What changed in this filing

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Item 1. Business

2024-01-12 compared with 2022-12-16 · 209 added, 196 removed, 178 unchanged (69% of the section changed)

Innovative Solutions and Support, Inc.

(the “Company,” “IS&S,” “we” or “us”) was incorporated in Pennsylvania on February 12, 1988.

The Company was incorporated in Pennsylvania on February 12, 1988.

The Company operates in one business segment as a systems integrator that designs, develops, manufactures, sells and services air data equipment, engine display systems, standby equipment, primary flight guidance, autothrottles and cockpit display systems for retrofit applications and original equipment manufacturers (“OEMs”).

The Company supplies integrated Flight Management Systems (“FMS”), Flat Panel Display Systems (“FPDS”), FPDS with Autothrottle, air data equipment, Integrated Standby Units (“ISU”), Standby ISU with Autothrottle Systems and advanced GPS receivers that enable reduced carbon footprint navigation.

The Company has continued to position itself as a system integrator, which capability provides the Company with the potential to generate more substantive orders over a broader product base.

This strategy, as both a manufacturer and integrator, is designed to leverage the latest technologies developed for the computer and telecommunications industries into advanced and cost-effective solutions for the general aviation, commercial air transport, United States Department of Defense (“DoD”)/governmental and foreign military markets.

This approach, combined with the Company’s industry experience, is designed to enable IS&S to develop high-quality products and systems, to reduce product time to market, and to achieve cost advantages over products offered by its competitors.

For several years the Company has been working with advances in technology to provide pilots with more information to enhance both the safety and efficiency of flying and has developed its COCKPIT/IP® Cockpit Information Portal (“CIP”) product line, that incorporates proprietary technology, lower cost relative to the competition, reduced power consumption, decreased weight, and increased functionality.

The Company has incorporated Electronic Flight Bag (“EFB”) functionality, such as charting and mapping systems, into its FPDS product line.

The Company has developed an FMS that combines the savings long associated with in-flight fuel optimization in enroute flight management combined with the precision of satellite-based navigation required to comply with the regulatory environments of both domestic and international markets.

The Company believes that the FMS, alongside its FPDS and CIP product lines, is well suited to address market demand driven by certain regulatory mandates, new technologies, and the high cost of maintaining aging and obsolete equipment on aircraft that may be in service for up to fifty years.

The Company supplies integrated flight management systems (“FMS”), flat panel display systems (“FPDS”), FPDS with autothrottle, air data equipment, integrated standby units, integrated standby units with autothrottle, advanced Global Positions System (“GPS”) receivers that enable reduced carbon footprint navigation, communication and navigation products and inertial reference units.

The Company has continued to position itself as a system integrator, which provides the Company with the capability and potential to generate more substantive orders over a broader product base.

Department of Defense (the “DoD”)/governmental and foreign military markets.

This approach, combined with the Company’s industry experience, is designed to enable the Company to develop high-quality products and systems, to reduce product time to market and to achieve cost advantages over products offered by its competitors.

The Company has been working with advances in technology to provide pilots with more information to enhance both the safety and efficiency of flying and has developed its COCKPIT/IP® Cockpit Information Portal product line, which incorporates proprietary technology, lower cost relative to the competition, reduced power consumption, decreased weight, and increased functionality.

The Company has incorporated electronic flight bag functionality, such as charting and mapping systems, into its FPDS product line.

The Company has developed an FMS that combines the savings long associated with in-flight fuel optimization in enroute flight management with the precision of satellite-based navigation required to comply with the regulatory environments of both domestic and international markets.

The Company believes that its FMS, alongside its FPDS and Cockpit Information Portal product lines, is well suited to address market demand driven by certain regulatory mandates, new technologies, and the high cost of maintaining aging and obsolete equipment on aircraft that may be in service for up to fifty-years.

The shift in the regulatory and technological environment is illustrated by the dramatic increase in the number of Space Based Augmentation System (“SBAS”) or Wide Area Augmentation System (“WAAS”) approach qualified airports, particularly as realized through Localizer Performance with Vertical guidance (“LPV”) navigation procedures.

Aircraft equipped with the Company’s FMS, FPDS and SBAS/WAAS/LPV enabled navigator, will be qualified to land at such airports and will comply with Federal Aviation Administration (“FAA”) mandates for Required Navigation Performance, and Automatic Dependent Surveillance-Broadcast navigation.

IS&S believes this will further increase the demand for the Company’s products.

The Company’s FMS/FPDS product line is designed for new production and retrofit applications into general aviation, commercial air transport and military transport aircraft.

In addition, the Company offers what we believe to be a state-of-the-art ISU, integrating the full functionality of the primary and navigation displays into a small backup-powered unit.

This ISU builds on the Company’s legacy air data computer to form a complete next-generation cockpit display and navigation upgrade offering to the commercial and military markets.

We believe this will further increase the demand for the Company’s products.

The Company’s FMS/FPDS product line is designed for new production and retrofit applications in general aviation, commercial air transport and military transport aircraft.

In addition, the Company offers what we believe to be a state-of-the-art integrated standby unit, integrating the full functionality of the primary and navigation displays into a small backup-powered unit.

This integrated standby unit builds on the Company’s legacy air data computer to form a complete next-generation cockpit display and navigation upgrade offering to the commercial and military markets.

The Company has developed and received certification from the FAA on its NextGen Flight Deck featuring its ThrustSense® Integrated PT6 Autothrottle (“ThrustSense® Autothrottle”) for retrofit in the Pilatus PC-12.

The NextGen Flight Deck features Primary Flight and Multi-Function Displays and ISUs, as well as an Integrated FMS and EFB System.

The NextGen Flight Deck features Primary Flight and Multi-Function Displays and integrated standby units, as well as an integrated FMS and electronic flight bag system.

The innovative avionics suite includes dual flight management systems, autothrottles, synthetic vision and enhanced vision.

The NextGen enhanced avionics suite is available for integration into other business aircraft with Non-FADEC and FADEC engines.

The NextGen Flight Deck enhanced avionics suite is available for integration into other business aircraft with full-authority digital engine control (“FADEC”) and non-FADEC engines.

The Company has developed its FAA-certified ThrustSense® Autothrottle for retrofit in the King Air, dual turbo prop PT6 powered aircraft.

The autothrottle is designed to automate the power management for speed and power control including go-around.

ThrustSense® also ensures aircraft envelope protection and engine protection during all phases of flight reducing pilot workload and increasing safety.

The ThrustSense® Autothrottle is designed to automate power management for speed and power control including go-around.

ThrustSense® Autothrottle also ensures aircraft envelope protection and engine protection during all phases of flight, thereby reducing pilot workload and increasing safety.

The Company has signed a multi-year agreement with Textron Aviation, Inc.

(“Textron”) to supply ThrustSense® on the King Air 360 and King Air 260.

ThrustSense® is also available for retrofit on King Airs through Textron service centers and third-party service centers.

The Company has also developed an FAA-certified safety mode feature for its King Air ThrustSense® Autothrottle, LifeGuard™, which provides critical Vmc a protection that proportionally reduces engine power to maintain directional control during an engine-out condition.

(“Textron”) to supply ThrustSense® Autothrottle on the King Air 360 and King Air 260.

ThrustSense® Autothrottle is also available for retrofit on King Air aircraft through Textron service centers and third-party service centers.

The Company has also developed an FAA-certified

safety mode feature for its King Air ThrustSense® Autothrottle, LifeGuard™, which provides critical Vmca protection that proportionally reduces engine power to maintain directional control during an engine-out condition.

We believe the ThrustSense® Autothrottle is innovative in that it is the first autothrottle developed for a turbo prop that allows a pilot to automatically control the power setting of the engine.

The autothrottle computes and controls appropriate power levels thereby reducing overall pilot workload.

