or
sale, or invitation for subscription or purchase, of the common
shares may not be circulated or distributed, nor may the common
shares be offered or sold, or be made the subject of an invitation
for subscription or purchase, whether directly or indirectly, to
persons in Singapore other than (i) to an institutional investor
under Section 274 of the Securities and Futures Act, Chapter 289 of
Singapore (the “SFA”), (ii) to a relevant person pursuant to
Section 275(1), or any person pursuant to Section 275(1A), and in
accordance with the conditions specified in Section 275 of the SFA
or (iii) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA, in each
case subject to compliance with conditions set forth in the
SFA.
Where the common shares are subscribed or purchased under Section
275 of the SFA by a relevant person which is:
| |
(a) |
a corporation (which is
not an accredited investor (as defined in Section 4A of the SFA))
the sole business of which is to hold investments and the entire
share capital of which is owned by one or more individuals, each of
whom is an accredited investor; or |
| |
|
|
| |
(b) |
a trust (where the trustee is not
an accredited investor) whose sole purpose is to hold investments
and each beneficiary of the trust is an individual who is an
accredited investor, |
shares, debentures and units of shares and debentures of that
corporation or the beneficiaries’ rights and interest (howsoever
described) in that trust shall not be transferred within six months
after that corporation or that trust has acquired the common shares
pursuant to an offer made under Section 275 of the SFA except:
| |
(a) |
to an institutional
investor (for corporations, under Section 274 of the SFA) or to a
relevant person defined in Section 275(2) of the SFA, or to any
person pursuant to an offer that is made on terms that such shares,
debentures and units of shares and debentures of that corporation
or such rights and interest in that trust are acquired at a
consideration of not less than $200,000 (or its equivalent in a
foreign currency) for each transaction, whether such amount is to
be paid for in cash or by exchange of securities or other assets,
and further for corporations, in accordance with the conditions
specified in Section 275 of the SFA; |
| |
|
|
| |
(b) |
where no consideration is or will
be given for the transfer; or |
| |
|
|
| |
(c) |
where the transfer is by operation
of law. |
Switzerland
The shares may not be publicly offered in Switzerland and will not
be listed on the SIX Swiss Exchange (the “SIX”) or on any other
stock exchange or regulated trading facility in Switzerland. This
document has been prepared without regard to the disclosure
standards for issuance prospectuses under art. 652a or art. 1156 of
the Swiss Code of Obligations or the disclosure standards for
listing prospectuses under art. 27 ff. of the SIX Listing Rules or
the listing rules of any other stock exchange or regulated trading
facility in Switzerland. Neither this document nor any other
offering or marketing material relating to the shares or the
offering may be publicly distributed or otherwise made publicly
available in Switzerland.
Neither this document nor any other offering or marketing material
relating to the offering, or the shares have been or will be filed
with or approved by any Swiss regulatory authority. In particular,
this document will not be filed with, and the offer of shares will
not be supervised by, the Swiss Financial Market Supervisory
Authority FINMA, and the offer of shares has not been and will not
be authorized under the Swiss Federal Act on Collective Investment
Schemes (“CISA”). Accordingly, no public distribution, offering or
advertising, as defined in CISA, and its implementing ordinances
and notices, and no distribution to any non-qualified investor, as
defined in CISA, and its implementing ordinances and notices, shall
be undertaken in or from Switzerland, and the investor protection
afforded to acquirers of interests in collective investment schemes
under CISA does not extend to acquirers of shares.
United Arab Emirates
This offering has not been approved or licensed by the Central Bank
of the United Arab Emirates (the “UAE”), Securities and Commodities
Authority of the UAE and/or any other relevant licensing authority
in the UAE including any licensing authority incorporated under the
laws and regulations of any of the free zones established and
operating in the territory of the UAE, in particular the Dubai
Financial Services Authority (“DFSA”), a regulatory authority of
the Dubai International Financial Centre (“DIFC”). The offering
does not constitute a public offer of securities in the UAE, DIFC
and/or any other free zone in accordance with the Commercial
Companies Law, Federal Law No 8 of 1984 (as amended), DFSA Offered
Securities Rules and NASDAQ Dubai Listing Rules, accordingly, or
otherwise. The common shares may not be offered to the public in
the UAE and/or any of the free zones.
The common shares may be offered and issued only to a limited
number of investors in the UAE or any of its free zones who qualify
as sophisticated investors under the relevant laws and regulations
of the UAE or the free zone concerned.
France
This prospectus (including any amendment, supplement or replacement
thereto) is not being distributed in the context of a public
offering in France within the meaning of Article L. 411-1 of the
French Monetary and Financial Code (Code monétaire et
financier).
This prospectus has not been and will not be submitted to the
French Autorité des marchés financiers (the “AMF”) for approval in
France and accordingly may not and will not be distributed to the
public in France.
Pursuant to Article 211-3 of the AMF General Regulation, French
residents are hereby informed that:
1. the transaction does not require a
prospectus to be submitted for approval to the AMF;
2. persons or entities referred to in Point
2°, Section II of Article L.411-2 of the Monetary and Financial
Code may take part in the transaction solely for their own account,
as provided in Articles D. 411-1, D. 734-1, D. 744-1, D. 754-1 and
D. 764-1 of the Monetary and Financial Code; and
3. the financial instruments thus acquired
cannot be distributed directly or indirectly to the public
otherwise than in accordance with Articles L. 411-1, L. 411-2, L.
412-1 and L. 621-8 to L. 621-8-3 of the Monetary and Financial
Code.
This prospectus is not to be further distributed or reproduced (in
whole or in part) in France by the recipients of this prospectus.
This prospectus has been distributed on the understanding that such
recipients will only participate in the issue or sale of our common
stock for their own account and undertake not to transfer, directly
or indirectly, our common stock to the public in France, other than
in compliance with all applicable laws and regulations and in
particular with Articles L. 411-1 and L. 411-2 of the French
Monetary and Financial Code.
Australia
No placement document, prospectus, product disclosure statement, or
other disclosure document has been lodged with the Australian
Securities and Investments Commission (“ASIC”), in relation to the
offering.
Neither this prospectus supplement nor the accompanying prospectus
constitutes a prospectus, product disclosure statement, or other
disclosure document under the Corporations Act 2001 (the
“Corporations Act”), nor do they purport to include the information
required for a prospectus, product disclosure statement, or other
disclosure document under the Corporations Act.
Any offer in Australia of the shares may only be made to persons
(the “Exempt Investors”) who are “sophisticated investors” (within
the meaning of section 708(8) of the Corporations Act),
“professional investors” (within the meaning of section 708(11) of
the Corporations Act), or otherwise pursuant to one or more
exemptions contained in section 708 of the Corporations Act so that
it is lawful to offer the shares without disclosure to investors
under Chapter 6D of the Corporations Act.
The shares applied for by Exempt Investors in Australia must not be
offered for sale in Australia in the period of 12 months after the
date of allotment under the offering, except in circumstances where
disclosure to investors under Chapter 6D of the Corporations Act
would not be required pursuant to an exemption under section 708 of
the Corporations Act or otherwise or where the offer is pursuant to
a disclosure document that complies with Chapter 6D of the
Corporations Act. Any person acquiring shares must observe such
Australian on-sale restrictions.
This prospectus supplement and the accompanying prospectus contain
general information only and do not take account of the investment
objectives, financial situation or particular needs of any
particular person. It does not contain any securities
recommendations or financial product advice. Before making an
investment decision, investors need to consider whether the
information in this prospectus supplement and the accompanying
prospectus is appropriate to their needs, objectives, and
circumstances, and, if necessary, seek expert advice on those
matters.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will
be passed upon for us by Shutts & Bowen LLP, Miami, Florida.
The underwriter is represented in this offering by Faegre Drinker
Biddle & Reath LLP.
EXPERTS
The consolidated balance sheets of Duos Technologies Group, Inc. as
of December 31, 2020 and 2019, and the related consolidated
statements of operations, stockholders’ equity, and cash flows for
each of the years then ended have been audited by Salberg &
Company, P.A., independent registered public accounting firm, as
stated in their report which is incorporated herein by reference.
Such financial statements have been incorporated herein (by
reference) in reliance on the report of such firm given upon their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus supplement and the accompanying prospectus are part
of the registration statement on Form S-3 we filed with the SEC
under the Securities Act, and do not contain all the information
set forth in the registration statement. Whenever a reference is
made in this prospectus supplement or the accompanying prospectus
to any of our contracts, agreements or other documents, the
reference may not be complete, and you should refer to the exhibits
that are a part of the registration statement or the exhibits to
the reports or other documents incorporated by reference into this
prospectus supplement and the accompanying prospectus for a copy of
such contract, agreement or other document. You may inspect a copy
of the registration statement, including the exhibits and
schedules, without charge, at the SEC’s public reference room
mentioned below, or obtain a copy from the SEC upon payment of the
fees prescribed by the SEC.
Because we are subject to the information and reporting
requirements of the Exchange Act, we file annual, quarterly and
special reports, proxy statements and other information with the
SEC. Our SEC filings are available to the public over the Internet
at the SEC’s website at www.sec.gov. You may also read and copy any
document we file at the SEC’s Public Reference Room at 100 F
Street, N.E., Room 1580, Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the operation of
the Public Reference Room.
