Financial Data and Key Metrics Changes - Net sales in Q4 2025 were $4 million, down from $5.2 million in Q4 2024, while full-year net sales were $21.5 million compared to $21.8 million in the prior year [15] - Q4 bookings were $3.1 million, down 25% from $4.1 million in the prior year, and full-year bookings were $18.6 million, down 17% from $22.5 million in 2024 [15] - Gross margins for Q4 were 43%, compared to 52.2% in Q4 2024, and full-year gross margin was 49.3% for 2025 compared to 53.3% in the prior year [17][19] - Net loss for Q4 was $2.5 million or $0.27 per share, compared to a net loss of $1.2 million or $0.13 per share in Q4 2024; full-year net loss was $5 million or $0.53 per share, compared to a net loss of $3.1 million or $0.34 per share in 2024 [19] Business Line Data and Key Metrics Changes - Consumables, adapters, and services represented 58% of total revenue for 2025, while capital equipment sales accounted for 42% [16] - Sales to the automotive electronics sector represented 52% of 2025 bookings, down from 59% in 2024 [17] Market Data and Key Metrics Changes - Bookings and revenues were strongest in Asia, while North America demand remained consistent with the prior year, and Europe experienced a decline [16] - Overall backlog as of December 31, 2025, was $2.3 million, down from $2.7 million at the end of September [17] Company Strategy and Development Direction - The company is transforming to shift from a traditional programming CapEx market to a broader data provisioning market, which is a significantly larger opportunity [9] - The strategy includes modernizing the go-to-market approach, investing in the core platform, strengthening customer relationships, optimizing business operations, and deploying AI company-wide [6][8] - The company is expanding its addressable market by leveraging partnerships, such as the recent collaboration with IAR, to enhance security provisioning capabilities [10][100] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in being ahead of schedule in the transformation plan, with expectations for organic revenue growth in 2026 supported by early demand signals from edge AI infrastructure [14][22] - The company anticipates improved gross margins as revenue increases and cost discipline is maintained, targeting positive operating cash flow by the end of 2026 [22] Other Important Information - The company faced challenges in 2025, including a cyber attack, but managed to recover quickly and continue its transformation efforts [7] - Operating expenses for Q4 were $4.2 million, including one-time expenses related to SEC filings and restructuring, compared to $4 million in Q4 2024 [18] Q&A Session Summary Question: Impact of semiconductor manufacturing reshoring on revenue opportunity - Management noted that while reshoring creates jobs and growth, it does not directly impact revenue; however, there is increased activity and conversations with clients regarding production needs [25][27] Question: AI-assisted software development - Management highlighted advancements in AI that have significantly reduced costs and improved efficiency in software development processes, enabling faster product releases [32][34] Question: Update on M&A pipeline - Management confirmed an active M&A pipeline with several opportunities being explored, emphasizing a disciplined approach to acquisitions [55][60] Question: Customer activity in Q4 - Management indicated that while Q4 had some customer conversations, many were looking to finalize plans in Q1 and Q2, with a significant portion of the pipeline consisting of new opportunities [66][68] Question: Activity in the electric vehicle market - Management affirmed that the automotive sector remains a strong market, with ongoing discussions and new solutions being developed for existing clients [92][94]

Financial Data and Key Metrics Changes - Net sales in Q4 2025 were $4 million, down from $5.2 million in Q4 2024. For the full year, net sales were $21.5 million compared to $21.8 million in the prior year [15] - Q4 bookings were $3.1 million, down 25% from $4.1 million in the prior year, while full year bookings were $18.6 million, down 17% from $22.5 million in 2024 [15] - Gross margins for Q4 were 43%, compared to 52.2% in Q4 2024, and full year gross margin was 49.3% for 2025 compared to 53.3% in the prior year [17] - Net loss for Q4 was $2.5 million or $0.27 per share, compared to a net loss of $1.2 million or $0.13 per share in Q4 2024. For the full year, net loss was $5 million or $0.53 per share, compared to a net loss of $3.1 million or $0.34 per share in 2024 [19] Business Line Data and Key Metrics Changes - Consumables, adapters, and services represented 58% of total revenue for 2025, while capital equipment sales accounted for 42% [16] - Sales to the automotive electronics sector represented 52% of 2025 bookings, down from 59% in 2024 [17] Market Data and Key Metrics Changes - Bookings and revenues were strongest in Asia, while North America demand remained consistent with the prior year, and Europe experienced a decline [16] - Overall backlog as of December 31, 2025, was $2.3 million, down from $2.7 million at the end of September [17] Company Strategy and Development Direction - The company is transforming to shift from a traditional programming CapEx market to a broader data provisioning market, which is a significantly larger opportunity [9] - The strategy includes modernizing the go-to-market approach, investing in the core platform, strengthening customer relationships, optimizing business operations, and deploying AI company-wide [6][8] - The company is actively pursuing M&A opportunities to fill strategic gaps and enhance growth [55][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in being ahead of schedule in the transformation plan, with expectations for organic revenue growth in 2026 supported by early demand signals from Edge AI infrastructure [14][22] - The company anticipates improved gross margins as revenue increases and cost discipline is maintained [22] - Management noted that the build-out of Edge AI is expected to create new revenue opportunities and align with customer demand [13][68] Other Important Information - The company has no debt on the balance sheet and maintains a solid liquidity position with cash at $7.9 million at the end of Q4 2025 [20][21] - Operating expenses for Q4 included one-time expenses related to SEC filings and restructuring, totaling approximately $312,000 [18] Q&A Session Summary Question: Impact of semiconductor manufacturing reshoring on revenue opportunity - Management indicated that while reshoring creates jobs and growth, it does not directly impact revenue. The focus remains on AI build-out and automation [25][26] Question: AI-assisted software development - Management discussed advancements in AI that have significantly reduced costs and improved efficiency in software development processes [29][34] Question: Balance sheet comfort level - Management expressed comfort with the balance sheet, noting a focus on controlling costs and targeting $1 million in run rate reductions [46][48] Question: M&A pipeline update - Management confirmed an active M&A pipeline with several opportunities being explored, emphasizing a disciplined approach to acquisitions [55][62] Question: Customer activity in Q4 - Management noted that while Q4 had some customer conversations, many were looking to finalize plans in Q1 and Q2, with a significant portion of the pipeline being new opportunities [66][68] Question: Activity in the electric vehicle market - Management confirmed that the automotive sector remains a strong market, with ongoing efforts to provide new solutions to existing customers [92][94] Question: Potential for additional partnerships - Management expressed interest in forming more partnerships similar to the agreement with IAR, which is expected to enhance growth opportunities [100][101]