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Item 9A. Controls and Procedures

2024-01-12 compared with 2022-12-16 · 60 added, 37 removed, 76 unchanged (56% of the section changed)

1 unchanged sentence

(a) We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a 15(e) promulgated under the Exchange Act of 1934.

Based on that evaluation, our chief executive officer and chief financial officer concluded that these controls and procedures were effective as of September 30, 2022 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission and accumulated and communicated to our management including our chief executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these controls and procedures were effective as of September 30, 2023 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the rules and forms of the SEC and accumulated and communicated to our management including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Management’s annual report on internal control over financial reporting is set forth below on this Annual Report on Form 10-K.

2 unchanged sentences

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting.

The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s principal executive officer and principal financial officer and intended to provide reasonable assurance regarding the reliability of financial reporting and preparation of the Company’s financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes policies and procedures that are intended to (1) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Company assets that could have a material effect on financial statements.

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Based on this assessment, management believes that, as of September 30, 2023, internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S.

generally accepted accounting principles.

Other Information

1 unchanged sentence

Directors, Executive Officers and Corporate Governance.

This information (other than information relating to executive officers included in Part I Item 1.) will be included in the Company’s Proxy Statement relating to its Annual Meeting of Shareholders, which will be filed within 120 days after the close of the Company’s fiscal year covered by this Annual Report on Form 10-K, and is hereby incorporated by reference to such Proxy Statement.

IS&S has adopted a written code of business conduct and ethics, known as the Company’s code of conduct, which applies to all of its directors, officers, and employees, including its chief executive officer, its president, and its chief financial officer.

The Company’s code of conduct is available on its website, www.innovative-ss.com .

This information (other than information relating to executive officers included in Part I, Item 1 of this Annual Report on Form 10-K) will be included in the Company’s Proxy Statement relating to its Annual Meeting of Shareholders, which will be filed within 120 days after the close of the Company’s fiscal year covered by this Annual Report on Form 10-K, and is hereby incorporated by reference to such Proxy Statement.

The Company has adopted a written code of business conduct and ethics, known as the Company’s code of conduct, which applies to all of its directors, officers, and employees, including its chief executive officer, its president, and its chief financial officer.

The Company’s code of conduct is available on its website, www.innovative-ss.com (under the “Investor Relations ─Corporate Governance” tab ).

The code of conduct may also be obtained by contacting investor relations at (610) 646 9800.

1 unchanged sentence

Executive Compensation.

This information will be included in the Company’s Proxy Statement relating to its Annual Meeting of Shareholders, which will be filed within 120 days after close of the Company’s fiscal year covered by this Report, and is hereby incorporated by reference to such Proxy Statement.

This information will be included in the Company’s Proxy Statement relating to its Annual Meeting of Shareholders, which will be filed within 120 days after close of the Company’s fiscal year covered by this Annual Report on Form 10-K, and is hereby incorporated by reference to such Proxy Statement.

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

This information will be included in the Company’s Proxy Statement relating to its Annual Meeting of Shareholders, which will be filed within 120 days after close of the Company’s fiscal year covered by this Report and is hereby incorporated by reference to such Proxy Statement.

This information will be included in the Company’s Proxy Statement relating to its Annual Meeting of Shareholders, which will be filed within 120 days after close of the Company’s fiscal year covered by this Annual Report on Form 10-K and is hereby incorporated by reference to such Proxy Statement.

Equity Compensation Plan Information

9 unchanged sentences

Plan Category

and rights (1)

options and rights

2 unchanged sentences

Equity compensation plans not approved by security holders

The Company expects to make annual grants of restricted stock awards to its non-employee directors under the 2019 Plan.

In the fiscal years ended September 30, 2022, 2021 and 2020, the Company granted to its non-employee directors a total of 27,425, 27,488 and 73,056 restricted shares, respectively, under the 2019 Plan.

Total share-based compensation expense for non-employee directors was $178,000, $160,000 and $160,000 for the fiscal years ended September 30, 2022, 2021 and 2020, respectively.

(1) Includes 101,968 restricted stock units.

These awards have no exercise price and are not included in the weighted-average exercise price of outstanding awards.

The Company expects to make annual grants of restricted stock awards to its non-employee directors under the 2019 Stock-Based Incentive Compensation Plan (the “ Plan”).

During the fiscal years ended September 30, 2023, 2022 and 2021, the Company granted to its non-employee directors a total of 36,182, 27,425 and 27,488 restricted shares, respectively, under the 2019 Plan.

Total share-based compensation expense for non-employee directors was approximately $212,000, $178,000 and $160,000 for the fiscal years ended September 30, 2023, 2022 and 2021, respectively.

Certain Relationships and Related Transactions and Director Independence.

Related Party Transactions

This information will be included in the Company’s Proxy Statement relating to its Annual Meeting of Shareholders, which will be filed within 120 days after close of the Company’s fiscal year covered by this Annual Report on Form 10-K, and is hereby incorporated by reference to such Proxy Statement.

