PART I [Business](index=6&type=section&id=Item%201.%20Business) Innovative Solutions and Support, Inc. (IS&S) integrates, designs, manufactures, and services advanced avionics for OEM and retrofit markets, with FPDS as a key product and significant customer concentration [Overview](index=6&type=section&id=Overview) IS&S integrates, designs, and services avionics equipment for retrofit and OEM markets, offering cost-effective solutions across aviation sectors with key products like ThrustSense® Autothrottle - The company operates as a systems integrator for **air data, engine display, standby, primary flight guidance, autothrottles, and cockpit display systems** for both retrofit and OEM markets[28](index=28&type=chunk) - IS&S has received **FAA certification for its ThrustSense® Autothrottle for King Air retrofit** and has a multi-year supply agreement with Textron for King Air 360 and 260 models[33](index=33&type=chunk) - The company's customer base includes **OEMs, commercial air transport, corporate/general aviation, the DoD, and foreign militaries**[37](index=37&type=chunk) [Strategy](index=10&type=section&id=Strategy) The company aims to be a leading cockpit information systems supplier by leveraging its ThrustSense® autothrottle, focusing on cost-effective retrofits, expanding flat panel display market presence, and increasing international sales - Introduce and capitalize on being the **first to market with the ThrustSense® turboprop autothrottle system**[48](index=48&type=chunk) - Focus on **cost-effective retrofitting of existing aircraft** with modern avionics like COCKPIT/IP® FPDS, FMS, and ISU systems[48](index=48&type=chunk) - Expand presence in the **flat panel display market**, leveraging the COCKPIT/IP® system's advantages in cost, weight, and functionality[48](index=48&type=chunk)[50](index=50&type=chunk) - Increase international sales by **adding personnel and obtaining EASA approvals** for products like the FPDS for B757/B767 aircraft[52](index=52&type=chunk) [Products](index=12&type=section&id=Products) IS&S offers advanced avionics, with Flat Panel Display Systems (FPDS) as the largest revenue source, alongside the innovative ThrustSense® Autothrottle, Flight Management Systems, and Integrated Standby Units Revenue by Product Line (as % of Total Sales) | Product Line | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Flat Panel Display Systems (FPDS) | 88% | 80% | 90% | | Air Data Systems and Components | 12% | 20% | 10% | - The ThrustSense® Autothrottle, certified for King Air and Pilatus PC-12 aircraft, offers **automated power control, engine protection, and Vmca protection** in multi-engine aircraft[69](index=69&type=chunk) - The Utilities Management System (UMS) for the Pilatus PC-24 **integrates over 20 aircraft systems**, including navigation, landing gear, and environmental controls, into a centralized processing unit[75](index=75&type=chunk)[76](index=76&type=chunk) [Customers](index=18&type=section&id=Customers) The company serves diverse customers including government, commercial airlines, and OEMs, but revenue is highly concentrated, with Pilatus and Textron being the largest in FY2021 Top Customer Revenue Concentration | Fiscal Year | Top Customers | % of Total Revenue | | :--- | :--- | :--- | | 2021 | Pilatus, Textron | 20%, 17% | | 2020 | Pilatus, Dayton T. Brown, Inc., Kalitta Air | 33%, 12%, 10% | | 2019 | Pilatus, Air Transport Services Group Inc. | 25%, 14% | [Backlog](index=20&type=section&id=Backlog) The company's backlog significantly increased to $9.1 million in FY2021, driven by new bookings, with only 4% expected beyond fiscal 2022 Backlog Changes (in USD) | | Sep 30, 2021 | Sep 30, 2020 | | :--- | :--- | :--- | | Beginning Backlog | $3,640,637 | $5,896,163 | | Net Bookings | $28,525,744 | $19,339,673 | | Sales Recognized | ($23,044,796) | ($21,595,199) | | **Ending Backlog** | **$9,121,585** | **$3,640,637** | - The backlog increase of **$5.5 million** was primarily due to a **$5.5 million increase in FPDS backlog**[86](index=86&type=chunk) - The backlog excludes potential future orders from key EDC programs, including the **Pilatus PC-24, KC-46A, and Textron King Air ThrustSense® programs**[86](index=86&type=chunk) [Human Capital](index=25&type=section&id=Human%20Capital) As of September 30, 2021, IS&S had 85 employees, none unionized, with good relations, and implemented COVID-19 safety protocols - As of September 30, 2021, the company had **85 employees (83 full-time)**[108](index=108&type=chunk) - None of the employees are **represented by a labor union** or subject to a collective bargaining agreement[108](index=108&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including