What changed in this filing

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Item 1A. Risk Factors

2022-12-16 compared with 2021-12-22 · 8 added, 43 removed, 243 unchanged (17% of the section changed)

28 unchanged sentences

● changes in law, including changes to corporate tax laws in the United States and the availability of certain tax credits;

● volatility and weakness in capital markets;

● volatility and weakness in capital markets, including rising inflation and interest rates;

● the efficacy of our internal control over financial reporting.

7 unchanged sentences

In addition, the Company’s business is dependent upon maintaining its reputation and relationships with existing customers.

If the Company’s performance does not meet its customers’ expectations, the Company’s reputation and its relationships could be

damaged, which may have a material adverse impact on the Company’s business and statements of income, including reductions in sales.

If the Company’s performance does not meet its customers’ expectations, the Company’s reputation and its relationships could be damaged, which may have a material adverse impact on the Company’s business and statements of income, including reductions in sales.

In seeking new customers, the Company may have difficulty in displacing the products of incumbent competitors.

64 unchanged sentences

● the impact of recessions in economies outside the United States;

● variances and unexpected ch anges in local laws and regulations.

● variances and unexpected changes in local laws and regulations.

Currently, all of the Company’s international sales are denominated in U.S.

15 unchanged sentences

The ongoing COVID-19 pandemic may adversely affect IS&S.

The ongoing global outbreak of coronavirus, which was declared a pandemic by the World Health Organization on March 11, 2020 and a national emergency by the President of the United States on March 13, 2020, has caused and is continuing to cause business slowdowns and shutdowns and turmoil in the financial markets both in the United States and abroad.

IS&S is monitoring the impact of the COVID-19 pandemic on its business, including how it has impacted and will impact the Company’s employees, customers, suppliers and distribution channels.

The COVID-19 pandemic, as well as the quarantines and other governmental and non-governmental restrictions that have been imposed throughout the world in an effort to contain or mitigate the spread of the coronavirus, has created significant volatility, uncertainty and disruption which may adversely affect IS&S’ business and has caused and is continuing to cause significant market turbulence and disruption that may continue for some time even after business restrictions are lifted and the threat of the coronavirus diminishes.

For example, governmental authorities in several jurisdictions have recently implemented or reimplemented orders mandating the cessation of all business activity that is deemed non-essential and, although the Company’s business has to date been deemed essential in many affected markets, there is a risk that these shutdown orders will be extended or expanded or that similar shutdown orders will be implemented in other regions.

While the Company has not yet seen a material impact from the COVID-19 pandemic on its business, financial position, liquidity, or ability to service customers or maintain critical operations, the nature and magnitude of this unprecedented crisis’ ultimate impact on the Company will depend on numerous evolving factors, future developments and cascading effects of the coronavirus pandemic that the Company is not able to predict, including:

the duration and severity of the COVID-19 pandemic and the international actions and business restrictions that are being undertaken and implemented as a result of it;

governmental, business and other responses to the COVID-19 pandemic, including the promotion of “social distancing,” the issuance of shelter in place orders and restrictions on the Company’s operations, and the possibility that government officials may mandate that the Company provide products or services;

the possibility that the COVID-19 pandemic will directly or indirectly delay the issuance of required government approvals, including necessary certifications from the FAA;

potential disruptions in the Company’s supply chain;

the impact of the COVID-19 pandemic on the Company’s ability to execute its short term and long-term business strategies and initiatives;

the extent to which forced remote working arrangements reduce the Company’s ability to manage its business effectively;

the extent to which staffing shortages due to members of the Company’s workforce being quarantined or exposed to the coronavirus may be detrimental to the Company’s

and the possibility that federal or state governments (including government agencies such as the Treasury Department, the Small Business Administration or the SEC) could promulgate new statutes, regulations, guidance or relief measures, or rescind or modify existing statutes, regulations, guidance or relief measures, in a way that is detrimental to the Company or its business in light of the Company’s prior Paycheck Protection Program loan.

In addition, while the Company cannot predict the magnitude of the impact that the COVID-19 pandemic will have on its customers and suppliers or their financial conditions, any material effect on the Company’s customers or suppliers could adversely impact the Company.

