Good afternoon, everyone, and welcome to Data I.O.'s fourth quarter 2025 Financial Results Conference Call. Please note, today's event is being recorded. At this time, I'd like to turn the conference over to Mr. Jordan Darrow, Investor Relations. Please go ahead, sir.

Thank you, Operator, and welcome to the Data I.O. Corporation fourth quarter 2025 Financial Results Conference Call. With me today are the company's president and CEO, Bill Wentworth, and Chief Financial Officer, Charlie DeBona. Before we begin, I'd like to remind you that statements made in this conference call concerning future events, results from operations, financial position, markets, economic conditions, supply chain expectations, estimated impact of tax and other regulatory reform, product releases, new industry participants, and any other statements that may be construed as a prediction of future performance or events or forward-looking statements, which involve known and unknown risks, uncertainties, and other factors which may cause actual results to differ materially from those expressed or implied in such statements. These factors also include uncertainties as to the impact of global and geopolitical events, international tariff and trade regulations, order level for the company and the activity level of the automotive and semiconductor industry overall, ability to record revenues based on the timing of product deliveries and installations, market acceptance of new products, changes in economic conditions and market demand, part shortages, pricing, and other activities by competitors, and other risks, including those described from time to time in the company's filings on Form 10-K and 10-Q with the Securities Exchange Commission in our press releases and other communications. The company may also reference GAAP and non-GAAP financial performance measures, including one-time items, which are intended to provide listeners with a means to better understand the company's performance. Please refer to reconciliations in our earnings press release issued today after marketing. Finally, the accuracy and completeness of all discussions on this call, including forward-looking statements, should not be unduly relied upon. Data.io is under no duty to update any forward-looking statements. And now I'll turn the call over to Bill Warnworth, President and CEO of Data.io. Thank you, Jordan, very much.

Thank you for everybody dialing to the call. And I want to start off, obviously this is a Q4 earnings call, but obviously there's lot that transpired over 2025. It was certainly a little more difficult of a quarter than we planned. You know, there were a lot of things and headwinds that still continue with tariffs, but I want to assure everyone that that did not waver us from the continuation of our transformation. You have to get through these tough times, and you can't stop the transformation that this company needed. You know, DataRail had some transformation work that was fairly heavy. We did invest a lot of money into the business, and I'm pretty proud of the team, very proud of the team, in how we ended the year and how we've teed up this year, which I'll talk a little bit about. The setup. Our mission throughout 25 was to transform Data I.O. for long-term growth. That plan proving to be approximately one year ahead of schedule. I've been through, personally, quite a few transformations in my own business and with other companies. I'm good at measuring. I'm pretty confident. I'm very confident. I'm acued against six, recognizing the go-to-market. Our team needs to hear from all of our customers and suppliers in order for those transformations to really take hold and for everybody to get energized around those. Optimizing business operations, IT infrastructure, you know, we went back, we made it through that. I felt up and running within 11 months. So we found out a lot about our infrastructure, too, and some of those things that we needed to button up. We've made great strides. cloud, you know, that offers obviously additional security, getting things off-prem into the cloud, moving data and additional processes, and deploying AI company-wide, and you'll definitely hear more about that later. You know, we've had a board member. Executive team obviously has been returning data rail to residents throughout the year. Again, transformations take time. They're not easy. I can tell you that the team has put in a ton of time. Our new direction, we're expanding our addressable market. DataRail is shifting from our traditional programming CapEx market to servicing a broader data provisioning market, a significantly larger opportunity for the company. We're leveraging our platform to reach into two adjacent markets programming. Yesterday, if you've seen the press release with IAR, this is one of the large, this is one of the, what we feel is going to be a significant opportunity this year and going forward. I've been a big believer in partnerships ever since I've been in the business and been in this business in particular, it's really important. We're a small company. You can't just go it alone. And being able to operation with IAR really combines their security expertise with our provisioning expertise to create a very comprehensive device support model for security provisioning in the industry. They have a significant algo library aligned with our algo library. We feel the solution is frictionless. I won't get into the details of how complicated security provisioning can be, But it's very difficult. We presented at a few of their conferences. It's gone really well. The interesting opportunity I've had from shareholders and other meetings and podcasts, conversations around, well, hey, how does AI help here? And have you heard me make this comment many times? It doesn't really help us now. That has changed. If you remember back in the mid-'90s, the Internet boom, and obviously that went through its change. But it continued even through that pause, and it continued to grow our industry. AI with the build-out, with the hypervisors, that continues and will continue. But what it's doing is these AI models are starting to really gain traction, and I'm sure we all see it in the news. What this does is now create the need for the build-out of edge AI, which is the edge of the network. You can't have autonomous cars and robotics and, you know, you know, IoT devices that are fairly, you know, have a high level of technical capability without expanding the edge of the network. It's just not. We have had conversations with new customers coming into the year of significant build-outs around see this pausing because AI is changing things so we see that edge of the network continuing to grow. So we're very excited about the setup, the drive and demand for semiconductors as we New and existing customers are confirming that Edge AI bill that's a real early customer alignment and interest validates our strategy. As we enter 2026, we are poised to deliver organic revenue growth this year with very encouraging customer activity in Q4 and into 20. Now I'd like to hand the rest of the conversation to Charlie DeBooma, our CFO.