new product market acceptance, contract termination, fixed-price contract exposure, customer concentration, government spending reliance, competition, and general operational challenges - **IS&S-Specific Risks** include dependence on new product market acceptance, customer contract terminations, cost overruns on fixed-price contracts, reduced government spending, loss of key customers, and intense competition[119](index=119&type=chunk)[122](index=122&type=chunk) - **General Risks** include the ongoing COVID-19 pandemic, rapid technological change, reliance on third-party suppliers, cybersecurity threats, intellectual property protection, and failure to retain key personnel[122](index=122&type=chunk) - Revenue is **concentrated with a limited number of customers**, with the top five accounting for **59% of revenue in fiscal year 2021**, posing a risk if key customers are lost or their financial condition deteriorates[131](index=131&type=chunk) - As of September 30, 2021, **only 4% of the company's backlog was expected to be filled beyond fiscal 2022**, indicating dependence on near-term orders[134](index=134&type=chunk) [Properties](index=45&type=section&id=Item%202.%20Properties) The company owns a 45,000 sq ft facility in Exton, PA, and leases two hangars in Delaware for approximately $53,000 annually - The company owns a **45,000 square foot facility in Exton, Pennsylvania**, with approval for a **20,400 square foot expansion**[172](index=172&type=chunk) - IS&S leases **two aircraft hangars in New Castle County, Delaware**, on a month-to-month basis, with an annual lease expense of approximately **$53,000**[174](index=174&type=chunk) [Legal Proceedings](index=47&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, but management does not expect a material impact on financial results or position - The Company does not believe any currently pending legal proceedings will have a **material effect on its results of operations or financial position**[175](index=175&type=chunk) [Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[176](index=176&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=47&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ under "ISSC", and it paid special cash dividends of $0.50 and $0.65 per share in fiscal 2021 and 2020, respectively - The company's common stock trades on the **NASDAQ Global Select Market** under the symbol **"ISSC"**[178](index=178&type=chunk) Special Cash Dividends Declared | Declaration Date | Amount per Share | Total Payment | Payment Date | | :--- | :--- | :--- | :--- | | Dec 10, 2020 | $0.50 | ~$8.6 million | Dec 30, 2020 | | Sep 4, 2020 | $0.65 | ~$11.2 million | Oct 1, 2020 | [Selected Consolidated Financial Data](index=49&type=section&id=Item%206.%20Selected%20Consolidated%20Financial%20Data) The company's FY2021 net sales were $23.0 million with net income of $5.1 million, while total assets decreased to $27.1 million due to cash reduction and dividend payments Selected Statement of Operations Data (in thousands, except per share data) | | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net sales | $23,045 | $21,595 | $17,573 | | Gross profit | $12,782 | $11,802 | $9,896 | | Operating income | $3,901 | $2,745 | $1,529 | | Net Income | $5,065 | $3,270 | $1,850 | | Diluted EPS | $0.29 | $0.19 | $0.11 | Selected Balance Sheet Data (as of Sep 30, in thousands) | | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $8,266 | $12,604 | $22,417 | | Working capital | $15,218 | $19,473 | $27,739 | | Total assets | $27,086 | $41,546 | $38,557 | | Total shareholders' equity | $24,585 | $27,769 | $36,208 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2021 net sales increased 6.7% to $23.0 million, gross margin improved to 55.5%, and net income rose to $5.1 million, significantly impacted by a $1.1 million tax benefit and $19.8 million in dividend payments [Results of Operations](index=53&type=section&id=Results%20of%20Operations) FY2021 net sales grew 6.7% to $23.0 million, gross margin improved to 55.5%, and net income increased to $5.1 million, largely due to a $1.1 million income tax benefit - **FY2021 net sales increased 6.7% to $23.0 million** from $21.6 million in FY2020, driven by higher shipments for OEM general aviation programs and retrofit displays for commercial transport customers[200](index=200&type=chunk) - **Gross margin for FY2021 was 55.5%**, up from 54.7% in FY2020, attributed to favorable product mix and leverage from higher revenues[201](index=201&type=chunk) - **FY2021 net income was $5.1 million**, compared to $3.3 million in FY2020, largely due to an **income tax benefit of $1.1 million** from the