For example, the Company’s customers or suppliers may themselves assert, or attempt to terminate various agreements and arrangements with us on the basis of, contractual force majeure provisions, and any termination of a significant commercial agreement may adversely harm our operations.

Earlier in the 2020 fiscal year, certain of the Company’s customers temporarily suspended product deliveries as a result of the COVID-19 pandemic, and while these deliveries subsequently resumed, there is a possibility that the COVID-19 pandemic will result in other suspensions, delays or order cancellations by the Company’s customers or suppliers.

Additionally, the COVID-19 pandemic and related travel restrictions and other containment efforts have had a significant impact on the travel industry, which may result in reduced demand for products in the general aviation and commercial air transport markets and therefore for the Company’s products and systems.

The impact of the COVID-19 pandemic may also exacerbate other risk factors described under this Part I, Item 1A of this Report, any of which could have a material effect on the Company.

For example, the risks associated with potential cybersecurity threats may be magnified given that many of the Company’s employees are currently working remotely using personal electronic devices and home internet connections.

The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict, as information is rapidly evolving with respect to the duration and severity of the COVID-19 pandemic.

At this point, the Company cannot reasonably estimate the duration and severity of the COVID-19 pandemic or its overall impact on the Company’s business.

The Company has not yet seen a material impact from the COVID-19 pandemic on its business, financial position, liquidity, or ability to service customers or maintain critical operations.

However, some parts of the world are continuing to see a rise in COVID-19 cases and hospitalizations, and it is possible that new, more virulent strains and variants of COVID-19 may emerge and lead governments and private sectors to re-institute quarantine and trade restrictions, which could adversely impact market conditions.

IS&S will continue to monitor the impact of the COVID-19 pandemic on its business, including how it has impacted and will impact the Company’s employees, customers, suppliers and distribution channels.

The Company could face liquidity shortages, weaker product demand from its customers, disruptions in its supply chain, and/or staffing shortages in its workforce in the future due to the direct and indirect effects of the COVID-19 pandemic.

If IS&S is unable to respond to rapid technological change, its products could become obsolete and its reputation could suffer.

49 unchanged sentences

The Company’s success depends on the efforts, abilities, and expertise of its senior management and other key personnel.

There can be no assurance IS&S will be able to retain such employees, and the loss of some could damage its ability to execute its business

There can be no assurance IS&S will be able to retain such employees, and the loss of some could damage its ability to execute its business strategy.

The Company intends to continue hiring key management, engineering, and sales and marketing personnel.

49 unchanged sentences

In addition, failure to timely comply with regulatory changes could cause payments to be withheld and/or an impact on future business.

The economic effects of the United Kingdom’s exit from the European Union may affect relationships with existing and future customers and could have an adverse impact on our business, financial condition, operating results and cash flows.

In June 2016, the United Kingdom (the “U.K.”) held a referendum in which voters approved an exit from the European Union (“E.U.”), commonly referred to as “Brexit.” The U.K.

formally exited the E.U.

on January 30, 2020, which exit was followed by a transitional period which ended on December 31, 2020.

On December 24, 2020, the E.U.

agreed to terms of a trade and cooperation agreement which sets out the terms of their future relationship (the “Trade Agreement”).

The Trade Agreement offers U.K.

businesses preferential access to each other’s markets, ensuring imported goods will be free of tariffs and quotas.

However, economic relations between the U.K.

will now be on more restricted terms than before and there remains uncertainty around the post-Brexit regulatory environment, as the provisions of the Trade Agreement do not cover the services sector.

As a result of Brexit, the global markets and currencies have been adversely impacted, including a decline in the value of the British pound as compared to the U.S.

A potential devaluation of the local currencies of our international customers relative to the U.S.

dollar may impair the purchasing power of our international customers and could cause international customers to decrease their volume of orders or cancel orders completely.

Brexit may also lead to legal uncertainty and potentially divergent national laws and regulations as the U.K.

determines which E.U.

laws to replace or replicate, and those laws and regulations may be cumbersome, difficult or costly in terms of compliance.

Any of these effects of Brexit, among others, could adversely affect our business, financial condition, operating results and cash flows.

Volatility and weakness in capital markets may adversely affect credit availability and related financing costs, which could adversely affect IS&S.

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors