One Stop Systems, Inc.

Please continue to stand by. Your conference will begin shortly. Thank you. Good afternoon and thank you for joining us today to discuss One Stop Systems financial results for the fourth quarter and full year ended December 31, 2023. With us today are the company's President and Chief Executive Officer, Mike Knowles, and its Chief Financial Officer, John Morrison. Following their remarks, we will open the call to your questions. Before we conclude this call, I will provide some important information regarding the forward-looking statements made by management during the call. I would like to remind everyone that the call will be recorded and made available for replay in the investor section of the company's website. Now, I would like to turn the call over to OSS President and CEO, Mike Knowles. Sir, please go ahead.

Thank you, Ina. Good afternoon, everyone, and thank you for joining today's call.

This is an exciting time at OSS, As we completed this strategic transition away from lower margin media revenue, established a new management team, and refocused our strategic growth priorities on large and rapidly evolving global markets. Throughout 2023, we demonstrated continued progress in our efforts to pursue strategies focused on AI-centered high-performance computing at the edge, where platforms require data center-level compute, storage, and switching solutions. These solutions support AI and machine learning sensor fusion, sensor processing, and autonomy applications. We coined this market AI transportals. We will continue these efforts throughout 2024, backed by the strong influence of AI and ML demand in both the commercial and defense markets. Recent wins in both markets, combined with a growing pipeline of opportunities, continue to validate our strategic focus. We have also continued our efforts to strengthen our executive team and our board of directors. adding skills and experience that will help facilitate our strategy and enable the company to scale for growth. Financially, we were able to further offset revenue from our forward media customer with higher margin revenue aligned with our strategy. So with this introduction, I want to provide an update on the growth strategies we are pursuing, our growing pipeline, and recent wins that we believe will create lasting value for OSS and our shareholders. Commercial adoption of artificial intelligence and machine learning, taking advantage of advanced sensor fusion and sensor processing, is dramatically moving to the edge across almost all business segments. Sensor systems and autonomous applications can rival those of modern defense implementations. We believe that our product portfolio and future roadmap position us to uniquely take advantage of this evolving technology environment. Strategically, we are focusing our efforts to expand the number of customers and platforms in our rugged edge processing portfolio and increasing our multi-year backlog by securing new, long-term contracts. These efforts are supported by opportunities in both commercial and defense markets, where strong dynamics and growth are being driven by AIML adoption, sensor fusion, sensor processing, and autonomy. The Department of Defense is making significant investments in next generation capabilities that require edge computing. While the overall defense budgets in the US are expected to remain stable, we expect to see increased spend, especially for autonomy, artificial intelligence, and machine learning. In fact, these represent some of the fastest areas of growth as the military looks to augment existing platforms with new sensors, platforms and weapon systems to maintain a technical and tactical advantage over our adversaries. We are continuing to pursue opportunities in both commercial and military segments where we can leverage OSS's differentiated and technologically advanced capabilities by bringing enterprise and data center class compute, storage, and switching capabilities to the most challenging environments, delivering low latency, high throughput, scalable solutions in real-time environments, delivering configurable off-the-shelf and custom high-performance solutions, and providing high-technology readiness-level product availability to enable first-to-market AI at the edge. We believe a balanced portfolio of commercial and military customers can serve as a strategic benefit as we focus on creating long-term value for our shareholders. Looking at our pipeline and recent wins in more detail, we made progress throughout the fourth quarter penetrating defense and commercial markets. We had three major new wins in composable infrastructure, aerospace, and defense that totaled $2.7 million during the quarter. These wins reflect our continued leadership in high-speed PCIe interconnect technology and scalable AI GPU compute systems. Turning to a major defense win, we announced a multimillion-dollar program with Leidos' Dynetics, a prime contract of mission-critical solutions for the U.S. government. Under this multi-year program, we will provide our proprietary transportable compute and storage technology, designed to power an emerging specialized mobile AI signal collection application. The award is the first multi-year win OSS has secured with Leidos, highlighting the growth, trust, and confidence in OSS in our innovative technology and advanced engineering capabilities. We are also pleased to see the expansion of mission application and platform integration consistent with our growth strategies. Earlier this month, we announced a pilot project to provide a liquid immersion-cooled data storage system for use on a deployable ground station that was also contracted through Leidos. This project for a major government intelligence agency expands our market opportunity into the intelligence community. As the pilot progresses over the coming quarters, we expect this program will lead to follow on production orders. This program also demonstrates our innovative thermal management technologies for cooling rugged high performance computing solutions. Our cooling solutions enable the highest level of GPU performance which our customers need to support their AI and ML mission objectives. We anticipate this initial design win will lead to additional deployments with this customer and other customers in the future. During the fourth quarter, we also booked an additional award from the U.S. Army Ground Vehicle Systems Center, increasing our scope in the 360-degree Situational Awareness Program to include the sensor processing for the video data input into the system. Within our commercial markets, we received an order from Daimler truck partner Torque Robotics to develop a cooling solution for their existing compute system, expanding our relationship within the autonomous trucking software vendor. We also finalized a multi-year deal with Thales in support of their in-flight networking system for commercial airlines. With growing interest in AI and ML solutions, we are quickly expanding our outreach efforts. We expect that 2024 will be a year marked by pipeline expansion and conversion as demand increases and we execute on our strategic plan. Actions underway include submitting a bid to provide a rugged, high-performance compute solution for a classified program within the sector that is advancing AI implementation at the edge, establishing a sponsorship and collaborative relationship with Andretti Racing and Zapata AI, promoting edge applications for AIML and commercial and defense markets, engaging with companies in the composable infrastructure market marked by leveraging our expansion chassis product line, and our UBMC software capability for system control and monitoring, and continuing to advance our engagement and reach with large prime organizations such as Booz Allen Hamilton, BAE Systems, Leidos, General Dynamics, Lockheed Martin, and General Atomics. As the Pentagon prioritizes incorporating advanced technologies into their equipment, we expect engagements for our products in the military space covering various autonomy, sensor fusion, and AIML applications. for aircraft, drones, ships, helicopters, and land vehicles will increase. Although we are seeing progress, it will continue to take time to pursue, secure, and turn target opportunities into increased bookings and revenue. One way that we've been working to accelerate the opportunities with the US Department of Defense is through lobbying efforts in Washington to advance the innovative solutions offered by OSS. Lastly, we continue attending commercial and defense trade shows to advance the OSS brand in the market and identify new and partner opportunities. The result of our efforts has enabled us to expand our five-year unfactored pipeline to an excess of a billion dollars. This growth reflects the initial success from our new sales infrastructure and talent, as well as the rapid expansion across our commercial and defense markets for AI and ML solutions. We are actively engaged with current and potential customers to execute against these opportunities and convert our growing pipeline into multi-year, multi-million dollar orders. Given our expanded engagements and growing pipeline, I am pleased to announce that we have added Craig Powell as business development executive. Craig served as an armored infantry officer in the Royal Canadian Armored Corps and brings 22 years of experience in the high-performance compute, defense, and commercial markets, having held senior positions at Sistel, L3 Harris, Rheinmetall, High Vision, and Teledyne. We believe his experience will support our efforts to expand sales into the Canadian markets in addition to his primary focus, on supporting sales efforts in the US. Turning to recent progress on the product and program front, at the beginning of 2024, we shipped our first AI transportable compute system for the motorsport industry to legendary motorsport champion Andretti Global. The system includes OSS's 3U SDS GPU accelerated server, powering advanced AI race analytics for Andretti, using Zapata AI's industrial generative AI platform for the cloud and edge called Orquestra. The solution represents a new application of OSS technology in our first foray into the $5 billion motorsports industry. This milestone demonstrates our unique capabilities for powering generative AI technology at the edge. Also at the beginning of this year, we announced the commencement of a multi-year design and manufacturing collaboration for Flight Aerospace's automated flight information reporting system, Edge Family, including its new AFERS Edge Plus. The expanded relationship ensures that flight has access to OSS's scaled capabilities as it launches the aviation industry's first-to-market 5G-enabled avionics solutions. For OSS, the design and manufacturing agreement with flight is valued at a minimum of $6 million over the initial five-year term. In Q4, we received $500,000 in revenue from the new flight contract. We have successfully passed the critical design review and are entering the test phase of the program. We expect to complete testing and expect to begin production and shipment of APERS Edge Plus as early as the second quarter of 2024. This multi-year engagement expands our position in commercial aerospace and further strengthens our technology development and manufacturing platform. This opportunity also underscores our commitment to aviation safety and delivering mission-critical performance. We've also seen progress on several fronts in the defense industry. The Raytheon P8 program has funded multiple development initiatives to incorporate hardware and software technology refresh and upgrades that will extend our product position and lifecycle through 2028. As a result, we expect annual revenue of $6 million in 2024 related to this program, which is at a similar level from 2023. We delivered our first shipments of the new Gen 5 short depth server to Dynetics, a Leidos company, for the C4ISR mobile command centers and to TALIS for submarine sonar and AI processing on a European Navy submarine. In addition, we received a contract amendment to add additional capability for time-sensitive networking, or TSN, to our 360-degree situational awareness solution for the Army Ground Vehicle System Center. This capability adds to the critical timing element required for contested environment operations and is an integrating capability for Joint All-Domain Command and Control, or JADC2, nodes. We continue to focus resources and capital to support our technology roadmap and maintain our strong market differentiation. As I've noted before, a key capability of ours is the ability to bring the newest and highest performing compute, storage, and switching solutions to the market and facilitate the demanding requirements of AIML, sensor fusion, sensor processing, and autonomy. We have seen that a first-to-market strategy is key to our ability to win significant opportunities. As a result, we continue to develop new state-of-the-art products across a range of high-performance compute demand, providing a unique value proposition for our customers in the targeted spaces. In November, we unveiled our latest rugged Gen 5 short-depth server at Super Compute 23, the International Conference for High-Performance Computing. Powered by NVIDIA H100 Tensor Core GPUs and high-performance NVMe storage, the OSS Gen5 SDS addresses the growing demand for more powerful and lower latency, rugged compute, storage, and networking capability at the edge. This new OSS Gen5 SDS server demonstrates our continued leadership in AI computing and high-speed PCIe interconnect technology. We anticipate this hyper-converged data center class computing server will be highly sought after for demanded rugged edge real-time AI applications and is already proving to be the workhorse of the OSS product portfolio. In fact, in February 2024, we showcased our specialized high-performance AI computing solutions at FCOS 2024, the premier naval conference and exposition on the West Coast, where we won the Best in Show Award for our liquid-cooled version of the rugged edge short-depth servers. Since I joined over eight months ago, we have focused on enhancing our management team and board of directors. Recent efforts include, in the third quarter of 2023, we appointed industry veteran Robert Calbaugh as VP of Sales, bringing more than 36 years of award-winning achievement in business development, sales, and marketing in the commercial defense market. Robert's impact is already being seen in our market outreach, increased opportunities, and growth. In the fourth quarter of 2023, we appointed retired U.S. Navy three-star Vice Admiral Michael J. Dumont to the board, bringing background and experience insights into technology and military operations. Mitchell Hurbis was also added to our board, bringing extensive strategic and technical experience as a C-suite executive serving technology and defense industries. Finally, we also appointed Joseph Manko to our board, who is affiliated with one of our largest shareholders and brings extensive financial, capital markets, investor, and governance experience to OSS. All these additions have substantially re-profiled our board and enhanced their impact on supporting strategy, driving growth, and delivering shareholder value. In addition to enhancing our management team and the board, we also have added talent to our growing program management capabilities with the addition of two seasoned professionals who bring over a decade of defense and commercial program management experience. I believe their experience will allow us to pursue even larger programs for development and production in defense and commercial markets. I'm extremely encouraged by the successful ongoing transformation we have completed to our business in 2023. As a result, we entered 2024 with strong momentum supported by a new, highly experienced leadership team, reprofiled board of directors, an enhanced margin profile, and a growing pipeline of significant revenue opportunities that we believe will support our business for many years to come. I want to thank our team for their continued hard work and dedication as we pursue compelling growth strategies aimed at creating lasting value for our shareholders. With this overview, I'd like to turn the call over to our CFO, John Morrison, to review our fourth quarter and the full year 2023 financial results in more detail. John, please go ahead.