UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ________________ Commission File Number: 001-38371 One Stop Systems, Inc. WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 (Exact Name of Registrant as Specified in its Charter) (State or other ju ...

N A S D A Q : O S S Corporate Presentation June 2021 onestopsystems.com Important Disclaimers & Cautions Regarding Forward-Looking Statements 2 One Stop Systems cautions you that statements in this presentation that are not a description of historical facts are forward-looking statements. These statements are based on the company's current beliefs and expectations. The inclusion of forward-looking statements should not be regarded as a representation by One Stop Systems or its partners that any of our plans ...

Financial Data and Key Metrics Changes - The company achieved revenue of $13.3 million in Q1 2021, similar to the record first quarter of the previous year, which was not impacted by the pandemic [16] - Adjusted EBITDA improved by $2 million compared to Q1 2020, reaching a record $1.1 million for OSS in the first quarter [6][7] - GAAP net income was $21,000 in Q1 2021, compared to a net loss of $1.1 million in the same period last year [20] - Non-GAAP net income improved to $643,000 or $0.03 per diluted share in Q1 2021, compared to a non-GAAP net loss of $714,000 or $0.04 per diluted share in the same year-ago period [21] - Cash and cash equivalents increased to $19.6 million, the highest in the company's history, up from about $3 million a year ago [23][24] Business Line Data and Key Metrics Changes - The core OSS business revenue increased to $8.6 million compared to $8.4 million in the same year-ago period [16] - Bressner, the European subsidiary, contributed $4.7 million in Q1, down from $4.9 million in the same year-ago period [17] - Gross profit in Q1 2021 was $4.4 million, an increase of $1 million from $3.4 million in Q1 2020, with gross margins of 33.3%, up 7.9 percentage points year-over-year [17][18] Market Data and Key Metrics Changes - The military segment accounted for approximately 37% of OSS' revenue in Q1, which is higher than in previous periods [58] - The company expects military business to grow from 30% to 40% or 50% over the next few years due to increased focus and activity in that area [56] Company Strategy and Development Direction - The company is executing a long-term strategic vision focused on AI Transportables, which are mobile, high-performance computing systems for edge computing applications [9][10] - AI Transportables contributed over 25% of the revenue in Q1, marking it as the fastest-growing and highest-margin segment of the business [11] - The company aims to drive revenue growth and industry expansion opportunities through strategic sales and diversification of the customer base [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the business and market conditions, expecting continued improvements in overall performance [33] - The company anticipates revenue of approximately $14.4 million for Q2 2021, representing a 24% growth over the same quarter last year [36] - The management highlighted the importance of maintaining a strong cash position to invest in future growth initiatives [24][34] Other Important Information - The company completed a registered direct equity offering to strengthen its cash position [23] - The $1.5 million PPP loan received last year has been forgiven, further enhancing the company's financial stability [23] Q&A Session Summary Question: Can you provide updates on your largest customer and component availability? - The largest customer generated $3.3 million in revenue during the quarter, with a positive outlook for their virtual product line [43][39] - Component supply issues have not significantly impacted revenue, particularly as the company focuses on high-end GPUs [40][41] Question: How is the pipeline for AI Transportables looking? - The company has around 24 RFPs in various stages, with a conservative estimate of a 60% or better chance to close [44][45] - The quality of wins is improving due to a focus on margins and AI Transportable solutions [47] Question: What is the potential of military contracts and overall revenue growth? - Military business is expected to grow significantly, with a target of double-digit growth this year and aiming for 20% growth in future years [56][58] - Military contracts accounted for about 25% of overall revenue in Q1 [58] Question: What is the status of the company's debt and cash management? - The company has $2.5 million in senior secured debt, which is likely to convert to equity upon maturity, and minimal foreign debt associated with working capital [61][62]