Thanks, Bill, and good afternoon, everyone. I'll take this time now to walk through our fourth quarter and full year financial results covering revenue and bookings, our revenue mix, margins, operating expenses, bottom line, and then also some balance sheet items. Net sales in fourth quarter were $4 million, down from $5.2 million in fourth quarter of 2024. For the full year, net sales were $21.5 million compared with $21.8 million in the prior year. Similarly, fourth-quarter bookings were $3.1 million, down 25% from $4.1 million in the prior year period, while full-year bookings were $18.6 million, down 17% from $22.5 million in 2024. Regionally, 2025 bookings and revenues were strongest for customers throughout Asia, as North America demand remained consistent with the prior year, but Europe declined. Moving forward, as a global company headquartered in the Western Hemisphere, Data.io is well positioned to support customers migrating manufacturing facilities to the Americans. In terms of mix for 2025, consumables and adapters and services represented 58% of total revenue for the year, providing a stable base of recurring revenue. As a result, deferred revenue rose to approximately $1.5 million on December 31, 2025, up from $1.4 million as of September 30 of the year. Capital equipment sales represented the remaining 42% of 2025 revenues. Demand for capital equipment continued to be negatively impacted by the realignment of technology spending with AI-related data center investments at the forefront, In particular, a reassessment of EV capacity and manufacturing impacted the company's largest end market, the automotive electronic sector. Notably, sales to the automotive electronic sector represented 52% of 2025 bookings compared to 59% in 2024, while overall backlog as of December 31st was $2.3 million, down from $2.7 million at the end of September. All that said, as Bill mentioned, we've recently seen very positive indications of demand for our products as the build-out of edge AI is beginning to ramp up. Gross margins as a percentage of sales was 43% in fourth quarter compared to 52.2% in the fourth quarter of 2024. Full-year gross margin was 49.3% for 2025 compared to 53.3% in the prior year. The decrease in gross margin reflects some mixed shift as well as lower absorption of labor and overhead costs. Direct material costs remained relatively steady and consistent with prior periods as the company continued to actively mitigate the impacts of tariffs and other inflationary pressures. Operating expenses for the fourth quarter were $4.2 million, which included approximately $312,000 in one-time expenses related to SEC filings, restructuring work, and the initial phases of our transition to a new ERP system. This compared to $4 million in the fourth quarter of 2024. Full-year 2025 operating expenses were $15.7 million, of which $1.4 million represented one-time expenses primarily related to the company's leadership transition, investments in the core programming platform, and information systems, again, SEC filings, and the remediation of the cybersecurity incident first identified on August 16, 2025. This compared to $14.6 million in 2024, wherein there were no one-time operating expenses recorded. Net loss for the fourth quarter was $2.5 million, or 27 cents per share, compared to a net loss of $1.2 million, or 13 cents per share, in the fourth quarter of 2024. For the full year, net loss was $5 million, or 53 cents per share, compared to a net loss of $3.1 million, or 34 cents per share, in 2024. Adjusted EBITDA, which excludes equity compensation, was negative $2.5 million in the fourth quarter compared to negative $1.1 million in the fourth quarter of 2024. Excluding one-time expenses of approximately $312,000 in the fourth quarter, adjusted EBITDA would have been at negative $1.9 million. For the full year, adjusted EBITDA was negative $3.9 million compared to negative $1.4 million in 2024. Excluding the one-time expenses of $1.4 million, Full-year adjusted EBITDA for 2025 would have been negative $2.6 million. The company's balance sheet and liquidity remain solid. Cash at the end of the fourth quarter was $7.9 million compared to $10.3 million on December 31, 2024. The decreased cash balance reflects one-time expenses, technology platform investments, and IT spending through the year, partially offset by reduced inventory levels and increased accounts payable. Networking capital was $12.3 million on December 31st, 2025, compared to $16.1 million on December 31st, 2024. In addition to cash, inventories were reduced by about half a million dollars as the team implemented programs to become leaner and more efficient. Finally, the company continues to have no debt on the balance sheet. Before wrapping up and before we turn to questions, I'd like to provide a framing or framework for thinking about 2026, which is based solely on organic growth. First, we are targeting organic growth for 2026 over 2025, supported by early demand signals we are seeing from edge AI infrastructure and continued strength in our recurring revenue base. Second, we have a growing pipeline for entry into the programming services and programming test markets, which represent meaningful opportunities to expand our addressable market. Third, as revenue increases, we expect improved absorption of labor and overhead costs, which should drive improved gross margins relative to what we've experienced in 2025. Fourth, on the expense side, we are targeting an additional $1 million in run rate reductions beyond the benefit of previously implemented structural and operational cost improvements starting in early 2026. Fifth, AI itself is becoming deeply ingrained across all functional departments in the organization, driving efficiency and enabling us to do more with less. And finally, the combination of revenue growth and cost discipline gives us line of sight to positive operating cash flow by the end of 2026. Again, this preview only addresses organic operations and does not include the inorganic initiatives which we're actively pursuing to accelerate our growth and build out. With that, I'll turn back to the operator for Q&A portion of the call.

