Q2 2021 One Stop Systems Inc Earnings Call

Good afternoon, and thank you for joining us today to discuss onestopsystems Financial results for the second quarter ended. June 30th..2021 with us today are the company's president and chief executive officer David Ronn and Chief Financial Officer. John Morrison. Also joining today is the company's Chief sales and marketing Officer, Jim Ison following the remarks. We will open the call to your questions. Before we conclude today's call. I will provide some important questions regarding the forward-looking statements made by man.

Event during this call. I would also like to remind everyone that today's call will be recorded and will be made available for replay via the instructions in today's press release and the investor section of the company's website. Now, I would like to turn the call over to OSS president and CEO David Ron, please go ahead.

Ed. Thank you, Christy and good afternoon, everyone. I'm happy to report. That OSS achieved record revenues for the first half of 2021.

One advancements across the company are the result of further execution on our growth strategy.

During the second quarter of 2021 we exceeded our cute to revenue Expectations by over 500k closing the quarter with fourteen point, nine million in total revenue, and increase 12 percent over last quarter and up, 28% over the same quarter last year.

The growth reflects a broader, number of customers additional programs with major accounts and at least a few indications of return to normalcy.

The strong top-line performance in Q2 was backed by solid bottom line improvement with net income. Increasing 1.7 million year over year and adjusted ibadah up by 1.3 million reaching 9% of the total quarterly Revenue.

Year-over-year gross margin improved two point six percentage points for the quarter and was up five point three percentage points for the first half of 2021 attributable to a refined product mix and a focus on increased efficiencies across our business segments.

Additionally, executing on our long-term, strategic vision, and product roadmap continues to be a company priority.

This plan includes strengthening our value proposition in the fast-growing Edge, Computing industry and becoming nothing less than the market leader in the AI transportable space.

As you may recall, the target market requires the highest performance Computing in a challenging mobile environment.

We Believe.

Execution to this plan company reorganization and improved improved board. Composition has contributed towards a tripling of shareholder value over the past two years.

There is significant Focus these days on diversity in the boardroom and the SEC recently approved nasdaq's proposal to include gender and race requirements as they relate to directors in its listing rules. We apply this effort and thought, you might be interested to know knowing that three of our directors are women. And two of our directors are from racial minorities. Far surpassing the new NASDAQ requirements.

As a company, we remain committed to and find strength in our diverse and talented staff and directors.

Will provide operational highlights and our outlook for the rest of the year in a moment, but first our CFO John Morrison will take you through our financial performance in the second quarter and the first half of the year and then following John, our chief sales and marketing Officer. Jim Ison will provide insights into Rai transportable strategy and related customer activities, John.

Thank you, David. Hey, good afternoon, everyone. Thank you for joining us for this call earlier today. We issued a press release with our results for the second quarter and first half ended June 30.2021. The release is available in the investor relations section of our new company website. At onestopsystems.com reviewing our statement of operations. We achieved

The quarter revenue of fourteen point nine million, which was up 12% from the Thirteen point, three million in the first quarter and up 28% from the 11.6 million in the. Same year ago period. The revenue increase for Q2 over the prior year quarter was a result of proportionate growth from both OSS and bressner our European subsidiary.

Free. This growth was primarily driven by improvements in the cell of ruggedized servers into the media. And entertainment markets are differentiated military, AI transportable data, processing and storage products as well as continued expansion of our customer base and new applications within key accounts.

It was a notable increase in product orders and revenues from our media and entertainment. Customer with new virtual with their new virtual products, gaining adoption and momentum.

Mmm, Parker. Our core OSS business increased 25% to 9 point 1 million as compared to the 7.3 million. In the same year ago, quarter brush or Revenue increased 34% contributing 5.8 million in the second quarter as compared to 4.3 million in the same year ago, period.

OSS gross.

Off it in the second quarter of 2021 was 4.7 million as compared to 3.3 million in the second quarter of 2020. This is an increase of 1.3 million in gross profit. On a revenue growth of 3.3 million. Overall. We had a strong gross margin of 31.2% an increase of two point six percentage points versus the

Same year ago period, the improvements in our quarterly, gross margin were attributable to product mix additional sales of high-value products and increase efficiencies.