The system computes thrust, holds selected speed/torque, and implements appropriate speed and engine limit protection.

When engaged by the pilot, the autothrottle system adjusts the throttles automatically to achieve and hold the selected airspeed guarded by a torque/temperature limit mode.

The autothrottle system takes full advantage of the integrated cockpit utilizing weight and balance information for optimal control settings and enabling safety functions like a turbulence control mode.

The ThrustSense® Autothrottle computes and controls appropriate power levels thereby reducing overall pilot workload.

The system computes thrust, holds selected speed/torque, and implements appropriate speed and engine limit protections.

When engaged by the pilot, the ThrustSense® Autothrottle system adjusts the throttles automatically to achieve and hold the selected airspeed while guarding the engines via a torque/temperature limit mode.

The autothrottle system takes full advantage of the integrated cockpit utilizing weight and balance information for optimal control settings and enables safety functions such as a turbulence control mode.

The Company sells to both the OEM and the retrofit markets.

Customers include various OEMs, commercial air transport carriers and corporate/general aviation companies, DoD and its commercial contractors, aircraft operators, aircraft modification centers, government agencies, and foreign militaries.

Occasionally, IS&S sells its products directly to DoD;

Customers include various OEMs, commercial air transport carriers and corporate/general aviation companies, the DoD and its commercial contractors, aircraft operators, aircraft modification centers, government agencies and foreign militaries.

Occasionally, the Company sells its products directly to the DoD;

however, the Company sells its products primarily to commercial customers for end use in DoD programs.

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Such changes may cause customers to curtail or delay their spending on both new and existing aircraft.

Factors that can impact general economic conditions and the level of spending by customers include, but are not limited to, the impact of the ongoing COVID-19 pandemic, general levels of consumer spending, increases in fuel and energy costs, conditions in the real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence, and other macroeconomic factors that affect spending behavior.

Furthermore, spending by government agencies may be reduced in the future if tax revenues decline.

Factors that can impact general economic conditions and the level of spending by customers include, but are not limited to, general levels of consumer spending, increases in fuel and energy costs, conditions in the real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence, inflation, public health crises and pandemics, including the COVID-19 pandemic, and other macroeconomic factors that affect spending behavior.

Furthermore, spending by government agencies may be reduced in the future.

If customers curtail or delay their spending or are forced to declare bankruptcy or liquidate their operations because of adverse economic conditions, the Company’s revenues and results of operations would be affected adversely.

For example, 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 (including as a result of the impact of any newer variants or strains of SARS-CoV-2) will result in other suspensions, delays or order cancellations by the Company’s customers or suppliers.

On the other hand, the Company believes that in adverse economic conditions, customers that may have otherwise elected to purchase newly manufactured aircraft may be interested instead in retrofitting existing aircraft as a cost-effective alternative, thereby creating a market opportunity for IS&S.

The ongoing COVID-19 pandemic is nevertheless a significant event, driver of market trends, and source of uncertainty that may ultimately have a direct or indirect material impact on the Company’s business, financial position, liquidity, or ability to service customers or maintain critical operations.

In direct response to the COVID-19 pandemic, the Company has taken specific actions to seek to ensure the safety of its employees, including temperature monitoring, frequent sanitization of workspaces, observance of social distancing protocols, and other increased safety measures.

A wide range of information is critical for proper and safe operation of aircraft.

With advances in technology, new types of information to assist pilots are becoming available for display in cockpits, such as satellite-based weather, ground terrain maps, and ADS-B navigation.

For example, 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 or similar pandemics will result in other suspensions, delays or order cancellations by the Company’s customers or suppliers.

On the other hand, we believe that in adverse economic conditions, customers that may have otherwise elected to purchase newly manufactured aircraft may be interested instead in retrofitting existing aircraft as a cost-effective alternative, thereby enhancing the retrofit market opportunity for the Company.

A wide range of information is critical for the proper and safe operation of aircraft.

With advances in technology, new types of information to assist pilots are becoming available for display in cockpits, such as satellite-based weather, ground terrain maps and Automatic Dependent Surveillance-Broadcast navigation.

The Company believes that aircraft cockpits will become more complete information centers, capable of delivering additional information that is either mandated by regulation or demanded by pilots to assist in the safe and efficient operation of aircraft.

The flight deck will continue to adapt technologies which are stepping-stones for complete autonomy.

The Company believes that the market will continue to embrace the initial phases of autonomous flight.

The flight deck will continue to incorporate technologies that are stepping-stones for complete autonomy.

We believe that the market will continue to embrace the initial phases of autonomous flight.

The Company classifies flight data into four general types:

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Aircraft heading and altitude information includes aircraft speed, altitude, and rates of ascent and descent.

Flight critical aircraft control information includes engine data, such as fuel and oil quantity, and other engine measurements.

Flight critical aircraft control data includes engine data, such as fuel and oil quantity, and other engine measurements.

Navigation data includes radio position, flight management, GPS and alternative source information (i.e., information not originating on the aircraft, including weather depiction maps, GPS navigation and surface terrain maps).

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Traditionally, flight data and other cockpit information were displayed on a series of separate analog mechanical instruments.

In the early 1980s, Cathode Ray Tubes (“CRT”) and digital displays using monochromatic Liquid Crystal Displays (“LCD”) began to replace some individual analog instruments.

Presently, the industry offers high resolution color flat panels using Active Matrix Liquid Crystal Displays (“AMLCD”) to replace traditional analog instruments, CRT or LCD displays.

IS&S expects that the ability to display more information in an efficient space and custom platform will become increasingly important if additional information, such as weather depiction maps, traffic information, surface terrain maps, datalink messaging, and surveillance displays, becomes mandated by regulation or demanded by pilots.

Accordingly, the Company believes flat panel displays, which can integrate and display a “suite” of information, will replace individual instrument CRTs and LCDs on legacy aircraft.

In the past, equipment data, such as engine and fuel-related information, were displayed on conventional analog mechanical instruments.

In the early 1980s, cathode ray tubes and digital displays using monochromatic Liquid Crystal Displays (“LCD”) began to replace some individual analog instruments.

Presently, the industry offers high resolution color flat panels using active matrix liquid crystal displays to replace traditional analog instruments, cathode ray tubes or monochromatic LCD displays.

We expect that the ability to display more information in an efficient space and custom platform will become increasingly important if additional information, such as weather depiction maps, traffic information, surface terrain maps, datalink messaging and surveillance displays, becomes mandated by regulation or demanded by pilots.

Accordingly, we believe flat panel displays, which can integrate and display a “suite” of information, will replace individual instrument cathode ray tubes and monochromatic LCDs on legacy aircraft.

In the past, equipment data, such as engine and fuel-related information, were displayed on analog mechanical instruments.

Engine and fuel instruments provide information on engine activity, including oil and hydraulic pressures and temperature.

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These new technologies and procedures, such as traffic avoidance, ground awareness, increased precision of navigation and vertical position, runway incursion prevention, and increased digital communication, will require innovation and intuitive methods to display situational awareness information for the pilots.

The Company believes that flat panel displays provide a strong solution to the growing need for innovation and new methods in this area.

The Company’s objective is to become a leading supplier and integrator of cockpit information, and believes that its industry experience and reputation, technology and products, and business strategy provide the basis to achieve this objective.

We believe that flat panel displays provide an attractive solution to the growing need for innovation and new methods in this area.

The Company’s objective is to become a leading supplier and integrator of cockpit information, and we believe that our industry experience and reputation, technology and products and business strategy provide the basis to achieve this objective.

Key elements of the Company’s strategy include:

● Continue to drive the market toward the performance, situational awareness and safety advantages of equipping the ThrustSense ® autothrottles on both aftermarket and OEM aircraft .

