Financial Data and Key Metrics - Revenue grew 28% YoY to a record $17.1 million in Q1 2022, with minimal seasonality impact (4% drop from Q4 to Q1 compared to 30%+ in prior years) [5] - Gross profit increased to $5.1 million from $4.4 million, with gross margins exceeding 30% [6] - Operating expenses increased by only 8% despite a 28% revenue growth, leading to improved operating leverage [6] - GAAP net income rose to $579,000, non-GAAP net income to nearly $1 million, and adjusted EBITDA to $1.4 million, all significant improvements over the previous year [6] - Cash and cash equivalents totaled $2.2 million, with short-term investments of $13.6 million, combining for $15.8 million as of March 31, 2022 [18] Business Line Performance - Core OSS revenue increased 23% YoY to $10.6 million, representing 62% of total revenue [12] - Bressner, the European subsidiary, saw a 37% revenue increase to $6.5 million, contributing 38% of total revenue [12] - Media and entertainment customer revenue exceeded pre-COVID levels, with expectations for continued growth throughout the year [5] - Autonomous trucking market saw four confirmed program wins in Q1, bringing the total to five, with products being shipped to three market leaders [10] Market Performance - The media and entertainment sector showed strong recovery, with revenues now greater than pre-COVID levels [5] - Bressner's performance in Europe was exceptional, with 37% revenue growth [6] - The AI transportable market, particularly in autonomous trucking, is accelerating, with significant interest in products like Rigel and Centauri [8][9] Strategic Direction and Industry Competition - The company is focusing on the AI transportable market, leveraging its technology to address high-growth verticals like autonomous trucks, military, and maritime applications [8][9] - Introduction of scalable standard products like Rigel and Centauri has been well-received, with Centauri specifically designed for autonomous trucking needs [9][10] - The company is investing in next-generation PCI Express Gen 5 technology, which will double the bandwidth of current Gen 4 products [23][24] Management Commentary on Operating Environment and Future Outlook - Supply chain disruptions, including long lead times, price increases, and higher shipping costs, continue to pose challenges, but the company is leveraging its strong cash position to mitigate these issues [7] - Management is optimistic about the growth potential in the AI transportable market, particularly in autonomous trucking, where the company has secured multiple program wins [10][29] - The company expects Q2 2022 revenue to be $17.3 million, representing 15% growth over Q2 2021 [38] Other Important Information - The company has a strong pipeline of pending major programs, with 34 opportunities, 20 of which involve AI transportable applications [19] - The company is actively participating in industry events and panels to position itself as a thought leader in the AI transportable market [26] - Management is focused on improving margins through price increases, manufacturing efficiencies, and the introduction of higher-value standard products [15] Q&A Session Summary Question: Performance of business segments outside media and entertainment and Bressner - All business segments are strong, with no decreases, but military shipments are expected to pick up in Q3 and Q4 [42] Question: Updates on military contracts - The company is working on several military projects, with additional shipments to Raytheon programs [44] Question: Pricing and differences in systems for autonomous trucks - The company is shipping to three customers with multiple products, and expects revenue from additional customers later this year [47] Question: Growth outlook for the media and entertainment customer - Steady growth is expected, driven by both virtual product lines and the return of large gatherings [49] Question: Margin improvement opportunities in media and entertainment - Margins in this segment are not expected to improve significantly, but the business remains profitable [53][56] Question: Integration opportunities with sensor platforms in autonomous vehicles - The company is already exploring deeper integration and potential partnerships in this area [58] Question: Replacement cycle for autonomous truck systems - Replacement cycles could be around three years, depending on technological advancements and application needs [59] Question: Development cycle for autonomous truck customers - The company is already shipping to three customers and expects to see revenue from additional customers later this year [63] Question: Contribution from autonomous trucking wins - Some autonomous trucking customers are expected to be in the top 10 by the end of 2022, with significant growth potential in 2023 and beyond [88] Question: Headcount growth plans - The company plans to add 2-3 employees per quarter, with flexibility to accelerate hiring if needed [92]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION 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 March 31, 2022 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. (Exact Name of Registrant as Specified in its Charter) (State or other j ...

| --- | --- | --- | --- | --- | --- | |------------|----------------------------|-------|-------|-------|-------------------------------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | April 2022 | OSS Corporate Presentation | | | | | | | | | | | | | | | | | | OneStopSystems.com NASDAQ:OSS | 1 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 ...