Revenue and Profitability - Revenue for the three months ended March 31, 2021, was $13,315,752, a slight decrease from $13,359,637 in the same period of 2020[154] - Net income for Q1 2021 was $41,198, a recovery from a net loss of $1,096,032 in Q1 2020[154] - Total revenue for the three months ended March 31, 2021, decreased by $43,885 or 0.33% compared to the same period in 2020, with OSS revenue increasing by $161,747 or 1.21 percentage points, while Bressner's revenue decreased by $205,632 or 1.54 percentage points[157] - The adjusted EBITDA for the three months ended March 31, 2021, was $1,065,574, a significant improvement from the adjusted EBITDA of $(957,076) in the same period of 2020[202] - The Company reported a net income of $41,198 for the three months ended March 31, 2021, compared to a net loss of $(1,096,032) in the same period of 2020[202] - Non-GAAP net income for the three months ended March 31, 2021, was $643,492, compared to a loss of $(713,746) in the same period of 2020[205] Cost Management - Cost of revenue decreased to $8,882,968 in Q1 2021 from $9,963,950 in Q1 2020, resulting in a gross profit increase to $4,432,784, compared to $3,395,687 in Q1 2020[154] - Gross margin improved to 33.3% in Q1 2021 from 25.4% in Q1 2020, reflecting better cost management and operational efficiency[156] - Cost of revenue decreased by $1,080,982 or 10.8% for the three months ended March 31, 2021, primarily due to reduced sales in the media and entertainment industry[158] - General and administrative expenses decreased by $356,446 or 14.2%, resulting in a decrease as a percentage of revenue to 16.2% in Q1 2021 from 18.8% in Q1 2020[161] - Research and development expenses decreased by $371,192 or 30.8%, with total R&D expense as a percentage of revenue decreasing to 6.2% in Q1 2021 from 9.0% in Q1 2020[163] Cash Flow and Liquidity - The company generated $4,291,066 in cash from operating activities in Q1 2021, an increase of $5,012,839 compared to cash used in Q1 2020[178] - Cash and cash equivalents as of March 31, 2021, were $19,614,315, with working capital of $22,935,632[170] - The company anticipates using liquidity and cash flows to fund ongoing operations, R&D projects, and potential acquisitions over the next year[171] - The Company had $19,614,315 in cash and cash equivalents as of March 31, 2021, compared to $6,316,921 as of December 31, 2020, indicating a significant increase in liquidity[194] Financing Activities - The company completed a $6.0 million debt financing in April 2020, with a non-interest bearing convertible note[142] - The company raised approximately $9.2 million in a registered direct offering in March 2021, selling 1,497,006 shares at $6.68 per share[143] - The Company generated $9,173,593 in cash from financing activities for the three months ended March 31, 2021, compared to cash used of $1,214,119 in the same period of 2020[183] - The Company experienced net cash provided by financing activities of $9,173,593 in Q1 2021, compared to net cash used of $1,214,119 in Q1 2020[177] - The Company received proceeds of $278,968 from the exercise of warrants and stock options during the three months ended March 31, 2021, up from $57,000 in the same period of 2020[184] - The Company entered into a Securities Purchase Agreement on March 1, 2021, issuing 1,497,006 shares at an offering price of $6.68 per share, resulting in net proceeds of approximately $9.22 million[185] Challenges and Strategic Actions - The company implemented a cost reduction plan in April 2020, estimated to save approximately $2.5 million annually[141] - The acquisition of Bressner Technology GmbH expanded the company's product lines and market reach in Europe[133] - The company continues to face challenges due to COVID-19, impacting demand and operational capabilities[136] Taxation - The company recorded an income tax provision of $60,522 for Q1 2021, with an effective tax rate of 76.4% compared to 28.2% in Q1 2020[168] Shareholder Information - The weighted average common shares outstanding increased to 17,348,164 for basic shares in Q1 2021, up from 16,332,898 in Q1 2020[205] - The Company does not have any off-balance sheet financing arrangements or liabilities, ensuring a straightforward financial position[186]