We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up your handstep before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from David Williams with Benchmark.

Good afternoon, everyone, and thanks for letting me ask the question here. So, Bill, good to hear from you, and thanks for all the updates. I guess maybe first, can you maybe talk a little bit about the semiconductor manufacturing and maybe what the reshoring does, especially as we come back to the American regions? What do you think that means for your revenue opportunity, and is that an area of growth and opportunity for you in the near term?

Well, you know, Dave, thanks for the question. Great to hear from you. You know, semiconductor manufacturing coming back to the U.S., I mean, it's great. Obviously, it creates a lot of jobs, which creates growth in other domains and things like that because of factories being built. I wouldn't say the semiconductor manufacturing coming back to the U.S. directly impacts us. What is impacting, again, as we talked about AI build-out? And that's not at the hypervisor level. This is the edge of the network, right, to be able to have all this automation that's coming our way that's going to be AI-driven and AI-enabled. What we're seeing, though, is, sure, there's some resharing going on. That's the other thing that we're seeing is not the semiconductor side, but just products being built and brought back to the Americas. You know, we're seeing things like, you know, factories kind of spinning up in activity that we really didn't think that would happen until second half of this year, starting early in the first half. You know, it's been a little slow out of the gate, but the conversations are definitely picking up. We've got a lot of conversations with quite a few clients and new logos that were not in part of our revenue plan, And they're very definitive about when their production is going to start, when they need systems. And, you know, I will say the plan that we've put in place, our strategy, we've been displaying to these customers, existing and new. The comments are things like, you're exactly the supplier we're looking for. You're hitting all the areas that we provision data and need to provision data. And in the past, we were in one box, is that we have the platform. It's not like we have to go out and buy a new technology or make some other investment, which does create maybe just if. Probably watch AI way too much on TV and not show. First became a board member was one of those couple meetings was getting AI to five days to read through to get all the, create an algorithm as an example. Now the doc AI that we created was two years now. It cost me the project, the POC, and to get it to work and function probably cost $120,000. I can tell you today our AI has advanced. So that's what you have, and every software to have that is built into your DevOps and Agile. So what you do is when you're writing code, you automate all the functions and what it takes. Duction code. We've only been using Claude, its department, but we're creating teams around other teams that are just going to be coming out this year that's going to start to retire technical debt, which will further reduce our costs. I can tell you, David, it's faster and gets to market faster. But on top of it, I've done a lot of M&A in my career. I can consolidate new components. If they have not deployed today, but also when we look at inorganic growth as well, I think it's going to accelerate that. It's going to greatly help us get our new ERP online far faster. We're doing now with AI. Start the actual process of the transformation at ERP is setting it up to make it. I don't want to say easy for Charlie because he's heading the project, But I'm concerned with an ERP implementation. If you want to comment on that.