Gross margin for our court OSS business increased two point four percentage points over the same year ago quarter to 36.7% likewise bresser is gross margin. Increase the 22.6% in the in the second quarter as compared to 19% in the same year ago period.

Adaptives.

That's Improvement was primarily due to the Kafka team of programs that were integrated into our new growth strategy. We, initiated last year and our continued focus on efficiencies.

Income from operations, improve to five hundred and seventeen thousand dollars compared to a loss from operations of four hundred six thousand. In the same year ago, quarter. Net income on a gaap. Bassist total 1.7 million or nine cents per diluted share in Q2.2021. This compares to the net loss of $12,000 are basically zero cents per share a year ago.

Our net income Improvement was due to our favorable gross margin and the debt and interest forgiveness on our PPP loan of approximately 1.5 million.

On a non-gaap basis. Net income improved to a record eight hundred twelve thousand or four cents per basic and diluted share in Q2.2021 as compared to two hundred forty eight thousand or 1 cent per diluted share in the same year ago period.

Adjusted ibadah. Another great, another Gap metric increased to 1.4 million or nine, or nine percent of quarterly Revenue as compared to $73,000. In the same year ago, quarter non-gaap net income and adjusted ibadah excludes the 1.5 million PPP loan and the interest forgiveness.

Now, looking at the results for the first half of 2021.

Blue total twenty eight point, two million, a new company record, which was up by 13 percent from 25 million in the same period last year. Gross profit, improve 2.4 million on incremental, revenue of 3.2 million, to 9 point, 1 million, or 32 percent of Revenue, this compares to 6.7 million, or 27 percent of Revenue a year ago.

Go gross margin for our court OSS business improve 26.7 improve, six, point seven percentage points to thirty seven point three in the first half as compared to 30.6 in the prior year. Brazzers gross margin increase the 23.6 as compared to twenty point five in the first half of last year.

Mark or OSF business increased 12% and contributed 17.7 million of total revenue as compared to the fifteen point. Seven million last year. Bressner contributed 10.5 million of Revenue, an increase of 14 percent compared to the 9.2 percent of last year.

We're total operating expenses decrease four percent to eighty three eighty, eight point three million as compared to eight point, six million in the previous year ago. Period, this decrease is primarily attributable to the Cost Containment efforts initiated in April 2020.

Operating expenses as a percentage of Revenue and prove to 29 percent compared to 35% in the prior year period. This again, is reflects the increase in revenue and the success of our expense Reduction Program and improved efficiencies.

All right, come from operations and prove to 792. Mm, compared to a 1.9 million dollar loss in the same year ago, period, net income on a gaap basis. Was 1.7 million or nine cents per diluted share compared to a loss of 1.1 million or a loss of seven cents per share. Last year as a reminder, this thing this includes the 1.5 million people.

And interest forgiveness.

Non-gaap, net income total 1.5 million or 8 cents per share as compared to a loss of four hundred sixty six thousand or where the loss of three cents per share in the same year ago period adjusted ibadah was 2.5 million. We're nine percent of Revenue compared to a negative 885 thousand in the same year ago period, the adjusted ebitda Improvement

Is due to a higher gross margin?

And Cost Containment and shows the path to re-bond objective of no, less than 10% non-gaap. Net income and adjusted ebitda excludes, the 1.5 million dollar, PPP loan and interest forgiveness. Now, turning to our balance sheet at June 30, 2021, cash, and cash, equivalents total four million dollars with short-term.

It's a 14-4.14.5 million or a combined total of eighteen point. Five million, this compares to cash and cash equivalents of nineteen point six million, as of March, 31.2021.

This completes our financial review. I would like now to turn this call over to our chief sales and marketing Officer. Jim Ison Jim. Thank you, John, and good afternoon everyone over the last year as COVID-19. Shuttered, practically all in-person events. We adapted our marketing efforts to Virtual Outreach and events. For example, in April. We hosted a webinar called Turning large data. Set IP into AI gold.