We also maintain a web site at www.duostechnologies.com, through
which you can access our SEC filings. The information set forth on
our web site is not part of this prospectus supplement.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate by reference” certain information
from other documents that we file with it, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is considered
to be part of this prospectus supplement and the accompanying
prospectus. Information contained in this prospectus supplement and
the accompanying prospectus and information that we file with the
SEC in the future and incorporate by reference in this prospectus
supplement and the accompanying prospectus will automatically
update and supersede this information. We incorporate by reference
the documents listed below and any future filings (other than
information in current reports furnished under Item 2.02 or Item
7.01 of Form 8-K and exhibits filed on such form that are related
to such items) we make with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act, after the date of this prospectus
supplement and prior to the termination of the offering of the
common stock covered by this prospectus supplement (Commission File
No. 333-237213):
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our Annual Report on Form 10-K for
the fiscal year ended December 31, 2020 as filed with the SEC on
March 30, 2021; |
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our Quarterly Report on Form 10-Q for
the three months ended March 31, 2021 as filed with the SEC on
May 14, 2021; |
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our Quarterly Report on Form 10-Q for
the three months ended June 30, 2021 as filed with the SEC on
August 12, 2021; |
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our Quarterly Report on Form 10-Q for
the three months ended September 30, 2021 as filed with the SEC on
November 15, 2021; |
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our Definitive Proxy Statement filed
June 23, 2021; |
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our Form 8-Ks filed with the SEC on
March 1, 2021, March 25, 2021, May 18, 2021, July 20, 2021 and November 30, 2021; and |
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a description of our common stock
contained in our Registration Statement on Form
8-A (001-39227) filed with the SEC under Section 12 of the
Exchange Act on February 12, 2020, including any amendment or
reports filed for the purpose of updating this description |
This prospectus supplement may contain information that updates,
modifies or is contrary to information in one or more of the
documents incorporated by reference in this prospectus supplement
or the accompanying prospectus. Reports we file with the SEC after
the date of this prospectus supplement may also contain information
that updates, modifies or is contrary to information in this
prospectus supplement or the accompanying prospectus or in
documents incorporated by reference in this prospectus supplement
or the accompanying prospectus. Investors should review these
reports as they may disclose a change in our business, prospects,
financial condition or other affairs after the date of this
prospectus supplement.
Our website is www.duostechnologies.com. Our website contains links
to our filings available on the SEC website. We will also provide
electronic or paper copies of our filings free of charge upon
written or oral request. The information available on or through
our website is not a part of this prospectus supplement or the
accompanying prospectus and should not be relied upon. You may
request and obtain a copy of these filings or any filings
subsequently incorporated by reference into this prospectus
supplement or the accompanying prospectus, at no cost, by writing
or telephoning us at the following address or phone number:
Duos Technologies Group, Inc.
7660 Centurion Parkway, Suite 100
Jacksonville, Florida 32256
(904) 652-1616
Attn: Adrian Goldfarb, Chief Financial Officer
PROSPECTUS
DUOS TECHNOLOGIES GROUP, INC.
$50,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Rights
Units
——————————
We may offer and sell up to $50 million in the aggregate of the
securities identified above from time to time in one or more
offerings. This prospectus provides you with a general description
of the securities.
Each time we offer and sell securities, we will provide a
supplement to this prospectus that contains specific information
about the offering and the amounts, prices and terms of the
securities. The supplement may also add, update or change
information contained in this prospectus with respect to that
offering. You should carefully read this prospectus and the
applicable prospectus supplement before you invest in any of our
securities.
We may offer and sell the securities described in this prospectus
and any prospectus supplement to or through one or more
underwriters, dealers and agents, or directly to purchasers, or
through a combination of these methods. If any underwriters,
dealers or agents are involved in the sale of any of the
securities, their names and any applicable purchase price, fee,
commission or discount arrangement between or among them will be
set forth, or will be calculable from the information set forth, in
the applicable prospectus supplement. See the sections of this
prospectus entitled “About this Prospectus” and “Plan of
Distribution” for more information. No securities may be sold
without delivery of this prospectus and the applicable prospectus
supplement describing the method and terms of the offering of such
securities.
INVESTING IN OUR SECURITIES INVOLVES RISKS. SEE THE “RISK
FACTORS” ON PAGE 8 OF THIS PROSPECTUS AND ANY
SIMILAR SECTION CONTAINED IN THE APPLICABLE PROSPECTUS SUPPLEMENT
CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR
SECURITIES.
Our common stock is listed on The NASDAQ Capital Market
under the symbol “DUOT”. On May 8, 2020, the last reported sale
price of our common stock on The NASDAQ Capital Market was $5.2326
per share.
The aggregate market value of our outstanding common stock held by
non-affiliates is $19,937,767 based on 3,523,757 shares of
outstanding common stock, of which 86,211 are held by affiliates,
and a price of $5.80 per share, which was the last reported sale
price of our Common Stock on The Nasdaq Capital Market on March 10,
2020. Pursuant to General Instruction I.B.6 of Form S-3, in no
event will we sell our common stock in a public primary offering
with a value exceeding more than one-third of our public float in
any 12-month period so long as our public float remains below
$75,000,000. We have not offered any securities pursuant to General
Instruction I.B.6. of Form S-3 during the prior 12 calendar month
period that ends on and includes the date of this prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is May 22, 2020.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed
with the U.S. Securities and Exchange Commission, or the SEC, using
a “shelf” registration process. By using a shelf registration
statement, we may sell securities from time to time and in one or
more offerings up to a total dollar amount of $50 million as
described in this prospectus. Each time that we offer and sell
securities, we will provide a prospectus supplement to this
prospectus that contains specific information about the securities
being offered and sold and the specific terms of that offering. The
prospectus supplement may also add, update or change information
contained in this prospectus with respect to that offering. If
there is any inconsistency between the information in this
prospectus and the applicable prospectus supplement, you should
rely on the prospectus supplement. Before purchasing any
securities, you should carefully read both this prospectus and the
applicable prospectus supplement, together with the additional
information described under the heading “Where You Can Find More
Information; Incorporation by Reference.”
We have not authorized any other person to provide you with
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We will not
make an offer to sell these securities in any jurisdiction where
the offer or sale is not permitted. You should assume that the
information appearing in this prospectus and the applicable
prospectus supplement to this prospectus is accurate as of the date
on its respective cover, and that any information incorporated by
reference is accurate only as of the date of the document
incorporated by reference, unless we indicate otherwise. Our
business, financial condition, results of operations and prospects
may have changed since those dates.
When we refer to “Duos,” “we,” “our,” “us” and the “Company” in
this prospectus, we mean Duos Technologies Group, Inc., unless
otherwise specified. When we refer to “you,” we mean the holders of
the applicable series of securities.
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY
REFERENCE
Available Information
We file reports, proxy statements and other information with the
SEC. Information filed with the SEC by us can be inspected and
copied at the Public Reference Room maintained by the SEC at 100 F
Street, N.E., Washington, D.C. 20549. You may also obtain copies of
this information by mail from the Public Reference Room of the SEC
at prescribed rates. Further information on the operation of the
SEC’s Public Reference Room in Washington, D.C. can be obtained by
calling the SEC at 1-800-SEC-0330. The SEC also maintains a web
site that contains reports, proxy and information statements and
other information about issuers, such as us, who file
electronically with the SEC. The address of that website is
http://www.sec.gov.
Our website address is https://www.duostechnologies.com. The
information on our website, however, is not, and should not be
deemed to be, a part of this prospectus.
This prospectus and any prospectus supplement are part of a
registration statement that we filed with the SEC and do not
contain all of the information in the registration statement. The
full registration statement may be obtained from the SEC or us, as
provided below. Forms of the documents establishing the terms of
the offered securities are or may be filed as exhibits to the
registration statement. Statements in this prospectus or any
prospectus supplement about these documents are summaries and each
statement is qualified in all respects by reference to the document
to which it refers. You should refer to the actual documents for a
more complete description of the relevant matters. You may inspect
a copy of the registration statement at the SEC’s Public Reference
Room in Washington, D.C. or through the SEC’s website, as provided
above.
Incorporation by Reference
The SEC’s rules allow us to “incorporate by reference” information
into this prospectus, which means that we can disclose important
information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference
is deemed to be part of this prospectus, and subsequent information
that we file with the SEC will automatically update and supersede
that information. Any statement contained in a previously filed
document incorporated by reference will be deemed to be modified or
superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus modifies or replaces that
statement.
We incorporate by reference our
documents listed below and any future filings made by us with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, which we refer to as the
“Exchange Act” in this prospectus, between the date of this
prospectus and the termination of the offering of the securities
described in this prospectus. We are not, however, incorporating by
reference any documents or portions thereof, whether specifically
listed below or filed in the future, that are not deemed “filed”
with the SEC, including any information furnished pursuant to Items
2.02 or 7.01 of Form 8-K or related exhibits furnished pursuant to
Item 9.01 of Form 8-K.
