One Stop Systems CEO and Chairman Issue Letter to Shareholders - Seite 2

Throughout the year the OSS leadership team was able to effectively manage the business as we transitioned away from $13.7 million of low-margin legacy media revenue. In fact, backing out this impact revenue in 2023 increased year-over-year by 4%. I am pleased to report that despite this impact to overall sales, we maintained positive adjusted EBITDA in 2023 reflecting our shift to higher margin revenue opportunities, our focus on controlling costs, and the compelling financial model we have created. In addition, during 2023 we implemented process improvements to drive efficiencies, and successfully achieved our Department of Defense facility clearance paving the way for OSS to execute classified work. Our Bressner team delivered on its 2023 financial objectives while expanding their business, enabling the strategic shift for the OSS business overall.

Looking forward to 2024, I am excited about leveraging the capabilities that differentiate OSS in the market. As a company we have proven to be pioneers at bringing enterprise class capabilities to challenging environments. We offer unique product solutions that provide low latency, high throughput, scalable solutions in real time applications. We leverage configurable, off-the-shelf, and custom high-performance solutions that enable OSS to rapidly develop cost-effective products for our customers. We are seen by customers as technology experts with a legacy of solving customer challenges and have built strong partnerships with leading enterprise AI compute suppliers.

We believe the technology, product development, and partnership structure we have developed is unique, as we deliver best-in-class performance, and scalable products and solutions to enable AI/ML, sensor fusion, sensor processing, and autonomy for global defense and commercial markets. These markets continue to be backed by strong and growing demand for AI/ML and will be for years to come. In fact, we see that in defense markets the spend on integration of AI/ML, sensor fusion, and autonomy are increasing rapidly as the military seeks to create a winning advantage on new and existing platforms.

We refer to our markets as AI Transportables, which aligns with our strategic focus on providing ruggedized solutions at the edge to support AI/ML, sensor fusion and autonomy for global defense and commercial customers. In the commercial space, we have seen a delay in the full implementation of autonomous trucking primarily due to evolving government regulations. We remain committed to this market, and we continue to design, develop, and prototype compute, storage, and cooling solutions for our customers including some of the world’s leading commercial vehicle manufacturers. We also successfully expanded our reach within the commercial sector with a new 5-year agreement with FLYHT for their commercial aerospace airborne data recorder and developed a new relationship with Andretti Racing and Zapata AI for race analytics. We believe these are the early adopters, and we expect new applications, solutions, and investments in AI/ML to support a growing need for our enterprise edge compute solutions for years to come.