Financial Data and Key Metrics Changes - In Q4 2020, revenue was $13.9 million, up 7% from Q3 but down 24% year-over-year due to pandemic impacts [13][15] - Full-year revenue totaled $51.9 million, a decrease of $6.4 million or 11% compared to the previous year [15] - Gross profit for Q4 was $4.8 million with a gross margin of 34.5%, down from $6.5 million and 35% in the same quarter last year [19] - Full-year gross profit was $16.4 million or 31.7% of revenue, compared to $19.4 million or 33.3% in 2019 [21] - Net income on a GAAP basis for Q4 was $244,000 or $0.01 per share, down from $1.1 million or $0.06 per share in the same period last year [24] Business Line Data and Key Metrics Changes - OSS business contributed $8.9 million in Q4, down from $13.9 million year-over-year, while Bressner contributed $5 million, up from $4.5 million [18] - For the full year, OSS business revenue was $33.7 million compared to $40.1 million last year, while Bressner remained flat at $18.2 million [18] Market Data and Key Metrics Changes - The largest customer in the media and entertainment industry accounted for over half of the $14 million in lost or delayed business due to COVID [8] - Encouraging signs of recovery were noted from this customer in Q4, particularly with their 3D virtual product line [9] Company Strategy and Development Direction - The company has implemented a multi-year strategic plan focusing on enhancing its product roadmap and market position, particularly in the fast-growing Edge computing space [37][38] - The strategic focus is on AI transportables, which are high-performance computing solutions for mobile applications in harsh environments [41][42] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued impacts from COVID in 2021 but sees early signs of recovery and improvement in customer demand [8][45] - The company expects Q1 2021 revenue to be approximately $13 million, indicating a strong rebound from the previous year [45] Other Important Information - The company has a cash position of approximately $19 million, bolstered by a recent direct offering and improved operational cash flow [11][28] - Operating expenses decreased by 16% for the full year, attributed to cost reduction initiatives [22] Q&A Session Summary Question: Clarification on Disguise's performance and recovery - Management noted a $4.3 million year-over-year decline for Disguise in Q4 but observed growth in new 3D virtual products, expecting further recovery in 2021 [48][49] Question: Component availability and its impact on gross margins - Management acknowledged supply chain challenges but stated that they have managed to avoid significant revenue impacts and do not expect margin deterioration [51] Question: Pipeline of opportunities and market strategy for AI transportables - The company reported 24 active opportunities, with over half related to AI transportables, and emphasized a careful approach to investment in growth initiatives [53][54] Question: Strategic shift towards Edge computing and project details - Management confirmed ongoing projects with Raytheon and Lyft, focusing on AI transportables, and indicated a potential market size of $200 million to $400 million, with long-term growth prospects [59][60] Question: Outlook for Disguise and inventory management - Management expects positive results from virtual products and anticipates a rebound in traditional revenue streams in the second half of 2021 [63]

(Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _______ Commission File Number 001-38371 One Stop Systems, Inc. (Exact name of Registrant as specified in its Charter) Delaware 33-0885351 (State or o ...