This prospectus and any accompanying prospectus supplement
incorporate by reference the documents set forth below that have
previously been filed with the SEC:
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Our Annual Report on
Form 10-K for the year ended December 31, 2019, filed with
the SEC on March 30, 2020, as amended on
Form 10-K/A filed with the SEC on March 31, 2020. |
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Our Current Reports on Form 8-K filed with the
SEC on
January 15,
2020,
February 7,
2020,
February 19,
2020, and
February 24,
2020. |
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The description of our Common Stock contained in
our Registration Statement on
Form S-1, filed with the SEC on December 11, 2019, as
amended, and any amendment or report filed with the SEC for the
purpose of updating the description. |
All reports and other documents we subsequently file pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of this offering, including all such documents we may
file with the SEC after the date of the initial registration
statement and prior to the effectiveness of the registration
statement, but excluding any information furnished to, rather than
filed with, the SEC, will also be incorporated by reference into
this prospectus and deemed to be part of this prospectus from the
date of the filing of such reports and documents.
You may request a free copy of any of the documents incorporated by
reference in this prospectus (other than exhibits, unless they are
specifically incorporated by reference in the documents) by writing
or telephoning us at the following address:
Duos Technologies Group, Inc.
6622 Southpoint Drive South, Suite 310
Jacksonville, Florida 32216
(904) 652-1616
Exhibits to the filings will not be sent, however, unless those
exhibits have specifically been incorporated by reference in this
prospectus and any accompanying prospectus supplement.
THE COMPANY
Overview
The Company, through its wholly owned
subsidiaries DTI, operating under its brand name duostech™,
and truevue360™,
focuses on the design, development and turnkey delivery of
proprietary “intelligent technologies” that enable our customers to
derive measurable increases in return on investment for their
business.
duostech™
The mission of duostech™ is
to develop, market and deploy disruptive technologies and systems
that capture, process and present users with an unlimited number
and types of data that provide our customers with a broad range of
sophisticated intelligent technology solutions. With an emphasis on
security, inspection and operations for critical infrastructure, we
target a variety of industries including transportation, retail,
law enforcement, oil, gas and utilities. Our technologies capture,
process and present all data in real time. A further differentiator
is that these technologies integrate with our customer’s existing
business process and create actionable information to streamline
mission critical operations. Our technologies have been verified by
multiple government and private organizations including but not
limited to, Johns Hopkins University Applied Physics Laboratory
(JHU/APL), the Department of Homeland Security (DHS) and the
Transportation Technology Center, Inc., a wholly owned subsidiary
of the Association of American Railroads, a transportation research
and testing organization (TTCI) and perhaps most significantly,
they have been field tested and found relevant by our customers,
which is the main reason for our substantial repeat business. The
Company has worked with these organizations over the past several
years where we have supplied funded prototypes of our technologies
to verify technology and operating parameters.
truevue360™
In January 2019, the Company launched
a dedicated Artificial Intelligence program through its
wholly-owned subsidiary True Vue 360, Inc., marketing its services
and solutions under the brand name truevue360™.
The Company is committed to adding significant focus on the
development, marketing and deployment of advanced convolutional
neural network-based Artificial Intelligence (“AI”), Deep Machine
Learning and Advanced Algorithms applications.
While truevue360™ will
chiefly support DTI’s business growth, it will also develop and
market its significant library of AI applications following a
stand-alone business development strategy. Accordingly, our
business is now operating in two equally important business units
which complement each other and provide comprehensive turn-key,
end-to-end, solutions to our customers.
Connected Intelligence
duostech™
Over the past 10
years, duostech™ has
developed an extensive suite of disruptive technologies, some of
the most relevant are described in the following:
Intelligent Railcar Inspection
Portal (rip®)
Federal regulations require each railcar/train to be inspected for
mechanical defects prior to leaving a rail yard. Founded in 1934,
the Association of American Railroads (AAR) is responsible for
setting the standards for the safety and productivity of the
U.S./North American freight rail industry, and by extension, has
established the inspection parameters for the rail industry’s
rolling stock. Also known as the “Why Made” codes, the AAR
established approximately 110 inspection points under its
guidelines for mechanical inspections.
Under current practice, inspections are conducted manually; a very
labor intensive and inefficient process that only covers a select
number of inspections points and can take up to 3 hours per train.
It should be noted that approximately 50% of the rail industry’s
operating costs are for maintenance, including 30% of the time
trains spend in workshops resulting from manual failure
diagnostics.
We invented, designed, deployed, and
are currently marketing our intelligent Railcar Inspection Portal
technology, intended to ultimately cover most, if not all,
inspection points and reduce the in-yard dwell time to minutes per
train. Our system combines high definition image and data capture
technologies (developed by duostech™)
with our AI-based analytics applications (developed and maintained
by truevue360™)
that are typically installed on active tracks located between two
rail yards. We inspect railcars traveling through our inspection
portal at speeds of up to 70 mph and report mechanical anomalies
detected by our system to the ensuing yard, well ahead of the
train(s) entering the yard. To date, we have successfully completed
the development of 21 AI applications and are in the process of
developing 44 additional applications scheduled to be completed by
the end of Q2, 2020.
Over the past two years, several
class 1 rail operators have ordered and are currently operating
our rip® technology
with the ultimate objective to cause a change in federal rules that
would allow replacement of the current manual inspection (in the
yard) with a fully automated process. The Company is collaborating
with certain industry professionals to pursue such regulatory rule
changes and we believe that there will be broad acceptance of our
technology as soon as a majority of required AI algorithm models
are completed and tested.
Our rip® system
consists of a suite of sub-systems for the automated inspection of
freight or transit railcars at high speeds. The combined
technologies capture images and other relevant operating data from
360-degrees of each locomotive and railcar passing through our
inspection portal. All data is processed and presented in real-time
by our proprietary intelligent user interface, branded
as centraco®.
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Inspection Portal rip® -
Canadian Location |
Operator Interface
- centraco® |
Mechanical anomalies are detected
through a combination of remote visual inspections, utilizing the
Company’s proprietary remote user interface which displays
ultra-high definition images of a 360-degree view of each railcar,
and by a growing number of the Company’s proprietary artificial
intelligence (AI) based algorithms, discussed in more detail
under truevue360™.
The inspection portal is typically installed between two rail yards
and the inspection takes place while the trains are traveling at
speeds of up to 70 mph. Detections are reported to the respective
rail yards well ahead of the train arrival at the yard.
An expanded version for speeds up to 120 mph with additional sensor
technologies for the transit rail is currently under development in
anticipation of market entry to the passenger railcar mechanical
inspection in early 2020.
The
following examples of automated detections are the result of the
combination of our image capture technologies designed
by duostech™,
with our AI-based analytics applications designed and maintained
by truevue360™. Some
of these mechanical defects, if unattended, could cause a
derailment. Other examples of our AI-based detection applications
include inspections at rail border crossings by CBP
agents.
Samples of Automated Detections
The Company continues to expand its detection capabilities through
the development of additional sensor technologies, necessary to
process AI-based analytics of targets not yet covered by its core
railcar inspection applications.
The industry’s main objective is to replace the manual inspection
process taking place inside rail yards with a fully automated
process taking place before trains reach the respective rail yards.
To that end, the Company, together with its rail partners, is
pursuing to effect changes to current FAA rules, an effort that we
expect to be successful and receive wide acceptance by the industry
and regulators alike.
Our Growth Strategy
Our strategy is to grow our business
through a combination of organic growth of both duostech™ and truevue360™, as
well as through strategic acquisitions.
Organic
Growth duostech™
Our organic growth strategy is to
increase our market share through the expansion of our business
development team and our research and development talent pool,
which will enable us to significantly expand our current solution
offerings with additional features, and the development of new and
enhanced technology applications. We plan to augment such growth
with strategic relationships both in the business development and
research development arenas, reducing time to market with
additional industry applications, expansion of existing offerings
to meet customer requirements, as well as, potential geographical
expansion into international territories. The launch of our AI
software systems through our truevue360™ subsidiary
is another building block of this strategy.
Organic
Growth truevue360™
truevue360™’s
immediate growth will mainly be driven by its already established
library of rail applications and existing rail customers. Each of
the most recent orders of rail inspection portals included an AI
component of between 20 and 30 algorithms per customer per site,
with a significant number of additional applications under
development. It is expected that future orders will continue to
include a significant component of algorithms i.e. AI
applications.
Our AI applications are sold as a SaaS model and are priced per
application/per site.
In addition to offering our AI modelling to our rail customers, we
plan to offer services to our commercial /industrial customers in
the following verticals:
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Logistics
companies |
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Oil & Gas |
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Commercial security |
truevue360™ is
currently developing a stand-alone marketing/business development
initiative to pursue an expanded number of target markets.
Additional verticals to be pursued as this unit expands
include:
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Automotive |
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Agriculture |
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Banking |
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Industrial |
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DOD/Government |
Strategic Acquisitions
Planned acquisition targets include sector specific technology
companies with the objective of augmenting our current capabilities
with feature-rich (third-party) solutions. The acquisition metric
includes, but is not limited to, weighing time, effort and
approximate cost to develop certain technologies in-house, versus
acquiring or merging with one or more entities that we believe have
a proven record of successfully developing a technology
sub-component. Additional criteria include an extended national
footprint of available manpower (predominantly technical and
software engineering), and evaluating the potential acquisition
target’s customer base, stage of technology and merger or
acquisition cost as compared to market conditions.