One Stop Systems, Inc. (NASDAQ:OSS) Q4 2021 Earnings Conference Call March 24, 2022 5:00 PM ET Company Participants David Raun – President and Chief Executive Officer John Morrison – Chief Financial Officer Jim Ison – Chief Sales and Marketing Officer Conference Call Participants Scott Searle – Roth Capital Eric Martinuzzi – Lake Street Capital Joe Gomes – Noble Capital David Williams – Benchmark Brian Kinstlinger – Alliance Global Partners Operator Good afternoon and thank you for joining us today to discu ...

Business Impact and Risks - The ongoing COVID-19 pandemic continues to impact the company's business, leading to operational challenges and potential adverse effects on financial condition and results of operations [132]. - Economic uncertainty and capital markets disruption, significantly influenced by the military conflict between Russia and Ukraine, could materially affect the company's financial condition and results of operations [144]. - Supply chain disruptions have resulted in longer lead times and increased product costs, impacting the company's ability to meet customer demands [135]. - A limited number of customers represent a significant portion of sales, and the loss of key customers could lead to a substantial decrease in revenue [132]. - The company faces increased pricing pressure due to the commoditization of HPC hardware and software, which may harm its competitive position [134]. - The company has not developed a specific contingency plan to address the challenges posed by the COVID-19 pandemic, which may hinder its ability to mitigate potential adverse effects [137]. - The company relies on a limited number of parts suppliers, and any disruptions could adversely affect manufacturing and design processes [132]. - The ongoing COVID-19 pandemic has led to increased product costs, limited supplies, and protracted delivery dates, which could materially impact business operations and financial results [164]. - Inflation has increased overall cost structures, potentially affecting liquidity and financial condition if price increases to customers do not keep pace [148]. - The company has experienced fluctuations in operating results, making future predictions challenging and potentially leading to operating results falling below expectations [150]. - Competition in the market is expected to increase, with established competitors and new entrants posing risks to market share and profit margins [152]. - The company faces risks from unsuccessful product launches, which could lead to reduced revenues and potential returns of products, adversely affecting financial condition and operating results [168]. - Inventory may become obsolete due to varying sales cycles, leading to potential write-offs or reduced inventory value, impacting financial results [169]. - Significant defects in products could incur high remediation costs, damage reputation, and result in loss of market share, affecting overall business performance [170]. - The company offers extended product warranties, which could lead to unexpected costs if failure rates change, impacting financial stability [171]. - Achieving design wins is crucial for growth; failure to do so could harm the company's business and market position [174]. - Retaining key personnel is essential; loss of executives could delay business objectives and affect development efforts [175]. Financial Position and Capital Structure - The company has never paid, and does not expect to pay, any cash dividends to common stockholders for the foreseeable future, which may limit attractiveness to investors [144]. - As of February 28, 2022, the company has 18,878,183 shares of common stock outstanding, and substantial future sales could lead to a decline in stock price [202]. - The company's directors and significant stockholders collectively own 26.7% of outstanding common stock, allowing them to exert significant control over corporate matters [200]. - The company may seek to raise additional capital through equity offerings, debt financings, collaborations, or licensing arrangements if cash balances and anticipated cash flow are insufficient [210]. - The company qualifies as an "emerging growth company" and a "smaller reporting company," which may make its common stock less attractive to investors due to reduced reporting requirements [213][215]. - The company could remain an emerging growth company until December 31, 2023, or until it meets certain revenue or debt thresholds [214]. - If the company raises funds by issuing equity securities, it may result in dilution to stockholders and could impose significant restrictions on operations [211]. - The issuance of additional equity securities may cause the market price of the company's common stock to decline [211]. - The company may have to liquidate assets or reduce the scope of development programs if it is unable to raise adequate funds [211]. - The company may continue to qualify