Financial Data and Key Metrics Changes - Revenue for Q3 2020 was $13 million, up 12% from $11.6 million in the previous quarter but down 13% from $14.9 million in Q3 2019 [12] - Operating margin, EBITDA, and net income all improved compared to the same quarter last year [8] - Net income on a GAAP basis totaled $858,000 or $0.05 per share in Q3 2020, compared to $545,000 or $0.03 per share in the same period last year [27] - Non-GAAP net income totaled $1.2 million or $0.07 per diluted share in Q3 2020, compared to $900,000 or $0.05 per diluted share in the same year-ago period [28] Business Line Data and Key Metrics Changes - Core OSS business contributed $9 million in Q3, down from $9.7 million in the same period last year [15] - European subsidiary Bressner contributed $4 million in Q3, down from $5.2 million in the same year-ago period [16] - Gross margins for the core OSS business increased to 44.6% in Q3 from 39% in the same year-ago quarter [19] Market Data and Key Metrics Changes - The media and entertainment business saw a revenue decrease of approximately $1.8 million due to the COVID-19 pandemic [13] - Revenue for the nine months ended September 30, 2020, was $38 million, a decrease of 5% compared to $39.9 million in the same period last year [14] Company Strategy and Development Direction - The company is focusing on diversifying its customer base and has closed four major opportunities in industrial, medical, and military programs [32] - A multi-year strategic plan is being developed to enhance the product roadmap and leverage employee talents [40] - The company aims to create higher value products for specific target verticals, particularly in military and transportable applications [41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of COVID-19 on revenue growth, estimating $9.9 million in lost or delayed revenue [7] - The company expects strong growth in the military vertical based on user engagement and value proposition [39] - For Q4 2020, the company is on target to generate approximately $13 million in revenue [43] Other Important Information - Operating expenses decreased by 15% to $3.9 million in Q3 2020 compared to $4.6 million in Q3 2019 [21] - Cash and cash equivalents totaled $5.5 million as of September 30, 2020, compared to $4.7 million as of June 30, 2020 [30] Q&A Session Summary Question: Impact of COVID-19 on revenue - Management clarified that over half of the $9.9 million loss was related to the largest customer, with military sales showing delays rather than losses [46][49] Question: Comparison of ramp to revenue in new markets - The commercial market typically has a 6 to 12-month ramp, while government contracts take 12 to 18 months [52] Question: Status of largest client and receivables - The accounts receivable from the largest client has been reduced to under $2 million, with ongoing payments being made [63] Question: Military revenue outlook - Military revenue for Q4 is expected to be strong, with solid wins in multiple programs anticipated to kick in 2021 [70] Question: Virtual events and customer engagement - Virtual events have been effective in maintaining customer engagement, with a mix of webinars and virtual trade shows [72][75]

Revenue Performance - For the three months ended September 30, 2020, total revenue decreased by $1,962,906 or 13.1% compared to the same period in 2019, with OSS experiencing a reduction of $759,091 or 5.1 percentage points primarily due to reduced revenue from its core media and entertainment business [155]. - For the nine months ended September 30, 2020, total revenue decreased by $1,922,076 or 4.8% compared to the same period in 2019, with OSS experiencing a reduction of $1,445,470 or 3.6 percentage points largely due to a decline in sales to its two largest customers impacted by the COVID-19 pandemic [157]. - Bressner Technology GmbH contributed $3,999,519 in revenue for the three months ended September 30, 2020, with a gross margin of 22.5% [154]. Profitability Metrics - Gross profit for the three months ended September 30, 2020, was $4,901,613, representing a gross margin of 37.8%, compared to a gross profit of $5,029,919 and a margin of 33.7% for the same period in 2019 [150]. - Overall gross margin percentage improved from 33.7% for the three-month period ended September 30, 2019, to 37.8% for the same period in 2020, an improvement of 4.1 percentage