Good day, and welcome to the One Stop Systems, Inc. Third Quarter 2025 Earnings Conference Call. As a reminder, this call is being recorded. As part of the discussion today, the representatives from OSS will be making certain forward-looking statements regarding the company's future financial and operating results, including those relating to revenue growth as well as business plans, bookings, the company's multiyear strategy, business objectives and expectations. These statements are based on the company's current beliefs and expectations and should not be regarded as a representation by OSS that any of its plans or expectations will be achieved. Please be advised that these forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and that OSS desires to avail itself of the protections of the safe harbor for these statements. Also, please be advised that the actual results could differ materially from those stated or implied by the forward-looking statements due to certain risks and uncertainties, including those described in the company's most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q and recent press releases. Please read these reports and other future filings that OSS will make with the SEC. OSS disclaims any duty to update or revise its forward-looking statements, except as required by applicable law. It is now my pleasure to turn the conference over to OSS' President and CEO, Mr. Mike Knowles. Please go ahead, sir.

Thank you, Andrew. Good morning, everyone, and thank you for joining today's call. OSS delivered a strong third quarter with significant consolidated revenue growth, higher gross margin and positive EBITDA and net income. Our third quarter and year-to-date performance underscore the solid foundation we have built as we capitalize on increasing demand from both defense and commercial customers for our rugged Enterprise Class compute solutions. Since implementing several strategic actions in 2023 and 2024 to reposition OSS for growth, we have seen continued improvements in our financial and operating results. These actions included strengthening our leadership team with proven defense industry executives, launching a multiyear strategic plan, rebuilding our go-to-market approach, expanding our sales pipeline and driving higher gross margins. As a result, we have experienced positive bookings momentum over the past 12 months, translating into increased sales and positive operating leverage. I'm extremely proud of what our teams have accomplished and believe we're well positioned for continued growth and strong profitability in the remainder of 2025 and into 2026. We continue to pursue strategic growth opportunities that leverage our high-performance edge compute solutions to meet the growing demands of AI, machine learning, autonomy and sensor fusion at the edge. Our pipeline is expanding across leading defense organizations and advanced commercial enterprises that seek trusted, proven partners like OSS. On a trailing 12-month basis, our OSS segment had a book-to-bill ratio of 1.4. After a historic level of bookings in the second quarter, third quarter trends reflected expected quarter-to-quarter variability. Our growing pipeline and customer engagement activities remain strong across both defense and commercial markets. Our second quarter performance also reflects our continued focus on fulfilling recent awards, investing in next-generation product development and advancing new program opportunities that are expected to contribute to positive bookings growth in 2026 and 2027. Overall, we are tracking ahead of our plan in product development milestones, which gives us confidence in our long-term growth trajectory. During the third quarter, we continued to support and increase our exposure on the P-8 Poseidon Reconnaissance aircraft. To date, we have recognized lifetime contracted revenue over $50 million on the P-8 platform. In addition, we had previously announced a 5-year sole-source supplier agreement and a 5-year extension support, which involves equipping the P-8 aircraft and ground base stations with high-capacity flash storage systems, spare flash storage canisters and related support services. We expect continued orders from both the U.S. Navy and our defense prime customer into 2026. Another highlight is our growing relationship with the leading medical imaging OEM, underscoring the growing relevance of our compute and storage solutions in health care. We believe there are opportunities to expand our presence with this customer beyond the current 5-year expected program value of over $25 million. Additional booking highlights include the September announcement of an initial $500,000 contract with Safran Federal System with additional orders expected totaling over $3 million. While smaller in size, this award establishes a new relationship with one of the world's leading high-technology defense contractors, and we see meaningful opportunity to expand this partnership over time. In October, we announced an initial $1.5 million order from a Canadian-based integrator of passenger cabin systems for the commercial aerospace industry. We expect this platform to contribute approximately $6 million in total revenue over the next 3 years. This award highlights the growing demand for high-performance compute in the commercial aerospace sector, an increasingly important component of our commercial market strategy. Across our pipeline, demand