Which featured speakers from OSS and Keo. Keo the webinar discussed collecting encrypting and creating value quickly from large Ai datasets and defense Aerospace autonomous vehicles and security applications at the edge.

With an improving business environment, our marketing efforts can now again include in-person events. We kicked off The Return to in-person events with our demonstration. Last week of a long-range visual observation system, utilizing a i at the Sea Air space 2021 conference that was sponsored by the US Navy. We were pleased with the attendance and the presence of decision-makers Navy leaders and Senior Management.

At the event. We also demonstrated our market-leading AI on the fly high speed PCI. Express interconnect, nvme storage and scalable GPU compute systems that are required by the most demanding military and Aerospace applications.

We expect the return to live interaction and face-to-face, selling will be more productive and help fuel our future revenues. In the second quarter. We won three new major opportunities. As a reminder, major program winds are those expected to yield 1 million dollars or more of Revenue within four years, these new wins include a medical control system and Edge. Flash storage program. Primarily targeting Edge data recording storage and

Tatian applications and lastly a GPU accelerated training and inferencing system with a major vehicle supplier in Germany. Increasing our footprint in the autonomous vehicle Market.

These successes brought a total wins year-to-date to six regarding our pipeline. In addition to the confirmed wins. We have 17 major pending opportunities. We are focused on closing.

on the

Mark front, we ship to Major products earlier this year into the AI transportable Marketplace. Including our Flagship gaas, our GPU accelerator that has been an Airborne trials with the Navy.

G. We are also shipping this quarter, our latest SDS rugged server that was designed into a military mobile data center application. Our sales team is eagerly anticipating the introduction of additional next-generation standard products currently under development and testing. Now with that. I'd like to turn the call back over to David for our Q3 Outlook.

Right. Thank you. John, and Jim in summary. We have made better than expected, top, and bottom line, progress, progress with adjusted, ebitda in nine percent of revenues, for the first half. We were making solid in roads towards our adjusted e. Badal objective of no, less than 10%.

So we continue to validate our AI transportable Market, Focus through wins and product introductions. And we have received positive feedback on our product roadmap with key customers under NDA. And we plan to introduce a number of innovative next-generation platforms later this year. And next.

Well, we expect the effects of the pandemic will continue through 2021. We are seeing improving customer demand. Even our commercial Aerospace customers, which were severely affected by COVID-19 re-engaging with us on New programs, as well as bringing back programs previously. Put on hold.

Old. And although product demand is increasing the supply chain continues to be a challenge with price increases and longer lead times. Our team is managing the fluid. Landscape on multiple fronts, including qualifying additional vendors implementing extended purchase planning and other strategic and tactical activities.

For example, Advanced purchases of the parts have minimize the adverse impact on Revenue, but have also increased inventory levels temporarily.

We continue to proactively manage the challenges, imposed by the pandemic and in doing so, our team has become Adept at optimizing, engineering, and manager, manufacturing processes shipping products on time and not only protecting, but increasing margins.

Looking forward, we are providing Revenue. Guidance of fifteen point nine million for the third quarter, which would represent eight percent growth over. Q223 percent growth over the same quarter last year and a new record for the company for Q3 revenues.

Thank you to all our shareholders for your support and joining us on this journey of growth and Innovation. I'd also like to invite all prospective investors to reach out to us to become more acquainted with our story.

finally, my

Patient, our entire OSS team for their dedication to the success of onestopsystems and their commitment to Quality and productivity. Now with that. I'd like to open it up to questions Christy.

Thank you. If you would like to ask a question, please press star. Followed by the number one on your telephone keypad. If you're calling from a speakerphone, please make sure your mute function is off to ensure your signal can reach your equipment again star. One to ask a question will go first to Scott Searle from Roth Capital. Your line is open. Good afternoon. Thanks for taking my questions. Nice job, guys. In a very difficult environment. He may be for starters. I'm not sure if I heard this in the opening remarks, but on the gross margin.