IS&S saw the lack of an available autothrottle system on turboprop aircrafts as an unmet need in the marketplace and has invested in the development of a sophisticated turboprop autothrottle.

We believe that ThrustSense ® , IS&S’s new turboprop autothrottle with patented technology, is highly effective, is less complex and less costly than other available products and offers very sophisticated sensing and multiple safety features that we believe even exceeds those of much more expensive jet autothrottle systems.

● Continue to drive the market toward the performance, situational awareness and safety advantages of equipping the ThrustSense® Autothrottle on both aftermarket and OEM aircraft .

The Company saw the lack of an available autothrottle system on turboprop aircraft as an unmet need in the marketplace and has invested in the development of a sophisticated turboprop autothrottle.

We believe that ThrustSense® Autothrottle, the Company’s turboprop autothrottle with patented technology, is highly effective, is less complex and less costly than other available products and offers sophisticated sensing and multiple safety features that even exceeds those of much more expensive jet autothrottle systems.

The Company received the first supplemental type certificate (“STC”) ever granted by the FAA for a turboprop autothrottle in June 2017.

IS&S intends to continue to capitalize on being the first to market and introduce the product to owners and operators of turboprop aircraft.

● Introduction of Autothrottle STC Installations :

IS&S supplemented the ThrustSense ® Autothrottle offering by seeking FAA approval to perform autothrottle installations.

The FAA approved IS&S to perform PC-12 and King Air STC installations in June 2022 as the date certified to perform installations.

IS&S can now go directly to an autothrottle customer location and perform the STC installation on site.

The Company intends to continue to capitalize on being the first to market an autothrottle to owners and operators of turboprop aircraft.

● Continuation of ThrustSense® Autothrottle STC Installations .

The Company supplemented the ThrustSense® Autothrottle offering by obtaining FAA approval to perform autothrottle installations.

In June 2022, the FAA approved and certified the Company to perform PC-12 and King Air STC installations.

The Company is now able to go directly to an autothrottle customer location and perform the STC installation on site.

● Focusing on retrofits.

Cockpit avionics upgrades for existing aircraft are of great interest in the present environment.

We believe the retrofit of an aircraft with the COCKPIT/IP ® FPDS, FMS, and ISU system components is cost effective compared to the acquisition of a new aircraft and can provide equivalent functionality to that of new aircraft.

We believe that retrofit of an aircraft with the COCKPIT/IP® FPDS, FMS and integrated standby unit system components is cost effective compared to the acquisition of a new aircraft and can provide equivalent functionality to that of new aircraft.

● Expand presence in the flat panel display market.

Due to recent demand from cargo operators, IS&S believes that many aircraft will be retrofitted with flat panel displays over the next several years.

Given the versatility, visual appeal, and lower cost of displaying a series of instruments and other flight relevant information on a single flat panel, the Company believes that flat panel displays will increasingly replace individual analog and digital instrument LCDs and CRTs.

The Company believes that the COCKPIT/IP ® has significant benefits over competitive flat panel displays, including lower cost, larger size, reduced weight, enhanced viewing angles, and a broader array of functions.

Due to recent demand from cargo operators, we believe that many aircraft will be retrofitted with flat panel displays over the next several years.

The Company believes that its COCKPIT/IP ® has significant benefits over competitive flat panel displays, including lower cost, larger size, reduced weight, enhanced viewing angles, and a broader array of functions.

The Company’s patented and proprietary Integrity Checking Processor and Zooming features provide increased situational awareness, reliability, performance and utility to the owner/operator.

Accordingly, the Company believes that these advantages will allow IS&S to generate significant revenues from the COCKPIT/IP ® product, and to increase market share.

Accordingly, we believe that these advantages will allow the Company to generate increased revenues from the COCKPIT/IP® product and increase our market share.

In addition, the Company believes that demand for new aircraft, FAA mandates and obsolescence issues on older aircraft will contribute to this growth.

● Continuing engineering and product development successes.

IS&S develops innovative products by combining its avionics, engineering, and design expertise with commercially available technologies, components, and products from non-aviation applications, including the personal computer and telecommunications industries.

● Continuing development of innovative products.

The Company develops innovative products by combining its avionics, engineering, and design expertise with commercially available technologies, components and products from non-aviation applications, including the personal computer and telecommunications industries.

The Company’s COCKPIT/IP® system components present examples of its ability to engineer products through the selective application of non-avionic technology.

In addition, as permitted by law, IS&S applies for and registers its patents and trademarks for the technology and products it develops in the United States and various countries around the world to protect its intellectual property.

In addition, as permitted by law, the Company applies for and registers its patents and trademarks for the technology and products it develops in the United States and various countries around the world to protect its intellectual property.

● Maintaining focus on air data markets.

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● Increasing sales to DoD, other government agencies, defense contractors, commercial air transport carriers and corporate/general aviation markets.

IS&S has extended its efforts to diversify sales to include all aviation end user markets, especially legacy military programs and commercial air transport aircraft.

The Company has extended its efforts to diversify sales to include all aviation end user markets, especially legacy military programs and commercial air transport aircraft.

In the commercial air transport market, the Company has addressed national carriers, regional carriers, and other fleet operators.

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● Expanding international presence.

IS&S plans to increase its international sales by adding sales and marketing personnel.

The Company plans to increase its international sales by adding sales and marketing personnel.

The Company believes that European and other international aircraft operators and aircraft modification centers will retrofit legacy in-service aircraft with large flat panel displays.

IS&S obtained approval from the European Union Aviation Safety Agency (“EASA”) for installing the FPDS in Europe for the B757/B767 aircraft and expects to obtain EASA approvals for other European aircraft types.

In addition, the King Air ThrustSense ® Autothrottle system is currently certified by most foreign civil aviation authorities;

including EASA, TCCA, UK-CAA, and CAAC

Current lines of products include:

In 2011, the Company obtained approval from the European Union Aviation Safety Agency (“EASA”) for installing its FPDS in Europe for the B757/B767 aircraft and anticipates obtaining EASA approvals for other European aircraft types.

In addition, the King Air ThrustSense® Autothrottle system is currently certified by most foreign civil aviation authorities, including the EASA, Transport Canada Civil Aviation, UK Civil Aviation Authority and Civil Aviation Administration of China.

● Acquisitions, investments, strategic partnerships or other ventures .

As a part of the Company’s growth strategy, we continuously evaluate acquisition opportunities and opportunities to make investments in complementary businesses, technologies, services or products, or to enter into strategic partnerships with parties who can provide access to those assets, additional product or services offerings, additional distribution or marketing synergies or additional industry expertise in order to enhance and expand the Company’s product offerings, technology and capabilities in its current products and in future products.

The new products and technology will enable the Company to sell to a new group of buyers and introduce them to our broader range of products.

The Company’s current product lines include:

Flat Panel Display Systems

Flat panel displays are AMLCD screens that can replicate the display of one or a suite of analog or digital displays on one screen.

Flat panel displays are active matrix liquid crystal display screens that can replicate the display of one or a suite of analog or digital displays on one screen.

Flat panel displays can replace existing displays in legacy aircraft.

AMLCDs are used also for security monitoring on-board aircraft and as tactical workstations on military aircraft.

The flat panel product line offers numerous advantages for presentation of engine performance data.

The Company’s FPDS can replace conventional analog and digital displays and can display additional information which is not commonly displayed in the cockpit with conventional analog and digital displays.

Active matrix liquid crystal display are used also for security monitoring on-board aircraft and as tactical workstations on military aircraft.

The FPDS product line also offers numerous advantages for the presentation of engine performance data.

The Company’s FPDS can replace conventional analog and digital displays and can display additional information that is not commonly displayed in the cockpit with conventional analog and digital displays.

The COCKPIT/IP® is capable of displaying nearly all types of air data, engine and fuel data, altitude, heading and navigational data, maintenance and aircraft health data and alternative source information.