points [160]. - Net income attributable to common stockholders for the three months ended September 30, 2020, was $857,790, compared to $544,901 for the same period in 2019 [150]. - Adjusted EBITDA for Q3 2020 was $1,566,649, up from $1,041,286 in Q3 2019, indicating a 50.5% growth [222]. - Non-GAAP net income attributable to common stockholders for the nine months ended September 30, 2020, was $773,050, compared to $1,002,613 in the same period of 2019, reflecting a decrease of 22.9% [225]. Operating Expenses - Operating expenses for the three months ended September 30, 2020, totaled $3,922,171, a decrease from $4,610,362 in the same period of 2019, with general and administrative expenses at $1,817,499 [150]. - General and administrative expenses decreased by $372,504 or 17% for the three-month period ended September 30, 2020, compared to the same period in 2019 [162]. - Marketing and selling expenses decreased by $280,581 or 20.3% during the three-month period ended September 30, 2020, compared to the same period in 2019 [165]. - Research and development expenses for the three months ended September 30, 2020, were $1,001,288, compared to $1,036,394 in the same period of 2019 [150]. - Research and development expenses decreased by $35,106 or 3.4% during the three-month period ended September 30, 2020, compared to the same period in 2019 [167]. Cash Flow and Liquidity - As of September 30, 2020, the company's cash and cash equivalents were $5,519,829, and working capital totaled $15,467,546 [180]. - The company experienced an operating loss of $937,546 with cash used in operating activities of $1,385,390 during the nine months ended September 30, 2020 [180]. - Cash used in operating activities for the nine months ended September 30, 2020, was $(1,385,390), a decrease of $1,773,737 compared to $388,347 in the same period in 2019 [194]. - Cash used for working capital requirements increased to $2,523,409 for the nine months ended September 30, 2020, compared to $862,102 in the same period in 2019, an increase of $1,661,307 [198]. - The company generated net cash of $2,325,509 from financing activities during the nine months ended September 30, 2020, compared to $3,659,731 in the same period in 2019 [201]. - Cash used in investing activities decreased to $662,843 for the nine months ended September 30, 2020, from $2,060,712 in the same period in 2019, a decrease of $1,397,869 [200]. - The company has sufficient liquidity to meet its cash requirements for at least the next twelve months, although there are no assurances regarding the effectiveness of cost reduction efforts [192]. Debt and Financing - The company received a Paycheck Protection Plan loan of $1,499,360 on April 28, 2020, to support its operations during the pandemic [136]. - The company received a Paycheck Protection Plan loan of $1,499,360 on April 28, 2020, which management believes will likely be forgiven [202]. - The company issued a Senior Secured Convertible Promissory Note with an aggregate of $3,000,000 to an institutional investor on April 24, 2020 [135]. Customer Impact and Business Strategy - The largest customer is in the media and entertainment industry, which has been adversely affected by COVID-19, leading to slower sales and extended collection cycles [214]. - The company has formulated a plan to extend payment terms for its largest customer, who is experiencing financial hardships due to COVID-19 [180]. - The company implemented a cost reduction plan expected to save between $1.5 million and $2.0 million for the year ending 2020 [190]. - The company has no off-balance sheet financing arrangements or liabilities other than lease commitments incurred in the normal course of business [204]. Shareholder Metrics - Stock-based compensation expense for Q3 2020 was $210,280, compared to $164,857 in Q3 2019, marking a 27.5% increase [225]. - Weighted average diluted shares outstanding increased to 17,018,614 in Q3 2020 from 16,390,206 in Q3 2019, an increase of 3.8% [225]. - Interest expense for Q3 2020 was $174,205, significantly higher than $52,182 in Q3 2019, indicating a 233.5% increase [222]. - Depreciation and amortization for Q3 2020 was $410,552, compared to $352,905 in Q3 2019, representing a 16.3% increase [222]. - The company expects to continue incurring expenses similar to those reflected in adjusted income from continuing operations and adjusted EPS [224].