as a "smaller reporting company" until it has more than $250 million in public float or annual revenues exceeding $100 million [215]. - The company’s reliance on exemptions from various reporting requirements may lead to less active trading and increased stock price volatility [216]. - Any delay or prevention of a change of control transaction could cause the market price of the company's common stock to decline [209]. Regulatory and Compliance Risks - The company is subject to various risks related to international operations, including regulatory changes and geopolitical instability, which could adversely affect business plans [143]. - Privacy concerns regarding data handling could damage reputation and result in legal or regulatory issues, adversely affecting operating results [189]. - The European Union's GDPR imposes penalties of up to 4% of worldwide revenue for non-compliance, affecting the company's data handling practices [190]. - The California Consumer Privacy Act (CCPA) took effect on January 1, 2020, expanding rights for California residents and potentially increasing compliance costs and liabilities for the company [191]. - The California Privacy Rights Act (CPRA) will expand the CCPA significantly on January 1, 2023, introducing stricter regulations on personal information usage and retention [191]. - Compliance with evolving data protection laws may incur substantial costs, adversely impacting the company's business and operational results [192]. - International operations expose the company to risks such as foreign currency fluctuations, increased compliance costs, and political instability, which could negatively affect financial performance [193]. - The company is subject to U.S. export and import controls, and violations could lead to significant penalties and loss of business opportunities [194]. - Changes in regulations affecting suppliers' products may result in unexpected costs or liabilities, impacting the company's market acceptance and sales [195]. - The company faces risks related to anti-bribery laws, with potential penalties that could adversely affect its business if violations occur [196]. Supply Chain and Product Development - The complexity and unpredictability of product development cycles may result in delays, leading to outdated products and decreased sales [166]. - The introduction of new products and enhancements is critical for future success, requiring effective coordination with customers and suppliers [165]. - Suppliers representing over 10% of total parts purchases accounted for approximately 12.6% and 18.3% of materials purchased in 2021 and 2020, respectively, highlighting reliance on a limited number of suppliers [162].

One Stop Systems, Inc. (NASDAQ:OSS) Q3 2021 Earnings Conference Call November 11, 2021 5:00 PM ET Company Participants David Raun - President and CEO John Morrison - CFO Jim Ison - Chief Sales and Marketing Officer Conference Call Participants Eric Martinuzzi - Lake Street Joseph Gomes - Noble Capital Scott Searle - ROTH Capital Brian Kinstlinger - Alliance Global Partners David Williams - Benchmark Operator Good afternoon, and thank you for joining us today to discuss One Stop Systems' financial results fo ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part provides the company's unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, and cash flows, showing significant revenue growth and a shift to net income for the nine months ended September 30, 2021 Consolidated Balance Sheet Highlights (Unaudited) | Account | September 30, 2021 ($) | December 31, 2020 ($) | | :--- | :--- | :--- | | **Total Current Assets** | 39,780,385 | 24,078,516 | | **Total Assets** | 53,802,595 | 39,128,763 | | **Total Current Liabilities** | 11,595,366 | 7,812,223 | | **Total Liabilities** | 11,595,366 | 9,842,930 | | **Total Stockholders' Equity** | 42,207,229 | 29,285,833 | Consolidated Statements of Operations Highlights (Unaudited) | Metric | Q3 2021 ($) | Q3 2020 ($) | Nine Months 2021 ($) | Nine Months 2020 ($) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 15,984,293 | 12,976,058 | 44,205,054 | 37,961,023 | | **Gross Profit** | 5,516,703 | 4,901,613 | 14,602,231 | 11,622,496 | | **Income (Loss) from Operations** | 1,026,279 | 979,442 | 1,817,960 | (937,598) | | **Net Income (Loss)** | 980,696 | 857,790 | 2,719,016 | (250,404) | | **Diluted EPS** | 0.05 | 0.05 | 0.14 | (0.02) | Consolidated Statements of Cash Flows Highlights (Unaudited, Nine Months Ended) | Cash Flow Activity | September 30, 2021 ($) | September 30, 2020 ($) | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | 3,297,125 | (1,385,390) | | **Net cash used in investing activities** | (14,845,282) | (662,843) | | **Net cash provided by financing activities** | 9,228,588 | 2,325,509 | [Note 1 – The Company and Basis of Presentation](index=11&type=section&id=Note%201%20%E2%80%93%20The%20Company%20and%20Basis%20of%20Presentation) This note describes