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11/05/2025 | Press release | Distributed by Public on 11/05/2025 07:22

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


X	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ________________

Commission File Number: 001-38371

One Stop Systems, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

33-0885351

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2235 Enterprise Street #110

Escondido , California 92029

(Address of principal executive offices including Zip Code

( 760 ) 745-9883

(Registrant's telephone number, including area code)

(Former Name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of exchange on which registered
Common Stock, $0.0001 par value per share	OSS	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes X  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No X

As of October 31, 2025, the registrant had 24,515,491 shares of common stock (par value $0.0001) outstanding.

Table of Contents

PART_1_FINANCIAL_INFORMATION

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q ("Quarterly Report"), contains forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations." All statements, other than statements of historical facts, contained in this Quarterly Report, including statements regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. Words such as, but not limited to, "anticipate," "aim," "believe," "contemplate," "continue," "could," "design," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "seek," "should," "suggest," "strategy," "target," "will," "would," and similar expressions or phrases, or the negative of those expressions or phrases, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

•

our ability to adjust to economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability, and could harm our financial condition and results of operations;

•

our ability to remediate issues with volatile or recessionary conditions in the United States or abroad which could adversely affect our business and/or our access to capital markets in a material manner;

•

adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations;

•

cybersecurity incidents or data breaches that could disrupt operations or compromise proprietary information;

•

changes in current legislation, regulations and economic conditions regarding federal governmental tariffs, the implementation of federal government budget cuts, a prolonged government shutdown and the potential that any of the foregoing disrupts our operations, and delays contract awards, funding under new or existing contracts and overall uncertainty regarding defense budgets and government spending;

•

our ability to file Annual and Quarterly Reports on a timely basis;

•

our ability to raise additional capital to fund our operations if and as needed;

•

our ability to achieve and sustain profitability;

•

our estimates regarding our future performance including, without limitation, any estimates of potential future revenues;

•

estimates regarding market size;

•

our estimates regarding expenses, revenues, financial performance, and capital requirements, including the length of time our capital resources will sustain our operations;

•

our dependence on third parties for the manufacture of our products;

•

our ability to expand our organization to accommodate potential growth; and

•

our ability to retain and attract key personnel

Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on our projections of the future that are subject to known and unknown risks and uncertainties and other factors that may cause our actual results, level of activity, performance or achievements expressed or implied by these forward-looking statements, to differ. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. All forward-looking statements are qualified in their entirety by this cautionary statement. Forward-looking statements should be regarded solely as our current plans, estimates and beliefs. You should read this Quarterly Report and the documents that we have filed as exhibits to this Quarterly Report and incorporated by reference herein completely and with the understanding that our actual results may be materially different from the plans, intentions and expectations disclosed in the forward-looking statements we make. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. The forward-looking statements contained in this Quarterly Report are made as of the date of this Quarterly Report, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Unless the context requires otherwise, references in this Quarterly Report to "OSS," "Company," "we," "us" and "our" refer to One Stop Systems, Inc. and its subsidiaries.

One Stop Systems, the One Stop Systems logo, and other trademarks or service marks of One Stop Systems appearing in this Quarterly Report are the property of One Stop Systems, Inc. This Quarterly Report also includes trademarks, trade names and service marks that are the property of other organizations. Solely for convenience, trademarks and trade names referred to in this Quarterly Report appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and trade names.

PART I - FINANC IAL INFORMATION

Item 1. Financi al Statements.

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. We have presented financial statements in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC"). Therefore, such financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America. In preparing these unaudited consolidated financial statements, management has evaluated events and transactions for potential recognition or disclosure through the date the unaudited consolidated financial statements were issued by filing with the SEC.

This Quarterly Report should be read in conjunction with our audited financial statements for the year ended December 31, 2024, included in our Annual Report on Form 10-K, filed with the SEC on March 19, 2025.

The results of operations for the three month and nine month periods ended September 30, 2025, are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2025.

ONE STOP SYSTEMS, INC. (OSS)

CONSOLIDA TED BALANCE SHEETS


	Unaudited			Audited
	September 30,			December 31,
	2025			2024
ASSETS
Current assets
Cash and cash equivalents	$	6,508,020		$	6,794,093
Short-term investments (Note 3)		-			3,217,065
Accounts receivable, net (Note 4)		12,024,553			8,177,371
Inventories, net (Note 5)		15,326,919			13,176,156
Prepaid expenses and other current assets		2,138,861			836,364
Total current assets		35,998,353			32,201,048
Property and equipment, net		1,519,045			1,669,026
Operating lease right-of use assets		4,012,747			1,536,094
Deposits and other		38,093			38,093
Goodwill		1,489,722			1,489,722
Total Assets	$	43,057,960		$	36,933,982

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	6,033,999		$	2,068,017
Accrued expenses and other liabilities (Note 6)		4,145,292			4,806,675
Current portion of operating lease obligation (Note 9)		513,093			285,937
Borrowing on bank lines of credit (Note 7)		1,000,000			-
Current portion of notes payable (Note 7)		1,173,116			1,035,050
Total current liabilities		12,865,500			8,195,679
Deferred tax liability, net		39,781			52,574
Operating lease obligation, net of current portion (Note 9)		3,812,931			1,513,684
Total liabilities		16,718,212			9,761,937
Commitments and contingencies (Note 9)
Stockholders' equity
Common stock, $ 0.0001 par value; 50,000,000 shares authorized; 22,008,583 and 21,148,810 shares issued and outstanding		2,201			2,115
Additional paid-in capital		51,168,618			49,082,737
Accumulated other comprehensive income		996,867			140,254
Accumulated deficit		( 25,827,938	)		( 22,053,061	)
Total stockholders' equity		26,339,748			27,172,045
Total Liabilities and Stockholders' Equity	$	43,057,960		$	36,933,982

See accompanying notes to unaudited consolidated financial statements.

ONE STOP SYSTEMS, INC. (OSS)

UNAUDITED CONSOLIDATED STATEM ENTS OF OPERATIONS


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
Revenue:
Product	$	18,460,660		$	12,682,241		$	44,032,955		$	36,722,411
Customer funded development		295,539			1,018,856			1,090,916			2,831,802
		18,756,199			13,701,097			45,123,871			39,554,213
Cost of revenue:
Product		11,967,908			14,601,408			29,325,649			32,123,488
Customer funded development		95,919			817,427			696,580			2,091,907
		12,063,827			15,418,835			30,022,229			34,215,395
Gross profit (loss)		6,692,372			( 1,717,738	)		15,101,642			5,338,818
Operating expenses:
General and administrative		2,344,776			2,057,092			7,097,346			6,558,807
Marketing and selling		2,328,973			2,008,824			6,872,293			6,184,065
Research and development		1,448,521			950,373			4,330,713			2,846,852
Total operating expenses		6,122,270			5,016,289			18,300,352			15,589,724
Income (loss) from operations		570,102			( 6,734,027	)		( 3,198,710	)		( 10,250,906	)
Other (expense) income, net:
Interest income		36,433			116,596			159,240			376,940
Interest expense		( 15,065	)		( 16,465	)		( 42,941	)		( 70,910	)
Other (expense) income, net		( 61,102	)		( 14,402	)		( 91,930	)		14,707
Total other (expense) income, net		( 39,734	)		85,729			24,369			320,737
Income (loss) before income taxes		530,368			( 6,648,298	)		( 3,174,341	)		( 9,930,169	)
Provision for income taxes		266,881			167,086			600,535			569,382
Net income (loss)	$	263,487		$	( 6,815,384	)	$	( 3,774,876	)	$	( 10,499,551	)

Net income (loss) per share:
Basic	$	0.01		$	( 0.32	)	$	( 0.17	)	$	( 0.50	)
Diluted	$	0.01		$	( 0.32	)	$	( 0.17	)	$	( 0.50	)

Weighted average common shares outstanding:
Basic		21,952,963			21,049,270			21,675,802			20,897,324
Diluted		22,840,761			21,049,270			21,675,802			20,897,324

See accompanying notes to unaudited consolidated financial statements.

ONE STOP SYSTEMS, INC. (OSS)

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
Net income (loss)	$	263,487		$	( 6,815,384	)	$	( 3,774,876	)	$	( 10,499,551	)
Other comprehensive income (loss):
Net unrealized (loss) gain on short-term investments		( 2,226	)		7,855			( 4,572	)		445
Currency translation adjustment		( 386,112	)		482,779			861,185			301,955
Total other comprehensive (loss) income		( 388,338	)		490,634			856,613			302,400
Comprehensive loss	$	( 124,851	)	$	( 6,324,750	)	$	( 2,918,263	)	$	( 10,197,151	)

See accompanying notes to unaudited consolidated financial statements.

ONE STOP SYSTEMS, INC. (OSS)

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three and Nine Month Periods Ended September 30, 2025


	Common Stock							Accumulated Other			Accumulated			Total
	Shares		Amount		Additional Paid-in-Capital			Comprehensive income			(Deficit) Earnings			Stockholders' Equity
Balance, January 1, 2025		21,148,810	$	2,115	$	49,082,737		$	140,254		$	( 22,053,061	)	$	27,172,045
Stock-based compensation		-		-		1,128,335			-			-			1,128,335
Exercise of stock options, RSUs and warrants		771,969		77		1,000,703			-			-			1,000,780
Taxes paid on net issuance of employee stock options		-		-		( 303,477	)		-			-			( 303,477	)
Currency translation adjustment		-		-		-			1,247,298			-			1,247,298
Net unrealized loss on short-term investments		-		-		-			( 2,346	)		-			( 2,346	)
Net loss		-		-		-			-			( 4,038,364	)		( 4,038,364	)
Balance, June 30, 2025		21,920,779		2,192		50,908,298			1,385,205			( 26,091,425	)		26,204,271
Stock-based compensation		-		-		444,621			-			-			444,621
Exercise of stock options, RSUs and warrants		87,804		9		22,199			-			-			22,208
Taxes paid on net issuance of employee stock options		-		-		( 206,500	)		-			-			( 206,500	)
Currency translation adjustment		-		-		-			( 386,112	)		-			( 386,112	)
Net unrealized loss on short-term investments		-		-		-			( 2,226	)		-			( 2,226	)
Net income		-		-		-			-			263,487			263,487
Balance, September 30, 2025		22,008,583	$	2,201	$	51,168,618		$	996,867		$	( 25,827,938	)	$	26,339,748

See accompanying notes to unaudited consolidated financial statements.