As technology and information delivery systems develop further, additional information will be displayed in the cockpit, such as surface terrain maps and data link messaging.

IS&S designed the COCKPIT/IP® to be capable of displaying information from a variety of sources, including its Reduced Vertical Separation Minimum (“RVSM”) air data system, engine and fuel instrumentation, and third-party data and information products.

The Company designed the COCKPIT/IP® to be capable of displaying information from a variety of sources, including its Reduced Vertical Separation Minimum air data system, engine and fuel instrumentation and third-party data and information products.

From time to time, customers may order one or more FPDSs customized to their particular requirements.

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This revenue is reported as Engineering Development Contracts (“EDC”) on the consolidated statements of operations.

Engineering costs incurred in customizing the FPDSs are included in cost of sales.

Engineering costs incurred in customizing FPDSs are included in cost of sales.

Flight Management Systems

The IS&S NextGen Flight Management System is an easily installed navigation and performance computer that complements the IS&S Flat Panel Display System upgrade for commercial air transport aircraft.

The FMS interfaces with the IS&S, SBAS, and GPS to provide a GPS-based navigation solution.

The Company’s NextGen Flight Deck management system is an easily installed navigation and performance computer that complements the Company’s FPDS upgrade for commercial air transport aircraft.

The FMS interfaces with the Company’s SBAS GPS receiver to provide a GPS-based navigation solution.

The GPS receiver is located remotely depending on space availability.

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Each FMS/MCDU has an LCD display, keyboard, mode and function keys, line select keys and annunciator lights, and supports ethernet data loading.

The flight crew can manually or datalink waypoint flight plans, routes or user-defined waypoints on the IS&S FMS and modify and update these plans via the FMS/MCDU screen.

Once the flight plan data is entered, the MCDU computes the most economical flight profiles and provides steering commands for use by the aircraft control system to fly the airplane along the desired route.

The flight crew can manually or datalink waypoint flight plans, routes or user-defined waypoints on the Company’s FMS and modify and update these plans via the FMS/MCDU screen.

Once the flight plan data is entered, the MCDU computes the most efficient flight profiles and provides steering commands for use by the aircraft control system to fly the airplane along the desired route.

The FMS/MCDU package incorporates a robust navigation database capable of storing today’s global database, with ample growth for the future.

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The navigation data includes airways, jet routes, Standard Instrument Departure, Standard Terminal Arrival Route and Company-stored routes.

The FMS/MCDU is ARINC 739B compliant, which provides an interface option for other cockpit equipment such as SATCOM, ACARS, CMU, HUD, and a printer.

The interface to the IS&S FPDS is provided via ethernet.

The IS&S EFB is integrated with the FMS/MCDU and FPDS where the control selection of the EFB features and applications are handled via the FMS/MCDU.

The FMS/MCDU is ARINC 739B compliant, which provides an interface option for other cockpit equipment such as satellite communications, ACARS, Communications Management Unit, HUD and a printer.

The interface to the Company’s FPDS is provided via ethernet.

The Company’s electronic flight bag system is integrated with the FMS/MCDU and FPDS where the control selection of the electronic flight bag features and applications are handled via the FMS/MCDU.

The display is a five-inch LCD with VGA resolution.

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Integrated Standby Unit

The Company’s ISU incorporates the measurement and display of attitude, altitude, airspeed, and navigation data into a single standby/backup navigation instrument for military, commercial air transport and corporate/general aviation applications.

The ISU has an integral Inertial Measurement Unit that includes accelerometer, gyro, and magnetometer triads.

The unit also includes an integral air data measurement module for measurement of static and total pressure for display of altitude, airspeed, and mach number.

The ISU is a highly reliable and accurate standby navigation system that is based on IS&S’s merger of COCKPIT/IP ® display technology and RVSM air data products coupled with the modern technology in MEMS Gyros that have exceptional stability.

An IS&S proprietary algorithm provides for accurate computation of attitude, heading and air data parameters.

The unit includes a triaxial magnetometer that is designed to be tolerant to the local soft iron effects.

The Company’s integrated standby unit incorporates the measurement and display of attitude, altitude, airspeed, and navigation data into a single standby/backup navigation instrument for military, commercial air transport and corporate/general aviation applications.

The integrated standby unit has an integral Inertial Measurement Unit that includes accelerometer, gyro and magnetometer triads.

The integrated standby unit also includes an integral air data measurement module for measurement of static and total pressure for display of altitude, airspeed and mach number.

The Company’s integrated standby unit is a highly reliable and accurate standby navigation system that is based on the Company’s merger of COCKPIT/IP® display technology and Reduced Vertical Separation Minimum air data products, coupled with the modern technology in MEMS Gyros that have exceptional stability.

The Company’s proprietary algorithm provides for accurate computation of attitude, heading and air data parameters.

The integrated standby unit includes a triaxial magnetometer that is designed to be tolerant to the local soft iron effects.

The display uses a familiar Primary Flight Display format to reduce pilot workload.

Logistics and maintenance savings are realized due to increased reliability and a reduction in line-replaceable units.

The unit is equipped with built-in test and display of navigational aid and maintenance data.

The integrated standby unit is also equipped with built-in test and display of navigational aid and maintenance data.

Air Data Systems and Components

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These air data products utilize advanced sensors to gather air pressure data and customized algorithms to interpret data, thus allowing the system to calculate altitude more accurately.

IS&S sells individual components and partial and complete air data systems.

The Company sells individual components and partial and complete air data systems.

The components and systems include:

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Engine and Fuel Displays

IS&S develops, manufactures and markets engine and fuel displays.

The Company develops, manufactures and markets engine and fuel displays.

These solid-state multifunction displays convey information with respect to fuel and oil levels and engine activity, such as oil and hydraulic pressure and temperature.

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Engine and fuel displays tend to be replaced more frequently than other displays and have been slow to incorporate new technology since their introduction because of their low cost, standard design and universal use.

IS&S believes that its air data engine and fuel displays are extremely reliable, have been designed to be programmable, and are easily adaptable without major modification to most modern aircraft.

We believe that our air data engine and fuel displays are extremely reliable, designed to be programmable and are easily adaptable without major modification to most modern aircraft.

These products have been installed on B727, B737, C-130H, DC-9, DC-10, P-3, F-16 and A-10 aircraft.

Integrated Global Navigation System

The Company’s Integrated Global Navigation System product is an alternative for adding GPS navigation capability to legacy aircraft through the OEM FMS without the high cost of upgrading the current FMS.

This product includes RNP and RNAV approaches via the certified IS&S Beta 3 GPS and leverages components of the Company’s FPDS to provide annunciation to the pilot during GPS procedures.

Autothrottle – ThrustSense®

The IS&S Autothrottle, ThrustSense®, is a full regime autothrottle, from takeoff to landing phases of flight including go around.

ThrustSense® combines full-authority digital engine control (“FADEC”) functionality with low and high-speed protection for the Pilatus PC-12 and Beechcraft King Air series aircraft.

IS&S believes ThrustSense® improves safety and performance for Pratt and Whitney PT6-powered single and multi-engine aircraft.

In the case of multi-engine aircraft, such as the Beechcraft King Air, ThrustSense® provides Vmc a protection during an engine out condition.

The system is light weight, installs with minimal downtime and provides the user with high value for performance.

IS&S believes ThrustSense® can attain fuel savings of 3% and when flying constant angle-of-attack the fuel savings can be as much as 10%.

The Company in April 2019 received certification from the FAA for, its ThrustSense® Autothrottle for retrofit in the King Air, dual turbo prop PT6 powered aircraft.

The Company has signed a multi-year agreement with Textron to supply ThrustSense® on their new production aircraft, the King Air 360 and King Air 260.

