ONE STOP SYSTEMS, INC. Files 2023 Annual Report on Form 10-K

TL;DR

<b>ONE STOP SYSTEMS, INC. has filed its 2023 10-K report detailing its financial performance and operational aspects.</b>

AI Summary

ONE STOP SYSTEMS, INC. (OSS) filed a Annual Report (10-K) with the SEC on March 21, 2024. Filed 10-K for the fiscal year ended December 31, 2023. Company operates in the Electronic Computers industry (SIC 3571). Addresses include Escondido, California. Mentions various stock option and incentive plans, including the 2015 Stock Option Plan and 2017 Equity Incentive Plan. References financial instruments and liabilities such as Term Loans, Notes Payable, and Lines of Credit from banks like Commerzbank AG and UniCredit Bank.

Why It Matters

For investors and stakeholders tracking ONE STOP SYSTEMS, INC., this filing contains several important signals. This filing provides a comprehensive overview of the company's financial health, operational risks, and strategic direction for the fiscal year 2023. Investors and analysts can use this report to assess the company's performance, evaluate its market position, and make informed investment decisions.

Risk Assessment

Risk Level: medium — ONE STOP SYSTEMS, INC. shows moderate risk based on this filing. The company faces risks related to supplier concentration, as indicated by the mention of 'CertainSupplier' and 'SupplierConcentrationRisk' in the context of Cost of Goods Sold for 2022.

Analyst Insight

Review the company's supplier diversification strategies and their impact on cost of goods sold and operational stability.

Key Numbers

• 20231231 — Fiscal Year End (CONFORMED PERIOD OF REPORT)
• 20240321 — Filing Date (FILED AS OF DATE)
• 3571 — SIC Code (STANDARD INDUSTRIAL CLASSIFICATION)
• 2015-12-01 — Stock Plan Start Date (2015 Stock Option Plan)
• 2021-05-18 — Equity Plan Start Date (2017 Equity Incentive Plan)
• 2023-09-29 — Loan Date (Term Loan with Bressner Technology GmbH)
• 2023-08-18 — Registration Statement Date (S8 Registration Statement)
• 2023-12-31 — Reporting Date (Domestic Country, Leasehold Improvements, Computer Equipment, Accounts Receivable, etc.)

Key Players & Entities

• ONE STOP SYSTEMS, INC. (company) — FILER
• 20231231 (date) — CONFORMED PERIOD OF REPORT
• 20240321 (date) — FILED AS OF DATE
• 0001394056 (company) — CENTRAL INDEX KEY
• 3571 (industry) — STANDARD INDUSTRIAL CLASSIFICATION
• 760-745-9883 (phone) — BUSINESS PHONE
• Bressner Technology GmbH (company) — Mentioned in relation to Term Loan
• Commerzbank AG (company) — Mentioned in relation to Notes Payable

FAQ

Risk Factors

• Supplier Concentration Risk [medium — financial]: The company faces risks related to concentration with certain suppliers, impacting the cost of goods sold.
• Customer Concentration Risk [medium — financial]: Risks associated with customer concentration are noted for both sales revenue and accounts receivable.
• Value Added Reseller with Minimal Customization [low — operational]: The business model includes operating as a value-added reseller with minimal customization, which may present specific operational considerations.
• Customized Computers and Flash Arrays [medium — operational]: The company's operations involve customized computers and flash arrays, potentially involving complex production and supply chain management.
• S8 Registration Statement [low — regulatory]: The mention of an S8 Registration Statement indicates regulatory filings related to securities offerings.

Key Financial Figures

• $0.0001 — ch registered Common Stock, par value $0.0001 per share OSS The Nasdaq Stock Mark
• $2.87 — n stock on The Nasdaq Capital Market of $2.87 per share on such date. This calculatio
• $61 billion — ch, resulting in an estimated market of $61 billion later this decade. The AI Transportab
• $5 billion — ing industry will grow to approximately $5 billion in the coming years. OSS' objective is

Filing Documents

• oss-20231231.htm (10-K) — 3948KB
• oss-ex10_15.htm (EX-10.15) — 68KB
• oss-ex19_1.htm (EX-19.1) — 141KB
• oss-ex23_1.htm (EX-23.1) — 4KB
• oss-ex31_1.htm (EX-31.1) — 15KB
• oss-ex31_2.htm (EX-31.2) — 15KB
• oss-ex32_1.htm (EX-32.1) — 8KB
• oss-ex32_2.htm (EX-32.2) — 9KB
• oss-ex97_1.htm (EX-97.1) — 56KB
• img52837052_0.jpg (GRAPHIC) — 59KB
• 0000950170-24-034668.txt (&nbsp;) — 14841KB
• oss-20231231.xsd (EX-101.SCH) — 1873KB
• oss-20231231_htm.xml (XML) — 2602KB

Business

Business 4 Item 1A.

Risk Factors

Risk Factors 26 Item 1B. Unresolved Staff Comments 46 Item 1C. Cybersecurity Item 2.

Properties

Properties 48 Item 3.

Legal Proceedings

Legal Proceedings 48 Item 4. Mine Safety Disclosures 48 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 49 Item 6. [Reserved] 49 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 50 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 69 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 69 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 69 Item 9A.

Controls and Procedures

Controls and Procedures 69 Item 9B. Other Information 70 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 70 PART III Item 10. Directors, Executive Officers and Corporate Governance 71 Item 11.

Executive Compensation

Executive Compensation 79 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 89 Item 13. Certain Relationships and Related Transactions, and Director Independence 92 Item 14. Principal Accountant Fees and Services 92 PART IV Item 15. Exhibit and Financial Statement Schedules 94 Item 16. Form 10-K Summary 94 2 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K ("Annual Report") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this Annual Report, including statements regarding our future operating results, financial position and cash flows, our business strategy and plans and our objectives for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. This Annual Report also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. In some cases, you can identify forward-looking statements by terms such as "may," "will," "would," "could," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential" or "continue" or the negative of these terms or other similar expressions. The

B USINESS

ITEM 1. B USINESS. Company History 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 ("HPC"), 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. If an application needs AI and/or autonomous capabilities, and it moves, OSS delivers the highest performance solutions that are designed to survive and enable these challenging applications. During the year ended December 31, 2015, the Company formed a wholly owned subsidiary in Germany, One Stop Systems, GmbH ("OSS GmbH"). Then, in July 2016, the Company acquired Mission Technologies Group, Inc. ("Magma") and its operations. 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 stock of Bressner Technology GmbH, a limited liability company registered under the

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View this 10-K filing on SEC EDGAR