ONE STOP SYSTEMS, INC. (OSS)

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three and Nine Month Periods Ended September 30, 2024


	Common Stock							Accumulated Other			Accumulated			Total
	Shares		Amount		Additional Paid-in-Capital			Comprehensive income			(Deficit) Earnings			Stockholders' Equity
Balance, January 1, 2024		20,661,341	$	2,066	$	47,323,673		$	675,310		$	( 8,418,727	)	$	39,582,322
Stock-based compensation		-		-		965,938			-			-			965,938
Exercise of stock options, RSUs and warrants		336,042		33		219,315			-			-			219,348
Taxes paid on net issuance of employee stock options		-		-		( 349,296	)		-			-			( 349,296	)
Currency translation adjustment		-		-		-			( 180,824	)		-			( 180,824	)
Net unrealized loss on short-term investments		-		-		-			( 7,410	)		-			( 7,410	)
Net loss		-		-		-			-			( 3,684,167	)		( 3,684,167	)
Balance, June 30, 2024		20,997,383		2,099		48,159,630			487,076			( 12,102,894	)		36,545,911
Stock-based compensation		-		-		458,011			-			-			458,011
Exercise of stock options, RSUs and warrants		117,151		12		18,388			-			-			18,400
Taxes paid on net issuance of employee stock options		-		-		( 73,268	)		-			-			( 73,268	)
Currency translation adjustment		-		-		-			482,779			-			482,779
Net unrealized gain on short-term investments		-		-		-			7,855			-			7,855
Net loss		-		-		-			-			( 6,815,384	)		( 6,815,384	)
Balance, September 30, 2024		21,114,534	$	2,111	$	48,562,761		$	977,710		$	( 18,918,278	)	$	30,624,303

See accompanying notes to unaudited consolidated financial statements.

ONE STOP SYSTEMS, INC. (OSS)

UNAUDITED CONSOLIDATED STATEM ENTS OF CASH FLOWS


	For the Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	( 3,774,876	)	$	( 10,499,551	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Deferred income taxes		( 534,594	)		( 551,567	)
Loss on disposal of property and equipment		-			354
Provision for bad debt		48,375			40,000
Warranty reserves		30,000			( 45,000	)
Depreciation		676,777			815,420
Amortization of right-of-use assets		154,509			312,396
Inventory reserves		( 553,702	)		7,351,278
Stock-based compensation expense		1,572,956			1,423,949
Changes in operating assets and liabilities:
Accounts receivable		( 3,334,841	)		( 1,003,287	)
Inventories		( 543,527	)		( 888,972	)
Prepaid expenses and other current assets		( 697,773	)		( 348,364	)
Accounts payable		3,689,669			2,823,183
Accrued expenses and other liabilities		( 1,551,215	)		2,993,729
Operating lease liabilities		( 107,373	)		( 280,023	)
Net cash (used in) provided by operating activities		( 4,925,615	)		2,143,545

Cash flows from investing activities:
Redemption of short-term investment grade securities		3,212,492			4,592,052
Purchases of property and equipment, including capitalization of labor costs for test equipment and ERP		( 467,879	)		( 298,789	)
Net cash provided by investing activities		2,744,613			4,293,263

Cash flows from financing activities:
Proceeds from exercise of stock options and warrants		1,022,988			237,748
Payment of payroll taxes on net issuance of employee stock options		( 509,977	)		( 422,564	)
Proceeds (repayments) from bank lines of credit		1,000,000			( 959,373	)
Net cash provided by (used in) financing activities		1,513,011			( 1,144,189	)

Net change in cash and cash equivalents		( 667,991	)		5,292,619
Effect of exchange rates on cash		381,918			61,041
Cash and cash equivalents, beginning of period		6,794,093			4,048,948
Cash and cash equivalents, end of period	$	6,508,020		$	9,402,608

See accompanying notes to unaudited consolidated financial statements.

ONE STOP SYSTEMS, INC. (OSS)

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED


	For the Nine Months Ended September 30,
	2025		2024
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	39,023	$	69,376
Cash paid during the period for income taxes	$	458,833	$	353,876

Supplemental disclosure of non-cash flow transactions:
Reclassification of inventories to property and equipment	$	18,406	$	12,106
Capitalization of right-of-use assets and operating lease liabilities	$	2,495,918	$	-

See accompanying notes to unaudited consolidated financial statements.

ONE STOP SYSTEMS, INC. (OSS)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Month Periods Ended September 30, 2025 and 2024

NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION

Nature of Operations

One Stop Systems, Inc. ("we," "our," "OSS," or the "Company") was originally incorporated as a California corporation in 1999, after initially being formed as a California limited liability company in 1998. On December 14, 2017, the Company was reincorporated as a Delaware corporation in connection with its initial public offering. The Company designs, manufactures, and markets specialized rugged high-performance compute, high speed switch fabrics and storage systems, which are designed to target edge applications for artificial intelligence ("AI")/machine learning ("ML"), sensor processing, sensor fusion and autonomy. The Company markets its products to manufacturers of equipment used for autonomous vehicles, medical, industrial, and military applications, with special focus on platforms that move, such as planes, trucks, ships, submarines and mobile datacenters or command posts where sensor processing, sensor fusion, AI and ML are integrated to support such applications.

During the year ended December 31, 2015, the Company formed a wholly owned subsidiary in Germany, One Stop Systems, GmbH ("OSS GmbH"). In July 2016, the Company acquired Mission Technologies Group, Inc. ("Magma") and its operations that complemented OSS' manufacture of custom high-performance compute servers.

On August 31, 2018, the Company acquired Concept Development Inc. ("CDI") located in Irvine, California. CDI specialized in the design and manufacture of custom high-performance computing systems for airborne in-flight entertainment, flight safety equipment, and networking systems. CDI's business was fully integrated into the core operations of the Company as of June 1, 2020.

On October 31, 2018, OSS GmbH acquired 100 % of the outstanding equity of Bressner Technology GmbH, a limited liability company registered under the laws of Germany and located near Munich, Germany ("Bressner"). Bressner designs and manufactures standard and customized servers, panel PCs, and PCIe accelerator systems. It also operates as a systems integrator with standard and custom all in one hardware systems and components. In addition, Bressner serves as a channel to market for OSS ruggedized datacenter level compute and storage products to the European and Middle Eastern markets.

In 2023 and 2024, the Company increased its focus on the development and sale of edge computing solutions and increased efforts to penetrate the military and defense sectors in particular. A re-profiling of the board of directors and the executive team enabled further emphasis and focus on the pursuit of revenue opportunities with major defense contractors and the military.

Impacts resulting in part from tariffs and the threat of tariffs, ongoing military conflicts in Europe and Middle East, Federal Reserve and European Central Bank interest rate policy, inflation and the risk of inflation, and uncertainty about the timing and substance of U.S. government budgets and policy actions have contributed to economic uncertainty and capital markets volatility in the near term that have and could continue to negatively affect our operations. Weakness in the European and more specifically the German economy negatively affected our Bressner segment in 2024. Economic conditions have improved in 2025, but uncertainty, volatility, and the risk of recessionary conditions in Europe and North America remain. As of September 30, 2025, the U.S. Federal Government had entered a shutdown following expiration of the continuing resolution. Prolonged shutdowns could delay awards or funding for U.S. defense programs that involve our products or customers.

Tariffs and the threat of tariffs sanctioned by the United States have contributed to uncertainty and supply chain disruptions that could impact our operations. The Company's OSS segment conducts final assembly and test of products at our facility in California. However, we source components and subassemblies from both within and outside of the United States. While we attempt to pass on the cost of tariffs to our customers, our ability to do so is dependent upon many factors, including the predictability of tariff rates and market conditions for the Company's

products. Management is closely monitoring and managing impacts and potential impacts to our business from ongoing trade policy developments.

In recent years, we have experienced increased supplier pricing, long lead-times, unavailability or limited supplies of certain products, protracted delivery dates, changes in minimum order quantities to secure products, and/or shortages of certain parts and supplies that are necessary components for the products and services we offer to our customers. While these supply chain pressures have eased in recent quarters, recent geopolitical and trade policy developments and uncertainty have increased the risk of continued or increased impacts to our supply chain in the near-term.

These global issues and concerns regarding general economic uncertainty or recession may impact our business as well as some of our customers, who may experience downturns or uncertainty in their own business operations and revenue. As a result, these customers may need to decrease or delay their technology spending, request pricing concessions or payment extensions, or seek to renegotiate their contracts.

These global issues and events may also have the effect of heightening many risks associated with our customers and supply chain. We may take further actions that alter our operations from time to time, or which we determine are in our best interests. In addition, we may decide to postpone or abandon planned investments in our business in response to changes in our business, which may impact our ability to attract and retain customers and our rate of innovation, either of which could harm our business.

As a result of these global issues, it has been difficult to accurately forecast our revenues or financial results, especially given the near and long-term impacts of the economic and geopolitical issues, inflation, the impact of tariffs, and uncertainty regarding the economic outlook. In addition, while the potential impact and duration of these issues on the economy and our business may be difficult to assess or predict, these world events have resulted in, and may continue to result in, significant disruption of global financial markets, and may reduce our ability to access additional capital, which could negatively affect our liquidity in the future. Our results of operations could be materially below our forecasts as well, which could adversely affect our results of operations, disappoint analysts and investors, or cause our stock price to decline.

Management's plans with respect to the above are to continue their efforts towards responding to the changing economic landscape and to continue to control costs, conserve cash, and strengthen margins through the introduction of new products and solutions focusing on AI compute capabilities for military and industrial applications.

Basis of Presentation

The accompanying financial statements have been prepared on an accrual basis of accounting in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP"), as set forth in the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC").

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of OSS, which include the acquisition of CDI, and its wholly owned subsidiary, OSS GmbH, which also includes the acquisition of Bressner. Intercompany balances and transactions have been eliminated in consolidation.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

There have been no changes to our accounting policies disclosed in our audited consolidated financial statements and the related notes for the period ended September 30, 2025.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure

of contingent liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and assumptions.

On an ongoing basis, our management evaluates these estimates and assumptions, including those related to determination of standalone selling prices of our products and services, allowance for credit losses and sales reserves, income tax valuations, stock-based compensation, goodwill, intangible assets and inventory valuations and recoverability. We base our estimates on historical data and experience, as well as various other factors that our management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities.

Recent Accounting Pronouncements

On December 14, 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure (Topic 740) which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. The Company must also further disaggregate income taxes paid. The objective of these disclosure requirements is for an entity, particularly an entity operating in multiple jurisdictions, to disclose sufficient information to enable users of financial statements to understand the nature and magnitude of factors contributing to the difference between the effective tax rate and the statutory tax rate. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. This guidance applies to annual periods beginning after December 15, 2024. The Company does not expect adoption to have any material impact to our results of operations or consolidated financial statements.

On November 4, 2024, the FASB issued ASU 2024-03 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" which requires disaggregated disclosure of certain income statement expenses. This amendment introduces enhanced guidance regarding presentation of certain income statement expense items and requires disclosure of certain types of expenses in the footnotes to the financial statements. This guidance applies to annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company does not expect adoption to have any material impact to our results of operations or consolidated financial statements.

NOTE 3 - SHORT-TERM INVESTMENTS

The Company's short-term investments by significant investment category as of September 30, 2025, were as follows:

Description

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Accrued
Interest

Estimated
Fair Value

Level 1: (1)

Cash alternatives

Certificates of deposit

(1)

Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.

The Company's short-term investments by significant investment category as of December 31, 2024, were as follows:


Description	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Accrued Interest		Estimated Fair Value
Level 1: (1)
Cash alternatives	$	814,717	$	-	$	-	$	-	$	814,717
Certificates of deposit		2,349,000		4,572		-		48,776		2,402,348
	$	3,163,717	$	4,572	$	-	$	48,776	$	3,217,065

(1)

Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.