remains strong, supported by growing interest for our Enterprise Class compute solutions. While the ongoing government shutdown may impact the timing of near-term bookings, we view this as a timing issue, not a demand issue since OSS remains the sole source provider on affected platforms. As a result, we expect defense-related bookings to improve as conditions normalize, though timing may remain uncertain. We also continue to see signs of stabilization in our European markets that are served by our Bressner operating unit. Recent bookings and revenue within our Bressner segment have been in line with our targets, and Bressner remains on track to achieve higher sales and profitability for 2025 as compared to last year's results. Looking ahead, we believe OSS is uniquely positioned to capitalize on multiyear growth opportunities driven by accelerating adoption of artificial intelligence, machine learning, autonomy and sensor fusion at the edge. As these requirements become increasingly central to defense and commercial innovation, customers are turning to trusted partners like OSS with proven expertise in rugged Enterprise Class compute solutions. In support of this, we increased R&D investments in 2025 to capitalize on emerging opportunities we see developing within our markets. Our high-wattage, high-density expansion products such as Ponto are currently under evaluation with several potential commercial customers as we focus on delivering high-density, high-wattage GPU and AI accelerator solutions that address the growing need for performance-intensive compute in data-rich environments. We're also encouraged by recent traction in commercial aerospace, highlighted by our recent award, which underscores how OSS technology is extending into new regulated markets where reliability and compute performance are critical. Looking ahead, we expect to further broaden our commercial product lineup with the planned launch of 2 new Gen 6 systems in November, designed to bring even greater processing capability and efficiency to our customers. Together, these initiatives demonstrate how we are executing on our strategy to leverage our rugged Enterprise Class engineering heritage into fast-growing commercial segments, driven by AI and data-centric workloads. We continue to execute against a growing pipeline in both commercial and defense markets. We recently attended the Association of the U.S. Army or AUSA conference in Washington, D.C. and introduced a newly developed portfolio of products that leverage the advanced compute and low-latency advantages of commercial data centers. In addition, we showcased our wide array of scalable AI/ML, sensor fusion and autonomy compute solutions, delivering leading compute and latency capability and advantage size, weight, power and cost, or SWAPC. These solutions generated strong interest and multiple new engagements across Army and OEM programs. We also recently attended the NVIDIA GTC Conference in Washington, D.C., where we highlighted OSS' expanding capabilities in high-performance GPU and AI accelerator expansion systems. Our participation at GTC reinforced OSS' growing presence within the AI compute ecosystem, where our technology complements leading platforms from NVIDIA, Broadcom and Astera Labs. The conference provided valuable engagement with commercial and government customers exploring next-generation architectures for AI, machine learning and data analytics at the edge and further validated the role OSS can play in enabling high-bandwidth, low-latency compute for commercial applications. The visibility relationships we're developing through these engagements are creating meaningful opportunities to expand our role on next-generation platforms. For example, our delivery of a rugged compute solution for combat vehicles for the U.S. Army remains under test and evaluation, which is expected to continue for the remainder of the year. We are encouraged by the growing number of multiyear platforms we now support, adding to our portfolio that includes the likes of the P-8 for the U.S. Navy, the medical imaging platform and the Autonomous Maritime program for a leading defense prime in Asia. Pursuing these types of recurring programmatic opportunities remains central to our long-term strategy. To accelerate our growth initiatives, we strengthened our balance sheet after quarter end through a registered direct offering, raising approximately $12.5 million in gross proceeds. This enhanced financial position, combined with improving fundamentals, provides the flexibility to fund operations, pursue strategic opportunities and capitalize on expanding global demand. Looking ahead, our solid execution and year-to-date performance give us the confidence to raise our full year 2025 consolidated revenue guidance range from $59 million to $61 million to $63 million to $65 million, while reaffirming our expectation to achieve positive annual EBITDA. I'm pleased with how 2025 is shaping up. Our turnaround strategies are progressing faster than expected, reflecting strong demand and operational execution. As we look ahead, we remain focused on accelerating growth, expanding profitability and creating long-term value for our shareholders. Finally, I want to thank our entire team for their dedication, innovation and relentless focus on delivering results for our customers and shareholders. So, with this overview, I'd like to now turn the call over to Dan.

