Good day, and welcome to the One Stop Systems, Inc. fourth quarter 2025 earnings conference call. Later, we will have the opportunity to ask questions during the question-and-answer session. As a reminder, this call is being recorded. As part of the discussion today, the representatives from One Stop Systems, Inc. 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 One Stop Systems, Inc. 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 One Stop Systems, Inc. desires to avail itself of the protections of the safe harbor for these statements. Please also be advised that 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 recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and recent press releases. Please read these reports and other future filings that One Stop Systems, Inc. will make with the SEC. One Stop Systems, Inc. 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 One Stop Systems, Inc. President and CEO, Michael Knowles. Please go ahead, sir.

Thank you, Sylvie. Good morning, everyone, and thank you for joining today’s call. 2025 was a defining year for One Stop Systems, Inc. and reflects the successful execution of a multiyear strategy to reposition the company around high-performance, ruggedized compute platforms that enable artificial intelligence, machine learning, and sensor processing at the edge. During the year, we saw that strategy translate into meaningful financial and operational progress. The strength of our performance throughout 2025 also created an opportunity to take an important strategic step for the company. In December, we completed the opportunistic sale of our wholly owned subsidiary Bressner and received proceeds of $22.4 million, subject to final closing working capital balances. One Stop Systems, Inc. acquired Bressner on October 31, 2018 for approximately $5.6 million, and we believe this transaction unlocks significant value for One Stop Systems, Inc.’s shareholders. While Bressner had been an important part of our history, the progress we made across One Stop Systems, Inc.’s core business positioned us to evaluate this asset from a position of strength. When we received an attractive offer for the business, we viewed it as a compelling opportunity to unlock that value, simplify our operating structure, strengthen our balance sheet, and concentrate our resources on the higher-margin, higher-growth, rugged enterprise-class compute opportunities that are driving the next phase of One Stop Systems, Inc.’s growth. As a reminder, following the transaction, Bressner’s historical financial results are now reported as discontinued operations, and the results we are discussing today reflect the performance of the core One Stop Systems, Inc. business. This transition effectively positions One Stop Systems, Inc. today as a pure-play provider of ruggedized AI compute platforms for edge applications. As a result, One Stop Systems, Inc. enters 2026 as a more focused company centered entirely on delivering high-performance compute…

Thank you, Mike, and good morning to everyone on today’s call. As a reminder, on 12/30/2025, the company closed a definitive agreement to sell our Bressner business. All operations, assets, and liabilities associated with Bressner, including the gain recognized on the sale, have been classified as discontinued operations. Our Q4 results reflect a number of important financial milestones and records. First, we achieved robust top-line growth of 70.2%, which drove revenue to the second-highest quarter in our history. Second, we achieved record gross margins of 58.5%. This reflects favorable mix and pricing, and it showcases the strong value that we provide to our customers. Third, higher sales, record gross margin, and disciplined expense management produced record quarterly net income from continuing operations. And finally, with the December sale of Bressner and the October registered direct offering of common stock, we ended the year with the strongest balance sheet in our history, which included only $6.8 million in total liabilities, no debt, and $33.4 million in cash, cash equivalents, and restricted cash. We believe the company is in a strong position, and with a solid backlog and a robust pipeline, we are on track to achieve our 2026 guidance and to execute on our growth and profitability objectives. Now for a quick overview of Q4 2025 financial performance. For the fourth quarter, we reported total revenue of $12.0 million compared to $7.0 million last year and $9.3 million for the 2025 third quarter. The 70.2% year-over-year increase in total revenue was primarily the result of higher revenue for the development and production custom server products for defense customers, higher shipments of data storage products for a defense prime customer, shipments of server products to a medical device customer, and shipments of compute and server products for an autonomous maritime application. Gross…

We will now open for questions. To ask a question, please press star followed by one on your touchtone phone. You will then hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, we ask that you please lift your handset before pressing any keys. Please go ahead and press star 1 now if you have any questions. First, we will hear from Scott Searle at Roth Capital. Please go ahead, Scott.

Hey, good morning. Thanks for taking the questions. Hey, Mike, hey, Dan, congrats on the quarter and congrats on getting the Bressner deal done. Maybe for starters, looking at 2026, nice guide. I am wondering if you could talk a little bit about the visibility that you have got into that number. Maybe as well kind of the unfactored opportunity pipeline that you have talked about. And you hinted at this as well a little bit just in terms of some of the timelines. Obviously, with the current military actions ongoing, is that delaying the ability for decisions to get made in the near term? Obviously, it is good in the longer term when you think about autonomy and edge AI being adopted in these types of conflicts, but wondering what that is doing to the near-term decision-making process.