Cash alternatives represent cash balances in savings accounts and U.S. Treasury Bills that are temporarily on-hand that are immediately available for investments in accordance with the Company's investment policy.

The Company typically invests in low risk securities and its investment policy limits the amount of credit exposure to any one issuer. The policy requires investments in fixed income instruments denominated and payable in U.S. dollars only and requires investments to have an investment grade credit rating, with a primary objective of minimizing the potential risk of principal loss.

NOTE 4 -ACCOUNTS RECEIVABLE

Accounts receivable, net consisted of the following for the periods indicated:


	September 30,			December 31,
	2025			2024
Accounts receivable	$	10,840,823		$	8,310,178
Unbilled receivables		1,374,445			-
Accounts receivable		12,215,268			8,310,178
Less: allowance for credit losses		( 190,715	)		( 132,807	)
	$	12,024,553		$	8,177,371

Unbilled receivables include amounts associated with percentage of completion and milestone billing accounting, which includes cost and gross profit earned in excess of billing, not currently billable due to contractual provisions.

Provision for credit losses related to accounts receivable was $ 43,496 a nd $ 40,000 for the three month periods ended September 30, 2025 and 2024, respectively, and $ 48,375 and $ 40,000 for the nine month periods ended September 30, 2025 and 2024, respectively.

The following tables represent the changes in the allowance for credit losses associated with our trade receivables for the nine month periods ended September 30, 2025 and 2024.


	For the Nine Months Ended September 30,
Allowance for Credit Losses	2025			2024
Balance on January 1,	$	( 132,807	)	$	( 50,032	)
Provision charged to expense		( 48,375	)		( 40,000	)
Receivables written-off		100			-
Effects of change in exchange rates		( 9,633	)		( 103	)
	$	( 190,715	)	$	( 90,135	)

NOTE 5 - INVENTORIES

Inventories, net consisted of the following for the periods indicated:


	September 30,			December 31,
	2025			2024
Raw materials	$	10,136,685		$	11,038,609
Sub-assemblies		966,054			887,440
Work-in-process		663,330			543,207
Finished goods		10,830,899			8,406,258
		22,596,968			20,875,513
Less: allowances for obsolete and slow-moving inventories		( 7,270,049	)		( 7,699,357	)
	$	15,326,919		$	13,176,156

NOTE 6 - ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consisted of the following for the periods indicated:


	September 30,		December 31,
	2025		2024
Accrued compensation and related liabilities	$	1,699,921	$	1,008,278
Deferred revenue		123,041		218,499
Customer deposits		80,274		26,607
Warranty reserve		583,311		501,726
Trade and other taxes		872,201		495,105
Other accrued expenses		786,544		2,556,461
	$	4,145,292	$	4,806,675

The tables below present the deferred revenue and deposit balances along with the significant activity affecting balances during the nine month periods ended September 30, 2025 and 2024:


	September 30,			September 30,
Deferred revenue	2025			2024
Beginning balance	$	218,499		$	299,514
Deferral of revenue during the period		5,047,814			74,863
Recognition of unearned revenue from beginning of period		( 185,716	)		( 199,843	)
Recognition of unearned revenue from additions		( 4,957,556	)		( 12,881	)
Ending balance	$	123,041		$	161,653


	September 30,			September 30,
Customer deposits	2025			2024
Beginning balance	$	26,607		$	27,447
Additions during the period		916,186			11,427,311
Deposits recognized from beginning of period		( 552	)		( 10,155	)
Deposits recognized from additions		( 861,967	)		( 10,226,072	)
Ending balance	$	80,274		$	1,218,531

As of September 30, 2025, the Company had approxi mately $ 1,579,324 of remaining performance obligations under fully funded contracts for wh ich the Company's performance obligations are satisfied over time and for which the customer receives benefits as the Company performs. These performance obligations are expected to be satisfied within 2025 .

Revenue from customers with non-U.S. billing addresses represented approximately 53 % and 55 % of the Company's revenue during the three month periods ended September 30, 2025 and 2024, respectively, and 59 % and 59 % for the nine month periods ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, substantially all the Company's long-lived assets are in the United States of America, except fo r assets of $ 668,746 located in Germany.

NOTE 7 - DEBT

Bank Lines of Credit

In April 2022, the Company obtained a domestic revolving line of credit of $ 2,000,000 at Torrey Pines Bank. To access this line of credit, the Company must maintain a minimum cash balance of $ 2,500,000 with the bank and maintain a maximum debt to tangible net worth of ratio of 1.00 . The line of credit is also collateralized by the assets of the Company. Borrowings under the line of credit bear interest at a rate equal to the prime rate. The rate as of September 30, 2025 was 7.25 % . The balance outstanding on the line of credit was $ 1,000,000 and $ 0 on September 30, 2025 and December 31, 2024 respectively.

Bressner has three revolving lines of credit with German institutions, including Uni Credit Bank AG, Commerzbank AG, and VR Bank, with total availability of up to € 2,700,000 (US $ 3,167,413 ) as of September 30, 2025. Borrowings under the lines of credit bear interest at a variable rate of Euribor plus a stated rate. The rates as of September 30, 2025, for the lines of credit ranged from 3.75 % to 6.55 %, with the balances remaining open indefinitely or until occurrence of a defined change of control event. Bressner did not have any outstanding lines of credit balances as of September 30, 2025 or December 31, 2024.

Foreign Debt Obligations

Bressner had two term loans outstanding as of September 30, 2025, with an aggregate balance outstanding of € 1,000,000 (US $ 1,173,116 ) as follows:

•

On December 31, 2024, Bressner had an outstanding note payable with UniCredit Bank for € 500,000 with a maturity date of June 20, 2025 at an interest rate of 4.40 %. On June 19, 2025, the note was extended to December 22, 2025 at an interest rate of 3.75 %, with accrued interest having been paid as current. The balance outstanding on the note as of September 30, 2025 and December 31, 2024, was € 500,000 (US $ 586,558 ) and € 500,000 (US $ 517,525 ), respectively.

•

On December 31, 2024, Bressner had an outstanding note payable with Commerzbank AG for € 500,000 with a maturity date of March 31, 2025 at an interest rate of 4.75 %. On March 31, 2025, the note was extended through September 30, 2025 , and the interest rate was reduced to 3.9 %, with accrued interest having been paid current as of March 31, 2025. On September 30, 2025, the note was further extended through March 31, 2026 and the interest rate was further reduced to 3.5 %, with accrued interest having been paid as current. The balance outstanding on the note as of September 30, 2025 and December 31, 2024, was € 500,000 (US $ 586,558 ) and € 500,000 (US$ 517,525 ), respectively.

A summary of outstanding debt obligations as of September 30, 2025, was as follows:


Loan Description	Current Interest Rate	Maturity Date	Balance (Euro)		Balance ($)		Current Portion
Domestic:
Torrey Pines Bank	7.25 %					1,000,000		1,000,000
Total Domestic					$	1,000,000	$	1,000,000

Foreign:
Commerzbank AG	3.50 %	March-26		500,000		586,558		586,558
Uni Credit Bank AG	3.75 %	December-25		500,000		586,558		586,558
Total Foreign			€	1,000,000	$	1,173,116	$	1,173,116

Total Outstanding Debt Obligations					$	2,173,116	$	2,173,116

NOTE 8 - STOCKHOLDERS' EQUITY

The Company's amended and restated certificate of incorporation, filed with the Delaware Secretary of State on December 14, 2017, authorizes the Company to issue 10,000,000 shares of preferred stock and 50,000,000 shares of common stock.

2017 Equity Incentive Plan

On October 10, 2017, the Company's board of directors approved and adopted the Company's 2017 Equity Incentive Plan (as amended to date, the "2017 Plan"), subject to stockholder approval thereof. On December 18, 2017, the Company's stockholders approved the 2017 Plan. The 2017 Plan allows for the grant of a variety of equity vehicles to provide flexibility in the grant and issuance of equity awards, including stock options, unrestricted stock grants, restricted stock units ("RSUs"), stock bonuses and performance-based awards. An aggregate of 1,500,000 shares of common stock were initially reserved for issuance under the 2017 Plan.

On June 24, 2020, the Company amended the 2017 Plan to increase the maximum number of shares of common stock with respect to one or more Stock Awards (as defined in the 2017 Plan) that may be granted to any one participant under the 2017 Plan during any calendar year from 500,000 shares to 1,000,000 shares. The amendment did not increase the total number of shares of common stock authorized for issuance under the 2017 Plan and did not require stockholder approval.

On May 19, 2021, the Company's stockholders approved the Company's proposal to increase the number of shares authorized for issuance under the 2017 Plan from 1,500,000 shares to 3,000,000 shares of common stock of the Company pursuant to the terms and conditions of the 2017 Plan. The amendment took effect upon receipt of stockholder approval.

On March 15, 2024, the Company's board of directors unanimously approved, and on May 15, 2024, the Company's stockholders approved, an amendment to the 2017 Plan to increase the number of shares of common stock authorized for issuance thereunder from 3,000,000 to 5,000,000 shares. The amendment took effect upon receipt of stockholder approval.

Executive Employment Agreements

On June 5, 2023, in connection with, and as a material inducement to, the appointment of Michael Knowles as the Company's new chief executive officer and president, Mr. Knowles was granted (i) non-qualified stock options to purchase 400,000 shares of Company common stock (the "Inducement Options"), which Inducement Options

have an exercise price equal to $ 2.95 per share and will expire ten years from the date of the grant; and (ii) 400,000 restricted stock units (together with the Inducement Options, the "Inducement Grants").

Both of the Inducement Grants shall vest over a four-year period as follows: 25 % on the one-year anniversary of the date of the grant, and the remaining 75 % will vest in six equal installments, commencing six months after the one-year anniversary of the date of grant and every six months thereafter until fully vested, subject to Mr. Knowles' continued employment by the Company.

The Inducement Grants were granted outside of the Company's 2017 Plan and any other equity incentive plans, and in reliance on the employment inducement exemption provided under the Nasdaq Listing Rule 5635(c)(4).

Stock Options

A summary of stock option activity under the Company's current equity incentive plans during the nine month period ended September 30, 2025, was as follows:


	Stock Options Outstanding
	Number of Underlying Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding on January 1, 2025		1,140,550		$	2.49		3.85	$	1,019,680
Granted		-		$	-		-		-
Forfeited / Canceled		( 26,000	)	$	2.96		-		62,340
Exercised		( 493,011	)	$	2.08		-	$	1,619,560
Outstanding on September 30, 2025		621,539		$	2.80		5.73	$	1,591,895
Exercisable as of September 30, 2025		421,539		$	2.73		4.81	$	1,109,895

As of September 30, 2025, there w as $ 334,358 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 0.84 years.

There were no options granted during the nine month periods ended September 30, 2025 and 2024. The following table presents the grant date fair value of options vested and the intrinsic value of options exercised:


	For the Nine Months Ended September 30,
	2025		2024
Grant date fair value of options vested	$	675,895	$	1,033,327
Intrinsic value of options exercised	$	528,143	$	132,083

If there are any modifications or cancellations of the underlying unvested awards, the Company may be required to accelerate, increase, or cancel any remaining unearned stock-based compensation expense or calculate and record additional expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that the Company grants additional common stock options or other stock-based awards.