Thank you, Mike, and good morning to everyone on today's call. Our Q3 results reflect several significant financial milestones. Firstly, we achieved strong top line growth, with consolidated revenue increasing year-over-year by 36.9% and by 43.4% for the OSS segment. This growth demonstrates the solid demand for our products and our capability to satisfy that demand for our customers. Secondly, we realized positive quarterly EBITDA in both of our operating segments and positive GAAP net income at a consolidated level. These outcomes were backed by robust gross margins, highlighting the value our customers see in our unique technology. After the quarter ended, we also improved our balance sheet by securing $12.5 million in gross proceeds through a registered direct offering of common stock. This offering enhances our financial position, gives us flexibility with working capital to support our growth, and positions us to pursue a measured M&A strategy in 2026 and beyond. We believe the company is in a solid position, and with a healthy backlog of orders, we are on track to meet our updated full-year guidance and achieve our strong growth and profitability goals. Now, for a brief overview of our Q3 2025 financial performance. In the third quarter, we reported consolidated revenue of $18.8 million compared to $13.7 million last year and $14.1 million for the second quarter of 2025. The 36.9% year-over-year growth in consolidated revenue was driven by approximately $2.8 million increase in OSS segment revenue and $2.3 million increase in Bressner segment revenue. Third quarter sales exceeded our expectations, and we forecast continued strength in both revenue and profitability in the fourth quarter of 2025. Consolidated gross margin for the third quarter was 35.7%. It’s worth noting that the gross margin from the same quarter last year included a $6.1 million inventory charge in our OSS segment. Excluding that charge, the gross margin for the third quarter of 2024 was 32%. On a segment level, the gross margin for the OSS segment improved to 45.6%, up from an adjusted gross margin of 43.2% from the same period last year. This 2.4 percentage point increase was mainly due to a better product mix this year. Year-to-date, the OSS segment’s gross margin has benefitted from both operational efficiency and an improved product mix. We expect some variability in gross margins from quarter to quarter based on absorption, product mix, and program lifecycle. As a general target, we aim for OSS segment margins in the mid-30s to low to mid-40s, with an anticipation of achieving margins in the upper end of that range in the fourth quarter of 2025. The Bressner segment recorded a gross margin percentage of 26% for the third quarter, a 400-basis point increase from the same period last year primarily due to a more profitable product mix. Total operating expenses for the third quarter increased by 22% to $6.1 million, largely due to heightened R&D expenditures related to our investment in new product development. For this quarter, we reported GAAP net income of $0.3 million, or $0.01 per diluted share, compared to a net loss of $6.8 million, or $0.32 per share, in the same quarter last year. We also reported non-GAAP net income of $0.7 million, or $0.03 per share, compared to a non-GAAP net loss of $6.4 million, or $0.30 per share, in the prior year quarter. Adjusted EBITDA, a non-GAAP measure, was $1.2 million, compared to an adjusted EBITDA loss of $6 million in the same quarter last year. On the balance sheet side, as of September 30, 2025, OSS had total cash and short-term investments of $6.5 million, with $1 million in borrowings on our $2 million revolving line of credit and $1.2 million remaining on our term loans. Following the end of the third quarter on October 1, 2025, OSS completed a registered direct offering with participation from several new and existing institutional investors, yielding gross proceeds of about $12.5 million before commissions and other operating expenses. For the nine months ended September 30, 2025, OSS used $4.9 million in cash from operating activities, compared to $2.1 million in operating cash flow for the same period in 2024. This change was mainly due to timing differences in working capital, particularly receivables tied to our revenue increase, somewhat offset by an improvement in net income. As Mike mentioned, we have updated our 2025 full-year financial guidance due to stronger-than-anticipated bookings over the past 12 months. We now project consolidated revenue of $63 million to $65 million for the full year 2025, compared to our previous estimate of $59 million to $61 million. We expect OSS segment revenue to range between $30 million to $32 million, reflecting a 22% to 30% increase in annual revenue for the OSS segment. We also expect to achieve positive EBITDA at a consolidated level. As we approach the final quarter of the year, we remain committed to disciplined execution, including managing our supply chain effectively and hitting our planned production ramp. We will also continue to focus on driving growth by investing in our technology and securing new platform opportunities that can deliver sustained multi-year revenue streams. I look forward to sharing updates on our progress. This concludes our prepared remarks. Operator, please open the call for questions.

Your first question is from Brian Kinstlinger from Alliance Global Partners.

Solid results. As we think about the uptick of revenue in the second half of the year, how should investors think about the seasonality going forward for Core OSS in light of the strong bookings' execution, but also as we think about the government shutdown?