release of a valuation allowance for deferred tax assets[205](index=205&type=chunk)[206](index=206&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash and cash equivalents decreased to $8.3 million by September 30, 2021, primarily due to $19.8 million in dividend payments, despite generating $4.6 million from operations Cash Flow Summary (in millions) | Activity | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $4.6 | $2.2 | $2.1 | | Net cash used in investing activities | ($0.3) | ($0.1) | ($0.1) | | Net cash used in financing activities | ($19.8) | ($0.7) | $0.0 | - Cash used in financing activities in FY2021 was **$19.8 million**, consisting primarily of dividend payments[227](index=227&type=chunk) - The company declared and paid two special cash dividends: **$0.65/share (total ~$11.2 million)** paid in Oct 2020 and **$0.50/share (total ~$8.6 million)** paid in Dec 2020[219](index=219&type=chunk)[220](index=220&type=chunk) [Critical Accounting Policies](index=59&type=section&id=Critical%20Accounting%20Policies) Critical accounting policies involve significant estimates for revenue recognition (product at shipment, EDC over time), income taxes (deferred tax asset realizability), and inventory valuation - Revenue from products (**100% of revenue in FY2021**) is recognized at a point in time, typically upon shipment, while EDC contract revenue is recognized over time using a cost-to-cost input measure[236](index=236&type=chunk) - For income taxes, the company **released the valuation allowance against all federal and most state deferred tax assets in FY2021**, concluding they are more likely than not to be realized[241](index=241&type=chunk) - Inventory is valued at the **lower of cost (FIFO) or net realizable value**, with write-downs for obsolescence based on historical usage and future demand forecasts[248](index=248&type=chunk) [Quantitative and qualitative disclosures about market risk](index=67&type=section&id=Item%207A.%20Quantitative%20and%20qualitative%20disclosures%20about%20market%20risk) The company's primary market risk is interest rate changes affecting income from cash equivalents, with a hypothetical 1% rate increase yielding an $88,000 income increase in FY2021 - The company's main market risk is **interest rate changes on its cash equivalents** (money market funds)[254](index=254&type=chunk) - A hypothetical **1% increase in interest rates** would have increased fiscal 2021 interest income by approximately **$88,000**[254](index=254&type=chunk) [Financial statements and supplementary data](index=67&type=section&id=Item%208.%20Financial%20statements%20and%20supplementary%20data) This section presents the company's audited consolidated financial statements for FY2019-2021, including balance sheets, income statements, cash flows, and notes, with an unqualified opinion from Grant Thornton LLP [Report of Independent Registered Public Accounting Firm](index=69&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Grant Thornton LLP issued an unqualified opinion on the company's consolidated financial statements for the three years ended September 30, 2021, confirming fair presentation in accordance with U.S. GAAP - The auditor, Grant Thornton LLP, issued an **unqualified opinion** on the consolidated financial statements for the three years ended September 30, 2021[260](index=260&type=chunk) - The auditor determined that there were **no critical audit matters** arising from the current period audit[264](index=264&type=chunk) [Consolidated Financial Statements](index=70&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show FY2021 total assets of $27.1 million, net sales of $23.0 million, net income of $5.1 million, and a $15.5 million net cash decrease due to dividends Consolidated Balance Sheet Highlights (as of Sep 30, 2021) | Account | Amount (USD) | | :--- | :--- | | Total Current Assets | $17,690,411 | | Total Assets | $27,086,000 | | Total Current Liabilities | $2,472,239 | | Total Liabilities | $2,500,919 | | Total Shareholders' Equity | $24,585,081 | Consolidated Statement of Operations (FY 2021) | Account | Amount (USD) | | :--- | :--- | | Total Net Sales | $23,044,796 | | Gross Profit | $12,781,630 | | Operating Income | $3,900,979 | | Net Income | $5,064,902 | [Notes to Consolidated Financial Statements](index=74&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail significant customer concentration (Pilatus 20%), revenue recognition, income tax accounting (including $2.0 million valuation allowance release), share-based compensation, and $2.1 million in purchase commitments - In FY2021, the largest customer, **Pilatus, accounted for 20% of total revenue**, with sales