Restricted Stock Units

RSUs may be granted at the discretion of the compensation committee of the Company's board of directors under the 2017 Plan in connection with the hiring and retention of personnel and are subject to certain conditions. RSUs generally vest quarterly or semi-annually over a period of one to three years and are typically forfeited if employment is terminated before the RSUs vest. The compensation expense related to the RSUs is calculated as the

fair value of the common stock on the grant date and is amortized to expense over the vesting period and is adjusted for estimated forfeitures.

The Company's RS U activity for the nine months ended September 30, 2025, was as follows:


	Restricted Stock Units
	Number of Underlying Shares			Weighted Average Grant Date Fair Value
Unvested on January 1, 2025		1,128,427		$	3.04
Granted		653,539		$	3.83
Vested		( 511,919	)	$	2.52
Canceled		( 142,350	)	$	2.54
Unvested on September 30, 2025		1,127,697		$	3.31

As of September 30, 2025, there was $ 2,987,924 of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted average period of 0.98 years.

Stock-based compensation expense for the three and nine month periods ended September 30, 2025 and 2024, was comprised of the following:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Stock-based compensation classified as:	2025		2024		2025		2024
General and administrative	$	283,559	$	304,917	$	1,081,712	$	891,643
Production		22,420		12,654		65,747		128,760
Marketing and selling		40,742		37,322		121,601		84,894
Product and programs		48,778		57,521		149,001		160,235
Research and development		49,122		45,597		154,895		158,417
	$	444,621	$	458,011	$	1,572,956	$	1,423,949

Warrants

The Company did no t have any outstanding warrants as of September 30, 2025 or December 31, 2024.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Legal

We are subject to litigation, claims, investigations, and audits arising from time to time in the ordinary course of our business. When applicable, we record accruals for contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in our opinion, individually or in the aggregate, no such lawsuits are expected to have a material effect on our consolidated financial position or results of operations.

In the opinion of management, after consultation with legal counsel, the ultimate disposition of any such matters as of September 30, 2025, are not expected to have a materially adverse effect on the consolidated financial position or results of operations of the Company.

Guarantees and Indemnities

The Company has made certain indemnities, under which it may be required to make payments to an indemnified party, in relation to certain transactions. The Company indemnifies its directors, officers, employees, and agents to the maximum extent permitted under the laws of the State of Delaware. In connection with its facility lease, the Company has indemnified its lessor for certain claims arising from the use of the facilities. The duration of the indemnities varies, and in many cases is indefinite. These indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make any payments for these obligations and no liabilities have been recorded for these indemnities in the accompanying consolidated balance sheets.

Leases

The Company leases its offices, manufacturing, and warehouse facility in San Diego County under a non-cancellable operating lease. Our corporate headquarters are in a leased space comprising of approximately 29,342 square feet in Escondido, California under a lease that was last modified and extended in September 2023 and expires in August 2030 . The Company also leases a facility in Salt Lake City, Utah that houses our Ion software development team. This lease expired on June 30, 2025, and the Company extended the lease for an additional 12 months, with the lease commencing in July 2025 and expiring in June 2026 . In the lease extension, the leased space was reduced from 3,208 square feet to 925 square feet. Additionally, we lease a 1,632 square foot facility located in Anaheim, California. This lease expired in July 31, 2025 and the company extended the lease through January 31, 2026.

Bressner leases space in Germany comprising of 11,836 square feet on a month-to-month basis. In June 2024, Bressner leased an additional 2,500 square feet of office space in Germany on a month-to-month basis with payments of approximately $ 5,950 per month, beginning in October 2024. In May 2025, Bressner entered into a lease agreement for approximately 15,629 square feet of office and warehouse space in Germany, with an initial lease term ending on June 30, 2030 . The lease has an option to renew for additional five-year term that the Company is reasonably certain to exercise. Bressner is transitioning operations into the new facility; when such transition is complete, the month to month lease for the other facility will be discontinued.

Other information related to leases as of the three and nine month periods ended September 30, 2025 and 2024 was as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
Operating lease expense	$	312,521	$	206,462	$	796,084	$	582,364
Total lease expense	$	312,521	$	206,462	$	796,084	$	582,364

Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases	$	228,900	$	170,777	$	489,218	$	519,206

Weighted-average remaining lease term - operating leases					92.8 months		67.8 months
Weighted-average discount rate - operating leases					9.06 %		13.6 %

The following table presents the maturity of the Company's operating lease liabilities as of September 30, 2025:


Year	Operating Leases
Remaining 2025	$	228,874
2026		847,295
2027		820,433
2028		802,462
2029		789,660
Thereafter		2,239,983
Total lease payments		5,728,707
Less: Amount representing interest		( 1,402,683	)
Present value of lease payment		4,326,024
Less: current portion of operating lease obligation		( 513,093	)
Operating lease obligation, net of current portion	$	3,812,931

Purchase Commitments

In the normal course of business, the Company may enter into purchase commitments for inventory components to be delivered based upon non-cancellable, pre-established, delivery schedules that are over a period that may exceed one year. Total non-cancellable purchase orders as of September 30, 2025 were $ 3,110,328 .

Customer Concentration

During the three month periods ended September 30, 2025 and 2024, the Company had two and one customers, respectively, that accounted for (in the aggregate) approximately 37.2 % and 13.6 % of revenue, respectively. During the nine month periods ended September 30, 2025 and 2024, the Company had two and one customers, respectively, that accounted for, in the aggregate, approximately 24.9 % and 10 % of revenue, respectively. No other customers represented greater than 10% of our consolidated revenue in these periods.

As of September 30, 2025 and December 31, 2024, the Company had two customers, in each period, that accounted for (in the aggregate) approximately 35 %, in each period, of trade accounts receivables for which each of such customer's balances represented 10% or greater of our consolidated trade accounts receivable balance.

During the three month periods ended September 30, 2025 and 2024, the Company had approximately 23 % and 37 %, respectively, of aggregate purchases from one and two vendors/suppliers, respectively, for which each represents greater than 10% of our consolidated purchases. During the nine month periods ended September 30, 2025 and 2024, the Company had approximately 21 % and 36 %, respectively, of aggregate purchases from one and two vendors/suppliers, respectively, for which each represents greater than 10% of our consolidated purchases.

NOTE 10 - NET LOSS PER SHARE

Basic and diluted net loss per share were calculated as follows for the three and nine month periods ended September 30, 2025 and 2024:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2025		2024			2025			2024
Basic and diluted net income (loss) per share:
Numerator:
Net income (loss)	$	263,487	$	( 6,815,384	)	$	( 3,774,876	)	$	( 10,499,551	)
Denominator:
Weighted average common shares outstanding - basic		21,952,963		21,049,270			21,675,802			20,897,324
Effect of dilutive securities		887,798		-			-			-
Weighted average common shares outstanding - diluted		22,840,761		21,049,270			21,675,802			20,897,324
Net loss per common share:
Basic	$	0.01	$	( 0.32	)	$	( 0.17	)	$	( 0.50	)
Diluted	$	0.01	$	( 0.32	)	$	( 0.17	)	$	( 0.50	)

NOTE 11 - SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates in two reportable segments: OSS and Bressner. OSS designs, manufactures, and markets specialized enterprise class high-performance compute, high speed switch fabrics, and storage hardware and software to target edge applications. Bressner operates as a system integrator with standard and custom all-in-one hardware systems and components for many kinds of industrial environments. The Chief Operating Decision Maker (CODM) evaluates financial performance on a Company-wide basis.

Segment Information

The accounting policies of the segments are the same as those described in the summary of significant accounting policies of the Company. Intersegment sales are generally recorded at cost plus a specified fee or at a negotiated fixed price. Intersegment sales are eliminated in consolidation and segment results are presented net of eliminations.

The Company's CODM is our Chief Executive Officer . The CODM evaluates performance for both reportable segments based on segment gross profit and segment operating profit. The CODM uses these measures to assess actual and forecasted segment performance and to make decisions regarding the allocation of capital and personnel.

Segment details for the three and nine month periods ended September 30, 2025 and 2024, are as follows:


	For the Three Months Ended September 30, 2025									For the Three Months Ended September 30, 2024
	OSS			Bressner			Total			OSS			Bressner			Total
Revenues	$	9,262,517		$	9,493,682		$	18,756,199		$	6,460,290		$	7,240,807		$	13,701,097
Cost of revenues		( 5,040,827	)		( 7,023,000	)		( 12,063,827	)		( 9,770,332	)		( 5,648,503	)		( 15,418,835	)
Gross profit (loss)		4,221,690			2,470,682			6,692,372			( 3,310,042	)		1,592,304			( 1,717,738	)
Gross margin %		45.6	%		26.0	%		35.7	%		- 51.2	%		22.0	%		- 12.5	%

General and administrative		( 1,728,012	)		( 616,764	)		( 2,344,776	)		( 1,624,043	)		( 433,049	)		( 2,057,092	)
Marketing and selling		( 1,632,506	)		( 696,467	)		( 2,328,973	)		( 1,444,433	)		( 564,391	)		( 2,008,824	)
Research & development		( 1,271,637	)		( 176,884	)		( 1,448,521	)		( 792,808	)		( 157,565	)		( 950,373	)
Total operating expenses		( 4,632,155	)		( 1,490,115	)		( 6,122,270	)		( 3,861,284	)		( 1,155,005	)		( 5,016,289	)

(Loss) income from operations	$	( 410,465	)	$	980,567		$	570,102		$	( 7,171,326	)	$	437,299		$	( 6,734,027	)


	For the Nine Months Ended September 30, 2025									For the Nine Months Ended September 30, 2024
	OSS			Bressner			Total			OSS			Bressner			Total
Revenues	$	20,230,038		$	24,893,833		$	45,123,871		$	17,516,196		$	22,038,017		$	39,554,213
Cost of revenues		( 11,257,267	)		( 18,764,962	)		( 30,022,229	)		( 17,557,397	)		( 16,657,998	)		( 34,215,395	)
Gross profit (loss)		8,972,771			6,128,871			15,101,642			( 41,201	)		5,380,019			5,338,818
Gross margin %		44.4	%		24.6	%		33.5	%		- 0.2	%		24.4	%		13.5	%

General and administrative		( 5,543,820	)		( 1,553,526	)		( 7,097,346	)		( 5,329,722	)		( 1,229,085	)		( 6,558,807	)
Marketing and selling		( 4,898,135	)		( 1,974,158	)		( 6,872,293	)		( 4,397,342	)		( 1,786,723	)		( 6,184,065	)
Research & development		( 3,838,850	)		( 491,863	)		( 4,330,713	)		( 2,387,906	)		( 458,946	)		( 2,846,852	)
Total operating expenses		( 14,280,805	)		( 4,019,547	)		( 18,300,352	)		( 12,114,970	)		( 3,474,754	)		( 15,589,724	)