Financial Data and Key Metrics Changes - Revenue in Q2 2020 totaled $11.6 million, down from $14.9 million in Q2 2019, primarily due to lower sales from custom servers for media and entertainment production impacted by COVID-19 [11][19] - Year-to-date revenue for the first half of 2020 was $25 million, essentially even with the same period last year, despite a $4.1 million reduction from the two largest customers [11][19] - Gross profit for Q2 was $3.3 million, representing a gross margin of 28.6%, down from 36.4% in the same year-ago quarter [14] - Net loss on a GAAP basis was $12,000 in Q2, compared to a loss of $1.6 million in the same year-ago period [19] Business Line Data and Key Metrics Changes - The core OSS business contributed $6.9 million or 60% of consolidated revenue in Q2, down from $10 million or 67% in the same year-ago period [12] - Bressner, the European subsidiary, contributed $4.3 million or 37% of consolidated revenue in Q2, up from $4 million or 27% in the same year-ago period [12] - CDI subsidiary contributed $386,000 or 3% of revenue in Q2, down from $895,000 or 6% in the year-ago quarter [12] Market Data and Key Metrics Changes - The company experienced significant revenue decline from its top customer, which serves large gathering events, down $3.1 million compared to the same quarter last year [8] - New customers from program wins over the past 18 months helped offset the overall impact of the pandemic on revenue [8] Company Strategy and Development Direction - The company is focusing on improving its vision and value proposition, executing the full integration of CDI, and reducing operating expenses by $2.5 million to $3 million [7] - The management aims to diversify the customer base to reduce dependency on a few larger accounts, which has been underscored by the revenue decrease from the two largest customers [31] - The company plans to introduce three additional PCI Express Gen 4 standard platforms before the end of the year, indicating a focus on innovation and product development [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that COVID-19 has impacted revenue and will likely continue to do so for the rest of the year, but they are working to minimize the impact and build a solid foundation for the future [29] - The company provided a minimum baseline revenue guidance of $11.8 million for Q3, indicating a cautious but optimistic outlook [29] - Management expressed confidence in the potential for a stronger, high-margin military component in the second half of the year, which could drive revenue and margins up [31] Other Important Information - The company raised $2.4 million in a senior secured convertible debt offering and received a Paycheck Protection Plan loan of approximately $1.5 million, strengthening its balance sheet [21] - Cash and cash equivalents totaled $4.7 million at June 30, 2020, up from $3 million at March 31, 2020 [21] Q&A Session Summary Question: Supply chain situation regarding PCB boards - Management confirmed that issues with PCB boards have been resolved, and while there are longer lead times for some components, there are no significant impacts on revenue [35] Question: Status of business with Raytheon - Management indicated that orders typically come in the back half of the year, and the year has been back-end loaded as expected [36] Question: RFPs status from last quarter - Out of 27 RFPs referenced last quarter, 10 have been resolved, with eight wins in the first half of the year [37] Question: Baseline revenue guidance for Q3 - Management clarified that the $11.8 million guidance is based on a thorough review of the customer base and backlog [42] Question: Expected gross margins for the back half of the year - Anticipated gross margins for Q3 are approximately 33%, with Q4 expected to be around 36% [44] Question: Transition time for RFPs to revenue-generating opportunities - The typical sales cycle for commercial opportunities is six to nine months, while military opportunities take 12 to 18 months [45] Question: Supply chain dependence on China - Management stated that while there are some products sourced from China, the dependence is not overwhelming, with more reliance on Taiwan [58] Question: Profitability on a GAAP basis - Management indicated that non-cash expenses related to amortization of intangibles will decline, potentially leading to profitability in future quarters [80]

Revenue Performance - For the three months ended June 30, 2020, total revenue decreased by $3,260,909 or 21.9% compared to the same period in 2019, primarily due to reduced revenue from OSS's core media and entertainment business and data storage units [141]. - For the six months ended June 30, 2020, total revenue increased by $40,829 or less than 1% compared to the same period in 2019, with OSS experiencing a reduction in revenue of approximately $4,100,000 from its two largest customers [142]. - Revenue for the three months ended June 30, 2020 was $11,625,327, down from $14,886,236 in the same period of 2019, while gross profit decreased to $3,325,195 from $5,413,158 [138]. - Bressner contributed $727,210 or an increase of 2.9 percentage points to revenue for the six months ended June 30, 2020, while CDI had a decrease of $185,599 or 0.8 percentage points [142]. Cost and Expenses - The cost of revenue for the three months ended June 30, 2020 was $8,300,132, representing 71.4% of total revenue, compared to 63.6% in the same period of 2019 [139]. - Operating expenses for the three months ended June 30, 2020 totaled $3,731,081, down from $6,393,638 in the same period of 2019, with significant reductions in general and administrative expenses [138]. - Cost of revenue decreased by $1,172,946 or 12.4% for the three-month period ended June 30, 2020, compared to the same period in 2019, primarily due to reduced media and entertainment sales [143]. - General and administrative expenses decreased by $2,054,120 or 52.3% for the three-month period ended June 30, 2020, compared to the same period in 2019, with expenses as a percentage of revenue decreasing to 16.1% [147]. - Marketing and selling expenses decreased by $391,905 or 31.7% during the three-month period ended June 30, 2020, as a result of cost reduction initiatives and reduced travel due to COVID-19 [150]. - Research and development expenses decreased by $216,532 or 17.7% during the three-month period ended June 30, 2020, although the percentage of revenue increased to 8.7% [152]. Profitability and Loss - The net loss attributable to common stockholders for the three months ended June 30, 2020 was $12,162, compared to a loss of $1,594,633 in the same period of 2019 [138]. - OSS's gross profit margin for the three months ended June 30, 2020 was 28.6%, down from 36.4% in the same period of 2019 [139]. - Adjusted EBITDA for the three months ended June 30, 2020, was $72,574, a significant decrease from $1,267,361 in the prior year [202]. - Non-GAAP net income attributable to common stockholders for the six months ended June 30, 2020, was $(466,004), compared to $105,959 for the same period in 2019 [206]. - Free cash flow for the six months ended June 30, 2020, was $(3,350,641), a decline of $3,707,550 compared to $356,909 in 2019 [209]. Financing Activities - The company received a two-year Paycheck Protection Plan loan in the amount of $1,499,360 on April 28, 2020 [123]. - The company issued a Senior Secured Convertible Promissory Note with an aggregate of $3,000,000 to an institutional investor on April 24, 2020 [122]. - The company closed on a $3,000,000 senior secured convertible debt offering in April 2020, resulting in net proceeds of $2,383,726 after fees [180]. - The company generated net cash of $2,817,718 from financing activities for the six months ended June 30, 2020, compared to $2,323,170 in the same period in 2019 [180]. Cash Flow and Liquidity - As of June 30, 2020, the company's cash and cash equivalents were $4,654,602, with working capital of $14,381,656 [163]. - The company experienced an operating loss of $1,917,040 during the six months ended June 30, 2020, with cash used in operating activities amounting to $2,935,059 [163]. - The company used $2,935,059 in cash from operating activities for the six months ended June 30, 2020, a decrease of $4,648,943 compared to $1,713,884 in the same period in 2019 [175]. - Cash used for investing activities decreased to $414,040 in the six months ended June 30, 2020, from $1,355,925 in the same period in 2019, a reduction of $941,885 [179]. - The company has sufficient liquidity to meet its cash requirements for at least the next twelve months, although there are no assurances regarding the effectiveness of cost reduction efforts [173]. Interest and Other Financial Metrics - Interest income increased by $89,175 for the three-month period ended June 30, 2020, attributed to increased finance charges on accounts receivable from the largest customer in the media and entertainment industry [154]. - Interest expense increased by $97,173 for the three-month period ended June 30, 2020, due to new borrowings and amortization of related costs [156]. - Interest expense for the three months ended June 30, 2020, was $150,186, compared to $53,013 in the same period of 2019 [202]. - Amortization of intangibles for the three months ended June 30, 2020, was $174,525, down from $269,151 in 2019 [206]. - Non-cash adjustments decreased to $406,785 for the six months ended June 30, 2020, from $2,727,460 in the same period in 2019, a decrease of $2,320,675 [176]. Customer Impact and Business Strategy - The company has formulated a plan to extend payment terms for its largest customer, who is facing financial hardships due to COVID-19 [164]. - The largest customer, in the media and entertainment industry, has experienced slowed sales and extended collection cycles due to the COVID-19 pandemic [194].