to government contractors and agencies approximately **18% of total sales**[280](index=280&type=chunk)[281](index=281&type=chunk) - The company **released its valuation allowance against most deferred tax assets in FY2021**, resulting in a **net deferred tax asset of $1,063,822** at year-end, compared to a net liability of $129,689 in 2020[348](index=348&type=chunk)[350](index=350&type=chunk) - As of September 30, 2021, the company had **100,000 stock options outstanding** under its 2019 Plan with a weighted-average exercise price of **$7.10**, and **689,147 securities remaining available** for future issuance[371](index=371&type=chunk)[407](index=407&type=chunk) [Controls and procedures](index=106&type=section&id=Item%209A.%20Controls%20and%20procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of September 30, 2021, with no material changes during the quarter - Management concluded that **disclosure controls and procedures were effective** as of September 30, 2021[395](index=395&type=chunk) - Based on the COSO 2013 framework, management concluded that **internal control over financial reporting was effective** as of September 30, 2021[398](index=398&type=chunk) PART III [Directors, executive officers and corporate governance](index=108&type=section&id=Item%2010.%20Directors,%20executive%20officers%20and%20corporate%20governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's Proxy Statement - This information is **incorporated by reference from the Company's Proxy Statement**[402](index=402&type=chunk) [Executive compensation](index=108&type=section&id=Item%2011.%20Executive%20compensation) Information regarding executive compensation is incorporated by reference from the company's Proxy Statement - This information is **incorporated by reference from the Company's Proxy Statement**[403](index=403&type=chunk) [Security ownership of certain beneficial owners and management and related stockholder matters](index=108&type=section&id=Item%2012.%20Security%20ownership%20of%20certain%20beneficial%20owners%20and%20management%20and%20related%20stockholder%20matters) Security ownership information is incorporated by reference from the Proxy Statement, detailing 100,000 outstanding stock options and 689,147 securities available for future issuance Equity Compensation Plan Information (as of Sep 30, 2021) | Plan Category | Securities to be issued upon exercise | Weighted-average exercise price | Securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Approved by security holders | 100,000 | $7.10 | 689,147 | | Not approved by security holders | — | — | — | | **Total** | **100,000** | **$7.10** | **689,147** | [Certain relationships and related transactions and director independence](index=109&type=section&id=Item%2013.%20Certain%20relationships%20and%20related%20transactions%20and%20director%20independence) Information on certain relationships, related party transactions, and director independence is incorporated by reference from the company's Proxy Statement - This information is **incorporated by reference from the Company's Proxy Statement**[409](index=409&type=chunk) [Principal accounting fees and services](index=109&type=section&id=Item%2014.%20Principal%20accounting%20fees%20and%20services) Information regarding principal accounting fees and services is incorporated by reference from the company's Proxy Statement - This information is **incorporated by reference from the Company's Proxy Statement**[410](index=410&type=chunk) PART IV [Exhibits, financial statement schedules](index=110&type=section&id=Item%2015.%20Exhibits,%20financial%20statement%20schedules) This section lists documents filed as part of the Form 10-K, including financial statements and key exhibits like corporate governance documents and certifications - The report includes **financial statements as detailed in Item 8**[413](index=413&type=chunk) - Exhibits filed with the report include **corporate governance documents, equity compensation plans, and required CEO/CFO certifications**[413](index=413&type=chunk) [Form 10-K Summary](index=112&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided - None[418](index=418&type=chunk)

Innovative Solutions and Support, Inc. (NASDAQ:ISSC) Q4 2021 Earnings Conference Call December 9, 2021 10:00 AM ET Company Participants Geoffrey Hedrick - Chairman & Chief Executive Officer Rell Winand - Chief Financial Officer Shahram Askarpour - President Conference Call Participants David Campbell - Thompson, Davis & Company Operator Good morning and welcome to the Innovative Solutions and Support Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. All participants will be in listen-only mode. ...