We're doing the new chart of accounts, creating the new chart of accounts, putting in new policies. The speed at which you can do that with assistance from AI, you know, obviously overseen by people, making sure everything works. It's just accelerating and de-risking the process. And I think it's probably the biggest impact on ERP is going to be the reduction in implementation costs as we go forward. It's just amazing how quickly we're getting the ball in play. We have a current example.

We just launched Salesforce a week ahead of schedule, a new software. This is our software, and that's where they entered the tickets. That project originally was scoped at, and this is only eight months ago, was scoped at almost $250,000 with AI and with some other things that we did to maximize the process to make it easy. We did this for $100,000, and we were on time with the project. And I can tell you after five days, typically, you'll see, you'll hear a lot of issues with changes substantial as that. I just talked to the head of service at the parking lot before I went and ran an errand. I said, how's it going, Sam? He's like, five days in, we're good. Like, no noise, you know, no challenges. There haven't been any problems with the customers being able to answer tickets. I mean, and AI was a big part of that.

And maybe, Charlie, just one for you, just kind of thinking about the balance sheet and where you are. What's your level of comfort, I guess, with the balance sheet, given the strategy and kind of what you see out in front of you?

Yeah, I'm comfortable with it. Obviously, you know, we did drain some cash last year. That's sort of the inevitable outcome of making the investments and the transformation that we were undergoing. But we do see that there's, you know, a turning point through the course of the year here as we, you know, we are very focused internally on controlling costs. We're making moves that we, like I said, we expect to be at least a million dollars of run rate savings. And that'll happen through the early part of the year. So we'll realize a lot of that through the course of the year as well. You know, this is, I think, a very solid, you know, we're a debt-free company right now with decent cash on hand and in a good position to sort of execute on the strategy we have, both organic and inorganic. And, you know, I really don't have any – certainly the balance sheet does not keep me up at night. ERP transformations keep me up at night.

But I would say in that to add to that, David, is that going back to AI, and I'm sorry to go back to this, but the transformations do cost money, right? And the thing is, is that coming into the business over a year and a half ago, this company was very thinly threaded, whereas you were going to need additional resources to do transformations. They don't happen on their own. I can tell you that AI has an impact in lowering the cost of the transformation, especially where we are today and moving forward. Then I don't have to hire a bunch of resources to continue the transformation because AI. Our next question comes from Michael Legg with Ladinburg-Thelman.

Thanks, Guy. How are you? I wanted to dig a little deeper into the M&A pipeline and where you are there. Could you just give us a little update on how that's going?

Yeah, absolutely, Mike. As we've talked about, that was certainly a big part of my charter and strategy. And this goes back to, you know, October of 2024 when we laid out the original strategy of the board to get into these other, you know, capabilities. We have – we are in – a data room was just opened up on one of our opportunities just two nights ago. We have another one being opened up most likely tomorrow. I got a call from a CEO in one of our strategic initiatives to meet at APEX to discuss a serious discussion around acquiring their business, and we have two other irons in the fire. So it is a quite active pipeline. more in there you know probably a little more than i'd like but at least it gives us choices something that happened this year obviously it wouldn't be having these conversations but everything again is directly tied to the strategy that we discussed so very active play mike and uh and there's more behind that once we get through a few of these that fit exactly where we want to fill and the holes we want to fill in our strategy um and then we will refill that pipeline and we will take another path to the next year you know I do I do want to emphasize

that both Bill and I are very disciplined acquirers yeah we have already walked from a couple transactions and it did not make sense once we got into the into looking at the financials we are not going to be we're good stewards of the capital of the company we have very exciting targets that we're looking at. We're enthusiastic about them, but we're also not in deal heat.

And they're day one accretive. That's the important thing. I mean, really. And the important thing too, Mike, is I've done a fair share of M&A activity. Strategy is a place of capabilities and a business that has horizontal. When you put those types of companies together, it accelerates growth. Okay, great. Thanks. And then, you know, obviously we have some headwinds

in the industry right now, you mentioned in the fourth quarter you saw a lot of good customer activity. Can you just expand on that customer activity and what you're seeing?

Yeah, sure. I wouldn't say Q4. There were some conversations, a lot of it was tailing off, like we'll talk to you in Q1 and Q2. So those were good conversations, trying to get an idea. You're always trying to set up your next year, right? So you do a big push, trying to find out when budgets expire, what's left, What's the budget going to look like next year? What are your projects you're working on? You know, a good amount of our pipe this year or opportunities that are in our pipeline, revenue plan, 75% of them are new from last year. I mean, so we've had conversations throughout the year, and they're not all new logos, but just new activity, right? Some new logos, which is a big push. It's a reason why we developed the manual product line. We've got reps ready to set up orders in Q1 for our manual systems, which we should start to see next month, and to get those manual systems both here in North America and China. I just came fresh off a trip from there. Met with one of our largest customers that's a big supplier to BYD. We have new products coming out. As a matter of fact, they brought up and asked for a solution. It just so happens we were already working on it. And so they offered to be our beta client. And so that's in our pipeline for the second half. So a lot of exciting things across the board. But, yeah, those conversations are starting now, look at, you know, turn into purchase orders as we get into the end of Q1 and definitely in the Q2. I mean, there's a lot of – and I think the tariff thing recently, pulling that back, there's some pent-up demand back there. I can't tell you how much. I think that will have an impact and give us a little bit of a tailwind, but we'll see. But outside of that, the build-out of Edge AI, our existing customers, the solutions we're bringing them, the new plan that we have to be in all areas of data provisioning.

And then you mentioned you're a year ahead of plans that you took over, Bill. Can you just kind of give us some of the thoughts you have on, you know, two years ago, what you thought versus what you're seeing today, some of that why you're ahead of plan, and what positive upside you may have seen that you might not have thought of a couple years ago?

Yeah, absolutely. It's a great question, and, you know, it's a hard thing to measure, obviously. But, you know, in year one, you know, there's always a significant amount of investment because you're going to have to maybe kill the old contracts or you're going to have to swizzle to manage the team. You're going to have a bunch of one-time costs. You know, we're paying for things that weren't fixed in the past three, four, five years ago, right? So a lot of that was really all in 2020. We're investing in 26, but the investment right now is directly in new products. It's directly in areas that are going to drive revenue. So there's no more. I would say the cleanup is pretty much completed. I would have thought it would have taken longer, but as I said, the tools we're using and the technology we're using to get there faster has paid huge dividends, and that's only going to accelerate. So, yes, I think we're probably, you know, typically transformations of this nature are two, two-and-a-half years. We're a good six months ahead of schedule. Could be more.

Our next question comes from George Marima with Pareto Ventures.

Hey, George. Hey, Bill. So, Bill, as you guys are moving into Physically I and kind of inline programming, what are you replacing out there? What are you competing against? And just internally as a company moving into these new areas, what kind of changes and distributions and sales and marketing motions need to happen to fully realize this? Yeah, the great thing is we don't have to change anything. These are existing customers, and some new logos that are large contract manufacturers that we call on globally, they're now, you know, obviously been tasked with new projects to build out, you know, the edge of the network, the products that fit that. There's one campus we went to, it's 80 acres, and next to them is Google, Verizon, a bunch of other companies that have created products that they're going to build for this build-out. It's changing, you know, channels. I mean, we are here. We'll tell you that's one of the things that, you know, look, like contracts, sure, we control our revenue this year. And in the future, it's important. I hope I answered your question. And then on the cash flow flipping positive, what kind of revenue do you need to achieve that? Well, you know, it's tough to say. I mean, obviously, you know, we're reducing and optimizing the business monthly honestly and there's some significant optimization that's coming some we've already done in q1 which we'll talk about yeah obviously

we can't give you want to we're not giving specific guidance on revenue but we believe between the uh upside on revenue and the uh cost containment and the cost reductions we can we can we did last year two lines are moving in opposite directions both in a positive way there's a point

at which they cross pretty close to where we're okay so perhaps back half 26 you can flip it

i think that's probably a reasonable type of thing that's better our next question comes from

david marsh with singular research hey david hey guys thanks for taking the question um

So, you know, your predecessor, you know, was pretty heavily focused on electric vehicle market, you know, talked a lot about that. And, you know, we are starting to see some new products come out and, you know, start to take, you know, a little bit of market share and, you know, starting to see that evolve a little bit. I just wanted to get a sense of, I mean, is it, you know, clearly you guys are focused on, you know, new and different markets, but, you know, can you talk a little bit about activity in that market specifically and if that's something that's still, you know, a revenue driver for you guys?