(Loss) income from operations	$	( 5,308,034	)	$	2,109,324		$	( 3,198,710	)	$	( 12,156,171	)	$	1,905,265		$	( 10,250,906	)



	For the Three Months Ended September 30, 2025									For the Three Months Ended September 30, 2024
	OSS			Bressner			Total			OSS			Bressner			Total
Interest income	$	36,433		$	-		$	36,433		$	116,596		$	-		$	116,596
Interest expense		( 2,424	)		( 12,641	)		( 15,065	)		-			( 16,465	)		( 16,465	)
Depreciation		( 192,841	)		( 32,927	)		( 225,768	)		( 221,954	)		( 30,188	)		( 252,142	)
Stock based compensation expense		( 411,687	)		( 32,934	)		( 444,621	)		( 419,729	)		( 38,281	)		( 458,011	)
Capital expenditures		( 52,433	)		( 242,117	)		( 294,550	)		( 81,302	)		( 13,393	)		( 94,695	)

	For the Nine Months Ended September 30, 2025									For the Nine Months Ended September 30, 2024
	OSS			Bressner			Total			OSS			Bressner			Total
Interest income	$	159,795		$	( 555	)	$	159,240		$	376,940		$	-		$	376,940
Interest expense		( 2,424	)		( 40,517	)		( 42,941	)		( 3,864	)		( 67,046	)		( 70,910	)
Depreciation		( 583,278	)		( 93,499	)		( 676,777	)		( 730,328	)		( 85,092	)		( 815,420	)
Stock based compensation expense		( 1,473,442	)		( 99,514	)		( 1,572,956	)		( 1,330,270	)		( 93,678	)		( 1,423,949	)
Capital expenditures		( 108,630	)		( 359,249	)		( 467,879	)		( 173,161	)		( 125,628	)		( 298,789	)

	September 30, 2025									December 31, 2024
	OSS			Bressner			Total			OSS			Bressner			Total
Total assets	$	18,183,262		$	24,874,698		$	43,057,960		$	20,552,197		$	16,381,785		$	36,933,982

NOTE 12 - SUBSEQUENT EVENTS

The Company's management has evaluated subsequent events after the consolidated balance sheet dated as of September 30, 2025, through the date of filing of this Quarterly Report. Based upon the evaluation, management has

determined that, other than as disclosed herein, no subsequent events have occurred that would require recognition in the accompanying consolidated financial statements or disclosure in the notes thereto.

Registered Direct Offering of Common Stock

On September 29, 2025, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with institutional investors (the "Investors"), pursuant to which the Company agreed to issue and sell to the Investors in a registered direct offering (the "Offering") 2,500,000 shares of the Company's Common Stock (the "Common Stock"), par value $ 0.0001 per share. The Common Stock was sold pursuant to a prospectus supplement, filed on October 1, 2025 to the Registration Statement on Form S-3, originally filed on August 18, 2023 with the SEC (File No. 333-274073), and declared effective by the SEC on August 25, 2023. The Company received aggregate gross proceeds from the Offering of $ 12,500,000 before deducting the placement agents' fees and the Company's Offering expenses. The Offering closed on October 1, 2025.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .

The terms "we," "us," "our," "OSS" or the "Company" refer collectively to One Stop Systems, Inc.. and its wholly-owned subsidiaries, unless otherwise stated. You should read the following discussion and analysis of our financial condition and operating results together with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this "Quarterly Report"). This discussion and analysis contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" or in other parts of this Quarterly Report. In evaluating our business, you should carefully consider the information set forth under the heading "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 19, 2025. Readers are cautioned not to place undue reliance on these forward-looking statements.

Overview

The Company designs, manufactures, and markets specialized enterprise class high-performance compute, high speed switch fabrics and storage hardware and software, which are designed to target edge applications for artificial intelligence ("AI") / machine learning "ML", sensor processing, sensor fusion and autonomy. Edge computing is a form of computing that is done on platform or on site, connected with the data source or the user, rather than in the cloud, minimizing the need for data to be processed remotely. This growing trend increases computing performance and security, as the data does not have to travel to distant datacenter locations. Edge computing is most recognizable in applications such as sensor processing, sensor fusion, autonomy, and AI/ML. To meet the demands at the edge we offer specialized products and system solutions that consist of computers, switch fabrics and storage products that incorporate the latest state-of-the art components with embedded proprietary software. Such products and systems allow us to offer high-end solutions to be integrated into edge platforms in our target markets.

The global increase in load on cloud infrastructure and increase in AI applications are the primary factors driving the growth of the edge computing market. We market our products to manufacturers of automated equipment used for medical, industrial, and military applications. Our customer applications often require connection to a wide array of data sources and sensors, ultra-fast processing power, and the ability to quickly access and store large and ever-growing data sets at their physical location (rather than in the cloud). This equipment requires datacenter class performance optimized for deployment at the edge in challenging environments. Many of these edge applications have unique requirements, including special and compact form factors ruggedized for harsh conditions, which cannot be accommodated by traditional products designed for controlled air-conditioned datacenters.

We believe that we are uniquely positioned as a specialized provider to address the needs of this market, providing custom servers, data acquisition platforms, compute accelerators, solid-state storage arrays, system input/output expansion systems, as well as edge optimized industrial and panel PCs, tablets, and handheld compute devices. Our systems also offer industry leading capabilities that occupy less physical space and require less power consumption. We deliver this high-end technology to our customers through the sale of equipment and embedded software.

Recent Developments

Registered Direct Offering of Common Stock

On September 29, 2025, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with institutional investors (the "Investors"), pursuant to which the Company agreed to issue and sell to the Investors in a registered direct offering (the "Offering") 2,500,000 shares of the Company's Common Stock (the "Common Stock"), par value $0.0001 per share. The Common Stock was sold pursuant to a prospectus supplement, filed on October 1, 2025 to the Registration Statement on Form S-3, originally filed on August 18, 2023 with the SEC (File No. 333-274073), and declared effective by the SEC on August 25, 2023. The Company received aggregate gross proceeds from the Offering of $12,500,000 before deducting the placement agents' fees and the Company's Offering expenses. The Offering closed on October 1, 2025.

Components of Results of Operations

Revenue

The Company recognizes revenue under accounting standard ASC 606. Revenue is primarily generated from the sale of computer hardware and engineering services, and, to a minimal extent, revenue is also generated from the sale of software and sales of software maintenance and support contracts. The Company's performance obligations are satisfied over time as work is performed or at a specific point in time. The majority of the Company's revenue is recognized at that point in time when products ship and control is deemed to be transferred to the customer. The Company determines revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, a performance obligation is satisfied.

Cost of revenue

Cost of revenue primarily consists of costs of materials, costs paid to third-party contract manufacturers (which may include the costs of components), and personnel costs associated with manufacturing and support operations. Personnel costs consist of wages, bonuses, benefits, and stock-based compensation expenses. Cost of revenue also includes freight, allocated overhead costs and inventory write-offs and changes to our inventory and warranty reserves. Allocated overhead costs consist of certain facilities and utility costs. We expect cost of revenue to increase in absolute dollars as product revenue increases.

Operating expenses

Our operating expenses consist of general and administrative, sales and marketing, and research and development expenses. Salaries and personnel-related costs, benefits, and stock-based compensation expense are the most significant components of each category of operating expenses. Operating expenses also include allocated overhead costs for facilities and utility costs.

General and Administrative

General and administrative expense consists primarily of employee compensation and related expenses for administrative functions including finance, legal, human resources, and fees for third-party professional services, as well as certain overhead expenses which are allocated to general and administrative expense. We expect our general and administrative expense to increase in absolute dollars as we continue to invest in growing the business.

Marketing and Selling

Marketing and Selling expense consists primarily of employee compensation and related expenses for marketing and sales functions, sales commissions, marketing programs, travel, and entertainment expenses, as well as certain overhead expenses which are allocated to marketing and selling expense. Marketing programs consist of advertising, tradeshows, events, corporate communications, and brand-building activities. We expect marketing and selling expenses to increase in absolute dollars as we expand our sales force, increase marketing resources, and further develop sales channels.

Research and Development

Research and development expense consists primarily of employee compensation and related expenses for research and development functions, certain prototype expenses, depreciation associated with assets acquired for research and development, third-party engineering and contractor support costs, as well as certain overhead expenses which are allocated to research and development expense. We expect variability in our research and development expenses due to the timing of new product development and introductions.

Other Income (Expense), net

Other income consists of miscellaneous income and income received for activities outside of our core business. Other expense includes expenses for activities outside of our core business.

Provision for Income Taxes

Provision for income taxes consists of estimated income taxes due to the United States and German governments, as well as state tax authorities in jurisdictions in which we conduct business, along with the change in our deferred income tax assets and liabilities.

Results of Operations

The following tables set forth our results of operations for the three and nine month periods ended September 30, 2025 and 2024, presented in dollars and as a percentage of revenue, respectively.


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
Revenue:
Product	$	18,460,660		$	12,682,241		$	44,032,955		$	36,722,411
Customer funded development		295,539			1,018,856			1,090,916			2,831,802
		18,756,199			13,701,097			45,123,871			39,554,213
Cost of revenue:
Product		11,967,908			14,601,408			29,325,649			32,123,488
Customer funded development		95,919			817,427			696,580			2,091,907
		12,063,827			15,418,835			30,022,229			34,215,395
Gross profit (loss)		6,692,372			(1,717,738	)		15,101,642			5,338,818
Operating expenses:
General and administrative		2,344,776			2,057,092			7,097,346			6,558,807
Marketing and selling		2,328,973			2,008,824			6,872,293			6,184,065
Research and development		1,448,521			950,373			4,330,713			2,846,852
Total operating expenses		6,122,270			5,016,289			18,300,352			15,589,724
Income (loss) from operations		570,102			(6,734,027	)		(3,198,710	)		(10,250,906	)
Other (expense) income, net:
Interest income		36,433			116,596			159,240			376,940
Interest expense		(15,065	)		(16,465	)		(42,941	)		(70,910	)
Other (expense) income, net		(61,102	)		(14,402	)		(91,930	)		14,707
Total other (expense) income, net		(39,734	)		85,729			24,369			320,737
Income (loss) before income taxes		530,368			(6,648,298	)		(3,174,341	)		(9,930,169	)
Provision for income taxes		266,881			167,086			600,535			569,382
Net income (loss)	$	263,487		$	(6,815,384	)	$	(3,774,876	)	$	(10,499,551	)


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2025	2024	2025	2024
Revenue:
Product	98.4%	92.6%	97.6%	92.8%
Customer funded development	1.6%	7.4%	2.4%	7.2%
	100.0%	100.0%	100.0%	100.0%
Cost of revenue:
Product	63.8%	106.6%	65.0%	81.2%
Customer funded development	0.5%	6.0%	1.5%	5.3%
	64.3%	112.5%	66.5%	86.5%
Gross profit (loss)	35.7%	-12.5%	33.5%	13.5%
Operating expenses:
General and administrative	12.5%	15.0%	15.7%	16.6%
Marketing and selling	12.4%	14.7%	15.2%	15.6%
Research and development	7.7%	6.9%	9.6%	7.2%
Total operating expenses	32.6%	36.6%	40.6%	39.4%
Income (loss) from operations	3.0%	-49.1%	-7.1%	-25.9%
Other (expense) income, net:
Interest income	0.2%	0.9%	0.4%	1.0%
Interest expense	-0.1%	-0.1%	-0.1%	-0.2%
Other (expense) income, net	-0.3%	-0.1%	-0.2%	0.0%
Total other (expense) income, net	-0.2%	0.6%	0.1%	0.8%
Income (loss) before income taxes	2.8%	-48.5%	-7.0%	-25.1%
Provision for income taxes	1.4%	1.2%	1.3%	1.4%
Net income (loss)	1.4%	-49.7%	-8.4%	-26.5%

