 ESCONDIDO, Calif., Aug. 06, 2020 GLOBE NEWSWIRE -- One Stop Systems, Inc. Nasdaq: OSS, a global leader in specialized high-performance edge computing, reported results for second quarter and first half ended June 30, 2020. Financial Highlights Q2 2020 revenue totaled 11.6 million, down 22 from prior year. First half revenue totaled 25.0 million, flat with prior year. Implemented 2.5 to 3.0 million annual expense reduction and reorganization. Operating expenses in Q2 decreased 42 to 3.7 million compared to prior year. For the first half, operating expenses decreased 20 to 8.6 million compared to prior year. Loss from operations in Q2 improved by 575,000 from a loss of 980,000 compared to prior year. For the first half, loss from operations decreased 1.1 million from 3.0 million compared to prior year. Non-GAAP net income in Q2 totaled 248,000 or 0.01 per diluted share, compared to 530,000 or 0.04 per basic and diluted share in the same year-ago period. Non-GAAP net loss for the first half of 2020 totaled 466,000 or 0.03 per basic and diluted share, compared to income of 106,000 or 0.01 per basic and diluted share in the same year-ago period. Raised net 2.4 million in a convertible debt offering and received a Paycheck Protection Plan loan of 1.5 million. Current cash on hand at July 31, 2020 totals 3.8 million.Q2 2020 Operational Highlights Appointed industry technology veteran, David Raun, as the companys new president and CEO. Appointed three new independent board members, with the board now comprised of four males and three females. Introduced the worlds first PCIe Gen 4 expansion system that fully supports NVIDIA new A100 Tensor Core GPUs, which can boost computing performance up to 20X over the previous generation. Announced 3.5 million in production orders for recently introduced OSS Gen 4 PCIe products from multiple OEM customers for delivery in 2020. Continued to ship OSS AI on the FlyTM products into next-generation autonomous vehicles with 1.8 million shipped to date. Hosted new digital series using virtual trade show tours and webinars, including an AI on the Edge webinar with NVIDIA and Marvell, and an International Supercomputing 2020 virtual booth tour available to view at Summary Revenue in the second quarter of 2020 was 11.6 million from 14.9 million in the same year-ago quarter. The majority of the decrease was due to lower sales of custom servers designed for use in media and entertainment production which was due to the COVID-19 pandemic and the absence of a high margin Data Storage Unit product sale.OSS core business contributed 6.9 million or 60 of consolidated revenue in the second quarter of 2020, a decrease compared to 10.0 million or 67 of consolidated revenue in the same year-ago period. The companys Bressner subsidiary contributed 4.3 million or 37 of consolidated revenue in the second quarter of 2020, an increase compared to 4.0 million or 27 of consolidated revenue in the same year-ago quarter. The companys CDI subsidiary contributed 386,000 or 3 of revenue in the second quarter of 2020 as compared to 895,000 or 6 in the year-ago period.In the first half of 2020, revenue was flat at 25.0 million consistent with the prior year. During the first half of 2020, OSS experienced a reduction in revenue of approximately 4.1 million from its two largest customers, which was offset by new business related to the companys AI on the Fly products.OSS core business contributed 14.7 million or 59 of consolidated revenue in the first half of 2020, a decrease compared to 15.2 million or 61 of consolidated revenue in the same year-ago period. Bressner contributed 9.2 million or 37 of consolidated revenue in the first half of the year, an increase compared to 8.5 million or 34 of consolidated revenue in the same year-ago period. CDI contributed 1 million or 4 of revenue as compared to 1.2 million or 5 in the same year-ago period.Gross profit in the second quarter of 2020 was 3.3 million or 28.6 of revenue, compared to 5.4 million or 36.4 of revenue in the same year-ago quarter. Gross margin for the companys core OSS business was down to 33.7 in the second quarter of 2020 from 42.9 in the same year-ago quarter, attributable to reduced sales and change in customer mix. Bressners gross margin decreased to 19.0 in the second quarter of 2020, as compared to 23.6 in the same year-ago quarter, while CDI gross margin improved, contributing 43.5.For the first half of 2020, gross profit was 6.7 million or 26.9 of revenue, compared to 7.8 million or 31.4 of revenue in the same year-ago quarter. Gross margin for the companys core OSS business was down to 30.7 in the first half of 2020 from 38.0 in the first half of 2019, attributable to reduced sales and change in customer mix. Bressners gross margin decreased to 20.5 in the first