Oh, yeah, absolutely. Automotive will still remain a pretty strong market for us, obviously. Actually, some of the customers we talked to, I'll give an example, a large German automotive company, Tier 2, but this was in November. And, you know, they had said, we're not going to buy any CapEx for all of 2026. Well, we just presented to their larger team down in Mexico. And after we presented where we were going, they want us to actually present to their global tech technology. They had on their boards, it's Asian nowadays, it's a strong market. The customer I was talking about for beta-earing our motor client. No, none of that changes or stops. If anything, we're trying to bring new solutions to them, which we are, that will gain more market share for us, but also provide them solutions to market expansion. In the other case, we're looking forward to that meeting, but the person who actually said that they weren't going to be buying any CapEx is actually on that council. Got it.

And the agreement with IAR, I mean, it seems like a really tremendously positive step for you guys. I mean, are there other agreements that you could potentially, you know, look to ink with some other folks that, you know, might be able to provide you those same types of opportunities? I mean, I know you have a pretty long history with, you know, some of the major electronic component suppliers out there. I mean, you had similar conversations with any of those that you might be able to, you know, allude to?

Absolutely. And that's, you know, I'm a big fan of partnerships, like real partnerships, right? These things do take time. The great thing about IAR is this was a company that was falling out of favor with Data RIO, and it actually started at an embedded conference in Nuremberg, Germany, and I'm with my team, and they're like, I'm walking towards their booth. They're like, where are you going? I'm like, I'm walking over there. They're in security. A large company, we should partner with them. They're like, you do know that is a company about secure things, and we've fallen out of favor with them. So I walk in, hey, I'm Bill Wentworth. They're like, well, they don't really like us. I said, they don't like you. they don't know me walk into the booth right completely oblivious and start up a conversation the first guy run into actually worked at arrow before he joined the company and we knew all the same people so it broke the ice right away we had a conversation that conversation led to this agreement and look people like monty reagan our vp of sales drove this relationship for the last year and ended in this result. If the relationship grows, I'm sure we'll get opportunities with their relationships because as we've created this, I say in partnerships, look, with a collaboration partnership you want, and yes, David, we're going to look for more and more of those. Absolutely. It's how this company will grow organically.

Once again, to ask a question, please press star 1. To withdraw your question, please press star 2. Our next question comes from Casey Ryan with West Park.

Hi, Bill. Hey, Charlie. Yeah, great update. We've kind of picked over the bones here in this call.

You've got to get first in line.

I didn't realize it was going to be such a bum rush tonight.

I love it.

Yeah, no, it's fantastic. Well, so one question, just about the gross margin dip, I think, obviously tied to revenue. You know, we all understand that, but what do you think is the rebuild? Is it sort of over all four quarters through the year, or can it bounce back a little faster to that? And is like 51-52 kind of the right normalized rate in some normal quarter down the road?

I'll let Charlie take that when he's studying hard.

I think it will sort of be through the course of the year, though not necessarily purely linear. I think it will come back a little bit faster than – again, it is tied to volumes, a big part of it, at least. And there's a mix shift issue. So there's some of the new products that we're going to be selling, particularly in the back half of the year, higher margin. That will help, certainly. You know, again, we're not giving firm guidance, but I think that if you sort of look at historical levels, that's probably a reasonable starting point. And then mix will play a big part.

And great question. Margin is always on everybody's mind. As we build more value in our software, one of the things that we've done and we'll be releasing, you'll see probably a release next month of a piece of software that really brings a tremendous amount of value. We've been demoing it already with customers. This is the other thing that's gone really well with these customer visits. And they see the value. But what it's going to allow us to do is increase our attach rate on our software or on our equipment. And as you know, that's highly profitable revenue. We have, I would say, our attach rate is probably at 20%, 30%. We should be able to double that throughout the year. And that's a significant boost.

It will both increase the attach rate. And we're looking at helping the overall margin profile of the company and then having sort of a, you know, repeated revenue source.

Yeah, because a lot of times they would buy these, you know, interesting and they didn't have employees weren't that sophisticated we're running our equipment without a software contract i want to get it to the point it's not good for their business it induces risk in our software stack is the ability to do things like have security built in like recognize illegal handshakes between our equipment and their network because we don't know with it departments cios security officers across the board it's been it's been something that's been ramping up over the last 12 to 18 months anyways when our software stack it'll force them to have to have their machines under contract which you know it's it's one of our initiatives this year

right right okay and then just one quick question about about the concept of maybe some acquisitions to maybe you know to add services um beyond being a creative are you sensitive to the size like like Is there sort of a minimum size that, like, you're thinking about, or is geography relevant? Like, does it need to be a U.S.-based surface or a core?