ThrustSense® is also available for retrofit on King Airs through Textron service centers and third-party service centers.

The IS&S ThrustSense® Autothrottle is designed to ensure stabilized approaches by controlling speeds during descent.

During high pilot workload, the autothrottle is designed to prevent the airplane from becoming dangerously slow or fast and protects against overtorque and overtemp, thereby enhancing the safety and capability of your aircraft.

Control of the autothrottle is housed in an easy-to-install ISU that provides standby functionality on a high-resolution LCD display.

The Company’s Integrated Global Navigation System product is an alternative for adding GPS navigation capability to legacy aircraft through an OEM FMS without incurring the high cost of upgrading the current FMS.

This product includes required navigation performance and RNAV approaches via the Company’s certified Beta 3 GPS and leverages components of the Company’s FPDS to provide annunciation to the pilot during GPS procedures.

ThrustSense® Autothrottle

The Company’s ThrustSense® Autothrottle is a full regime autothrottle that can operate from takeoff to landing phases of flight including go around.

ThrustSense® Autothrottle combines FADEC functionality with low and high-speed protection for the Pilatus PC-12 and Beechcraft King Air series aircraft.

We believe ThrustSense® Autothrottle improves safety and performance for Pratt and Whitney PT6 powered single and multi-engine aircraft.

In the case of multi-engine aircraft, such as the Beechcraft King Air, ThrustSense® Autothrottle provides Vmca protection during an engine out condition.

The system is lightweight, installs with minimal downtime and provides the user with high value for performance.

We believe ThrustSense® Autothrottle can attain fuel savings of 3%, and when flying constant angle-of-attack, the fuel savings can be as much as 10%.

In April 2019, the Company received certification from the FAA for its ThrustSense® Autothrottle for retrofit in the King Air dual turboprop PT6 powered aircraft.

The Company has signed a multi-year agreement with Textron to supply ThrustSense® Autothrottle on their new production aircraft, the King Air 360 and King Air 260.

The ThrustSense® Autothrottle is also available for retrofit on King Airs through Textron service centers and third-party service centers.

The ThrustSense® Autothrottle is designed to ensure stabilized approaches by controlling speeds during descent.

During high pilot workload, the ThrustSense® Autothrottle is designed to prevent the airplane from becoming dangerously slow or fast and protects against overtorque and overtempt conditions, thereby enhancing the safety and capability of the aircraft.

Control of the ThrustSense® Autothrottle is housed in an easy-to-install integrated standby unit that provides standby functionality on a high-resolution LCD display.

The ThrustSense® Autothrottle is designed to avoid structural modifications to the existing throttle quadrant.

ThrustSense® has MEL Relief and On Condition Maintenance.

IS&S believes ThrustSense® can be adapted to virtually all PT6 powered aircrafts with the IS&S ISU.

The ISU executes software to control the autothrottle actuator.

In addition the ISU calculates, processes and displays altitude, attitude, airspeed, slip/skid, and navigation display information, which IS&S believes is presented in a logical and concise single instrument display.

It features a high- resolution LCD display with full LED backlighting, thereby improving reliability and full sunlight readability to the pilot, and fully anti-aliased graphics.

IS&S believes the autothrottle retrofit and standby are easily installed, and typical installation can take less than a week with minimum modifications to the existing flight deck.

ThrustSense® Autothrottle has Minimum Equipment List Relief and on-condition maintenance.

We believe the ThrustSense® Autothrottle can be adapted to virtually all PT6 powered aircraft by installing the Company’s integrated standby unit.

The integrated standby unit executes software to control the autothrottle actuator.

In addition, the Company’s integrated standby unit calculates, processes and displays altitude, attitude, airspeed, slip/skid, and navigation display information, which we believe is presented in a logical and concise single instrument display.

It features a high- resolution LCD display with full LED backlighting, thereby improving reliability and providing full sunlight readability to the pilot and fully anti-aliased graphics.

We believe the autothrottle retrofit and standby are easily installed, and typical installation can take less than a week with minimum modifications to the existing flight deck.

Other potential benefits of the ThrustSense® Autothrottle include:

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● FADEC-like engine protection;

● does not require replacement of the existing throttle quadrant (major cockpit modification) due to the patented compact and safe actuation mechanism;

● No required replacement of the existing throttle quadrant (major cockpit modification) due to the patented compact and safe actuation mechanism;

● broader applications for retrofit in FADEC or non-FADEC turbofan and turboprop aircraft.

Utilities Management System

IS&S provides the Utilities Management System (“UMS”) for the Pilatus PC-24 which has been certified and delivered.

The IS&S UMS integrates a wide range of aircraft functions, which are commonly supported by multiple individual controllers.

The UMS-24 monitors aircraft sensors and aircraft control systems as required to achieve system functionality.

The Company provides its utilities management system for the Pilatus PC-24 aircraft.

The Company’s utilities management system integrates a wide range of aircraft functions that are commonly supported by multiple individual controllers.

The Company’s utilities management system for the Pilatus PC-24 monitors aircraft sensors and aircraft control systems as required to achieve system functionality.

This open architecture system allows Pilatus to design and/or refine control and monitoring algorithms in-house.

IS&S believes there is interest in its UMS from other aircraft manufacturers as well.

The UMS is an innovative design that controls 20 plus aircraft systems such as navigation, auto-flight, landing gear, surface positions, fire protection, ice/rain protection, electrical loads, lighting, environmental conditions, cabin pressurization, and oxygen systems based on OEM custom configuration.

The UMS is a Data Concentrator and Processing Unit (“DCPU”) that allows manufacturers to configure and program specific applications on a ARINC 653 operating system in an open architecture platform.

The UMS acts as the aircraft central maintenance computer allowing for a maximum of six DCPUs to be included in the communication ring.

The system provides a significant power and weight saving over the use of federated boxes and utilizes the latest IS&S technological advancements in avionics circuit design.

The Company’s customers include the United States government (including DoD, the Department of Interior and the Department of Homeland Security), Air Transport Services Group Inc.

We believe there is interest in the Company’s utilities management system from other aircraft manufacturers as well.

The Company’s utilities management system is an innovative design that controls more than 20 aircraft systems such as navigation, auto-flight, landing gear, surface positions, fire protection, ice/rain protection, electrical loads, lighting, environmental conditions, cabin pressurization and oxygen systems based on OEM custom configuration.

The Company’s utilities management system is a Data Concentrator and Processing Unit that allows manufacturers to configure and program specific applications on a ARINC 653 operating system in an open architecture platform.

The Company’s utilities management system acts as the aircraft central maintenance computer allowing for a maximum of six Data Concentrator and Processing Units to be included in the communication ring.

The system provides a significant power and weight savings over the use of federated boxes and utilizes the Company’s latest technological advancements in avionics circuit design.

Communications and Navigation, Inertial Reference Products

In June 2023, the Company entered into an Asset Purchase and License Agreement (the “Honeywell Agreement”) with Honeywell International, Inc.

(“Honeywell”) pursuant to which Honeywell sold, assigned or licensed certain assets related to its inertial, communication and navigation product lines, including a sale of certain inventory, equipment and customer-related documents, an assignment of certain contracts and a grant of exclusive and non-exclusive licenses to use certain Honeywell intellectual property related to its inertial, communication and navigation product lines to repair, overhaul, manufacture sell, import, export and distribute certain products to the Company for cash consideration of $35.9 million (the “Transaction”).

The exclusive licensing of these product lines from Honeywell is a unique opportunity for the Company that enhances its current offerings in the air transport, military and business aviation markets.

In addition, there are potential cost synergies from better utilization of the Company’s skilled engineering team and its existing operational capacity.

The Company believes the Honeywell Agreement will help to accelerate the Company’s growth and enhance its global reputation for delivering some of the industry’s best price-for-performance value propositions.