half of 2020, as compared to 22.3 in the first half of 2019. CDI gross margin improved, contributing 28.9.Operating expenses in Q2 decreased 42 to 3.7 million compared to the same year-ago quarter. Operating expenses as a percentage of revenue improved to 32 in Q2 versus 43 in the year-ago quarter. On a pro forma basis after adjusting for the prior year second quarter goodwill impairment charge of 2.0 million and Q2 2020 severance payments of 287,000, operating expenses decreased 22 to 3.5 million compared to the same quarter a year ago. The improved expense level reflects the 2.5 million to 3.0 million in anticipated annual savings the company expects to realize from its expense reduction program.For the first half of 2020, operating expenses decreased 20 to 8.6 million versus the first half of 2019. Operating expenses as a percentage of revenue improved to 35 during the first half of 2020 versus 43 in the year-ago period. On a pro forma basis after adjusting for the prior year first half goodwill impairment charge of 2.0 million and 1H 2020 severance payments of 815,000, operating expenses decreased 12 to 7.8 million as compared to the prior year. This expense level reflects the 2.5 million to 3.0 million in anticipated annual savings resulting from the companys implemented expense reduction program.Net loss attributable to common stockholders on a GAAP basis totaled 12,000 or 0.00, or approaching breakeven, per share in Q2 compared to a loss of 1.6 million or 0.11 per share in the year-ago period.For the first half of 2020, net loss attributable to common stockholders on a GAAP basis totaled 1.1 million or 0.07 per share, as compared to a loss of 2.5 million or 0.18 per share in the first half of 2019.Non-GAAP net income attributable to common stockholders totaled 248,000 or 0.01 per diluted share in Q2, as compared to 530,000 or 0.04 per basic and diluted share in the same year-ago period. For the first half of 2020, non-GAAP net loss attributable to common stockholders totaled 466,000 or 0.03 per share, as compared to non-GAAP net income of 106,000 or 0.01 per share in the first half of 2019. Adjusted EBITDA, a non-GAAP term, was positive 73,000 in Q2, as compared to positive 1.3 million in the same year-ago period. In the first half of 2020, adjusted EBITDA, a non-GAAP term, was negative 885,000, as compared to negative 156,000 in the same year-ago period.Cash and cash equivalents totaled 4.7 million as of June 30, 2020, as compared to 3.0 million at March 31, 2020. The increase is primarily due to the company raising net 2.4 million in a convertible debt offering during the quarter and receiving a Paycheck Protection Plan loan of approximately 1.5 million. As of July 31, 2020, the company had cash on hand of 3.8 million. The company believes its cash position and other available funds provide it with sufficient liquidity to meet its cash requirements for current operations.Management Commentary Although we have been challenged by the disruption of COVID-19 during most of Q2, impacting OSS and our customers, our management teams have made important progress across key fronts, said OSS president and CEO, David Raun. This has included keeping our products shipping with uninterrupted manufacturing; a reorganization that put more focus on the development of an improved vision and value proposition, as well as the full integration of CDI completed in June; 2.5 million to 3 million in operating expense reductions with a focus on efficiency; and lastly, strengthening our balance sheet with an additional 4 million in working capital.As expected, COVID-19 impacted OSS for the second quarter after a strong first quarter. We saw revenues down significantly from our top customer by 3.1 million compared to the same quarter last year. This customer serves large gathering events like concerts and sporting events. The combination of a strong first quarter and contributions from some of our newer customers from program wins over the past 18 months helped offset the overall impact to the first half. This resulted in total revenues year to date being on par with last years first half.In the second quarter, OSS introduced the worlds first PCIe Gen 4 expansion system that fully supports NVIDIAs new A100 Tensor Core GPUs, which can boost computing performance up to 20X over the previous generation. Building upon this success, we are planning to introduce additional new PCI Express Gen 4 platforms this year. We continue to receive significant interest in these leading-edge standard products, and we are planning to convert this interest into more Gen 4 revenue in the near term.Our pipeline of major opportunities is currently around 17. Given our historical closing rate, we expect about half of these to convert to wins before the end of the year. 