Yeah, it's a great question. You know, it's a little bit of both, honestly. You know, geography, you know, that to me is definitely strategic, right? I mean, we do have, obviously, a significant operation in China. It would be good to de-risk that a little bit in Asia, right, because Asia will continue to be a strong market. And it's a market, quite honestly, we're weaker against our competition. So my goal is to strengthen that, right, especially with our new products, but also with a footprint. So that's important. In the U.S., certainly easy to do transactions in the U.S. So those are not only geography-friendly, but also strategically friendly as well.

Both Bill and I have experience doing international transactions as well as domestic. Obviously, there's complications that come with international, but there's also opportunities that come with international because we are comfortable treading where other people might not want to walk.

We have time for one more question before concluding the call. We will now take Howard Root, retail investor.

Thanks. Good afternoon. I'll keep it real short not to delay it, but two little quick things. One, Bill, you know, when you stepped in, you really had two sets of challenges. One was the market, the other was the product, kind of the platform, in that it wasn't integrated. You didn't talk anything about the product status. Has that work all been done to integrate automatic and manual programmers?

We now can run both our manual engineering units and our automation units on the same software. There's still some cleanup to do. Three months away from cleaning that up, three to four. unified platform is what we talk about a lot with customers because that platform, again, also will be used in services and at tests when we get there. So, fully integrated, fully compliant, forward compatible with algorithms. Obviously, we've still got to also be a revenue. Okay, great.

And then in terms of cash flow, just to follow up, I mean, you ended the year a little under $8 million in cash. Near-term positive cash flow, you're saying, but that looks like second half of the year, not first half. And then you're talking about the acquisitions, and then you've got the shelf that you've filed out there. Obviously, the stock being depressed, to use that as a currency is dilutive. Can you do the acquisitions and run your business without issuing any more shares in order to accomplish that? Or is that going to be a – you're going to need a financing here in order to accomplish what you want to do?

If you want to take –

I mean, you know, there are alternative sources that we're exploring, and we're building some – I have some relationships, as has Bill, to look for non-equity sources of cash. I'm not going to say that there wouldn't be any component of equity in the transaction, but I don't think we're looking at a wholly equity type of acquisition. Some of it depends on the scale. We're looking at a couple different things. There are different sizes. The size obviously plays some role in how much would be cashed.

And how the deal is structured, too. So we have a lot of different options on deal structure. There are some that are very favorable to cash. Like you don't need much of it.

There's a couple different permutations, but I don't think you're going to look at us just issuing stock for a company. I don't think that's what you're going to be seeing.

And the reason for doing the shelf registration?

The reason for doing the shelf registration. Well, it is to have that flexibility. I mean, there's not many public companies that don't have some kind of shelf registration because it affords you flexibility if an opportunity that's sort of uniquely strong comes along. And as I said, I don't think that we're looking at not – we may blend some equity component into some of these acquisitions, So we would need some flexibility to issue SOC. But, again, I don't think we're going to see 100% SOC.

No, definitely not.

You broke up there. We couldn't hear it.

I'm saying there's no near term. There's no present need or desire to tap into that shelf. No, no, no.

We're not going to just issue shares right now. This would, no. That's not our plan.

Okay, great.

Ladies and gentlemen, at this time, we've reached the end of our question and answer session. I'd like to turn the floor back over to management for any closing remarks. Bill Wentworth, Chief Executive Officer.

Thank you, Aubrey. I really appreciate everybody jumping on, the people that jumped on the call, and really appreciate the questions. I can't tell you that's far better than reading a script, and I get to talk from the heart and, you know, where we're going with the company. I'm very proud of this team, and I'm really looking forward to this year. You know, it was a tough, tough 2025. I can tell you that the lack of anxiety that's happening right now, granted, we still have a lot of work to do, and that pace will not stop. If anything, I would expect the pace to up. The team is ready for it, and we've had a lot of meetings over the last week or two, getting people prepared and the team prepared for what we're going to embark upon this year and into 27. So thank you again, all of you, for your time. I'm always available for a conversation. Jordan knows that. So if you want any additional conversations, please be happy to talk about the business anytime. Thank you, everyone, and have a great day.

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.