The Company’s customers include the U.S.

government (including the DoD, the Department of Interior and the Department of Homeland Security), Air Transport Services Group Inc.

(“ATSG”), Amazon.com, Inc., American Airlines, Inc.

(“AAL”), Boeing, Deutsche Post DHL Group (“DHL”), FedEx Corporation (“FedEx”), Icelandair, L3Harris Technologies, Inc., Lockheed Martin Corporation, Pilatus, Sierra Nevada Corporation (“Sierra Nevada”), Textron, and the Department of National Defense (Canada), among others.

(“AAL”), Boeing, Deutsche Post DHL Group, FedEx Corporation (“FedEx”), Icelandair, L3Harris Technologies, Inc.

(“L3 Harris Technologies”), Lockheed Martin Corporation (“Lockheed Martin”), Pilatus, Sierra Nevada Corporation, Textron, and the Department of National Defense (Canada), among others.

The Company’s revenue is concentrated with a limited number of customers.

In fiscal year 2023, the three largest customers, Pilatus, ATSG and Textron accounted for 23%, 12% and 10% of total revenue, respectively.

In fiscal year 2022, the three largest customers, Pilatus, ATSG and Textron accounted for 22%, 11% and 11% of total revenue, respectively.

In fiscal year 2021, the two largest customers, Pilatus and Textron accounted for 20% and 17% of total revenue, respectively.

In fiscal year 2020, the three largest customers, Pilatus, Dayton T.

Brown, Inc., and Kalitta Air accounted for 33%, 12% and 10% of total revenue, respectively.

Retrofit Market

Historically, most of the Company’s sales have come from the retrofit market, which IS&S has pursued because of its continued growth in response to the need to support the world’s aging fleet of aircraft.

The design and airframe structure of many types of older aircraft generally exceeds the technology and technical capabilities of the original cockpit instruments and avionics.

The Company has developed products that enable owners and operators to upgrade their aircraft by retrofitting them with IS&S products at a competitive cost and with equipment that provides cockpit displays with capabilities and technology equivalent to new aircraft.

IS&S expects its main customers in the retrofit market will continue to be:

● the DoD and defense contractors,

● aircraft operators, and

● aircraft modification centers.

Historically, most of the Company’s sales have come from the retrofit market, which the Company has pursued because of the growing need to support the world’s aging fleet of aircraft.

The design and airframe structure of many types of older aircraft generally exceed the technology and technical capabilities of the original cockpit instruments and avionics.

The Company has developed products that enable owners and operators to upgrade their aircraft by retrofitting them with the Company’s products at a competitive cost and with equipment that provides cockpit displays with capabilities and technology equivalent to newer aircraft.

We expect our main customers in the retrofit market will continue to be the DoD and defense contractors, aircraft operators and aircraft modification centers.

Department of Defense and Defense Contractors.

The Company sells its products directly to the DoD and to domestic and international defense contractors for end use on military aircraft retrofit programs.

The Company sells its products directly to the DoD and to domestic and international defense contractors for end use in military aircraft retrofit programs.

DoD programs generally take one of two forms:

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Each government agency or general contractor retains the right to terminate a contract at any time at its convenience.

Upon such alteration or termination, IS&S is entitled typically to be compensated for already delivered items and reimbursement for allowable costs incurred.

Upon such alteration or termination, the Company is entitled typically to be compensated for already delivered items and reimbursement for allowable costs incurred.

Aircraft Operators.

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The Company’s commercial fleet customers include or have included, among others, AAL, ATSG, FedEx and Icelandair.

IS&S sells these customers a range of products from FPDS to air data systems.

The Company sells these customers a range of products from FPDS to air data systems.

Aircraft Modification Centers.

Aircraft modification centers, which repair and retrofit private aircraft, represent the primary retrofit market for private and corporate jets.

IS&S has established relationships with a several aircraft modification centers throughout the United States, which act as distribution outlets and installation centers for the Company’s products.

The Company has established relationships with a several aircraft modification centers throughout the United States which act as distribution outlets and installation centers for the Company’s products.

Original Equipment Manufacturers

IS&S has signed a multi-year agreement with Textron to supply ThrustSense® on their new production aircraft, the King Air 360 and King Air 260 as described above in “Products-Autothrottle – ThrustSense®”.

The Company has developed and manufactures the UMS for Pilatus’ PC-24 aircraft under a multi-year production contract as described above under “Products-Utilities Management System”.

The Company has signed a multi-year agreement with Textron to supply ThrustSense® Autothrottle on their new production aircraft, the King Air 360 and King Air 260, as described above in “Products - ThrustSense® Autothrottle”.

The Company has developed and manufactures the utilities management system for the Pilatus’ PC-24 aircraft under a multi-year production contract as described above under “Products - Utilities Management System”.

The Company also markets its products to other OEMs including, among others, Boeing and Lockheed Martin.

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Engineering Development

The Company invests a significant percentage of its sales on engineering development, both Research & Development (“R&D”) and EDC.

The Company invests a significant percentage of its sales in engineering development, which includes both research & development (“R&D”) and EDC.

At September 30, 2023, approximately 26% of the Company’s employees were engineers engaged in various engineering development projects.

Total engineering development expense comprises both internally funded R&D and product development and design charges related to specific customer contracts.

Total engineering development expense comprises both internally funded R&D and product development and design changes related to specific customer contracts.

Engineering development expense consists primarily of payroll-related expenses of employees engaged in EDC projects, engineering related product materials and equipment and subcontracting costs.

R&D charges incurred for product design, product enhancements, and future product development are expensed as incurred.

R&D charges incurred for product design, product enhancements and future product development are expensed as R&D.

Product development and design charges related to specific customer contracts are charged to cost of sales-EDC based on the method of contract accounting (either recognized over time or at a point in time) applicable to such contracts.

Sales and Marketing

IS&S focuses its sales efforts on passenger and cargo carrying aircraft operators, general aviation owner/operators, MRO/dealer networks, distributors, avionics integrators, aircraft modification centers, the DoD, DoD contractors, and OEMs.

The Company focuses its sales efforts on passenger and cargo carrying aircraft operators, general aviation owner/operators, maintenance, repair and overhaul (“MRO”) dealer networks, distributors, avionics integrators, aircraft modification centers, the DoD, DoD contractors and OEMs.

Periodically, the Company evaluates its sales and marketing efforts with respect to these focus areas and, where appropriate, makes use of third-party sales representatives who receive compensation through commissions based on performance.

As of September 30, 2022, we have twelve representatives worldwide that are actively selling IS&S products.

We are continuing to expand our maintenance, repair and overhaul (“MRO”) dealer network to address worldwide markets for Boeing 737, 757 and 767, Pilatus PC-12’s, Beechcraft King Air models and other aircraft types.

We have established a dealer network for ThrustSense®, and we are in the process of exploring adding more MRO dealerships in the United States and internationally.

Our marketing efforts have focused on applicable markets establishing and maintaining key customer rapport using email campaigns, key market influencers, advertisements, trade shows, web casts, direct mailers, digital and social media.

Our Autothrottle offering on the Pilatus PC-12 and King Air have been favorably featured in multiple articles in major publications over the past several years.

As of September 30, 2023, we had thirteen third-party sales representatives worldwide actively selling the Company’s products.

We are continuing to expand our MRO dealer network to address worldwide markets for Boeing 737, 757 and 767, Pilatus PC-12, Beechcraft King Air models and other aircraft types.

We have established a dealer network for ThrustSense® Autothrottle, and we are exploring adding more MRO dealers in the United States and internationally.

Our marketing efforts have focused on applicable markets to establish and maintain customer relationships using email campaigns, key market influencers, advertisements, trade shows, web casts, direct mailers and digital and social media.

Our ThrustSense® Autothrottle offering on the Pilatus PC-12 and King Air have been favorably featured in multiple articles in major publications over the past several years.

The Company believes its ability to provide prompt and effective repair and upgrade service is critical to its marketing efforts.

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The Company may lend spare units to customers when it is repairing or overhauling their equipment.

IS&S provides customers with a standard two-year warranty on new products.

The Company offers customers extended warranties of varying lengths beyond the two years for additional fees.

The Company provides customers with a standard two-year warranty on new products and offers customers extended warranties of varying lengths beyond the two years for additional fees.

The Company believes its ability to provide an installation service is critical to its marketing efforts.

The Company’s Repair Station provides a mobile STC Installation Team to install the PC-12 and King Air ThrustSense® Autothrottle systems beginning in June 2022.

The Company’s repair station, which began operating in June 2022, provides a mobile STC Installation Team to install the PC-12 and King Air ThrustSense® Autothrottle systems.

Most of the Company’s sales, personnel and assets are located within the United States.

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FAA regulations govern the manufacture and installation of the Company’s products in aircraft owned and operated in the United States.

Both the IS&S manufacturing facility and the IS&S repair station are FAA-certified.

The most significant product and installation regulations are Technical Standard Orders (“TSOs”), Parts Manufacturer Approvals (“PMA”), and STCs, which establish the minimum operational performance standards.

For example, in April 2019, the FAA issued its TSO authorization and STC for the Company’s ThrustSense® Autothrottle for retrofit in the King Air dual prop PT6 powered aircraft.

In February 2019, the FAA issued its TSO authorization and STC for the Company’s B767 Integrated Standby Unit to be used on B767 aircraft in the United States.

Generally, sales of IS&S products to European or other non-U.S.

Both the Company’s manufacturing facility and repair station are FAA-certified.

The most significant product and installation regulations are Technical Standard Orders, Parts Manufacturer Approvals and STCs, which establish the minimum operational performance standards.

For example, in April 2019, the FAA issued its Technical Standard Orders authorization and STC for the Company’s ThrustSense® Autothrottle for retrofit in the King Air dual prop PT6 powered aircraft.

In February 2019, the FAA issued its Technical Standard Orders authorization and STC for the Company’s B767 Integrated Standby Unit to be used on B767 aircraft in the United States.

Generally, sales of the Company’s products to European or other non-U.S.

owners of aircraft require approval of EASA, or other relevant governmental agencies.

EASA certification requirements for the manufacture and installation of the Company’s products in European owned aircraft mirror FAA regulations, and its process for European certification is similar to that of the FAA.

For example, in September 2021, EASA and the Transport Canada Civil Aviation issued STCs for the Company’s ThrustSense(R) Full Regime Autothrottle for King Air series aircraft in the European Union and Canada, respectively.

In addition to product-related regulations, IS&S is subject to U.S.

For example, in September 2021, EASA and the Transport Canada Civil Aviation issued STCs for the Company’s ThrustSense® Autothrottle for King Air series aircraft in the European Union and Canada, respectively.

In addition to product-related regulations, the Company is subject to U.S.

government procurement regulations with respect to the sale of the Company’s products to government entities or government contractors.

The government agency or general contractor retains the right to terminate a contract at any time at its convenience.

Upon such alteration or termination, IS&S is generally entitled to an equitable adjustment to the contract price, so that the Company receives the purchase price for products or services already delivered, reimbursement for allowable costs incurred and for termination related costs.

Upon such alteration or termination, the Company is generally entitled to an equitable adjustment to the contract price so that the Company receives the purchase price for products or services already delivered, reimbursement for allowable costs incurred and termination related costs.

The Company’s business is also impacted by various other laws and regulations, including, but not limited to, local, state, federal, and international tax codes, import and export controls and customs laws, employment and employment-related laws, environmental laws, intellectual property laws, and consumer protection statutes.

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Although there are a limited number of suppliers of particular components, management believes other suppliers could provide similar components on comparable terms.

When appropriate, IS&S enters into long-term supply agreements and uses its relationships with long-term suppliers to improve product quality and availability, and to reduce delivery times and product costs.

In addition, the Company identifies alternative suppliers for important component parts.

When appropriate, the Company enters into long-term supply agreements and uses its relationships with long-term suppliers to improve product quality and availability and reduce delivery times and product costs.

In addition, the Company identifies alternative

suppliers for important component parts.

Generally, the introduction of component parts from new suppliers into existing products requires FAA certification of the entire finished product if the newly sourced component varies significantly from the original drawings and specifications.

IS&S has not experienced significant delays in delivery of products caused by the inability to obtain either component parts or FAA approval of products incorporating new component parts.

The Company has not experienced significant delays in delivery of products caused by the inability to obtain either component parts or FAA approval of products incorporating new component parts.

Quality Assurance

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These standards represent an international consensus on effective management practices with the goal of ensuring that a company can deliver its products and related services consistently in a manner that meets or exceeds customer quality requirements.

IS&S’s certification to these standards allows the Company to represent to customers that it maintains high-quality industry standards in the education of its employees and in the design and manufacture of its products.

The Company’s certification to these standards allows the Company to represent to customers that it maintains high-quality industry standards in the education of its employees and in the design and manufacture of its products.

In addition, the Company’s products undergo extensive and documented quality control testing prior to being delivered to customers.

The market for the Company’s products is highly competitive.

Competitors vary in size and resources, and substantially all the Company’s competitors are much larger than IS&S and have substantially greater resources.

With respect to air data systems and related products, the Company’s principal competitors include Honeywell International Inc., Collins Aerospace, Thales Defense & Security, Inc., and Garmin Ltd.

With respect to flat panel displays, principal competitors currently include Honeywell International Inc., Collins Aerospace, L3Harris Technologies, Inc., Garmin Ltd.

Competitors vary in size and resources, and substantially all the Company’s competitors are much larger than the Company and have substantially greater resources.

With respect to air data systems and related products, the Company’s principal competitors include Honeywell, Collins Aerospace, Thales Defense & Security, Inc.

and Garmin Ltd.

With respect to flat panel displays, principal competitors currently include Honeywell, Collins Aerospace, L3Harris Technologies, Garmin Ltd.

and GE Aviation Systems.

However, as the flat panel display industry evolves and the demand for flat panel displays increases, IS&S may face future competition in this area from other suppliers.

However, as the flat panel display industry evolves and the demand for flat panel displays increases, the Company may face future competition in this area from other suppliers.

The Company believes that the principal competitive factors in its markets are cost, development cycle time, responsiveness to customer preferences, product quality, technology and reliability.

IS&S believes that its significant and long-standing customer relationships reflect the Company’s ability to compete favorably with respect to these factors.

We believe that its our significant and long-standing customer relationships reflect the Company’s ability to compete favorably with respect to these factors.

Intellectual Property and Proprietary Rights

IS&S relies on patents to protect its proprietary technology.

The Company relies on patents to protect its proprietary technology.

As of September 30, 2023, the Company holds 32 U.S.

patents and has 3 U.S.

patents and has three U.S.

patent applications pending relating to its technology.

In addition, IS&S holds 40 international patents and has 2 international patent applications pending.

Certain of these patents and patent applications cover technology relating to air data measurement systems and others cover technology relating to flat panel display systems and other aspects of the COCKPIT/IP® solution.

While IS&S believes these patents have significant value in protecting its technology, it believes that the innovative skill, technical expertise, and know-how of the Company’s personnel in applying the technology reflected in its patents would be difficult, costly, and time consuming to reproduce.

While IS&S is not aware of any pending lawsuits against the Company alleging patent infringement or the violation of other intellectual property rights, it cannot be certain such infringement claims will not be asserted against the Company in the future.

In addition, as of September 30, 2023, the Company holds 85 international patents and has six international patent applications pending.