Principal Accounting Fees and Services

Exhibits, financial statement schedules.

(a) The following documents are filed as part of this report:

This information will be included in the Company’s Proxy Statement relating to its Annual Meeting of Shareholders, which will be filed within 120 days after close of the Company’s fiscal year covered by this Annual Report on Form 10-K, and is hereby incorporated by reference to such Proxy Statement.

Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this Annual Report on Form 10-K:

Financial Statements

See index to Financial Statements at Item 8 on page 36 of this report.

See index to Financial Statements at Item 8 of this Annual Report on Form 10-K.

Financial Statement Schedules

Schedules have been omitted because they are not applicable or are not required or the information required to be set forth therein is included in the financial statements or notes thereto.

The following exhibits are filed as part of, or incorporated by reference into this report:

(b) The following exhibits are filed as part of, or incorporated by reference into this Annual Report on Form 10-K:

Exhibit Title

Asset Purchase and License Agreement, dated June 30, 2023, by and between IS&S and Honeywell International Inc.

Articles of Incorporation of IS&S.

Articles of Amendment, filed April 17, 2023, to the Articles of Incorporation of IS&S (3)

Amended and Restated Bylaws of IS&S (4)

Description of Capital Stock

Rights Agreement, dated September 12, 2022, between IS&S and Broadridge Corporate Issuer Soltutions, Inc.

Rights Agreement, dated September 12, 2022, between IS&S and Broadridge Corporate Issuer Solutions, Inc.

Amendment to Rights Agreement, dated September 1, 2023, between IS&S and Broadridge Corporate Issuer Solutions, Inc.

Employment Agreement, dated February 14, 2012, between IS&S and Shahram Askarpour (7)

IS&S 2019 Stock-Based Incentive Compensation Plan (8)

Offer Letter from IS&S to Relland Winand, dated November 8, 2023 (9)

Amendment to Loan Documents, dated June 28, 2023, by and among Innovative Solutions and Support, Inc., Innovative Solutions and Support, LLC, and PNC Bank, National Association (1)

Term Note, executed June 28, 2023, by Innovative Solutions and Support, Inc.

and Innovative Solutions and Support, LLC (1)

Revolving Line of Credit Note, executed May 11, 2023, by Innovative Solutions and Support, Inc.

and Innovative Solutions and Support, LLC (1)

Amendment to Loan Documents, dated December 19, 2023, by and among Innovative Solutions and Support, Inc., Innovative Solutions and Support, LLC, and PNC Bank, National Association (10)

Amended and Restated Revolving Line of Credit, dated December 19, 2023, executed by Innovative Solutions and Support, Inc.

and Innovative Solutions and Support, LLC (10)

Amended and Restated Line of Credit and Investment Sweep Rider, dated December 19, 2023, by and among Innovative Solutions and Support, Inc., Innovative Solutions and Support, LLC, and PNC Bank, National Association (10)

Sales Agreement, dated September 22, 2023, by and between Innovative Solutions and Support, Inc.

and Stifel, Nicolaus & Company, Incorporated (11)

Subsidiaries of IS&S.

4 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Clawback Policy (filed herewith)

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(1) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the Commission on September 19, 2007.

(2) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the Commission on May 1, 2018.

(3) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the Commission on September 12, 2022.

(4) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the Commission on April 2, 2012.

(5) Incorporated by reference from the Registrant’s Proxy Statement filed with the Commission on January 28, 2019.

*Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Company will furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

(1) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2023.

(2) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the SEC on September 19, 2007.

(3) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the SEC on April 18, 2023

(4) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the SEC on May 1, 2018.

(5) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the SEC on September 12, 2022.

(6) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the SEC on September 1, 2023

(7) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the SEC on April 2, 2012.

(8) Incorporated by reference from the Registrant’s Proxy Statement filed with the SEC on January 28, 2019.

(9) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the SEC on November 14, 2023.

(10) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the SEC on December 12, 2023.

(11) Incorporated by reference from the Registrant’s Current Report on Form 8-K filed with the SEC on September 22, 2023.

Form 10-K Summary

4 unchanged sentences

Director & Chief Executive Officer

December 16, 2022

January 12, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

1 unchanged sentence

Director & Chief Executive Officer

December 16, 2022

January 12, 2024

Shahram Askarpour

(Principal Executive Officer)

/s/ Michael Linacre

Chief Financial Officer

December 16, 2022

Michael Linacre

/s/ Relland M.

Interim Chief Financial Officer

January 12, 2024

(Principal Financial and Accounting Officer)

/s/ Winston J.

Director & Chairman of the Board

December 16, 2022

Director & Vice Chairman of the Board

December 16, 2022

January 12, 2024

/s/ Stephen L.

December 16, 2022

January 12, 2024

/s/ Parizad Olver (Parchi)

December 16, 2022

January 12, 2024

Parizad Olver (Parchi)

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 9A. Controls and Procedures