Comparison of the Three and Nine Month Periods Ended September 30, 2025 and 2024:

Revenue, cost of revenue and gross profit:


	For the Three Months Ended September 30, 2025										For the Three Months Ended September 30, 2024
Entity:	Revenue		Cost of Revenue			Gross Profit		Gross Margin %			Revenue		Cost of Revenue			Gross (Loss) Profit			Gross Margin %
OSS	$	9,262,517	$	(5,040,827	)	$	4,221,690		45.6	%	$	6,460,290	$	(9,770,332	)	$	(3,310,042	)		-51.2	%
Bressner		9,493,682		(7,023,000	)		2,470,682		26.0	%		7,240,807		(5,648,503	)		1,592,304			22.0	%
	$	18,756,199	$	(12,063,826	)	$	6,692,372		35.7	%	$	13,701,097	$	(15,418,835	)	$	(1,717,738	)		-12.5	%

	For the Nine Months Ended September 30, 2025										For the Nine Months Ended September 30, 2024
Entity:	Revenue		Cost of Revenue			Gross Profit		Gross Margin %			Revenue		Cost of Revenue			Gross (Loss) Profit			Gross Margin %
OSS	$	20,230,038	$	(11,257,267	)	$	8,972,771		44.4	%	$	17,516,196	$	(17,557,397	)	$	(41,201	)		-0.2	%
Bressner		24,893,833		(18,764,962	)		6,128,871		24.6	%		22,038,017		(16,657,998	)		5,380,018			24.4	%
	$	45,123,871	$	(30,022,229	)	$	15,101,642		33.5	%	$	39,554,213	$	(34,215,395	)	$	5,338,817			13.5	%

Revenue

For the three months ended September 30, 2025, our total revenue increased $5,055,102, or 36.9%, as compared to the same period in 2024. The OSS segment saw an increase in revenue of $2,802,227, or 43.4%, as compared to the same period in 2024. The primary contributors to this increase were higher revenues related to the development and production of custom server products for a defense customer, higher shipments of data storage products to a defense prime customer, shipments of server products to a medical devices customer, and shipments of compute and server products for an autonomous maritime application to a customer in Asia. Bressner experienced an increase of $2,252,875, or 31.1%, as compared to the same period in 2024, due to higher demand across multiple industrial end markets, as well as the impact of foreign exchange rates.

For the nine months ended September 30, 2025, our total revenue increased $5,569,658, or 14.1%, as compared to the same period in 2024. The OSS segment saw an increase in revenue of $2,713,842, or 15.5%. This increase was primarily driven by higher revenues related to development and production of custom server products for a defense customer, higher shipments of data storage products to a defense prime customer and to a US government customer, and the initiation of shipments of server products to a medical devices customer. This increase was partially offset by lower volume of revenue to a commercial aerospace customer. Bressner experienced an increase in revenue of $2,855,816, or 13%, due to higher book-and-ship revenue in the period, higher demand across multiple industrial end markets, as well as the impact of foreign exchange rates.

Cost of revenue and gross profit

Cost of revenue decreased by $3,355,008, or 21.8%, for the three months ended September 30, 2025, as compared to the same period in 2024. The OSS segment saw a decrease in cost of revenue of $4,729,505, or 48.4%, as compared to the same period in 2024. This decrease in cost of revenue was due to the non-recurrence of a $6,099,259 inventory charge recognized in the prior year quarter and a more profitable mix of products shipped in the quarter, partially offset by higher revenue volume. Bressner's cost of revenue increased $1,374,497, or 24.3%, as compared to the same period in 2024, due primarily to higher revenue volume and the impact of foreign exchange rates, partially offset by a more profitable mix of products shipped in the quarter.

The overall gross margin percentage was 35.7% for the three months ended September 30, 2025, compared to a gross margin percentage of -12.5% in the prior year period. OSS segment gross margin percentage for the three months ended September 30, 2025, was 45.6%, compared to a gross margin percentage of -51.2% in the prior year period. This increase was due to the non-recurrence of an inventory charge recognized in the prior year quarter, as well as a more profitable mix of products shipped in the quarter. Bressner contributed gross margin at a rate of 26%, as compared to the same period in 2024 of 22%, due primarily to product mix.

Cost of revenue decreased $4,193,166, or 12.3%, for the nine months ended September 30, 2025, as compared to the same period in 2024. The OSS segment saw a decrease in cost of revenue of $6,300,130, or 35.9%, as compared to the same period in 2024. This decrease in cost of revenue was mainly due to the non-recurrence of $6,665,867 of inventory charges recognized in the prior year period and a more profitable mix of products shipped in the period, partially offset by higher revenue volume. Bressner's cost of revenue increased $2,106,964, or 12.6%, as compared to the same period in 2024 due primarily to higher revenue volume and the impact of foreign exchange rates.

The overall gross margin percentage was 33.5% for the nine months ended September 30, 2025, compared to a gross margin percentage of 13.5% in the same period in 2024. OSS segment gross margin percentage for the nine months ended September 30, 2025, was 44.4%, compared to a gross margin percentage of -0.2% in the same period in 2024. This increase was primarily due to the non-recurrence of inventory charges recognized in the prior year period and a more profitable mix of products shipped in the period. Bressner contributed gross margin at a rate of 24.6%, as compared to the same period in 2024 of 24.4%, an increase of 0.2 percentage points, due primarily to product mix.

Operating expenses

General and administrative expense

General and administrative expense increased $287,684, or 14%, for the three months ended September 30, 2025, as compared to the same period in 2024. The OSS segment experienced an increase of $103,969, or 6.4%. This increase in general and administrative expense is primarily attributable to higher salary and personnel expenses due to annual escalation and the impact of severence expenses. Bressner had an increase of $183,715, or 42.4%, as a result of higher salary and personnel costs, higher insurance costs, higher lease costs due to overlapping lease periods during the transition to a new facility, and the impact of foreign exchange rates. Overall, total general and administrative expense decreased as a percentage of revenue to 12.5% for the three months ended September 30, 2025, as compared to 15% during the same period in 2024.

General and administrative expense increased $538,539, or 8.2%, for the nine months ended September 30, 2025, as compared to the same period in 2024. OSS segment general and administrative expense increased $214,098, or 4%, due primarily to higher salary and personnel expenses due to annual escalation and the impact of severence expenses and increased stock compensation expense due to a higher grant date fair value of employee restricted stock units recognized as expense in the period, partially offset by a reduction in general corporate expenses, including board compensation. Bressner segment general and administrative expense increased $324,441, or 26.4%, primarily due to higher salary and personnel costs and higher lease cost due to overlapping lease periods during the transition to a new facility, as well as the impact of foreign exchange rates. Overall, total general and administrative expense decreased as a percentage of revenue to 15.7% for the nine months ended September 30, 2025, as compared to 16.6% during the same period in 2024.

Marketing and selling expense

Marketing and selling expense increased $320,149, or 15.9%, for the three months ended September 30, 2025, as compared to the same period in 2024. OSS had an increase of $188,073, or 13%, due primarily to an increase in personnel costs. Bressner had an increase of $132,076, or 23.4%, due primarily to higher personnel costs and the impact of foreign exchange rates. Overall, total marketing and selling expense decreased as a percentage of revenue to 12.4% during the three months ended September 30, 2025, as compared to 14.7% during the same period in 2024.

Marketing and selling expense increased $688,228, or 11.1%, for the nine months ended September 30, 2025, as compared to the same period in 2024. OSS segment marketing and selling expense increased $500,794, or 11.4%, due to an increase in personnel costs resulting from additions in headcount made during the course of 2024. Bressner segment marketing and selling expense increased $187,434, or 10.5%, due primarily to higher personnel costs and the impact of foreign exchange rates. Overall, total marketing and selling expense decreased as a percentage of revenue to 15.2% for the nine months ended September 30, 2025, as compared to 15.6% during the same period in 2024.

Research and development expense

Research and development expense increased $498,148, or 52.4%, for the three months ended September 30, 2025, as compared to the same period in 2024. OSS segment research and development expense increased $478,829, or 60.4%, due to higher engineering costs to support targeted investments in new product development. Bressner segment research and development expense increased $19,319, or 12.3%, due primarily to the impact of foreign exchange rates. Overall, total research and development expense as a percentage of revenue increased to 7.7% for the three months ended September 30, 2025, as compared to 6.9% during the same period in 2024.

Research and development expense increased $1,483,861 or 52.1%, for the nine months ended September 30, 2025, as compared to the same period in 2024. OSS segment research and development expense increased $1,450,944, or 60.8%, due to higher engineering costs to support targeted investments in new product development. Bressner segment research and development expense increased $32,917, or 7.2%, due primarily to the impact of foreign exchange rates. Overall, total research and development expense as a percentage of revenue increased to 9.6% for the nine months ended September 30, 2025, as compared to 7.2% during the same period in 2024.

Interest income

Interest income decreased $80,163 for the three months ended September 30, 2025, as compared to the same period in 2024. The decrease is primarily attributable to lower investment balances due to the company's usage of cash for operations.

Interest income decreased $217,700 for the nine months ended September 30, 2025, as compared to the same period in 2024. The decrease is primarily attributable to lower investment balances due to the company's usage of cash for operations and debt repayment.

Interest expense

Interest expense decreased $1,400 for the three months ended September 30, 2025, as compared to the same period in 2024. The decrease is primarily attributable to as lower interest rates on outstanding notes payable.

Interest expense decreased $27,969 for the nine months ended September 30, 2025, as compared to the same period in 2024. The decrease is attributable to declining borrowing balances due to the repayment of debt, as well as lower interest rates on outstanding notes payable.

Other income (expense), net

Other income (expense), for the three months ended September 30, 2025, resulted in net other expense of $61,102, as compared to net other expense of $14,402 in the same period in 2024, for an increase in net other expense of $46,700, attributable primarily to changes in foreign currency gain and losses.

Other income (expense), for the nine months ended September 30, 2025, resulted in net other expenses of $91,930, as compared to net other income of $14,707 in the same period in 2024, for a a net decrease in other income of $106,637, attributable primarily to changes in foreign currency gain and losses.

Provision for income taxes

We have recorded an income tax provision of $266,881 and $167,086 for the three months ended September 30, 2025 and 2024, respectively, and $600,535 and $569,382 for the nine months ended September 30, 2025 and 2024, respectively. The effective tax rate for the nine months ended September 30, 2025 and 2024 differed from the statutory rate mainly due to permanent non-deductible goodwill amortization for Bressner, change in valuation allowance, deductions related to expenses of OSS stock options, research and development credits, and changes in reserves for uncertain tax positions, as well as projecting foreign and state tax liabilities for the year. The tax provision is predominately attributable to profit on operations in Germany.