Certain of these patents and patent applications cover technology relating to air data measurement systems, and others cover technology relating to flat panel display systems and other aspects of the COCKPIT/IP® product.

While we believe these patents have significant value in protecting our technology, we believe that the innovative skill, technical expertise and know-how of the Company’s personnel in applying the technology reflected in its patents would be difficult, costly and time consuming for third parties to reproduce.

While the Company is not aware of any pending lawsuits against the Company alleging patent infringement or the violation of other intellectual property rights, it cannot be certain such infringement claims will not be asserted against the Company in the future.

Human Capital

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We are fortunate to have talented and outstanding employees, and we are proud of our diverse workforce and the broad range of skills and experiences that our people have.

We work hard to cultivate a dynamic and enjoyable work environment full of opportunities to learn new skills, stressing teamwork and encouraging our employees to brainstorm, develop and refine new ideas to help us innovate and achieve our goals, and we maintain equity compensation plans and benefits packages designed to retain talented people who share our goals and interests.

We also offer competitive salaries and generous benefits, including vacation, a 401(k) savings and retirement plan, health, dental, life, long-term disability insurance, an Employee Assistance Program (“EAP”), and health and dependent Flexible Spending Account programs.

We work hard to cultivate a dynamic and enjoyable work environment that provides opportunities to learn new skills.

We emphasize teamwork and encourage our employees to brainstorm and develop and refine new ideas to help us innovate and achieve our goals.

We maintain equity compensation plans and benefits packages designed to retain talented people who share our goals and interests.

We also offer competitive salaries and generous benefits, including vacation, a 401(k) savings and retirement plan, health, dental, life, long-term disability insurance, an Employee Assistance Program and health and dependent Flexible Spending Account programs.

Additionally, we regularly review and reevaluate our recruitment strategies to ensure our practices align with our mission, purpose, and values.

Nevertheless, competition for such qualified personnel is intense, and the Company may not be able to attract, train and retain highly qualified personnel in the future.

We are an equal opportunity employer and a Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) federal contractor.

All qualified applicants receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability status, protected veteran status, or any other characteristic protected by law.

We are an equal opportunity employer and a Vietnam Era Veterans’ Readjustment Assistance Act federal contractor.

All qualified applicants receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity,

national origin, disability status, protected veteran status, or any other characteristic protected by law.

We also comply with all applicable state and local laws governing nondiscrimination in employment and have a Code of Business Conduct and Ethics applicable to each employee, director, officer, contractor and consultant of the Company designed to ensure that we maintain the highest standards of business conduct in every aspect of our business and operations.

Safety is a vital aspect to the success of our people and business.

We are proud of our employees’ collective commitment to secure and maintain safe work practices, in particular during the COVID-19 pandemic.

Protecting the health and safety of our employees and their families has been a priority throughout the pandemic, and we have implemented temperature monitoring, frequent sanitization of workspaces, observance of social distancing protocols, and other increased safety measures in response to the pandemic.

As of September 30, 2022, IS&S had 81 employees (79 of whom were full-time employees).

As of September 30, 2023, the Company had 98 employees (95 of whom were full-time employees).

None of our employees are currently represented by a labor union, nor are they subject to a collective bargaining agreement.

We consider relations with our employees to be good.

We consider our relationship with our employees to be good.

Executive Officers of the Registrant

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Director and Chief Executive Officer

Michael Linacre

Chief Financial Officer

Shahram Askarpour has been the CEO since April of 2022.

Askarpour joined the Company as a Director of Engineering in 2003, was promoted to Vice President of Engineering in 2005, and was promoted to President on April 2, 2012.

Interim Chief Financial Officer

(1) On November 8, 2023, Michael Linacre, Chief Financial Officer of Innovative Solutions and Support, Inc., notified the Company of his resignation from all of his positions with the Company, effective immediately.

Winand was appointed as interim Chief Financial Officer of the Company on November 8, 2023.

Shahram Askarpour has been the Chief Executive Officer of the Company since April 2022.

Askarpour joined the Company as a Director of Engineering in 2003, was promoted to Vice President of Engineering in 2005, and was promoted to President in 2012.

Askarpour has more than 30 years of aerospace industry experience in managerial and technical positions.

Prior to joining IS&S, he was employed by Smiths Aerospace (a division of Smiths Group PLC), Instrumentation Technology and Marconi Avionics.

He holds a number of key patents in the aviation field.

Prior to joining the Company, he was employed by Smiths Aerospace (a division of Smiths Group PLC), Instrumentation Technology and Marconi Avionics.

He holds several key patents in the aviation field.

Askarpour received his engineering education in the United Kingdom and received an undergraduate degree in Electrical Engineering from Middlesex University, a post graduate Certificate of Advanced Study in Systems Engineering and a PhD in Automatic Control from Brunel University.

He was awarded the title of Associate Research Fellow for three consecutive years by Brunel University, and has published numerous papers in leading international peer reviewed journals.

In addition, he has completed management courses at Carnegie Mellon University and finance courses at the Wharton Business School.

Michael Linacre has been the CFO since July of 2022.

Prior to joining IS&S in 2022, Mr.

Linacre, worked as a public accountant and auditor at KPMG LLP.

He also held finance leadership positions at Genpak, LLC, a food service packaging company, and SI Group, Inc., a chemical manufacturing company, before serving as the Chief Financial Officer of Sysco Albany, LLC, a subsidiary of Sysco Corporation, a public multinational seller, marketer, and distributor of food products, Mr.

Linacre is a licensed CPA and a member of the American Institute of CPAs and the New York State Society of CPAs.

He received his Bachelor’s degree in Accounting from the State University of New York at Albany.

The SEC maintains a website that contains annual, quarterly, and current reports, proxy statements and information statements, and other information about issuers, including IS&S, that file electronically with the SEC.

In addition, he has completed management courses at Carnegie Mellon University and finance courses at the Wharton School of Business at the University of Pennsylvania.

Winand was appointed as interim Chief Financial Officer of the Company on November 8, 2023.

Winand, age 69, previously served as the Company’s Chief Financial Officer from December 2014 until his retirement in July 2022, after serving as the Company’s Controller from September 2014 to December 2014.

Previously, Mr.

Winand served in a number of executive financial capacities with public companies, including Chief Financial Officer of ECC International, Corp, a manufacturer of computer-controlled maintenance simulators primarily for the DoD and Vice President Finance and Administration of Traffic.com, Inc., a leading provider of accurate, real-time traffic information in the United States.

Immediately prior to joining the Company, Mr.

Winand was Chief Financial Officer from 2008 to 2013 of Orbit/FR, Inc., an international developer and manufacturer of sophisticated microwave test and measurement systems for aerospace/defense, wireless, satellite and automotive industries.

From January 2014 until September 2014, Mr.

Winand served as a consultant for Solomon Edwards Group LLC.

He has over 30 years’ experience in financial management and reporting for both public domestic and international manufacturing companies.

Winand received a B.S.

in Accounting from Drexel University and an M.B.A.

in Finance from Widener University.

The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and information statements and other information about issuers, including the Company, that file electronically with the SEC.

The public can obtain any document we file with the SEC at www.sec.gov.

IS&S also maintains its corporate website at http://www.innovative-ss.com and makes available, free of charge, on that website (under the “Investor Relations” tab) the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those as reasonably practicable after it electronically files such material with, or furnishes it to, the SEC.

The Company also maintains its corporate website at http://www.innovative-ss.com and makes available, free of charge, on that website (under the “Investor Relations – Investor Information” tab) the Company’s annual reports on Form 10-K, quarterly reports on Form 10 Q, current reports on Form 8 K, and amendments to those as reasonably practicable after it electronically files such material with, or furnishes it to, the SEC.

The information on the Company’s website is not incorporated as part of this Annual Report on Form 10-K.

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 1. Business