the company's industrial-grade computer system operations, corporate structure, and the significant impact of the COVID-19 pandemic on supply chains and component pricing - The company designs, manufactures, and markets industrial-grade computer systems for various applications, including media, medical, industrial, and military[30](index=30&type=chunk) - In March 2021, the company raised net proceeds of **$9,188,673** through a registered direct offering of its common stock[34](index=34&type=chunk) - The COVID-19 pandemic has caused increased pricing and shortages of necessary components, leading to longer lead times and increased inventory balances to ensure product availability[40](index=40&type=chunk)[43](index=43&type=chunk) [Note 8 – Debt](index=18&type=section&id=Note%208%20%E2%80%93%20Debt) This note details the company's debt structure, including foreign obligations, a Senior Secured Convertible Note, and the full forgiveness of its $1.5 million PPP loan in May 2021 - On May 3, 2021, the company received notification from the SBA that its Paycheck Protection Program (PPP) loan of **$1,499,360**, plus accrued interest of **$14,994**, had been fully forgiven[80](index=80&type=chunk) - The company has a Senior Secured Convertible Promissory Note with a principal face value of **$3,000,000**, issued in April 2020 with a **10%** original issue discount, maturing in April 2022[81](index=81&type=chunk)[82](index=82&type=chunk) Outstanding Debt Obligations as of September 30, 2021 | Loan Description | Balance ($) | Current Portion ($) | | :--- | :--- | :--- | | Convertible senior secured note | 2,590,909 | 2,590,909 | | Foreign (Uni Credit Bank AG) | 1,736,546 | 1,736,546 | | **Total** | **4,327,455** | **4,327,455** | [Note 9 – Stockholders' Equity](index=22&type=section&id=Note%209%20%E2%80%93%20Stockholders%27%20Equity) This note details stockholders' equity components, including stock-based compensation for options, RSUs, and warrants, totaling approximately $1.3 million for the nine months ended September 30, 2021 - As of September 30, 2021, there were **1,076,999** stock options outstanding with a weighted average exercise price of **$1.95**[98](index=98&type=chunk) - As of September 30, 2021, there was **$2,285,644** of unrecognized compensation cost related to **697,321** unvested restricted stock units (RSUs), expected to be recognized over a weighted average period of **1.87 years**[101](index=101&type=chunk) Stock-Based Compensation Expense | Period | 2021 | 2020 | | :--- | :--- | :--- | | **Three Months Ended Sep 30** | $399,148 | $210,280 | | **Nine Months Ended Sep 30** | $1,302,878 | $503,419 | [Note 10 – Commitments and Contingencies](index=25&type=section&id=Note%2010%20%E2%80%93%20Commitments%20and%20Contingencies) This note addresses legal matters, lease obligations, and significant customer concentration, including the resolution of a former CEO's legal dispute and one customer accounting for 60% of receivables - A legal action brought by former CEO Stephen D. Cooper was resolved, and the litigation was dismissed with prejudice on June 28, 2021[108](index=108&type=chunk)[110](index=110&type=chunk) - For the nine months ended September 30, 2021, two customers accounted for approximately **36%** of consolidated revenue[118](index=118&type=chunk) - As of September 30, 2021, one customer accounted for approximately **60%** of consolidated trade accounts receivable[119](index=119&type=chunk) [Note 13 – Revenue, Segment and Geographic Information](index=27&type=section&id=Note%2013%20%E2%80%93%20Revenue%2C%20Segment%20and%20Geographic%20Information) This note details segment performance, with OSS generating $27.0 million revenue (38.5% gross margin) and Bressner $17.2 million (24.4% gross margin) for the nine months ended September 30, 2021, with 62% of revenue from non-U.S. customers Segment Performance (Nine Months Ended September 30, 2021) | Segment | Revenues ($) | Gross Profit ($) | Gross Margin % | | :--- | :--- | :--- | :--- | | **OSS** | 26,968,202 | 10,395,769 | 38.5% | | **Bressner** | 17,236,852 | 4,206,462 | 24.4% | | **Total** | **44,205,054** | **14,602,231** | **33.0%** | - For the nine months ended September 30, 2021, revenue from customers with non-U.S. billing addresses represented approximately **62%** of the company's total revenue[125](index=125&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial performance for the three and nine months ended September 30, 2021, covering revenue growth, gross margin, operating expenses, and liquidity, including non-GAAP measures like Adjusted EBITDA and EPS [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This subsection details financial results, with Q3 2021 revenue growing 23.2% to $16.0 million, driven by Bressner, while nine-month revenue increased 16.4% to $44.2 million with improved gross margin - Q3 2021 revenue increased **23.2%** year-over-year to **$16.0 million**, driven by