Liquidity and Capital Resources

Historically, our primary sources of liquidity have been provided by public and private offerings of our securities and revenues generated from our business operations. As of September 30, 2025, we had total cash and cash equivalents of $6,508,020 and total net working capital of $23,132,853. Cash and cash equivalents held by Bressner totaled $3,765,771 on September 30, 2025. Bressner's debt covenants limit the use of those funds by its parent company.

During the nine month period ended September 30, 2025, we had a loss from operations of $3,198,710, with net cash used in operating activities of $4,925,615.

During the nine month period ended September 30, 2024, we had a loss from operations of $10,250,905, with cash provided by operating activities of $2,143,545.

During the year ended December 31, 2024, we had a loss from operations of $13,356,813, with net cash used in operating activities of $108,098.

Our sources of liquidity and cash flows are used to fund ongoing operations, to fund research and development projects for new products and technologies, and to provide ongoing support services for our customers. Over the next year, we anticipate that we will use our liquidity and cash flows from our operations to fund our business. In addition, as part of our business strategy, we occasionally evaluate potential acquisitions of businesses, products, and technologies. Accordingly, a portion of our available cash may be used at any time for the acquisition of complementary products or businesses. Such potential transactions may require substantial capital resources, which may require us to seek additional debt or equity financing. We cannot assure that we will be able to

successfully identify suitable acquisition candidates, complete acquisitions, successfully integrate acquired businesses into our current operations, or expand into new markets. Furthermore, we cannot provide assurances that additional financing will be available to us at any required time and on commercially reasonable terms, if at all.

As of September 30, 2025, there remains an elevated level of uncertainty regarding the economic outlook. We intend to continue to monitor the effects of trade and tariff policy, inflation, global supply chain disruptions, and economic conditions, and, if appropriate, we may alter our plans to address such concerns as they may arise. On September 30, 2025, the continuing resolution that funded U.S. government operations expired, and the federal government began shutdown procedures. A prolonged shutdown could delay the timing of new contract awards, funding on existing defense programs, and payments from U.S. government or prime contractor customers. Any such delays could temporarily increase our working capital requirements and reduce near-term liquidity. Management is monitoring the situation and evaluating potential mitigation measures, including managing expenditures and maintaining access to available borrowing capacity under our revolving credit facility.

Management's plans are to focus on acquiring new customer orders, to further grow and expand our business in both commercial and military markets, and to respond to the changing economic landscape by continuing to control hiring and operating costs, conserve cash and focus on growth and margin expansion. Management is committed to conserving cash and securing debt and/or equity financing, as required, for liquidity to meet our near-term cash requirements.

In April 2022, the Company obtained a domestic revolving line of credit of $2,000,000 at Torrey Pines Bank. To access this line of credit, the Company must maintain a minimum cash balance of $2,500,000 with the bank and maintain a maximum debt to tangible net worth of ratio of 1.00. The line of credit is also collateralized by the assets of the Company. The balance outstanding on this line of credit was $1,000,000 and $0 on September 30, 2025 and December 31, 2024, respectively.

Additionally, in August 2023, we filed a new registration statement on Form S-3 (Registration No. 333-274073) with the SEC, which became effective on August 25, 2023 ("the Form S-3"), and allows us to offer and sell up to an aggregate of $100,000,000 of our common stock, preferred stock, debt securities, warrants to purchase our common stock, preferred stock or debt securities, subscription rights to purchase our common stock, preferred stock or debt securities and/or units consisting of some or all of these securities, in any combination, together or separately, in one or more offerings, in amounts, at prices and on the terms that we will determine at the time of the offering and which will be set forth in a prospectus supplement and any related free writing prospectus. In the event that we need additional financing, we may choose to consummate an offering of our securities under the Form S-3 in order to raise capital.

On September 29, 2025, the Company entered into a Securities Purchase Agreement with certain institutional investors, pursuant to which the Company agreed to issue and sell to the Investors in a registered direct offering 2,500,000 shares of the Company's Common Stock, par value $0.0001 per share. The Common Stock was sold pursuant to a prospectus supplement, filed on October 1, 2025, supplementing the Registration Statement on Form S-3. The Company received aggregate gross proceeds from the Offering of $12,500,000 before deducting the placement agents' fees and the Company's Offering expenses. The Offering closed on October 1, 2025; as such, the proceeds of this offering are not reflected on the Company's consolidated balance sheets as of September 30, 2025.

Management believes that we have sufficient liquidity to satisfy our anticipated working capital requirements for our ongoing operations and obligations for at least the next twelve months. However, there can be no assurance that management's efforts will be effective or the forecasted cash flows will be achieved. Furthermore, we will continue to evaluate our capital expenditure needs based upon various factors, including but not limited to, our sales from operations, growth rate, the timing and extent of spending to support development efforts, the expansion of our sales and marketing efforts, the timing of new product introductions, and the continuing market acceptance of our products and services.

If cash generated from operations is insufficient to satisfy our capital requirements, we may borrow from our revolving line of credit with our bank (subject to satisfaction of certain borrowing conditions), may have to sell additional equity or debt securities, or may obtain expanded credit facilities to fund our operating expenses, pay our

obligations, diversify our geographical reach, and grow the Company. In the event such financing is needed in the future, there can be no assurance that such financing will be available to us, or, if available, that it will be in amounts and on terms acceptable to us. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected. However, if cash flows from operations become insufficient to continue operations at the current level, and if no additional financing were obtained, then management would consider restructuring the Company in a way to preserve its business while maintaining expenses within operating cash flows.

The following table summarizes our cash flows for the nine month periods ended September 30, 2025 and 2024:


	For the Nine Months Ended September 30,
Cash flows:	2025			2024
Net cash (used in) provided by operating activities	$	(4,925,615	)	$	2,143,545
Net cash provided by investing activities	$	2,744,613		$	4,293,263
Net cash provided by (used in) financing activities	$	1,513,011		$	(1,144,189	)

Operating Activities

During the nine month period ended September 30, 2025, we used $4,925,615 in cash from operating activities, compared to cash generated from operating activities of $2,143,545 in the same period in 2024.

Net cash used in operating activities during the nine month period ended September 30, 2025 was the result of three components: (i) net loss of $3,774,876; (ii) net adjustments to net loss for non-cash items of $1,394,321, of which the largest component was stock based compensation expense of $1,572,956; and (iii) cash used from net changes in operating assets and liabilities of $2,545,060.

Cash used from net changes in operating assets and liabilities for the nine month period ended September 30, 2025 was $2,545,060, compared to cash provided by net changes in operating assets and liabilities of $3,296,266 for the same period in 2024. The change in cash due to net changes in working capital was primarily due to an increase in accounts receivable associated with ramping revenue, as well as cash disbursements in 2025 related to accrued expenses for a contract loss and for accrued losses related to supplier material received on non-cancellable purchase orders.

Our ability to generate cash from operations in future periods will depend in large part on our profitability, the rate and timing of collections of our accounts receivable, our inventory turns, and our ability to manage other areas of working capital, including accounts payable and accrued expenses.

Investing Activities

During the nine month period ended September 30, 2025, the Company generated cash of $2,744,613 from investing activities, as compared to $4,293,263 provided by investing activities during the prior year period in 2024, a net reduction of $1,548,650. This change is attributable to a decrease in the number of short-term investments redeemed in the current year period as compared to the prior year period, as well as higher capital expenditures primarily associated with facility-related investments at Bressner.

Financing Activities

During the nine month period ended September 30, 2025, the Company generated $1,513,011 in cash from financing activities, compared to a usage of $1,144,189 of cash from financing activities in the same period of 2024. The change was due to proceeds from borrowings on bank lines of credit of $1,000,000 in the current year period, compared to repayments on bank lines of credit of $959,373 in the period year period. Additionally, proceeds from the exercise of employee stock options net of payment of tax on the net exercise of vested RSUs and employee stock options provided cash of $513,011 in the current year period, compared to a net usage of $184,816 in the prior year period.

Known Trends or Uncertainties

We have experienced delays in funding for customer projects, delays in delivery schedules based upon customer requirements, and an extended sales cycle. Such delays could negatively impact the Company's results of operations for the year ending December 31, 2025. If such delays in orders continue in the future, our operating results will be further impacted, and our revenues may decline in future periods.

With the Company's shifted focus to the development and sale of edge computing, we have significantly increased our efforts to penetrate the military and defense sectors in particular, which typically have protracted sales cycles, significant contracting requirements, and multi-year deliverables. Our pipeline reflects the procurement habits and timing of the military and defense sector.

We have received notifications from certain of our suppliers of extended lead times for certain components used in our products. Extended lead times or other supply chain disruptions could lead to extended delivery cycles, impacting the timing of revenue and working capital. Management is closely monitoring developments within our supply chain.

Inflation

We have recently experienced and continue to experience effects due to inflation in both the U.S. and Europe. Although the Company attempts to pass on increases in raw material, labor, energy and fuel-related costs to our customers, the Company's ability to do so is dependent upon the rate and magnitude of any increase, competitive pressures, and market conditions for the Company's products. There have been in the past, and may be in the future, periods of time during which increases in these costs cannot be fully recovered. These increasing costs are being aggressively managed by the Company and actions are being taken to minimize the impact to the Company. Inflation affects the Company's manufacturing costs, distribution costs and operating expenses.

U.S. Government Budget Environment

On September 30, 2025, the Continuing Resolution (CR) allowing government agencies and departments to operate expired without the passage of an extended CR or an Appropriations Act. As a result, the U.S. government began shutdown procedures, to include furlough of certain government employees. The duration of the shutdown is unknown at this time. Our business and results of operations may be impacted by disruptions to U.S. government operations, and these impacts may include delays in contract awards and new program starts. A prolonged shutdown could delay new awards, funding on existing defense-related projects involving U.S. government agencies and prime contractor customers. These delays may temporarily affect the timing of our revenue recognition, increase our working capital requirements, or reduce near-term liquidity. Management is monitoring the situation and evaluation potential mitigation measures, including managing expenditures and maintaining access to available borrowing capacity under our revolving credit facility.

Tariffs

Tariffs and the threat of tariffs, including both United States sanctioned tariffs and the potential for retaliatory tariffs, have contributed to uncertainty and supply chain disruptions that could impact our operations. The

Company's OSS segment conducts final assembly and test of products at our facility in California. However, we source components and subassemblies from both within and outside of the United States. While we attempt to pass on the cost of tariffs to our customers, our ability to do so is dependent upon many factors, including the predictability of tariff rates and market conditions for the Company's products. Management is closely monitoring and managing impacts and potential impacts to our business from ongoing trade policy developments.

Off balance sheet arrangements

We do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets, or any obligation arising out of a material variable interest in an unconsolidated entity.

We do not have any majority-owned subsidiaries that are not consolidated in the financial statements. Additionally, we do not have an interest in, or relationships with, any special purpose entities.