Yeah. Just as a top level on that, Scott, I think our visibility in our pipeline is still as strong as we start 2026 as we were in 2025. We continue to expand opportunities commercial and defense. As I noted, there is still a strong pipeline supporting our growth objectives organically. So we feel good about that and where we are progressing and the momentum we have been building in that area. We are encouraged this year that there is actually a defense budget. As I noted in my remarks, we had the full-year continuing resolution and the new administration coming on board. So contracting of awards last year in terms of timing was a little bit challenging at times. But this year, with a budget in place, we have seen a little bit better movement in that respect. However, as in the past with conflicts like we are seeing today, and the quick movement and reestablishment of operational funds to support that, sometimes that will cause a little bit of delay in the contracting system as there are other higher priorities in certain areas. So we will continue to monitor that as it goes throughout the year, but as of right now, we do not anticipate that will be an impact on the full year. It just could be, again, impacted on timing from month to month or quarter to quarter.

And yeah, Scott, I might just add a little bit on the timing. As we put together our guide, we feel very strong about the demand environment. I think that some of the bookings that we have already released press on for Q1 support that—so really strong demand environment. What we have taken into account in our guidance is some of the supply chain and production lead times. We are seeing extended supply chain lead times, and so that does guide the conversion of those opportunities into revenue.

Gotcha. So just to clarify, you are already accounting for memory and other component issues within that 20% to 25% outlook. And then wondering as well kind of how you are thinking about military government applications versus the commercial mix for the year?

Yeah. I will start on it. Yes. Our guide takes into account our expectations for longer lead times in the supply chain. As we are looking at the mix, I will just reiterate as we are seeing that market that the memory impact has been fairly noticeable. We have projected that into guidance and continue to monitor that. We have a fairly diverse supply chain and partners we work with. And our designs are somewhat flexible. So we have levers to pull to help to address that moving forward. And then as for defense commercial, they still remain well aligned in our ratios. They can change quite a decent amount from quarter to quarter based on opportunities and timings and awards. As we have noted before, we have generally been around the 50/50 area. However, in any given quarter or period, we could go 10%, 15%, 20% in either direction. No real impact on the strategy. Both markets need our componentry. Our hardware is generally agnostic to market. We use similar servers in defense as we use in commercial. So we are able to move and adjust quickly to where demand is in either market.

Got you. And if I could, two last ones. On the OpEx front, Dan, I am wondering, can you calibrate us in terms of the first quarter looking at the fourth quarter? I would imagine somewhat normalized for seasonality. But just to give us an idea about how we go into the first quarter and that progresses throughout the year. And then, Mike, now with the balance sheet, now with the opportunity set with you guys getting to sustained positive EBITDA, and the balance sheet, M&A starts to come into play, becomes more realistic. How active are you guys on that front? What is the pipeline looking like? And if you could put some parameters around how you are thinking about it in terms of size and timeline to accretion.

Yeah. I will start on the operating expenses. So we do expect somewhat lower operating expenses in 2026, most of that being driven by R&D. We made some one-time investments in R&D in 2025 that we do not expect to recur. So I think we mentioned our guidance for R&D expenditures in 2026 will be about 10% to 12% of revenue, so a bit of a step down from 2025. In terms of the time phasing of that throughout the year, I would expect R&D to be somewhat higher in the first half of the year compared to the second half of the year. You could think of about 60% of our R&D expenditures in the first half of the year, about 40% in the second half of the year. And that is really driven by the timing of customer-funded R&D efforts, which we deploy our engineering resources towards and away from internal investment.

And, Scott, on the M&A part of the question. So, yeah, we have ramped up efforts on our strategy in that area. We had been working a funnel of opportunities since I joined the company just for the point in time we knew when we would have the levers to be able to be engaged in that kind of activity. And as we have noted in the financial performance, we believe we have some of those levers now to do that. So we have increased our activity on that front. I would say we have a decent funnel of opportunities that we are evaluating across both hardware-adjacent capabilities and potential for software capabilities that we could add to the company that would allow us to provide more integrated solutions and gather larger footprints and capabilities on edge platforms. In terms of timeline, I would just say that we look at this like we want to do the right deal that aligns to the strategy of the company, moves it forward, and makes sense to what we are doing. And so we will not be rushed into doing a deal. But we are actively engaged, and if we find the right deal, the right value that advances the company along with our strategy and performance, then we will do so.