Yes. I'll start with the seasonality and then Mike can talk a little bit more about the government shutdown. So, in general, we've seen this consistent pattern where we tend to see higher revenues in the second half of the year just based on the timing of bookings. As the government goes into the holiday period, you tend to see a bit of a slowdown in bookings, and so, just the timing of that tends to drive second quarter revenue or second half revenue higher than first half. We'd expect that to continue as we go into 2026, probably a somewhat moderated ramp compared to what we saw in 2025, but still somewhat of a ramp as we go through the year.

Yes, Brian, with the strong bookings we've had this year and as we finish the year, we expect to start next year with a bit more backlog. We believe that while we had a significant ramp this year, the backlog and how we manage it should help ease that. A lot of this will depend on the government shutdown. As we've mentioned before, we have everything in backlog we need to meet our guidance for 2025. The bookings we are making now will further support that and contribute to the backlog for next year. The main bookings affected by the government shutdown are anticipated sole source awards. We won't be missing out on opportunities, we'll just be impacted by timing.

Got it. And then, maybe you can update us on the data center market opportunity and the advancements you're making. I mean that market has seen unprecedented demand in the last few months. And then, maybe also at a high level, touch on the situational awareness technology procurement evaluation by the Army. I don't know if that's been able to progress, given the government shutdown, but that was something obviously of importance to the company.

Yes, on the data center side, we recently launched Ponto, which is a larger version of our standard 4U GPU expansion solution. This product is currently being evaluated by several customers in the data center markets that are seeking opportunities for significant GPU and compute expansion. We are actively engaging with this market and have generated interest, with customers currently testing the product. We anticipate that by the end of this year and into the first half of next year, this could lead to awards and backlog. Additionally, we will enhance our offerings by introducing new PCIe Gen 6 technologies and other innovations for data center architectures, positioning us well with multiple products in that market. Regarding the Army's situational awareness technology, testing is ongoing. However, progress has stalled due to the government shutdown, which has resulted in delays in their evaluation process. Despite this, the Army has identified additional ways to utilize our distributed compute system, which has opened up new opportunities that we aim to pursue into 2026 and beyond. We expect to share more updates on this in the coming year.

Your next question is from Eric Martinuzzi from Lake Street.

Yes, it was great to see the OSS segment rebound so strongly. That was a remarkable recovery. This is something investors have been patiently waiting for. I also wanted to ask about Bressner. The performance there exceeded my estimates for the third quarter. Can you explain what contributed to that? Additionally, were there any pull forwards from Q4, or can you indicate what we might expect for the final quarter of the year for Bressner?

Yes. Bressner has been performing strong. We've seen some nice recovery in their industrial end markets and expect continued strength as we go through the year. FX has been a tailwind to Bressner's segment revenue. In the third quarter, they grew by about $2.3 million, about $600,000 of that was due to FX. The other $1.7 million was growth on a constant currency basis, just really based on strength in their end markets and some of the larger products or projects that they've been executing on. And so, we continue to see Bressner performing well and see strength as we close out the year and go into '26.

Yes, Eric, I'd just add, right, the economy hasn't fully recovered across the EU and Germany to the growth expectations they had at the start of the year. But Bressner has been able to find some strength in its markets to keep them on our targets and on our plans for the year. And they've seen some pockets of people generating some bigger orders, which has helped keep them on plan through the year.

Okay. Well, just sequentially then, is it your expectation that we're in line to better with the final quarter of the year? Or what...

Yes, I would anticipate some shipments in Bressner that will be close to the end of this year and the beginning of next year. The timing of these shipments will influence Q4. However, I expect Q4 to be essentially the same as Q3 for Bressner.

Got you. Okay. You mentioned the registered direct offering that closed on October 1, which raised $12.5 million in gross cash. I’m curious about how we are deploying the cash in the near term. Are we holding onto it, or are we investing it in inventory or sales channel developments? What can you share about this?

Yes, definitely. The cash raise accomplished a few important things for us. Firstly, it helped to support our working capital as we experience growth. This is reflected in our results for this quarter, especially in accounts receivable. I believe we have good visibility to collect that accounts receivable this year. I anticipate that as we enter Q4, we will see positive cash flow. Several shipments are planned for the end of November and early December, and their timing will influence our cash flow for Q4. However, I do expect it to be positive. Regarding the cash raise, we are using it to support the working capital ramp. Companies that generate positive EBITDA will also produce positive cash flow. We plan to reinvest the cash raise into a disciplined mergers and acquisitions strategy as we move into 2026.