Our Risks and Challenges
An investment in our securities involves a high degree of risk. You
should carefully consider the risks summarized below. The risks are
discussed more fully in the “Risk Factors” section of this
prospectus immediately following this prospectus summary. These
risks include, but are not limited to, the following:
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The nature of the technology management
platforms utilized by us is complex and highly integrated, and if
we fail to successfully manage releases or integrate new solutions,
it could harm our revenues, operating income, and
reputation. |
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Our products and services may fail to keep
pace with rapidly changing technology and evolving industry
standards. |
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The market opportunity for our products and
services may not develop in the ways that we
anticipate. |
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Our revenues are dependent on general economic
conditions and the willingness of enterprises to invest in
technology. |
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Some of our competitors are larger and have
greater financial and other resources than we do. |
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We
have a history of losses and our growth plans may lead to
additional losses and negative operating cash flows in the
future. |
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We
may be unable to protect our intellectual property, which could
impair our competitive advantage, reduce our revenue, and increase
our costs. |
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We
may be required to incur substantial expenses and divert management
attention and resources in defending intellectual property
litigation against us. |
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We
may incur substantial expenses and divert management resources in
prosecuting others for their unauthorized use of our intellectual
property rights. |
Recent Developments
On February 12, 2020, we entered into an underwriting
agreement (the “Underwriting Agreement”) with ThinkEquity, a
division of Fordham Financial Management, Inc. (“ThinkEquity”), as
representative of the underwriters listed therein (the
“Underwriters”), pursuant to which the Company agreed to sell to
the Underwriters in a firm commitment underwritten public offering
(the “Offering”) an aggregate of 1,350,000 shares of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), at a
public offering price of $6.00 per share. In addition, the
Underwriters were granted an over-allotment option (the
“Over-allotment Option”) for a period of 45 days to purchase up to
an additional 202,500 shares of Common Stock. The Offering closed
on February 18, 2020. In connection with the Offering, the Common
Stock began trading on the Nasdaq Capital Market under the symbol
DUOT on February 13, 2020.
On February 12, 2020, pursuant to the Underwriting Agreement, the
Company entered into an Underwriter’s warrant agreement (the
“Underwriters’ Warrant Agreement”) with the Underwriters and
certain affiliates of the Underwriters. Pursuant to the
Underwriters’ Warrant Agreement, the Company provided the
Underwriters and certain affiliates of the Underwriters with a
warrant to purchase 67,500 shares of Common Stock in the aggregate.
Such warrant may be exercised beginning on August 10, 2020 (the
date that is 180 days after the date on which the Registration
Statement became effective) until February 12, 2023 (the date that
is three years after the date on which the Registration Statement
became effective). The initial exercise price of the Underwriters’
Warrant Agreement is $9.00 per share.
On February 20, 2020, pursuant to and in compliance with the terms
and conditions of the Underwriting Agreement and the Offering, the
Underwriters provided notice that they would partially exercise the
Over-allotment Option to purchase 192,188 shares of Common Stock at
$6.00 per share (the “Over-Allotment Exercise”). The sale of the
Over-Allotment Exercise to purchase 192,188 shares of Common Stock
closed on February 21, 2020. The Company has received gross
proceeds of approximately $9.25 million for the Offering, including
the exercise of the Over-Allotment Exercise, prior to deducting
underwriting discounts and commissions and offering expenses
payable by the Company.
Our Corporate History
We were incorporated on May 31, 1994 in the State of Florida as
Information Systems Associates, Inc. Initially, our business
operations consisted of consulting services for asset management of
large corporate data centers and development and licensing of
Information Technology (IT) asset management software. On
April 1, 2015, we completed a reverse triangular merger, pursuant
to an Agreement and Plan of Merger (the “Merger Agreement”) among
Duos Technologies, Inc., a Florida corporation (“DTI”), the
Company, and Duos Acquisition Corporation, a Florida corporation
and wholly owned subsidiary of the Company (“Merger Sub”). Under
the terms of the Merger Agreement, the Merger Sub merged with and
into DTI, whereby DTI remained as the surviving corporation and a
wholly-owned subsidiary of the Company (the “Merger”). On the same
date, TrueVue 360, Inc., a Delaware corporation, became a wholly
owned subsidiary of the Company. In connection with the Merger, on
July 10, 2015, the Company effected a name change to Duos
Technologies Group, Inc. Since January 2019, Truevue360, Inc. has
been focused on the development and marketing of Artificial
Intelligence applications. The Company’s headquarters are located
at 6622 Southpoint Drive South, Suite 310, Jacksonville Florida
32216 and main telephone number is 904 652 1616.
RISK FACTORS
Investment in any securities offered pursuant to this prospectus
and the applicable prospectus supplement involves risks. You should
carefully consider the risk factors incorporated by reference to
our Registration Statement on Form S-1, filed with the SEC on
December 11, 2019, as amended, our most recent Annual Report on
Form 10-K and any subsequent Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K we file after the date of this
prospectus, and all other information contained or incorporated by
reference into this prospectus, as updated by our subsequent
filings under the Exchange Act, and the risk factors and other
information contained in the applicable prospectus supplement
before acquiring any of such securities. The occurrence of any of
these risks might cause you to lose all or part of your investment
in the offered securities.
SPECIAL NOTICE REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve
risks and uncertainties, principally in the sections entitled “Risk
Factors.” All statements other than statements of historical fact
contained in this prospectus, including statements regarding future
events, our future financial performance, business strategy and
plans and objectives of management for future operations, are
forward-looking statements. We have attempted to identify
forward-looking statements by terminology including “anticipates,”
“believes,” “can,” “continue,” “could,” “estimates,” “expects,”
“intends,” “may,” “plans,” “potential,” “predicts,” “should,” or
“will” or the negative of these terms or other comparable
terminology. Although we do not make forward looking statements
unless we believe we have a reasonable basis for doing so, we
cannot guarantee their accuracy. These statements are only
predictions and involve known and unknown risks, uncertainties and
other factors, including the risks outlined under “Risk Factors” or
elsewhere in this prospectus, which may cause our or our industry’s
actual results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements.
Forward-looking statements should not be read as a guarantee of
future performance or results, and will not necessarily be accurate
indications of the times at, or by which, that performance or those
results will be achieved. Forward-looking statements are based on
information available at the time they are made and/or management’s
good faith belief as of that time with respect to future events,
and are subject to risks and uncertainties that could cause actual
performance or results to differ materially from what is expressed
in or suggested by the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
You should not put undue reliance on any forward-looking
statements. We assume no obligation to update forward-looking
statements to reflect actual results, changes in assumptions or
changes in other factors affecting forward-looking information,
except to the extent required by applicable securities laws. If we
do update one or more forward-looking statements, no inference
should be drawn that we will make additional updates with respect
to those or other forward-looking statements.
USE OF PROCEEDS
We
intend to use the net proceeds from the sale of the securities as
set forth in the applicable prospectus supplement.
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is not complete and
may not contain all the information you should consider before
investing in our capital stock. This description is summarized
from, and qualified in its entirety by reference to, our
Certificate of Incorporation and Bylaws, which have been publicly
filed with the SEC. See “Where You Can Find More Information;
Incorporation by Reference.”
Our authorized capital stock consists of 500,000,000 shares of
common stock, par value of $0.001 per share, and 10,000,000 shares
of preferred stock, par value of $0.001 per share. As of May 7,
2020, there were 3,523,757 shares of our common stock issued and
outstanding held by 376 holders of record. We currently have (i)
500,000 shares of Series A Preferred Stock authorized of which 0
shares of Series A Preferred Stock are issued and outstanding; (ii)
15,000 shares of Series B Preferred Stock authorized of which 1,705
shares of Series B Preferred Stock are issued and outstanding; and
(iii) 9,485,000 shares of undesignated “blank check” preferred
stock.
Common Stock
Each share of our common stock entitles its holder to one vote in
the election of each director and on all other matters voted on
generally by our stockholders. No share of our common stock affords
any cumulative voting rights. This means that the holders of a
majority of the voting power of the shares voting for the election
of directors can elect all directors to be elected if they choose
to do so.
Holders of our common stock will be entitled to dividends in such
amounts and at such times as our Board of Directors in its
discretion may declare out of funds legally available for the
payment of dividends. We currently do not anticipate paying any
cash dividends on the common stock in the foreseeable future. Any
future dividends will be paid at the discretion of our Board of
Directors after taking into account various factors, including:
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general
business conditions; |
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industry practice; |
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our financial condition and
performance; |
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our future prospects; |
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our cash needs and capital
investment plans; |
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our obligations to holders of any
preferred stock we may issue; |
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income tax consequences;
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the restrictions Florida and
other applicable laws and our credit arrangements may impose, from
time to time. |
If we liquidate or dissolve our business, the holders of our common
stock will share ratably in all our assets that are available for
distribution to our stockholders after our creditors are paid in
full and the holders of all series of our outstanding preferred
stock, if any, receive their liquidation preferences in full.
Our common stock has no preemptive rights and is not convertible or
redeemable or entitled to the benefits of any sinking or repurchase
fund.