You know, certainly a lot of issues as it relates to the overall Global Supply Chain seems like you guys have been doing pretty well. I was wondering your thoughts in terms of what the impact was in the quarter and how you're seeing that impact in terms of gross margins going forward. I know you've beefed up your inventory a little bit on the balance sheet, but, you know, but what was the the second quarter impact? What do you see in for the second half of this year?

We're no worse. The following is the dynamic. First of all, as far as, you know, the question is, are we leaving Revenue behind? Because we didn't have the product. Sure, we have supply issues. But I think the demand that we're shipping reflects the real demand in the market. And so if anything was held up a little bit, it's really more of a reflection of somebody building inventory. So we feel good about that. We've had Dynamics where we pulled stuff in push stuff out to stay on track as far as the margins go because we're so focused.

Guest with the culture of the company and every aspect of the company to be more efficient, focus on margins, that's helped us offset price increases in addition to that. You know, we have actually reduced our cost by continuing to ask for cost reductions. And so we're doing all these things together to really offset that including price increases to our customers.

Gotcha, and and maybe if it could as well on the Outbacks front seemed like you guys continue to do a very good job on that front. Is that the the reported pro-forma number in the second quarter? Is that what we should be using as a base line going forward? I know the, the PPE loan was removed from that as well. But, you know, given the roadmap in the Investments that you're making sure we expect that to be moving up in any sort of a material fashion over the next couple of quarters.

No, I mean, it's going to go a little bit with like additional trade shows a little more travel. We're hiring a few people but we are really, you know, just on the hiring front, for example, we get together on the executives at executive group and really evaluate the requests on hires and make decisions based on the return on investment. So we're being real careful about it. So it'll be up a little bit, but not too much. And lastly, if I could just kind of shift into the RFP pipeline. I think you said the number is now 17 meaningful.

So when did you get a little bit more color in terms of somebody and market dynamics? There may be the

I mean, it seems like you've been hitting two or three quarter is that the same sort of level we should be thinking about, and maybe the gross margin profile as well on some of those newer wins. I you know, I think you continue to refine your go-to-market, which would certainly help out on that gross. Margin. Front. Does that contribute to a more favorable mix going forward? And how are you thinking about, you know, getting to a 40% kind of gross margin out there? What sort of timeline should we be thinking? Thanks.

Thanks.

I'll take the first part of that. Our pipeline is continuing to be and hopefully expanding to 50% of AI transportable type market. So as we're focusing on those markets, those are the types of accounts that were adding to that pipeline that tends to be more when you focus more higher margin as well. So that's a good rule of thumb. We've continued to have about a 6.

Percent or better success rate. If you look at the last three years, we've been tracking this metric. So we've been pretty good at putting the ones in there that we know. We have a good shot at winning Scott. I would just add that. I'm hoping you know with us getting back to trade shows and meeting customers live. We can, you know drive that number upward and in the process, you know will weeding out lower margin opportunities and focusing on the higher.

He went one last question. If I could Dave, you know, given given the recovery and some of your customers particularly the entertainment front. I just want to get better Insight in into the sustainability of that. It, I think that that customer had shifted very much online into a virtual environment, but we started to see live concerts come back before. Second wave of Delta is kind of, you know, crossing the country. Now, you know, is there is there any risk in terms of? Well, I guess what it, what is built-in, you know, for the entertainment vertical, if you will.

Like into the second half of this year and you have pretty good comfort and visibility on the front given, you know, pretty fluid dynamics in the u.s. Right now. Thanks and globally.

Lee. Yeah, so the dynamic has happened really is that what we're seeing and what we're shipping? Which is you know, as come up quite a bit is primarily all their virtual products. And so we're excited about the fact, we're doing those kind of numbers and yet, it's not bringing back the large Gathering events, which eventually will happen. We understand that their well engaged with a large and Gathering people. Now again, so we expect to see that later in the year. Maybe it's late this year. Next.

G r. But the number is safe because the number appears to be in pretty good shape because of the success of the virtual products. I think what that means is that, you know, you know, in 2022. We probably have a customer that's, you know, stronger than ever.

Great. Thank you. Thank you, Scott.

And next, we'll go to Eric. Martinuzzi from Lake Street. Your line is open.

Customers at work.