```markdown PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) For the nine months ended June 30, 2021, net income increased to **$3.5 million** due to a tax benefit, while total assets decreased to **$27.0 million** primarily from **$19.8 million** in dividend payments [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$27.0 million** as of June 30, 2021, from **$41.5 million**, primarily due to reduced cash and restricted cash from dividend payments, while total liabilities also significantly decreased Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2021 | September 30, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $7,482,863 | $12,603,967 | | Restricted Cash | $0 | $11,180,900 | | Total current assets | $17,312,730 | $33,120,422 | | **Total assets** | **$27,016,964** | **$41,545,837** | | **Liabilities & Equity** | | | | Total current liabilities | $4,008,223 | $13,647,117 | | **Total liabilities** | **$4,008,223** | **$13,776,806** | | **Total shareholders' equity** | **$23,008,741** | **$27,769,031** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 2021, net sales slightly increased to **$6.2 million**, and net income surged to **$2.7 million** due to a **$1.5 million** income tax benefit, with nine-month net income reaching **$3.5 million** Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total net sales | $6,180,183 | $5,953,689 | $16,171,680 | $15,300,182 | | Gross profit | $3,354,502 | $3,394,673 | $8,823,316 | $8,291,491 | | Operating income | $1,195,569 | $1,244,446 | $2,039,159 | $1,527,967 | | Net income | $2,685,921 | $1,259,858 | $3,534,643 | $2,025,871 | | Diluted EPS | $0.16 | $0.07 | $0.21 | $0.12 | [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity decreased from **$27.8 million** to **$23.0 million** primarily due to **$8.6 million** in declared dividends, partially offset by **$3.5 million** in net income - For the nine months ended June 30, 2021, the company declared dividends of **$8,607,192**, which significantly impacted shareholders' equity[12](index=12&type=chunk) - Total shareholders' equity decreased from **$27,769,031** at the beginning of the period to **$23,008,741** at June 30, 2021[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated **$3.8 million** in cash, while financing activities used **$19.8 million** primarily for dividends, resulting in a **$16.3 million** net decrease in cash and restricted cash Cash Flow Summary (Unaudited) | Activity | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,793,103 | $626,221 | | Net cash (used in) investing activities | ($324,025) | ($67,624) | | Net cash (used in) provided by financing activities | ($19,771,082) | $8,822 | | **Net (decrease) increase in cash** | **($16,302,004)** | **$567,419** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, a significant tax benefit from releasing a valuation allowance, customer concentration with Pilatus and Textron, and special cash dividends declared in late 2020 - The company operates in a single business segment as a systems integrator for the aviation industry, providing products like flight management systems, cockpit displays, and autothrottles[17](index=17&type=chunk) - In the third quarter of 2021, two customers, Pilatus Aircraft Ltd and Textron Aviation, Inc., accounted for **25%** and **21%** of net sales, respectively, and for the nine-month period, they accounted for **20%** and **17%**[66](index=66&type=chunk) - The company released the valuation allowance for all federal and certain state deferred tax assets during the quarter ended June 30, 2021, as it determined they were more likely than not to be realized[89](index=89&type=chunk) - The company declared a special cash dividend of **$0.50 per share** in December 2020, totaling approximately **$8.6 million**[26](index=26&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Quarterly net sales increased **3.8%** driven by King Air autothrottle systems, gross margin declined to **54.3%**, and a significant tax benefit boosted net income, while backlog grew to **$9.5 million** despite large dividend payments [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q3 2021 net sales rose **3.8%** to **$6.2 million** due to autothrottle shipments, gross margin fell to **54.3%**, and a **$1.47 million** tax benefit drove net income to **$2.7 million** Q3 2021 vs Q3 2020 Performance | Metric | Q3 2021 | Q3 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $6.2M | $6.0M | +3.8% | | Gross Profit | $3.4M | $3.4M | -1.2% | | Gross Margin | 54.3% | 57.0% | -2.7 p.p. | | R&D Expense | $0.65M | $0.87M | -25.7% | | SG&A Expense | $1.51M | $1.28M | +18.2% | | Net Income | $2.7M | $1.3M | +113.2% | - The increase in product sales for the quarter was primarily due to increased shipments of King Air autothrottle systems to the company's OEM customer[147](index=147&type=chunk) - The effective tax benefit rate for Q3 2021 was **121.4%**, differing from the statutory rate primarily due to the release of the valuation allowance for deferred tax assets[152](index=152&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents decreased to **$7.5 million** due to **$19.8 million** in dividend payments, yet the current ratio improved to **4.32**, with management confident in sufficient liquidity for the next year Key Liquidity Metrics | Metric | June 30, 2021 | September 30, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $7,482,863 | $12,603,967 | | Current assets | $17,312,730 | $33,120,422 | | Current liabilities | $4,008,223 | $13,647,117 | | Current ratio | 4.32 | 2.43 | - The company declared and paid two special cash dividends: **$0.65 per share** (approx. **$11.2 million**) paid on Oct 1, 2020, and **$0.50 per share** (approx. **$8.6 million**) paid on Dec 30, 2020[167](index=167&type=chunk)[168](index=168&type=chunk) - Net cash used in financing activities for the nine months ended June 30, 2021, was **$19,771,082**, primarily due to dividend payments[173](index=173&type=chunk) [Backlog](index=44&type=section&id=Backlog) The company's backlog significantly increased to **$9.5 million** as of June 30, 2021, from **$3.6 million** at the fiscal year start, driven by strong net bookings of nearly **$22.0 million** Backlog Activity (Nine Months Ended June 30, 2021) | Item | Amount | | :--- | :--- | | Backlog, beginning of period | $3,640,637 | | Bookings, net | $21,984,917 | | Recognized in revenue | ($16,171,680) | | **Backlog, end of period** | **$9,453,874** | [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate changes on variable-rate cash equivalents, where a hypothetical **1%** increase would yield approximately **$14,000** more in interest income for the quarter - The company's main market risk exposure is from interest rate fluctuations on its cash equivalent balances[178](index=178&type=chunk) - A hypothetical **1%** increase in variable interest rates would have increased interest income by approximately **$14,000** for the three-month period ended June 30, 2021[178](index=178&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[179](index=179&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[180](index=180&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material impact on its financial position or results of operations - The Company does not believe any currently pending legal matters will have a material effect on its results of operations or financial position[182](index=182&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020 - The report refers to the risk factors described in the Company's Form 10-K for the fiscal year ended September 30, 2020[183](index=183&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None reported[184](index=184&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL interactive data files - The exhibits filed with the report include CEO and CFO certifications (Exhibits 31.1, 31.2), a Section 906 certification (Exhibit 32.1), and XBRL data files[185](index=185&type=chunk) ```

Innovative Solutions & Support Inc. (NASDAQ:ISSC) Q3 2021 Results Conference Call August 12, 2021 11:00 AM ET Company Participants Geoffrey Hedrick - Chairman and Chief Executive Officer Rell Winand - Chief Financial Officer Shahram Askarpour - President Conference Call Participants David Campbell - Thomson, Davis & Company George Marema - Pareto Ventures Operator Good day, and welcome to the Innovative Solutions & Support Third Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now lik ...

FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [For the transition period from _____________________ to ___________________________] Commission File No. 000-31157 INNOVATIVE SOLUTIONS AND SUPPORT, INC. (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D ...