Preferred Stock
The Company has 10,000,000 authorized shares of preferred stock par
value $0.001 per share, which have two classes. The Series A
Preferred Stock has 0 shares issued and outstanding, the Series B
Preferred Stock has 1,705 shares issued and outstanding.
Our Board has the authority, within the limitations and
restrictions in our certificate of incorporation, to issue shares
of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including
dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and
the number of shares constituting any series or the designation of
any series, without further vote or action by the stockholders. The
issuance of shares of preferred stock may have the effect of
delaying, deferring or preventing a change in our control without
further action by the stockholders. The issuance of shares of
preferred stock with voting and conversion rights may adversely
affect the voting power of the holders of our common stock. In some
circumstances, this issuance could have the effect of decreasing
the market price of our common stock.
Undesignated preferred stock may enable our Board to render more
difficult or to discourage an attempt to obtain control of the
Company by means of a tender offer, proxy contest, merger or
otherwise, and thereby to protect the continuity of our management.
The issuance of shares of preferred stock may adversely affect the
rights of our common stockholders. For example, any shares of
preferred stock issued may rank senior to the common stock as to
dividend rights, liquidation preference or both, may have full or
limited voting rights and may be convertible into shares of common
stock. As a result, the issuance of shares of preferred stock, or
the issuance of rights to purchase shares of preferred stock, may
discourage an unsolicited acquisition proposal or bids for our
common stock or may otherwise adversely affect the market price of
our common stock or any existing preferred stock.
Series A Preferred Stock
Each share of the Series A Preferred Stock is convertible into ten
(10) shares of common stock, is senior to any other class or series
of capital stock of the Company. Holders of Series A Preferred
Stock shall vote together with the holders of common stock on an
as-converted basis on all matters on which holders of the common
stock are entitled to vote.
There are currently 0 shares of Series A Preferred Stock
outstanding.
Series B Preferred Stock
Each share of the Series B Preferred Stock is convertible into one
(1) share of common stock, is senior to any other class or series
of capital stock of the Company. Holders of Series B Preferred
Stock shall have one vote for each share of Series B Preferred
Stock, and shall vote together with the holders of common stock on
all matters on which holders of the common stock are entitled to
vote.
There are currently 1,705 shares of Series B Preferred Stock
outstanding.
Options and Warrants
There are 2,282,000 outstanding options to purchase our securities.
The weighted average exercise price of these options is $1.00, the
average term when issued was five years and the average term
remaining is four years.
As of May 7, 2020, there are warrants outstanding to purchase
1,521,250 shares of our common stock of which none are subject to
full ratchet price protection on the exercise price potentially
increasing the total number of common shares issuable upon
exercise. The warrants are exercisable for a term of five years
with a weighted average exercise price of $8.78.
Anti-Takeover Provisions
Florida Anti-Takeover Law and Certain Charter and Bylaw
Provisions
Certain provisions of Florida law and our Charter and bylaws could
make it more difficult to acquire us by means of a tender offer, a
proxy contest or otherwise, or to remove incumbent officers and
directors. These provisions, summarized below, may discourage
certain types of takeover practices and takeover bids, and
encourage persons seeking to acquire control of our company to
first negotiate with us. We believe that the potential ability to
negotiate with the proponent of an unfriendly or unsolicited
proposal to acquire or restructure us outweigh the disadvantages of
discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of
their terms.
Florida Law
As a Florida corporation, we are subject to certain anti-takeover
provisions that apply to public corporations under Florida law.
Pursuant to Section 607.0901 of the Florida Business Corporation
Act, or the FBCA, a publicly held Florida corporation may not
engage in a broad range of business combinations or other
extraordinary corporate transactions with an interested shareholder
without the approval of the holders of two-thirds of the voting
shares of the corporation (excluding shares held by the interested
shareholder), unless:
The transaction is approved by a majority of disinterested
directors before the shareholder becomes an interested
shareholder;
The interested shareholder has owned at least 80% of the
corporation’s outstanding voting shares for at least five years
preceding the announcement date of any such business
combination;
The interested shareholder is the beneficial owner of at least 90%
of the outstanding voting shares of the corporation, exclusive of
shares acquired directly from the corporation in a transaction not
approved by a majority of the disinterested directors; or
The consideration paid to the holders of the corporation’s voting
stock is at least equal to certain fair price criteria.
An interested shareholder is defined as a person who, together with
affiliates and associates, beneficially owns more than 10% of a
corporation’s outstanding voting shares. We have not made an
election in our amended Articles of Incorporation to opt out of
Section 607.0901.
In addition, we are subject to Section 607.0902 of the FBCA which
prohibits the voting of shares in a publicly held Florida
corporation that are acquired in a control share acquisition unless
(i) our Board of Directors approved such acquisition prior to its
consummation or (ii) after such acquisition, in lieu of prior
approval by our Board of Directors, the holders of a majority of
the corporation’s voting shares, exclusive of shares owned by
officers of the corporation, employee directors or the acquiring
party, approve the granting of voting rights as to the shares
acquired in the control share acquisition. A control share
acquisition is defined as an acquisition that immediately
thereafter entitles the acquiring party to 20% or more of the total
voting power in an election of directors.
The NASDAQ Capital Market Listing
Our
common stock is listed on the NASDAQ Capital Market under the
symbol “DUOT”.
Transfer Agent
The transfer agent and registrar for our common stock is
Continental Stock Transfer & Trust Company located at 1 State
Street, 30th Floor, New York, NY 10004.
DESCRIPTION OF DEBT
SECURITIES
General
The debt securities that we may offer by this prospectus consist of
notes, debentures, or other evidences of indebtedness. The
debt securities may constitute either senior or subordinated debt
securities, and in either case may be either secured or
unsecured. Any debt securities that we offer and sell will be
our direct obligations. Debt securities may be issued in one or
more series. All debt securities of any one series need not be
issued at the same time, and unless otherwise provided, a series of
debt securities may be reopened, with the required consent of the
holders of outstanding debt securities, for issuance of additional
debt securities of that series or to establish additional terms of
that series of debt securities (with such additional terms
applicable only to unissued or additional debt securities of that
series). The form of indenture has been filed as an exhibit to the
registration statement of which this prospectus is a part and is
subject to any amendments or supplements that we may enter into
with the trustee(s), however, we may issue debt securities not
subject to the indenture provided such terms of debt securities are
not otherwise required to be set forth in the indenture. The
material terms of the indenture are summarized below and we refer
you to the indenture for a detailed description of these material
terms. Additional or different provisions that are applicable to a
particular series of debt securities will, if material, be
described in a prospectus supplement relating to the offering of
debt securities of that series. These provisions may include, among
other things and to the extent applicable, the following:
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the title of the debt securities, including, as
applicable, whether the debt securities will be issued as
senior debt securities, senior subordinated debt securities or
subordinated debt securities, any subordination provisions
particular to the series of debt securities; |
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any
limit on the aggregate principal amount of the debt
securities; |
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whether the debt securities are senior debt
securities or subordinated debt securities and applicable
subordination provisions, if any; |
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whether the debt securities will be secured or
unsecured; |
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if
other than 100% of the aggregate principal amount, the percentage
of the aggregate principal amount at which we will sell the debt
securities, such as an original issuance discount; |
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the
date or dates, whether fixed or extendable, on which the principal
of the debt securities will be payable; |
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the
rate or rates, which may be fixed or variable, at which the debt
securities will bear interest, if any, the date or dates from which
any such interest will accrue, the interest payment dates on which
we will pay any such interest, the basis upon which interest will
be calculated if other than that of a 360-day year consisting of
twelve 30-day months, and, in the case of registered securities,
the record dates for the determination of holders to whom interest
is payable; |
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the
place or places where the principal of and any premium or interest
on the debt securities will be payable and where the debt
securities may be surrendered for conversion or
exchange; |
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whether we may, at our option, redeem the debt
securities, and if so, the price or prices at which, the period or
periods within which, and the terms and conditions upon which, we
may redeem the debt securities, in whole or in part, pursuant to
any sinking fund or otherwise; |
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if
other than 100% of the aggregate principal amount thereof, the
portion of the principal amount of the debt securities which will
be payable upon declaration of acceleration of the maturity date
thereof or provable in bankruptcy, or, if applicable, which is
convertible or exchangeable; |
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any
obligation we may have to redeem, purchase or repay the debt
securities pursuant to any sinking fund or analogous provisions or
at the option of a holder of debt securities, and the price or
prices at which, the currency in which and the period or periods
within which, and the terms and conditions upon which, the debt
securities will be redeemed, purchased or repaid, in whole or in
part, pursuant to any such obligation, and any provision for the
remarketing of the debt securities; |
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the
issuance of debt securities as registered securities or
unregistered securities or both, and the rights of the holders of
the debt securities to exchange unregistered securities for
registered securities, or vice versa, and the circumstances under
which any such exchanges, if permitted, may be made; |
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the
denominations, which may be in United States Dollars or in any
foreign currency, in which the debt securities will be issued, if
other than denominations of $1,000 and any integral multiple
thereof; |
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whether the debt securities will be issued in the
form of certificated debt securities, and if so, the form of the
debt securities (or forms thereof if unregistered and registered
securities are issuable in that series), including the legends
required by law or as we deem necessary or appropriate, the form of
any coupons or temporary global security which may be issued and
the forms of any other certificates which may be required under the
indenture or which we may require in connection with the offering,
sale, delivery or exchange of the debt securities; |
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if other than United States Dollars, the currency
or currencies in which payments of principal, interest and other
amounts payable with respect to the debt securities will be
denominated, payable, redeemable or repurchasable, as the case may
be; |
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whether the debt securities may be issuable in