The next question is from Scott Searle from ROTH Capital.

Congrats on the quarter, guys. Mike, maybe just to get some clarifications on the government shutdown. I want to understand a little bit better about what's still operating and what isn't. It sounds like some larger sole-source opportunities might just be delayed from a timing standpoint. But I'm just kind of wondering what you're able to do in concert with government entities at the current time. And I think given the backlog you've talked about in the past, you felt pretty good for the next 6 months or so. I'm wondering if that still holds and when the shutdown becomes a little bit more concerning for me as you start to look into '26?

Thank you, Scott, for your question. Currently, major organizations are largely inactive and unresponsive. We can still operate with third-party services that the government engages, allowing us to fulfill some ongoing contracts. We are able to make deliveries to our customers, and the government is in a position to process payments for contracted deliveries. For deliveries planned this quarter through defense primes or directly to end services, we expect to ship and receive payments within the typical timeframe. The main impact for us at the end of the year will be the planned awards we anticipated, resulting in a backlog to address in the first half of next year. If we can secure government bookings before the end of Q2 next year, we will have sufficient time and capacity to convert that backlog into revenue. We have a plan in place to monitor and manage where that goes.

Great. That great clarification really helps to see that we got visibility then through the first half. Looking to the fourth quarter and the guidance, it really implies that the core OSS is either flat to up $2 million. So, you're starting to get to new highs in terms of the business, which I guess brings sustained EBITDA profitability with it. So, I guess as we're looking into 2026 now. Is that sustainable? And are you thinking about the core OSS business now being EBITDA positive for the year, which is, I think, well ahead of prior expectations. Just some clarification on the early thoughts there.

Yes. I'll let Dan follow up on it, too. But yes, in general, as we've kind of highlighted, we believe based on our pipeline and everything we've been looking at that the core OSS segment has this opportunity to grow at 20% to 30% a year. And so the bookings this year, the pipeline for next year, how we've been performing still gives us confidence that we should see growth into 2026 for the OSS segment in that range. Clearly, that opportunity would give us opportunity to get OSS into the positive EBITDA range next year that actually would be accelerating our plans a little bit. But given where we are and how we're performing the opportunity, I think it would be our intent that if bookings can play through and the timing can work out correctly, would be to try to accelerate that plan and work into that because we are now kind of at that nexus point where the revenue inside of OSS segment would support that kind of outcome. Dan, anything?

Yes. No, the only thing I'd add, just kind of reiterating that high-level parameters for '26 revenue growth, that 20% to 30% that we've been targeting. Gross margins for the OSS segment, we continue to see it in that mid-30s to low to mid-40s range for the segment. OpEx, we would see as being roughly flattish, but we did make some one-time investments to accelerate our R&D in '25. So, I think you'll see some moderation or normalization of R&D expenditures as we go into 2026. And then Bressner segment, we model growth in the range of 5% a year and stable gross margin.

Got you. And lastly, if I could, Mike, just kind of looking at the opportunity pipeline, certainly have been a lot of government and military opportunities. But commercial as well now kind of given the slowdown with the current government infrastructure. Are some more of those commercial opportunities kind of accelerating to the forefront? I think you referenced some in-flight entertainment opportunities in commercial aviation. But are there some bigger things that we should be thinking about in the 2026 timeframe on the commercial side?

Yes, I think as we discussed in the earnings call, we are experiencing some movement. We have made some product placements aimed at advancing our commercial strategy. We may be a bit slower than we anticipated regarding some commercial opportunities. We are hopeful that we will begin to see those take shape in 2026, instead of the end of 2025 as we initially expected. However, we are now well-positioned with our products. We have established contacts and engagements in several areas, including data centers, medical imaging, and some efforts in commercial aerospace. We are beginning to see some expansion in these areas, and as long as the economy and investment in these markets remain strong, I believe we will continue to succeed in these sectors.

There are no further questions at this time. Please proceed with closing remarks.

Andrew, that completes our remarks for today. We appreciate everybody's support of the company and the questions. You can end the conference call.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.