Twenty-four percent of the company's total revenue. Do you have any color that you can give us either on the quarter or on the six months for the impact that those two customers have had on your top line.

Right. Both those customers have come back, pretty strong. And as a result, the other percentage of our total business has increased back up, but I'm not wishing that there, you know, I'm happy that they've showed up strong, but we continue to develop the other customers. Do you want to add anything to that gym or John? We are actually participating a greater number of programs. So even though it's within

Name of a customer. We're actually selling into more programs within that customer.

Different buckets of.

Money, okay, and then to your, you were kind of headed towards elaborating a little bit on the expanding and broadening of the customer base. David interested to know if you're seeing any Trends, whether geographically vertically you do serve such such disparate parties, but anything showing up in the new customer numbers.

Not from a geographic standpoint. Definitely, more military type applications as we focus towards the AI transportable market. So that market space is pretty hot right now and especially with the the budgeting and everything geared towards AI applications for the government continue to expand and we expect to capture as much of that as we can. And that isn't focused increase that portion of the

Okay, I'm looking at your profit margins year ago. The second half you were pretty strong double digit margin, despite some of the the challenges that the business had. If I look at it. I kind of a, a back half in the in its entirety you're coming into the stronger part of your year when it comes to demand from defense and Military. And those historically been higher gross margin.

You also talked about a goal of you know, north of 10% on the adjusted. Ibadah. Margin is that to say we're kind of locked in there, or could we still dip below that?

At. Well, first of all, you know, one of the Dynamics that we've tried to point out is that in 2021 because of the expansion of the programs and the additional customers we have in the military space. We've had that show up in the first half. So that percentage has actually more than doubled from 2022.2021. And so that's helped us on the margins and spread it out. So that's an additional all the other things we're doing. But also in

Vynamic world would be the supply challenges. The second.

We would expect to be strong on margins like historic historically. They are probably nothing, you know, probably in the similar range as you've seen before from us in that area.

Via in the pipeline. Is this also skewing towards military DOD in inline with the winds that you've you've knocked down.

Down a higher percentage is in Military and you know, over 50 percentage in the I transportable which by definition is higher margin.

All right, there covers it for me. Thanks for taking my questions. Yeah.

Next, we'll go to Joe Gomes from double Capital. Your line is open.

Ian.

Thank you.

For a sack in, you know, they they were down. Sequentially. I was just wondering, is that, you know, product mix or is there anything else there? And they that would cause the margin gross margins to decline sequentially?

It's, it's just it's mostly product mix. And then also, we had some cost associated with a military program that brought the margins down a little bit. But if you look at us, you know, year-over-year for the first half, where up, what is it? Five percentage points? John? Yeah, so we're pretty pleased with that.

At some of the commercial Aerospace guys, re-engaging. I don't no way you could give us a little color. You know, what? They were kind of doing pre COVID-19 either on, you know, on a revenue type basis, or you know, what, what could, you know if it's continues and we start to get some of these customers back. You know, what good that kind of added to the top?

Line. And, you know where those margins on those products compared to the the korb Arjun.

Yeah, so that business primarily came from the acquisition of CDI a number of years ago and back when they were stronger that was more in the you know, it wasn't a huge number but it was in those say the three million dollar kind of range that has dried up to a pretty small number and recent in recent quarters. So the really the challenge there is because that's really part of AI transportable. 'S is how do we take that to a whole nother level and and that's one of the

Areas were definitely engaged with more focused though. Less on say entertainment systems for the aircraft moron, you know, data centers in the sky. We are, you know, re-engage where we're at with that. Really. Today is, we're not seeing a whole lot of Revenue show up yet. But where we had programs that were put on hold, we're starting to discuss them starting to talk terms. And so we hope to start seeing orders from them. And the second thing is that the re-engaging on new programs that they're targeting.

Either be things like Degas. It on the sky, or different.

Action or safety type products.

For that and then just hate to keep going back but on the, you know, on the rfps and the wind. So you've got six wins year-to-date, you know, last year year to date. You had eight when including five that you want in the second quarter and it's just, you know, timing still thinking you're on that, that passed. That the last two years, you've won 16 of these.