a **$2.7 million (68.0%)** increase at Bressner and a **$0.3 million (3.2%)** increase at OSS[158](index=158&type=chunk) - Nine-month 2021 revenue increased **16.4%** year-over-year to **$44.2 million**, reflecting a general economic improvement and recovery from the COVID-19 pandemic's impact[159](index=159&type=chunk) - Consolidated gross margin for Q3 2021 decreased to **34.5%** from **37.8%** in Q3 2020, primarily due to changes in product mix at the OSS segment; however, the nine-month gross margin improved to **33.0%** from **30.6%** in the prior year[161](index=161&type=chunk)[164](index=164&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20capital%20resources) This subsection reviews liquidity, with $4.0 million cash, $14.5 million short-term investments, and $28.2 million working capital as of September 30, 2021, bolstered by a $9.2 million stock offering - As of September 30, 2021, the company had cash and cash equivalents of **$4.0 million**, short-term investments of **$14.5 million**, and working capital of **$28.2 million**[181](index=181&type=chunk) - Net cash provided by operating activities for the nine months ended September 30, 2021, was **$3.3 million**, a **$4.7 million** improvement compared to the **$1.4 million** used in the same period in 2020[190](index=190&type=chunk) - Financing activities provided **$9.2 million** in cash, primarily from a **$10.0 million** registered direct stock offering completed in March 2021[195](index=195&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures) This subsection presents non-GAAP metrics like Adjusted EBITDA ($4.3 million) and Non-GAAP diluted EPS ($0.15) for the nine months ended September 30, 2021, providing insight into core operating performance Adjusted EBITDA Reconciliation | Period | Q3 2021 ($) | Q3 2020 ($) | Nine Months 2021 ($) | Nine Months 2020 ($) | | :--- | :--- | :--- | :--- | :--- | | **Net Income (Loss)** | 980,696 | 857,790 | 2,719,016 | (250,404) | | **Adjusted EBITDA** | 1,811,899 | 1,566,649 | 4,262,897 | 682,147 | Non-GAAP Net Income and EPS | Metric | Q3 2021 ($) | Q3 2020 ($) | Nine Months 2021 ($) | Nine Months 2020 ($) | | :--- | :--- | :--- | :--- | :--- | | **Non-GAAP Net Income** | 1,543,744 | 1,239,055 | 2,999,241 | 773,050 | | **Non-GAAP Diluted EPS** | 0.08 | 0.07 | 0.15 | 0.05 | - Free cash flow for the nine months ended September 30, 2021, was **$3.0 million**, compared to a negative free cash flow of **$(2.0) million** in the same period of 2020[223](index=223&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risks include interest rate exposure on variable debt, credit risk from receivables, and foreign currency fluctuations primarily from its German subsidiary Bressner's Euro transactions - The company is exposed to interest rate risk through its variable rate borrowings[207](index=207&type=chunk) - Credit risk is concentrated in cash, cash equivalents, and accounts receivable, with ongoing credit evaluations performed to mitigate this risk[208](index=208&type=chunk) - The company is subject to foreign currency risk as its German subsidiary, Bressner, largely transacts in Euros, with resulting translation adjustments recorded in other comprehensive income[209](index=209&type=chunk)[210](index=210&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[227](index=227&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2021[228](index=228&type=chunk) [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, and details regarding unregistered sales of equity securities and use of proceeds [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10, detailing the resolution and dismissal of a legal action filed by the company's former CEO in June 2021 - A legal action filed by former CEO Stephen D. Cooper against the company was resolved, and the court entered a dismissal with prejudice on June 28, 2021[110](index=110&type=chunk)[231](index=231&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section highlights ongoing business risks from the COVID-19 pandemic, including demand fluctuations, supply chain disruptions, and impacts on media, entertainment, and airline industries - The business continues to face negative effects from the COVID-19 pandemic, including impacts on customers, suppliers, and overall demand[233](index=233&type=chunk) - Demand from customers in the media, entertainment, and commercial airline industries has been particularly impacted by restrictions on public gatherings and reduced travel[236](index=236&type=chunk) - The pandemic raises the possibility of an extended global economic downturn, which could disrupt the supply chain and negatively affect revenues in future periods[237](index=237&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first nine months of 2021, the company issued common stock shares from warrant exercises, generating $107,500 in proceeds, without registration under the Securities Act of 1933 - During the nine months ended September 30, 2021, the company issued **54,834** shares of common stock from the exercise of warrants, generating total proceeds of **$107,500**[238](index=238&type=chunk)