Stockholder transactions

See Note 8 to the accompanying consolidated financial statements for a discussion regarding our stockholder transactions for the relevant periods.

Critical accounting policies and estimates

In preparing our consolidated financial statements in conformity with U.S. generally accepted accounting principles, management must make a variety of decisions which impact the reported amounts and the related disclosures. These decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In making these decisions, management applies its judgment based on its understanding and analysis of the relevant circumstances and our historical experience.

Our accounting policies and estimates that are most critical to the presentation of our results of operations and financial condition, and which require the greatest use of judgments and estimates by management, are designated as our critical accounting policies. See further discussion of our critical accounting policies under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on Form 10-K for the year ended December 31, 2024.

Interest rate risk

Our exposure to interest rate risk is primarily associated with borrowing on revolving lines of credit denominated in both U.S. dollars and Euros. We are exposed to the impact of interest rate changes primarily through our borrowing activities for our variable rate borrowings.

Concentration of credit risk

At times, deposits held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation ("FDIC") and Securities Investor Protection Corporation ("SIPC"), both of which provide basic deposit coverage with limits up to $250,000 per owner. As of September 30, 2025, the Company had $2,492,250 in cash in our accounts that exceeded the insurance limits. The Company has not experienced any losses in these accounts and believes that the financial institutions at which such amounts are held are stable; however, no assurances can be provided as to such. In Germany, the deposit insurance is €100,000 per bank, per customer. Bressner has funds on deposit in both Euro and U.S. dollar denominations of €2,733,842 (US$3,254,038) with banks in excess of the insurance limits.

We provide credit to our customers in the normal course of business. We perform ongoing credit evaluations of our customers' financial condition and limit the amount of credit extended when deemed necessary.

Foreign currency risk

We operate in the United States and Germany. Our primary reporting currency is the United States dollar. Foreign sales of products and services are primarily denominated in U.S. dollars. We also conduct business outside the United States through Bressner, our foreign subsidiary in Germany, where business is largely transacted in non-U.S. dollar currencies, particularly the Euro, which is subject to fluctuations due to changes in foreign currency exchange rates. Accordingly, we are subject to exposure from changes in the exchange rates of local currencies. Foreign currency transaction gains and losses are recorded in other income (expense), net in the consolidated statements of operations.

OSS GmbH operates as an extension of OSS' domestic operations and acquired Bressner in October 2018. The functional currency of OSS GmbH is the Euro. Transactions denominated in currencies other than the functional currency are remeasured in the functional currency at the average exchange rate in effect during the period. At the end of each reporting period, monetary assets and liabilities are translated using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are remeasured at historical exchange rates. Consequently, changes in the exchange rates of the currencies may impact the translation of the foreign subsidiaries' statements of operations into U.S. dollars, which may in turn affect our consolidated statement of operations. The resulting foreign currency translation adjustments are recorded as a separate component of accumulated other comprehensive income in the consolidated statement of comprehensive income.

Derivative Financial Instruments

We employ derivatives on a periodic basis to manage certain market risks through the use of foreign exchange forward contracts. We do not use derivatives for trading or speculative purposes. Our derivatives are designated as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). We hedge a portion of the exchange risk involved in anticipation of highly probable foreign currency-denominated transactions. In anticipation of these transactions, we may enter into foreign exchange contracts to provide currency at a fixed rate. The Company is currently not a party to any of these types of transactions.

Non-GAAP Financial Measures

Adjusted EBITDA

We believe that the use of adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, is helpful for an investor to assess the performance of the Company. The Company defines adjusted EBITDA as income (loss) before interest, taxes, depreciation, amortization, acquisition expenses, impairment of long-lived assets, financing costs, fair value adjustments from purchase accounting, stock-based compensation expense and expenses related to discontinued operations.

Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles in the United States, or GAAP. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company's non-cash operating expenses, we believe that providing a non-GAAP financial measure that excludes non-cash and non-recurring expenses allows for meaningful comparisons between our core business operating results and those of other companies, as well as providing us with an important tool for financial and operational decision making and for evaluating our own core business operating results over different periods of time.

Our adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. Our adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. We do not consider adjusted EBITDA to be a substitute for, or superior to, the information provided by GAAP financial results.


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
Net income (loss)	$	263,487		$	(6,815,384	)	$	(3,774,876	)	$	(10,499,551	)
Depreciation		225,768			252,142			676,777			815,420
Amortization of right-of-use assets net of change in lease liability		(2,708	)		(10,739	)		47,136			32,373
Stock-based compensation expense		444,621			458,011			1,572,956			1,423,949
Interest expense		15,065			16,465			42,941			70,910
Interest income		(36,433	)		(116,596	)		(159,240	)		(376,940	)
Provision for income taxes		266,881			167,086			600,535			569,382
Adjusted EBITDA	$	1,176,681		$	(6,049,015	)	$	(993,771	)	$	(7,964,457	)

Adjusted EPS

Adjusted EPS excludes the impact of certain items, and therefore, has not been calculated in accordance with GAAP. We believe that exclusion of certain selected items assists in providing a more complete understanding of our underlying results and trends and allows for comparability with our peer company index and industry. We use this measure along with the corresponding GAAP financial measures to manage our business and to evaluate our performance compared to prior periods and the marketplace. The Company defines non-GAAP income (loss) as income or (loss) before amortization, stock-based compensation, expenses related to discontinued operations, impairment of long-lived assets and non-recurring acquisition costs. Adjusted EPS expresses adjusted income (loss) on a per share basis using weighted average diluted shares outstanding.

Adjusted EPS is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. These non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies. We expect to continue to incur expenses similar to the adjusted income from continuing operations and adjusted EPS financial adjustments described above, and investors should not infer from our presentation of these non-GAAP financial measures that these costs are unusual, infrequent or non-recurring.

The following table reconciles non-GAAP net loss and basic and diluted earnings per share:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2025		2024			2025			2024
Net income (loss)	$	263,487	$	(6,815,384	)	$	(3,774,876	)	$	(10,499,551	)
Stock-based compensation expense		444,621		458,011			1,572,956			1,423,949
Non-GAAP net income (loss)	$	708,108	$	(6,357,373	)	$	(2,201,920	)	$	(9,075,602	)
Non-GAAP net income (loss) per share:
Basic	$	0.03	$	(0.30	)	$	(0.10	)	$	(0.43	)
Diluted	$	0.03	$	(0.30	)	$	(0.10	)	$	(0.43	)
Weighted average common shares outstanding:
Basic		21,952,963		21,049,270			21,675,802			20,897,324
Diluted		22,840,761		21,049,270			21,675,802			20,897,324

Free Cash Flow

Free cash flow, a non-GAAP measure for reporting cash flow, is defined as cash provided by or used in operating activities, less capital expenditures for property and equipment. We believe free cash flow provides investors with an important perspective on cash available for investments and acquisitions after making capital investments required to support ongoing business operations and long-term value creation. We believe that trends in our free cash flow can be valuable indicators of our operating performance and liquidity.

Free cash flow is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies.

Investors should not infer from our presentation of this non-GAAP financial measure that these expenditures reflect all of our obligations which require cash. The following table reconciles cash provided by or used in operating activities, the most directly comparable GAAP financial measure, to free cash flow:


	For the Nine Months Ended September 30,
Cash flow:	2025			2024
Net cash (used in) provided by operating activities	$	(4,925,615	)	$	2,143,545
Capital expenditures		(467,879	)		(298,789	)
Free cash flow	$	(5,393,494	)	$	1,844,756

Item 3. Quantitative and Qualitati ve Disclosures About Market Risk.

Not Applicable.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms; and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Limitation on Effectiveness of Controls

The design of any control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals. The inherent limitations in any control system include the realities that judgments related to decision-making can be faulty and that reduced effectiveness in controls can occur because of simple errors or mistakes. Due to the inherent limitations in a cost-effective control system, misstatements due to error may occur and may not be detected.

Evaluation of Disclosure Controls and Procedures

Management is required to evaluate our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Disclosure controls and procedures are controls and other procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on our management's evaluation (based upon 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and with the participation of our principal executive officer and principal financial officer), our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective at a reasonable assurance level as of the end of the period covered by this Quarterly Report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2025, which were identified in connection with management's evaluation required by paragraph (d) Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

For a description of any material pending legal proceedings, please see Note 9, Commitments and Contingencies, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.

Item 1A. Ri sk Factors.

Please carefully consider the information set forth in this Quarterly Report and the risk factors discussed in Part I, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition, or future results. In evaluating our business, you should carefully consider the risk factors discussed in our Annual Report on Form 10-K, as updated by our subsequent filings under the Exchange Act. The occurrence of any of the risks discussed in such filings, or other events that we do not currently anticipate or that we currently deem immaterial, could harm our business, prospects, financial condition and results of operations. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

There have not been any material changes to the risk factors disclosed in our Form 10-K for the year ended December 31, 2024, as filed with the SEC.

Item 2. Unregistered Sales of Equit y Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Saf ety Disclosures.

Not Applicable.

Item 5. Other Information.

(a) None.

(b) None.

During the nine months ended September 30, 2025, none of our directors or officers entered into, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," that were intended to satisfy the affirmative defense conditions of Rule 10b5-1, in each case as defined in Item 408 of Regulation S-K.

Item 6. E xhibits.

Exhibit Index

Exhibit

Number

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed

Herewith

3.1

Amended and Restated Certificate of Incorporation (currently in effect).

8-K

001-38371

3.1

March 15, 2025

10.1

Securities Purchase Agreement, dated September 29, 2025

8-K

001-38371

10.1

September 29, 2025

10.2

Lock-Up Agreement dated September 29, 2025

8-K

00138371

10.2

September 29, 2025

31.1

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 INS

Inline XBRL Instance Document with Embedded Linkbase Documents

101 SCH

Inline XBRL Taxonomy Extension Schema Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 attachments)

* Furnished herewith

** The XBRL related information in Exhibit 101 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

SIGNA TURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	One Stop Systems, Inc.

Date: November 5, 2025	By:	/s/ Michael Knowles
		Michael Knowles
		President and Chief Executive Officer (Principal Executive Officer)

Date: November 5, 2025	By:	/s/ Daniel Gabel
		Daniel Gabel
		Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Knowles, certify that:

I have reviewed this Quarterly Report on Form 10-Q of One Stop Systems, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 5, 2025	By:	/s/ Michael Knowles
		Michael Knowles
		President and Chief Executive Officer (Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel Gabel, certify that:

I have reviewed this Quarterly Report on Form 10-Q of One Stop Systems, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 5, 2025	By:	/s/ Daniel Gabel
		Daniel Gabel
		Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of One Stop Systems, Inc. (the "Company") for the period ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Knowles, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


Date: November 5, 2025	By:	/s/ Michael Knowles
		Michael Knowles
		President and Chief Executive Officer (Principal Executive Officer)

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of One Stop Systems, Inc. (the "Company") for the period ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Daniel Gabel, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


Date: November 5, 2025	By:	/s/ Daniel Gabel
		Daniel Gabel
		Chief Financial Officer (Principal Accounting and Financial Officer)

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