That you'll still be in that same range by the end of the year.

Yeah, you know. So yeah, you're right, you know, we're a little off where we've been but I do not believe that as an indication of activity moving forward. We've put a lot of focus on the AI transportable space that creates a little bit of disruption because we're really focusing people, you know, on the higher margin business and you know, we've been selling in this virtual world for about 18 months. So I think it's really those Dynamics but we feel good about where we're headed and the things we're going to be able to do so. Yeah, but a nap

Numbers. You're right there. Down a little bit that hopefully will will get stronger in the coming quarters and be real strong next year.

Irr supply chain issues. And some of the, you know, the inflationary pressures, other big issue, that that a lot of people companies seem to be having is in Staffing and just wondering, you know, you guys seeing any issues there. Are you fully staffed and happy with where you are today?

Yeah, we're okay on that front. We have found that, you know, searching for people is more challenging. We do tend to one of the one of the reasons geographically where we're at, since we're outside of San Diego, in a more affordable area, people don't tend to to move. And then also, we're seeing a lot of people moving to from the Bay Area to Southern California. So, those different Dynamics are helping us, but we we are staffed where we want to be today and we have, we just

It's done another salesperson. We've been looking for a while and we plan to do another one on that front.

Went great. Thanks guys, and again really nice quarter.

Thank you, Joe.

David Williams from Benchmark company. Your line is open.

Ian, just the typical customer wins or here. What is that typical, I guess design cycle or wind cycle look like from a person gauge, but to to grab it.

Yep. So the on the commercial side of things is typically in the 6 to 12 months, to design in and get them to the wind category on the military side. It could be anywhere from 12 to 20, 24 months, typically, but your designed in for a longer period of time.

Combat, though, you know, we have multiple lists in the company that we're focused on, we have targeted lists and other stuff. So the target list would take that type of time frame, when Jim talks about the 17 pending opportunities. Those are well down, you know, that funnel, and that time, in that time period.

Okay, and then maybe if you're if you kind of think about the demand and maybe even through the corridor, where are you seeing the largest growth opportunities maybe outside of your transportable. But what other opportunities are you seeing? And we're seeing the greatest level of the man, do you think?

Other opportunities outside AI, you know, we come across them. But you know, we're really trying to focus on they I transportable. So I mean that's one of the things I'm really trying to drive with organization. That's our Focus. Now, we do have other opportunities and we can't we can't just turn the ship to quick. So we continue to look at different things. What do you want to add to that gym? So because of our Innovation the PCI Express Gen 4 generally quickly.

Something that going to Gen 5 when that's available. We get a lot of oems that maybe not our million dollar accounts, but they do come to us for those Technologies to be able to scale out GPU Solutions or their own OEM I/O or instrumentation. Like, you know, test equipment, things like that, for the early adopters, that tends to be very lucrative and we've reported that in previous years.

As our pcie gen for business. So that's still a solid underlying business that really just takes its parts from Rai transportable strategy, so we won't lose that going forward.

Thanks so much certain, appreciate the time.

David.

And again, if you have a question, please press star one on your telephone keypad. Now. We'll go next to Brian can Slinger from Alliance Global Partners. Your line is open. Good evening, guys. Nice results.

Thank you. How are you? And you get to the point of putting them in this bucket? Are these RFP types? I think it's a government. At least is where you're bidding against the number of competitors. And if so, then describe the competitive landscape and or feedback you get when you're not selected.

Yeah, so most of those accounts that we have, there are usually firm fixed price agreement, single source, so that includes the five different programs. We we have with our largest military customer. I believe maybe one of those is a bid for bid type of situation. We do give feedback from those customers as to why we weren't selected for say, a bid for bid type of situation, but I'd say a good 60 to 75% of our

Our.

Next have been firm, fixed price and are that sole source?