tranches; |
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the
obligations, if any, we may have to permit the conversion or
exchange of the debt securities into common stock, preferred stock
or other capital stock or property, or a combination thereof, and
the terms and conditions upon which such conversion or exchange
will be effected (including conversion price or exchange ratio),
and any limitations on the ownership or transferability of the
securities or property into which the debt securities may be
converted or exchanged; |
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if
other than the trustee under the indenture, any trustees,
authenticating or paying agents, transfer agents or registrars or
any other agents with respect to the debt securities; |
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any
deletions from, modifications of or additions to the events of
default with respect to the debt securities or the right of the
Trustee or the holders of the debt securities in connection with
events of default; |
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any
deletions from, modifications of or additions to the covenants with
respect to the debt securities; |
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if
the amount of payments of principal of, and make-whole amount, if
any, and interest on the debt securities may be determined with
reference to an index, the manner in which such amount will be
determined; |
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whether the debt securities will be issued in
whole or in part in the global form of one or more debt securities
and, if so, the depositary for such debt securities, the
circumstances under which any such debt security may be exchanged
for debt securities registered in the name of, and under which any
transfer of debt securities may be registered in the name of, any
person other than such depositary or its nominee, and any other
provisions regarding such debt securities; |
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whether, under what circumstances and the
currency in which, we will pay additional amounts on the debt
securities to any holder of the debt securities who is not a United
States person in respect of any tax, assessment or governmental
charge and, if so, whether we will have the option to redeem such
debt securities rather than pay such additional amounts, and the
terms of any such option; |
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whether the debt securities will be secured by
any collateral and, if so, a general description of the collateral
and the terms of any related security, pledge or other
agreements; |
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the
persons to whom any interest on the debt securities will be
payable, if other than the registered holders thereof on the
regular record date therefor; and |
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any
other material terms or conditions upon which the debt securities
will be issued. |
Unless otherwise indicated in the applicable prospectus supplement,
we will issue debt securities in fully registered form without
coupons and in denominations of $1,000 and in integral multiples of
$1,000, and interest will be computed on the basis of a 360-day
year of twelve 30-day months. If any interest payment date or the
maturity date falls on a day that is not a business day, then the
payment will be made on the next business day without additional
interest and with the same effect as if it were made on the
originally scheduled date. “Business day” means any calendar day
that is not a Saturday, Sunday or legal holiday in New York, New
York, and on which the trustee and commercial banks are open for
business in New York, New York.
Unless we inform you otherwise in a prospectus supplement, each
series of our senior debt securities will rank equally in right of
payment with all of our other unsubordinated debt. The subordinated
debt securities will rank junior in right of payment and be
subordinate to all of our unsubordinated debt.
Unless otherwise indicated in the applicable prospectus supplement,
the trustee will act as paying agent and registrar for the debt
securities under the indenture. We may act as paying agent under
the indenture.
The prospectus supplement will contain a description of United
States federal income tax consequences relating to the debt
securities, to the extent applicable.
Covenants
The applicable prospectus supplement will describe any covenants,
such as restrictive covenants restricting us or our subsidiaries,
if any, from incurring, issuing, assuming or guarantying any
indebtedness or restricting us or our subsidiaries, if any, from
paying dividends or acquiring any of our or its capital stock.
Consolidation, Merger and Transfer
of Assets
The indenture permits a consolidation or merger between us and
another entity and/or the sale, conveyance or lease by us of all or
substantially all of our property and assets, provided that:
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the resulting or acquiring entity, if other than
us, is organized and existing under the laws of a United States
jurisdiction and assumes all of our responsibilities and
liabilities under the indenture, including the payment of all
amounts due on the debt securities and performance of the covenants
in the indenture; |
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immediately after the transaction, and giving
effect to the transaction, no event of default under the indenture
exists; and |
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we
have delivered to the trustee an officers’ certificate stating that
the transaction and, if a supplemental indenture is required in
connection with the transaction, the supplemental indenture comply
with the indenture and that all conditions precedent to the
transaction contained in the indenture have been
satisfied. |
If we consolidate or merge with or into any other entity, or sell
or lease all or substantially all of our assets in compliance with
the terms and conditions of the indenture, the resulting or
acquiring entity will be substituted for us in the indenture and
the debt securities with the same effect as if it had been an
original party to the indenture and the debt securities. As a
result, such successor entity may exercise our rights and powers
under the indenture and the debt securities, in our name and,
except in the case of a lease, we will be released from all our
liabilities and obligations under the indenture and under the debt
securities.
Notwithstanding the foregoing, we may transfer all of our property
and assets to another entity if, immediately after giving effect to
the transfer, such entity is our wholly owned subsidiary. The term
“wholly owned subsidiary” means any subsidiary in which we and/or
our other wholly owned subsidiaries, if any, own all of the
outstanding capital stock.
Modification and Waiver
Under the indenture, some of our rights and obligations and some of
the rights of the holders of the debt securities may be modified or
amended with the consent of the holders of not less than a majority
in aggregate principal amount of the outstanding debt securities
affected by the modification or amendment. However, the following
modifications and amendments will not be effective against any
holder without its consent:
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a change in the stated maturity date of any
payment of principal or interest; |
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a
reduction in the principal amount of or interest on any debt
securities; |
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an
alteration or impairment of any right to convert at the rate or
upon the terms provided in the indenture; |
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a
change in the currency in which any payment on the debt securities
is payable; |
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an
impairment of a holder’s right to sue us for the enforcement of
payments due on the debt securities; or |
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a
reduction in the percentage of outstanding debt securities required
to consent to a modification or amendment of the indenture or
required to consent to a waiver of compliance with certain
provisions of the indenture or certain defaults under the
indenture. |
Under the indenture, the holders of not less than a majority in
aggregate principal amount of the outstanding debt securities may,
on behalf of all holders of the debt securities:
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waive compliance by us with certain restrictive
provisions of the indenture; and |
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waive
any past default under the indenture in accordance with the
applicable provisions of the indenture, except a default in the
payment of the principal of or interest on any series of debt
securities. |
Events of Default
Unless we indicate otherwise in the applicable prospectus
supplement, “event of default” under the indenture will mean, with
respect to any series of debt securities, any of the following:
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failure to pay interest on any debt security for
30 days after the payment is due; |
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failure to pay the principal of any debt security
when due, either at maturity, upon redemption, by declaration or
otherwise; |
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failure on our part to observe or perform any
other covenant or agreement in the indenture that applies to the
debt securities for 90 days after we have received written
notice of the failure to perform in the manner specified in the
indenture; and |
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certain events of bankruptcy, insolvency or
reorganization. |
Remedies Upon an Event of
Default
If an event of default occurs and continues, the trustee or the
holders of not less than 25% in aggregate principal amount of the
outstanding debt securities of such series may declare the entire
principal of all the debt securities to be due and payable
immediately, except that, if the event of default is caused by
certain events in bankruptcy, insolvency or reorganization, the
entire principal of all of the debt securities of such series will
become due and payable immediately without any act on the part of
the trustee or holders of the debt securities. If such a
declaration occurs, the holders of a majority of the aggregate
principal amount of the outstanding debt securities of such series
can, subject to conditions, rescind the declaration.
The indenture requires us to furnish to the trustee not less often
than annually, a certificate from our principal executive officer,
principal financial officer or principal accounting officer, as the
case may be, as to such officer’s knowledge of our compliance with
all conditions and covenants under the indenture. The trustee may
withhold notice to the holders of debt securities of any default,
except defaults in the payment of principal of or interest on any
debt securities if the trustee in good faith determines that the
withholding of notice is in the best interests of the holders. For
purposes of this paragraph, “default” means any event which is, or
after notice or lapse of time or both would become, an event of
default under the indenture.
The trustee is not obligated to exercise any of its rights or
powers under the indenture at the request, order or direction of
any holders of debt securities, unless the holders offer the
trustee satisfactory security or indemnity. If satisfactory
security or indemnity is provided, then, subject to other rights of
the trustee, the holders of a majority in aggregate principal
amount of the outstanding debt securities may direct the time,
method and place of:
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conducting any proceeding for any remedy
available to the trustee; or |
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exercising any trust or power conferred upon the
trustee. |
The holder of a debt security will have the right to begin any
proceeding with respect to the indenture or for any remedy only
if:
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the holder has previously given the trustee
written notice of a continuing event of default; |
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the
holders of not less than a majority in aggregate principal amount
of the outstanding debt securities have made a written request of,
and offered reasonable indemnity to, the trustee to begin such
proceeding; |
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the
trustee has not started such proceeding within 60 days after
receiving the request; and |
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no
direction inconsistent with such written request has been given to
the trustee under the indenture. |
However, the holder of any debt security will have an absolute
right to receive payment of principal of and interest on the debt
security when due and to institute suit to enforce this
payment.