Innovative Solutions and Support, Inc. (NASDAQ:ISSC) Q2 2021 Earnings Conference Call May 13, 2021 10:00 AM ET Company Participants Geoffrey Hedrick – Chairman and Chief Executive Officer Rell Winand – Chief Financial Officer Shahram Askarpour – President Conference Call Participants George Marema – Pareto Ventures Michael Frederick – Investor Operator Good day, and welcome to the Innovative Solutions and Support Second Quarter 2021 Earnings Conference Call and Webcast. All participants will be in a listen- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [For the transition period from _____________________ to ___________________________] Commission File No. 000-31157 INNOVATIVE SOLUTIONS AND SUPPORT, INC. (Exact name of registrant as specified in its charte ...

Financial Data and Key Metrics Changes - Revenues for Q1 2021 were $4.9 million, an increase of 8% from $4.5 million in the same quarter last year, driven by sales growth in King Air Autothrottle Systems and flat panel display revenues [11] - Gross margins decreased to 52.7% from 57.7% year-over-year, primarily due to increased direct costs and warranty expenses [11] - Operating income was $232,000, a slight increase from the previous year, while net income was $240,000 or $0.01 per share, down from $328,000 or $0.02 per share in the prior year [13] Business Line Data and Key Metrics Changes - The retrofit market is currently outperforming the OEM opportunity, with ongoing demand for legacy products and new technology such as ThrustSense autothrottle [8][19] - New orders in Q1 2021 reached $5.4 million, up $2 million sequentially from Q4 2020, with a backlog of $4.2 million at the end of the quarter, indicating growth [20] Market Data and Key Metrics Changes - The company is experiencing strong demand in the cargo conversion market, particularly for 757 and 767 aircraft, as online shopping increases and air passenger miles decrease [9][19] - The King Air market presents a significant retrofit opportunity, estimated at $300 million, with approximately 5,000 aircraft currently in service [17] Company Strategy and Development Direction - The company is focused on innovative opportunities, including expanding its product revenue through partnerships with major industry players like Textron, Pilatus, and Boeing [6][7] - The strategy includes leveraging existing relationships to promote autothrottle benefits and exploring growth potentials across commercial air transport, general aviation, and military markets [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining revenue growth and profitability despite the pandemic's impact, noting that the company remains in a strong financial position with significant liquidity and no debt [5][14] - The ongoing pandemic has limited personal interactions with customers and FAA, but management does not expect it to materially alter the overall growth strategy [21] Other Important Information - The company declared a special dividend of $0.50 per share in December 2020, returning nearly $20 million to shareholders over the second half of 2020 [6] - The company received recognition from Flying Magazine for its ThrustSense autothrottle, highlighting its influence on safety and technology in aircraft operations [18] Q&A Session Summary Question: Comments on the company's performance and future revenue expectations - Management acknowledged the challenges posed by the pandemic but expressed optimism for future profits and revenue growth [25][26] Question: Inquiry about battery-powered airplanes and market involvement - Management stated that they have not yet explored the battery-powered airplane market, preferring to wait for more definitive market developments [28][29] Question: Discussion on the twin jet market and ThrustSense application - Management confirmed that ThrustSense technology is applicable to other twin jet models and highlighted its unique features that enhance safety [32][33] Question: Update on FAA interactions and pending applications - Management reported that the FAA has been responsive despite work-from-home challenges, and they have several pending applications [35][38] Question: Clarification on COVID-19's impact on retrofit market rollout - Management noted that COVID-19 has affected customer interactions and the ability to conduct demonstrations, impacting demand for upgrades [39]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________. Commission File No. 000-31157 INNOVATIVE SOLUTIONS AND SUPPORT, INC. (Exact name of registrant as specified in its charter) Pennsylvania 23-2507402 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 3 ...

Innovative Solutions and Support, Inc. (NASDAQ:ISSC) Q4 2020 Results Conference Call December 10, 2020 10:00 AM ET Company Participants Geoffrey Hedrick - Chairman & CEO Shahram Askarpour - President Relland Winand - CFO Conference Call Participants David Campbell - Thompson, Davis & Company Operator Welcome to the Innovative Solutions and Support Fourth Quarter 2020 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, ther ...