Great. Thanks so much. I will get back in the queue.

Alright. Thanks, Scott.

Next question will be from Eric Martinuzzi at Lake Street. Please go ahead, Eric.

Yes. My congrats as well on the quarter and the guide for the upcoming year. You talked a little bit about the R&D investment. Curious to know on the sales front, are we adding folks in our sales and distribution, sales or marketing, at least as far as 2026? What is the plan for headcount there?

Yeah. With the performance we have had, we are always evaluating our overall staff and sales and where we are going. So we are always making adjustments in capability access, whether it is through hiring people onto staff or utilizing distributors or consultants in certain areas. So we continue to be active across all those fronts. And so as we continue to grow, we will always look at what is the best method or approach for us to continue to accelerate pipeline identification and conversion to bookings so we can stay on the growth rate organically that we have indicated our pipeline could support and potentially grow that. So we treat those as opportunistic based on people, markets, etc. But our intent is we keep focused on that all the time and are always looking to expand where we can move and continue to grow the company or accelerate its growth.

So I guess, let me ask it a different way. So to support the sales growth of 20% to 25%, does that require additional hiring? If so, are we talking 10% to 15% increase in sales heads?

Yeah. We think with the investments now in our sales team and Salesforce, we can support the growth rate that we have noted.

Okay. Alright. And you highlighted in the press release regarding the outlook that the higher customer-funded development sales as compared to 2025. Curious to know, is this coming from the same customers? Is this coming from additional customers? In other words, is there a potential for new logos? What is the mix kind of between new logos and existing customers in that customer-funded development?

Yeah, Eric, I think it will be a combination. So even some of the awards that we have already announced, including on the ground combat vehicle opportunity with a defense prime, that does involve some customer-funded development. So we will see that converting to revenue throughout the year. And then we also have some additional opportunities that are in the pipeline now that would represent new customers.

Okay. Thanks for taking my questions.

Thanks, sir.

Next question will be from Brian Kinstlinger at Alliance Global Partners. Please go ahead, Brian.

Great. Thanks, guys. Been a great transformation. My first question is with the partnership with the defense prime you announced, I think it was January, to develop the enhanced vision system for Army vehicles. What is the addressable market opportunity for a product like this in a production environment? How many vehicles might this be integrated with? And then is there already an RFP that the prime is bidding on with this technology, or is it just in development phase so that they can bid on RFPs in the future?

Yes, Brian. Thanks for the question and for joining in. So it is an early-stage development program that will, as we mentioned, complete this year and transition into testing. So there is not a formal RFP for deployment or production of this capability. It will roll through testing and evaluation. The system is somewhat agnostic to combat vehicle type. So there would be opportunities for multiple combat vehicle acquisition offices to evaluate the technology versus their requirements, their funding lines, and any deployment requirements or needs for that. And so as the system moves through testing, we will, of course, engage with those customer sets and follow that as it moves through. You know, the benefits could be in a wide range of scale depending on how the Army might move that forward in terms of one or multiple combat vehicle classes. The exciting part for us is that the U.S. Army generally, if they decide to form a program of record and deploy a system across vehicles, is known to buy things in tens and hundreds. Usually, it can end up in the thousands. And those would represent the kind of larger-end, more transformative type program awards for the company.

Great. And then as it relates to the low end of revenue guidance, I think one of the analysts asked about visibility. How much of the low end of revenue guidance, using the growth rate, comes from what is already in backlog or orders in contract? I am not sure if you answered that. And then do you expect traditional revenue seasonality or even more pronounced with the long lead time? Just curious how you think about that.

Yeah. I will jump in on the seasonality. So we do expect—we always kind of see this kind of an increase as we go throughout the year. We do expect that in 2026, and you are correct. That is driven largely by supply chain lead times as well as some production lead times in converting some of the orders that we have in backlog, as well as some of the orders secured in Q1, into revenue. Roughly, though, we expect about 40% of our revenue in the first half of the year, about 60% of our revenue in the second half of the year. So that is somewhat less pronounced than we saw in 2025.

Great. Thank you so much.

Alright. Thanks, Brian.

Ladies and gentlemen, this does conclude our question-and-answer session for today as well as the conference call. We would like to thank you for attending, and at this time, ask that you please disconnect your lines. Enjoy the rest of your day.