Satisfaction and Discharge; Defeasance
Satisfaction and Discharge of Indenture. Unless
otherwise indicated in the applicable prospectus supplement, if at
any time,
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we have paid the principal of and interest on all
the debt securities of any series, except for debt securities which
have been destroyed, lost or stolen and which have been replaced or
paid in accordance with the indenture, as and when the same shall
have become due and payable, or |
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we
have delivered to the trustee for cancellation all debt securities
of any series theretofore authenticated, except for debt securities
of such series which have been destroyed, lost or stolen and which
have been replaced or paid as provided in the
indenture, or |
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all
the debt securities of such series not theretofore delivered to the
trustee for cancellation have become due and payable, or are by
their terms are to become due and payable within one year or are to
be called for redemption within one year, and we have deposited
with the trustee, in trust, sufficient money or government
obligations, or a combination thereof, to pay the principal, any
interest and any other sums due on the debt securities, on the
dates the payments are due or become due under the indenture and
the terms of the debt securities, |
then the indenture shall cease to be
of further effect with respect to the debt securities of such
series, except for:
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rights of registration of transfer and exchange,
and our right of optional redemption; |
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substitution of mutilated, defaced, destroyed,
lost or stolen debt securities; |
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rights of holders to receive payments of
principal thereof and interest thereon upon the original stated due
dates therefor (but not upon acceleration) and remaining rights of
the holders to receive mandatory sinking fund payments, if
any; |
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the
rights, obligations and immunities of the trustee under the
indenture; and |
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the
rights of the holders of such series of debt securities as
beneficiaries thereof with respect to the property so deposited
with the trustee payable to all or any of them. |
Defeasance and Covenant Defeasance. Unless
otherwise indicated in the applicable prospectus supplement, we may
elect with respect to any debt securities of any series either:
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to defease and be discharged from all of our
obligations with respect to such debt securities (“defeasance”),
with certain exceptions described below; or |
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to be
released from our obligations with respect to such debt securities
under such covenants as may be specified in the applicable
prospectus supplement, and any omission to comply with those
obligations will not constitute a default or an event of default
with respect to such debt securities (“covenant
defeasance”). |
We must comply with the following conditions before the defeasance
or covenant defeasance can be effected:
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we must irrevocably deposit with the indenture
trustee or other qualifying trustee, under the terms of an
irrevocable trust agreement in form and substance satisfactory to
the trustee, trust funds in trust solely for the benefit of the
holders of such debt securities, sufficient money or government
obligations, or a combination thereof, to pay the principal, any
interest and any other sums on the due dates for those
payments; and |
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we
must deliver to the trustee an opinion of counsel to the effect
that the holders of such debt securities will not recognize income,
gain or loss for federal income tax purposes as a result of
defeasance or covenant defeasance, as the case may be, to be
effected with respect to such debt securities and will be subject
to federal income tax on the same amount, in the same manner and at
the same times as would be the case if such defeasance or covenant
defeasance, as the case may be, had not occurred. |
In connection with defeasance, any irrevocable trust agreement
contemplated by the indenture must include, among other things,
provision for:
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payment of the principal of and interest on such
debt securities, if any, appertaining thereto when due (by
redemption, sinking fund payments or otherwise), |
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the
payment of the expenses of the trustee incurred or to be incurred
in connection with carrying out such trust provisions, |
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rights of registration, transfer, substitution
and exchange of such debt securities in accordance with the terms
stated in the indenture, and |
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continuation of the rights, obligations and
immunities of the trustee as against the holders of such debt
securities as stated in the indenture. |
The accompanying prospectus supplement may further describe any
provisions permitting or restricting defeasance or covenant
defeasance with respect to the debt securities of a particular
series.
Global Securities
Unless otherwise indicated in the applicable prospectus supplement,
each debt security offered by this prospectus will be issued in the
form of one or more global debt securities representing all or part
of that series of debt securities. This means that we will not
issue certificates for that series of debt securities to the
holders. Instead, a global debt security representing that series
will be deposited with, or on behalf of, a securities depositary
and registered in the name of the depositary or a nominee of the
depositary. Any such depositary must be a clearing agency
registered under the Exchange Act. We will describe the specific
terms of the depositary arrangement with respect to a series of
debt securities to be represented by a global security in the
applicable prospectus supplement.
Notices
We will give notices to holders of the debt securities by mail at
the addresses listed in the security register. In the case of
notice in respect of unregistered securities or coupon securities,
we may give notice by publication in a newspaper of general
circulation in New York, New York.
Governing Law
The particular terms of a series of debt securities will be
described in a prospectus supplement relating to such series of
debt securities. Any indentures will be subject to and governed by
the Trust Indenture Act of 1939, as amended, and may be
supplemented or amended from time to time following their
execution. Unless otherwise stated in the applicable prospectus
supplement, we will not be limited in the amount of debt securities
that we may issue, and neither the senior debt securities nor the
subordinated debt securities will be secured by any of our property
or assets. Thus, by owning debt securities, you are one of our
unsecured creditors.
Regarding the Trustee
From time to time, we may maintain deposit accounts and conduct
other banking transactions with the trustee to be appointed under
the indenture or its affiliates in the ordinary course of
business.
DESCRIPTION OF WARRANTS
We may offer to sell warrants from time to time. If we do so, we
will describe the specific terms of the warrants in a prospectus
supplement. In particular, we may issue warrants for the purchase
of common stock, preferred stock and/or debt securities in one or
more series. We may also issue warrants independently or together
with other securities and the warrants may be attached to or
separate from those securities.
We will evidence each series of warrants by warrant certificates
that we will issue under a separate agreement. We will enter into
the warrant agreement with a warrant agent. We will indicate the
name and address of the warrant agent in the applicable prospectus
supplement relating to a particular series of warrants.
We will describe in the applicable prospectus supplement the terms
of the series of warrants, including:
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the offering price and aggregate number of
warrants offered; |
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the
currency for which the warrants may be purchased; |
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if
applicable, the designation and terms of the securities with which
the warrants are issued and the number of warrants issued with each
such security or each principal amount of such
security; |
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if
applicable, the date on and after which the warrants and the
related securities will be separately transferable; |
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in
the case of warrants to purchase debt securities, the principal
amount of debt securities purchasable upon exercise of one warrant
and the price at, and currency in which, this principal amount of
debt securities may be purchased upon such exercise; |
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in
the case of warrants to purchase common stock or preferred stock,
the number of shares of common stock or preferred stock, as the
case may be, purchasable upon the exercise of one warrant and the
price at which these shares may be purchased upon such
exercise; |
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the
effect of any merger, consolidation, sale or other disposition of
our business on the warrant agreement and the warrants; |
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the
terms of any rights to redeem or call the warrants; |
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any
provisions for changes to or adjustments in the exercise price or
number of securities issuable upon exercise of the
warrants; |
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the
dates on which the right to exercise the warrants will commence and
expire; |
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the
manner in which the warrant agreement and warrants may be
modified; |
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certain United States federal income tax
consequences of holding or exercising the warrants; |
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the
terms of the securities issuable upon exercise of the
warrants; and |
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any
other specific material terms, preferences, rights or limitations
of or restrictions on the warrants. |
Holders may exercise the warrants by delivering the warrant
certificate representing the warrants to be exercised together with
other requested information, and paying the required amount to the
warrant agent in immediately available funds, as provided in the
applicable prospectus supplement. We will set forth in the
applicable prospectus supplement the information that the holder of
the warrant will be required to deliver to the warrant agent.
Upon receipt of the required payment and the warrant certificate
properly completed and duly executed at the office of the warrant
agent or any other office indicated in the applicable prospectus
supplement, we will issue and deliver the securities purchasable
upon such exercise. If a holder exercises fewer than all of the
warrants represented by the warrant certificate, then we will issue
a new warrant certificate for the remaining amount of warrants.
Holder will not have any of the rights of the holders of the
securities purchasable upon the exercise of warrants until you
exercise them. Accordingly, holder will not be entitled to, among
other things, vote or receive dividend payments or similar
distributions on the securities you can purchase upon exercise of
the warrants.
The information provided above is only a summary of the terms under
which we may offer warrants for sale. Accordingly, investors must
carefully review the applicable warrant agreement for more
information about the specific terms and conditions of these
warrants before investing in us. In addition, please carefully
review the information provided in the applicable prospectus
supplement, which contains additional information that is important
for you to consider in evaluating an investment in our
securities.
DESCRIPTION OF RIGHTS
We may issue rights to our stockholders to purchase shares of our
common stock or preferred stock described in this prospectus. We
may offer rights separately or together with one or more additional
rights, preferred stock, common stock, warrants or any combination
of those securities in the form of units, as described in the
applicable prospectus supplement. Each series of rights will be
issued under a separate rights agreement to be entered into between
us and a bank or trust company, as rights agent. The rights agent
for any rights we offer will be set forth in the applicable
prospectus supplement. The rights agent will act solely as our
agent in connection with the certificates relating to the rights of
the series of certificates and will not assume any obligation or
relationship of agency or trust for or with any holders of rights
certificates or beneficial owners of rights. The following
description sets forth certain general terms and provisions of the
rights to which any prospectus supplement may relate. The
particular terms of the rights to which any prospectus supplement
may relate and the extent, if any, to which the general provisions
may apply to the rights so offered will be described in the
applicable prospectus supplement. To the extent that any particular
terms of the rights, rights agreement or rights certificates
described in a prospectus supplement differ from any of the terms
described below, then the terms described below will be deemed to
have been superseded by that prospectus supplement. We encourage
you to read the applicable rights agreement and rights certificate
for additional information before you decide whether to purchase
any of our rights.
