NOTE 10 – REVENUES AND CONTRACT ACCOUNTING

Revenue Recognition and Contract Accounting

The Company generates revenue from four sources: (1) Technical Support; (2) Consulting Services which is included in the consolidated statements of operations line-item Services and Consulting; (3) Hosting and (4) Technology Solutions.

Contract assets and contract liabilities on uncompleted contracts for revenues recognized over time are as follows:

Contract Assets

Contract assets represent cumulative revenues recognized in excess of billings.

At June 30, 2026 and December 31, 2025, contract assets, consisted of the following:

As of June 30, 2026:

As of December 31, 2025:

Contract Liabilities

Contract liabilities represent billings and/or cash received that exceed cumulative revenues recognized.

At June 30, 2026 and December 31, 2025, contract liabilities consisted of the following:

Six months ended June 30, 2026 

Services and Consulting Related Parties

In December 2024, the Company entered into a series of contracts with Fortress under which the Company deployed and operated a fleet of mobile gas turbines and balance-of-plant inventory, providing management, sales and operations functions to Sawgrass in connection with the assets. In exchange for services performed under the Asset Management Agreement (“AMA”), the Company received an advance cash payment and common units in Sawgrass (see Note 8). Sawgrass paid the Company $5.0 million in cash upon execution of the contract, which was applied ratably on a monthly basis against amounts incurred under the AMA for a period of 12 months in 2025. In the event that the AMA was terminated within the first 12 months, any balance remaining of the advanced funds would have been credited in full to Duos

As of December 31, 2024 deferred revenue under the arrangement was $5.0 million, comprised of the $5.0 million advance payment. The Company recognized $5.0 million in revenue under the AMA during the year ended December 31, 2025. No revenues were recognized during the six months ended June 30, 2026. related to the advance payment. However, $3,616,500 of previously deferred revenue was recognized as revenue during the three and six months ended June 30, 2026 related to the AMA (see Note 8).

The Company also concluded that the arrangement with Sawgrass is within the scope of ASC 606, Revenue from contracts with customers, and the common units issued to the Company by Sawgrass Parent represented non-cash consideration. The initial carrying value as of December 31, 2024 of $7.2 million was measured equal to the fair value of the common units received for future services to be performed under the AMA. The Company recorded $7.2 million of deferred revenue for services to be performed under the AMA (see Note 8). During the year ended December 31, 2024, the Company did not recognize any revenue associated with the AMA. The Company initially recorded the equity method investment in Sawgrass of $7.2 million, equal to the fair value of the common units as of December 31, 2024.

As of June 30, 2026, the balance in contract liabilities pertaining to the value of the equity method interest will be recognized as revenue as follows:

Disaggregation of Revenue  

The Company is following the guidance of ASC 606-10-55-296 and 297 for disaggregation of revenue. Accordingly, revenue has been disaggregated according to the nature, amount, timing and uncertainty of revenue and cash flows. We are providing qualitative and quantitative disclosures.

Qualitative:

1. We have three distinct revenue sources:

a. Technology Solutions - delivers manufacturer-agnostic infrastructure sourcing, integration, and value-added supply chain services supporting data center, AI, and enterprise deployments;

b. Services and Consulting Services (including related parties); and

c. Hosting (Deployment and operation of edge data centers, providing customers with cabinet space and related infrastructure service).

2. We currently operate in North America.

Quantitative:

For the three months ended June 30, 2026

For the three months ended June 30, 2025

For the six months ended June 30, 2026

For the six months ended June 30, 2025