Edge Computing Market & AI Transportables - The global edge computing market is projected to reach $61.1 billion by 2025[14] - In 2018, only 10% of generated data was processed on the edge, but by 2025, it is expected to grow to 75%[14] - One Stop Systems (OSS) focuses on "AI Transportables," which require the power of the datacenter at each node in harsh environments[19] - The AI Transportables market is estimated to be a $200M-$400M market[45] OSS Financial Performance & Strategic Changes - OSS's revenue in 2017 was $27.5 million, $37.0 million in 2018, $58.3 million in 2019, and $51.9 million in 2020 (impacted by COVID)[50, 62] - OSS experienced a COVID-related loss/delay of $14 million in revenue[61] - Q2 2021 revenue was $14.9 million, up 28% compared to Q2 2020[71] - Q2 2021 gross profit was $4.7 million, up 40% compared to Q2 2020[71] - Q2 2021 Adjusted EBITDA was $1.4 million, up $1.3 million compared to Q2 2020, representing 9% of quarterly revenue[71] - Cash and cash equivalents increased by $12 million+ to $18.5 million as of Q2 2021[71] - OSS expects AI Transportables to grow from 20% of revenue in 2020 to 50% in the future[45]

Financial Data and Key Metrics Changes - One Stop Systems achieved record revenues for the first half of 2021, with Q2 revenue of $14.9 million, an increase of 12% from Q1 and up 28% year-over-year [4][9] - Net income increased to $1.7 million in Q2 2021, compared to a net loss of $12,000 in the same quarter last year [13] - Adjusted EBITDA reached $1.4 million, representing 9% of quarterly revenue, compared to $73,000 in the same year-ago quarter [14] Business Line Data and Key Metrics Changes - The core OSS business revenue increased by 25% to $9.1 million compared to $7.3 million in the same year-ago quarter [10] - Bressner, the European subsidiary, saw a revenue increase of 34%, contributing $5.8 million in Q2 compared to $4.3 million in the same period last year [10] - Gross margin for the core OSS business improved to 36.7%, up 2.4 percentage points year-over-year [11] Market Data and Key Metrics Changes - Revenue growth was driven by sales of ruggedized servers into the media and entertainment markets and military AI transportable products [9] - The company reported a notable increase in product orders from media and entertainment customers, particularly for new virtual products [10] Company Strategy and Development Direction - The company aims to strengthen its position in the edge computing industry and become a market leader in the AI transportable space [5] - A focus on diversifying the customer base and expanding into military applications is evident, with a significant portion of the pipeline now targeting AI transportable markets [44] Management's Comments on Operating Environment and Future Outlook - Management noted that while the pandemic's effects will continue, there is improving customer demand, particularly from commercial aerospace clients [25][26] - The company anticipates revenue guidance of $15.9 million for Q3, representing 8% growth over Q2 and 23% growth year-over-year [28] Other Important Information - The company has seen a tripling of shareholder value over the past two years, attributed to strategic execution and improved board composition [6] - Cash and cash equivalents totaled $4 million, with short-term investments of $14.5 million, down from $19.6 million as of March 31, 2021 [19] Q&A Session Summary Question: Impact of global supply chain issues on gross margins - Management acknowledged supply issues but emphasized that demand reflects real market needs, and they are focused on efficiency to offset price increases [32][33] Question: Operating expenses outlook - Operating expenses are expected to increase slightly due to trade shows and hiring, but management is cautious about significant increases [35] Question: RFP pipeline and end market dynamics - The pipeline includes 17 major pending opportunities, with a focus on higher-margin AI transportable markets [36][38] Question: Sustainability of entertainment vertical revenue - Management expressed confidence in the sustainability of revenue from virtual products, anticipating a stronger customer base in 2022 [40] Question: Revenue concentration from major customers - Both major customers have returned strong, but the company is diversifying its customer base and participating in more programs [42][43] Question: Staffing challenges - The company is adequately staffed but noted challenges in finding new talent due to geographic dynamics [55] Question: Design cycle for major customer wins - The design cycle for commercial customers typically takes 6 to 12 months, while military projects can take 12 to 24 months [57]

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 ...