The prospectus supplement relating to any rights that we offer will
include specific terms relating to the offering, including, among
other matters:
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the
date of determining the stockholders entitled to the rights
distribution; |
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the
aggregate number of shares of common stock, preferred stock or
other securities purchasable upon exercise of the
rights; |
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the
exercise price; |
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the
aggregate number of rights issued; |
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whether the rights are transferrable and the
date, if any, on and after which the rights may be separately
transferred; |
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the
date on which the right to exercise the rights will commence, and
the date on which the right to exercise the rights will
expire; |
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the
method by which holders of rights will be entitled to
exercise; |
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the
conditions to the completion of the offering; |
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the
withdrawal, termination and cancellation rights; |
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whether there are any backstop or standby
purchaser or purchasers and the terms of their
commitment; |
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whether stockholders are entitled to
oversubscription right; |
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any
U.S. federal income tax considerations; and |
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any
other terms of the rights, including terms, procedures and
limitations relating to the distribution, exchange and exercise of
the rights. |
If less than all of the rights issued in any rights offering are
exercised, we may offer any unsubscribed securities directly to
persons other than stockholders, to or through agents, underwriters
or dealers or through a combination of such methods, including
pursuant to standby arrangements, as described in the applicable
prospectus supplement. In connection with any rights offering, we
may enter into a standby underwriting or other arrangement with one
or more underwriters or other persons pursuant to which such
underwriters or other persons would purchase any offered securities
remaining unsubscribed for after such rights offering.
DESCRIPTION OF UNITS
We may issue units consisting of any combination of the other types
of securities offered under this prospectus in one or more series.
We may evidence each series of units by unit certificates that we
will issue under a separate agreement. We may enter into unit
agreements with a unit agent. We will indicate the name and address
of the unit agent in the applicable prospectus supplement relating
to a particular series of units.
The following description, together with the additional information
included in any applicable prospectus supplement, summarizes the
general features of the units that we may offer under this
prospectus. You should read any prospectus supplement and any free
writing prospectus that we may authorize to be provided to you
related to the series of units being offered, as well as the
complete unit agreements that contain the terms of the units.
Specific unit agreements will contain additional important terms
and provisions and we will file as an exhibit to the registration
statement of which this prospectus is a part, or will incorporate
by reference from another report that we file with the SEC, the
form of each unit agreement relating to units offered under this
prospectus.
If we offer any units, certain terms of that series of units will
be described in the applicable prospectus supplement, including,
without limitation, the following, as applicable:
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the title of the series of units; |
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identification and description of the separate
constituent securities comprising the units; |
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the price or prices at which the units will be
issued; |
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the date, if any, on and after which the
constituent securities comprising the units will be separately
transferable; |
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a discussion of certain United States federal
income tax considerations applicable to the units; and |
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any other terms of the units and their
constituent securities. |
PLAN OF DISTRIBUTION
We may sell the securities from time to time pursuant to
underwritten public offerings, negotiated transactions, block
trades or a combination of these methods or through underwriters or
dealers, through agents and/or directly to one or more purchasers.
The securities may be distributed from time to time in one or more
transactions:
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at a
fixed price or prices, which may be changed; |
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at
market prices prevailing at the time of sale; |
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at
prices related to such prevailing market prices; or |
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at
negotiated prices. |
Each time that we sell securities covered by this prospectus, we
will provide a prospectus supplement or supplements that will
describe the method of distribution and set forth the terms and
conditions of the offering of such securities, including the
offering price of the securities and the proceeds to us, if
applicable.
Offers to purchase the securities being offered by this prospectus
may be solicited directly. Agents may also be designated to solicit
offers to purchase the securities from time to time. Any agent
involved in the offer or sale of our securities will be identified
in a prospectus supplement.
If a dealer is utilized in the sale of the securities being offered
by this prospectus, the securities will be sold to the dealer, as
principal. The dealer may then resell the securities to the public
at varying prices to be determined by the dealer at the time of
resale.
If an underwriter is utilized in the sale of the securities being
offered by this prospectus, an underwriting agreement will be
executed with the underwriter at the time of sale and the name of
any underwriter will be provided in the prospectus supplement that
the underwriter will use to make resales of the securities to the
public. In connection with the sale of the securities, we or the
purchasers of securities for whom the underwriter may act as agent,
may compensate the underwriter in the form of underwriting
discounts or commissions. The underwriter may sell the securities
to or through dealers, and those dealers may receive compensation
in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for which they
may act as agent. Unless otherwise indicated in a prospectus
supplement, an agent will be acting on a best efforts basis and a
dealer will purchase securities as a principal, and may then resell
the securities at varying prices to be determined by the
dealer.
Any compensation paid to underwriters, dealers or agents in
connection with the offering of the securities, and any discounts,
concessions or commissions allowed by underwriters to participating
dealers will be provided in the applicable prospectus supplement.
Underwriters, dealers and agents participating in the distribution
of the securities may be deemed to be underwriters within the
meaning of the Securities Act of 1933, as amended, and any
discounts and commissions received by them and any profit realized
by them on resale of the securities may be deemed to be
underwriting discounts and commissions. We may enter into
agreements to indemnify underwriters, dealers and agents against
civil liabilities, including liabilities under the Securities Act,
or to contribute to payments they may be required to make in
respect thereof and to reimburse those persons for certain
expenses.
Any common stock will be listed on the Nasdaq Capital Market, but
any other securities may or may not be listed on a national
securities exchange. To facilitate the offering of securities,
certain persons participating in the offering may engage in
transactions that stabilize, maintain or otherwise affect the price
of the securities. This may include over-allotments or short sales
of the securities, which involve the sale by persons participating
in the offering of more securities than were sold to them. In these
circumstances, these persons would cover such over-allotments or
short positions by making purchases in the open market or by
exercising their over-allotment option, if any. In addition, these
persons may stabilize or maintain the price of the securities by
bidding for or purchasing securities in the open market or by
imposing penalty bids, whereby selling concessions allowed to
dealers participating in the offering may be reclaimed if
securities sold by them are repurchased in connection with
stabilization transactions. The effect of these transactions may be
to stabilize or maintain the market price of the securities at a
level above that which might otherwise prevail in the open market.
These transactions may be discontinued at any time.
We may engage in at the market
offerings into an existing trading market in accordance with Rule
415(a)(4) under the Securities Act.
In addition, we may enter into derivative transactions with third
parties, or sell securities not covered by this prospectus to third
parties in privately negotiated transactions. If the applicable
prospectus supplement so indicates, in connection with those
derivatives, the third parties may sell securities covered by this
prospectus and the applicable prospectus supplement, including in
short sale transactions. If so, the third party may use securities
pledged by us or borrowed from us or others to settle those sales
or to close out any related open borrowings of stock, and may use
securities received from us in settlement of those derivatives to
close out any related open borrowings of stock. The third party in
such sale transactions will be an underwriter and, if not
identified in this prospectus, will be named in the applicable
prospectus supplement (or a post-effective amendment). In addition,
we may otherwise loan or pledge securities to a financial
institution or other third party that in turn may sell the
securities short using this prospectus and an applicable prospectus
supplement. Such financial institution or other third party may
transfer its economic short position to investors in our securities
or in connection with a concurrent offering of other
securities.
We do not make any representation or prediction as to the direction
or magnitude of any effect that the transactions described above
might have on the price of the securities. In addition, we do not
make any representation that underwriters will engage in such
transactions or that such transactions, once commenced, will not be
discontinued without notice.
The specific terms of any lock-up provisions in respect of any
given offering will be described in the applicable prospectus
supplement.
To comply with applicable state securities laws, the securities
offered by this prospectus will be sold, if necessary, in such
jurisdictions only through registered or licensed brokers or
dealers. In addition, securities may not be sold in some states
unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
The underwriters, dealers and agents may engage in transactions
with us, or perform services for us, in the ordinary course of
business for which they receive compensation.
LEGAL MATTERS
Lucosky Brookman LLP will pass upon certain legal matters relating
to the issuance and sale of the securities offered hereby on behalf
of Duos Technologies Group, Inc. Additional legal matters may be
passed upon for us or any underwriters, dealers or agents, by
counsel that we will name in the applicable prospectus
supplement.
EXPERTS
Our consolidated balance sheets as of December 31, 2019 and 2018,
and the related consolidated statements of operations,
stockholders’ equity (deficit), and cash flows for each of those
two years have been audited by Salberg & Company, P.A., an
independent registered public accounting firm, as set forth in its
report incorporated by reference and are included in reliance
upon such report given on the authority of such firm as experts in
accounting and auditing.
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