All right, so it's just so when you do lose, is it because they went with another solution. Do they not award the contract? I'm just trying to understand. Yep. It seems you win so often. It's too high winrate. You know, what, what's the feedback when you don't win? Someone else? Had a better solution particularly for Price, particularly on the military side. It's been we compete against in-house resources. So we have seen a loss where

The customer wanted to go with our PCI Express. We bit it they won the program and then decided that they want to keep it in-house and change the technology. So those type of things are the kind of feedback that we get. It's not really been on price. We win things even when we're higher-priced. We have a pretty good service track record that keeps our customers coming back to us.

Great. Are you always going direct is a prime or is it an opportunity to partner with larger either system integrators or prime contractors that? You know, you can be part of a bigger solution.

Yep, the biggest piece of our business is with the prime contractor. So we don't go direct to the military on. I'd say 80% of our projects. Most of them are through vars or prime contractor. We do have some direct Navy business that we do with them, also, with the Army, but typically you'll see is going through the the prime.

Main military primes like raytheon's lockheed's, General Dynamics, those type of companies like, okay. Thank you.

Thank you.

And now, I'll turn it back to David Ron for closing remarks.

Thank you, Christy, and thank you everyone for joining us today. We believe The Best Is Yet To Come, and we look forward to meeting with you again and Reporting our progress. As we pursue the many opportunities ahead. Meanwhile, please stay safe and healthy and feel free to reach out to John gym or me at any time Christie, please go ahead and wrap up the call.

Thank you. Now, we before now, before we conclude today's call. I would like to provide the company Safe Harbor statement. That includes important questions regarding forward-looking statements made during today's call onestopsystems, cautions you that the statements in the presentation are not a description of historical facts are forward looking statements. These statements are based on company's current beliefs and expectations. Such forward-looking statements include those regarding the company's expectations for Revenue growth generated by new products. Design wins.

or m&a activity the inclusion of such forward-looking statements and

There should not be regarded as a representation by OSS that any of its plans will be achieved actual results May differ from those set forth in the presentation, due to the risks and uncertainties inherent in our business, including without limitation that the market for our products is developing and may not develop. As we as we expect Global pandemics or other disasters, or public health concerns include including COVID-19 in regions of the world where we have operations, customer or source.

Cereal or sell products that may affect such Market are operating results. May fluctuate significantly, which would make our future operating results difficult to predict and could cause operating results to fall below, expectations or guidance. Our ability to successfully integrate the operation, systems, technologies, product offerings, and personnel with acquired companies, may prove difficult and adversely affect our financial results. Our products are subject to competition. Including competition from the customers, too.

We may sell and competitive pressure from new and existing companies May harm our business sales growth rates and market. Share our future success depends on our abilities, to develop and successfully introduced new and enhanced products that meet the needs of our customers. The likelihood of our design proposals, becoming design wins is uncertain and revenue, may never be realized our products. Fulfill specialized needs and functions within the technology industry and such needs or functions may become unnecessary.

Or the characteristics of such needs and functions may shift in such a way as to cause our products to no longer fulfill. Such a needs our functions, new entrance into our market May harm. Our competitive position. We rely on limited number of suppliers to support a manufacturer design process, and if we cannot protect our proprietary design rights and intellectual property rights are comp. Our competitive position could be harmed. Or we could incur significant expenses to enforce our rights, our International sales.

Operation subjects us to additional risks that can adversely affect our operating results and financial condition, and we fail to remedy material weaknesses in our internal controls or financial reporting. We may not be a be able to accurately report our financial results and other risks described in our prior, press release and in our filing with the Securities and Exchange Commission SEC, including Under The Heading risk factors in our annual report on form, 10-K and any up.

Subsequent filings with the SEC.

You were cautioned not to place under Reliance on these forward-looking statements which speak only as of the date of the conference call. And we undertake no obligation to revise or update this information to reflect events or circumstances after the state here of all forward-looking statements are qualified in their entirety. By this cautionary statement, which is made under the Safe Harbor, provision of the private Securities. Litigation Reform, Act of 1995. Before we end today's conference. I would like to remind everyone that this call will be

be available for replay.

Later this evening through August 26th. Please refer to today's press release for dialing and replay instructions available via the company's website at irs.gov. Onestopsystems.com. Thank you for joining us today. This concludes our conference. You may now disconnect.

Act.