INNOVATIVE SOLUTIONS & SUPPORT INC

Previous wording

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. The Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report, or to reflect the occurrence of unanticipated events. The forward-looking statements in this document are intended to be subject to the safe harbor protection provided by Sections 27A of the Securities Act of 1933, as amended (the “Securities Act”) and 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Current wording

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. The Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report, or to reflect the occurrence of unanticipated events. The

Previous wording

The Company believes that its critical accounting policies affect its more significant estimates and judgments used in the preparation of its condensed consolidated financial statements. The Annual Report on Form 10-K for the fiscal year ended September 30, 2024 contains a discussion of these critical accounting policies. See also Note 1 to the unaudited condensed consolidated financial statements for the three and six months ended March 31, 2025 as set forth herein.

Current wording

The Company believes that its critical accounting policies affect its more significant estimates and judgments used in the preparation of its condensed consolidated financial statements. The Annual Report on Form 10-K for the fiscal year ended September 30, 2024 contains a discussion of these critical accounting policies. See also Note 1 to the unaudited condensed consolidated financial statements for the three and nine months ended June 30, 2025 as set forth herein.

Previous wording

In connection with June 2023 Honeywell Agreement, during the 18- month period following closing, which ended December 31, 2024, the Company received various components of PP&E. Rotables are parts that are not designed to be discarded after a certain period of use but rather are intended to be restored to a serviceable condition and reused. The Company had historically depreciated rotables PP&E on a straightline basis, over 5 years. During the second quarter of 2025, the Company updated its analysis of the

Current wording

In connection with June 2023 Honeywell Agreement, during the 18 month period following closing, which ended December 31, 2024, the Company received various components of PP&E. Rotables are parts that are not designed to be discarded after a certain period of use but rather are intended to be restored to a serviceable condition and reused. The Company had historically depreciated rotables PP&E on a straightline basis, over 5 years. During the second quarter of 2025, the Company updated its analysis of the economic lives of various owned rotable assets. As a result of this update, to better reflect the revised estimate of physical lives of rotable assets, the Company changed its useful lives estimate of rotable assets from 5 years to 10 years, effective as of January 1, 2025.

Previous wording

Adhering to the guidance found in ASC 250, the Company recognized the change in depreciation expense of Rotable assets prospectively as of January 1, 2025. The change in accounting estimate decreased depreciation expense $0.4 million, or $ 0.02 per diluted share, for the three months ended March 31, 2025.

Current wording

Adhering to the guidance found in ASC 250, the Company recognized the change in depreciation expense of Rotable assets prospectively as of January 1, 2025. The change in accounting estimate decreased depreciation expense $0.4 million, or $0.02 per diluted share, and $0.7 million, or $0.04 for the three and nine months ended June 30, 2025, respectively.

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RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED

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RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED

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The following table sets forth the statements of operations data expressed as a percentage of total net sales for the periods indicated (some items may not add due to rounding):

Current wording

The following table sets forth the statements of operations data expressed as apercentage of total net sales for the periods indicated (some items may not add due to rounding):

Previous wording

Historically, the Company presented Net Sales and Cost of Sales related to each of Customer service and Engineering and development contracts separately on the Consolidated Statements of Operations. For the three and six months ended March 31, 2025, the Company has aggregated these items into one category, “Services” and reclassified Customer service and Engineering and development contracts revenues as well as Cost of sales to conform the presentation of the Consolidated Statements of Operations for the three and six months ended March 31, 2024. For additional information, see Note 3,Summary of Significant Accounting Policies, (“Reclassifications”) to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Current wording

Historically, the Company presented Net Sales and Cost of Sales related to each of Customer service and Engineering and development contracts separately on the Consolidated Statements of Operations. For the three and nine months ended June 30, 2025, the Company has aggregated these items into one category, “Services” and reclassified Customer service and Engineering and development contracts revenues as well as Cost of sales to conform the presentation of the Consolidated Statements of Operations for the three and nine months ended June 30, 2024. For additional information, see Note 3,Summary of Significant Accounting Policies, (“Reclassifications”) to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Previous wording

Net sales. Net sales for the three months ended March 31, 2025 increased $11.2 million, or 104.3%, to $21.9 million from $10.7 million for the three months ended March 31, 2024. Net sales of $21.9 million for the three months ended March 31, 2025 was comprised of $11.1 million in organic Net sales and $10.8 million in Net sales related to the September 2024 Honeywell Agreement. The increase in Net sales was driven primarily by a $8.3 million, or 169.2%, increase in Product sales of which $7.9 million were derived from Honeywell military products. This quarter’s Net sales benefitted from an acceleration of the production and sales of Honeywell’s military product line in anticipation of Honeywell ceasing production at its own facilities and transitioning that production to the Company’s facilities. Net sales also benefited froman increase in commercial air transport sales of $3.7 million partially offset by $2.7 million of reduced shipsets in business aviation and $0.7 million of reduced shipsets in military. Service sales for the three months ended March 31, 2025 increased $2.9 million, or 49.8%, compared to Services sales for the three months ended March 31, 2024. The increase in service sales primarily reflects increases in engineering development services of $0.4 million and an increase in customer service sales from the product lines acquired from Honeywell of $3.0 million, partially offset by lower legacy customer service revenue of $0.5 million.

Current wording

Net sales. Net sales for the three months ended June 30, 2025 increased $12.4 million, or 105.2%, to $24.1 million from $11.8 million for the three months ended June 30, 2024. Net sales of $24.1 million for the three months ended June 30, 2025 comprised $11.6 million in organic Net sales and $12.5 million in Net sales related to the September 2024 Honeywell Agreement. The increase in Net sales was driven primarily by a $11.4 million, or 223.8%, increase in Product sales of which $11.5 million were derived from Honeywell military products. This quarter’s Net sales benefitted from an acceleration of the production and sales of Honeywell’s military product line in anticipation of Honeywell ceasing production at its own facilities and transitioning that production to the Company’s facilities. Net sales also benefited from an increase in commercial air transport sales of $0.4 million partially offset by $0.4 million of reduced sales in business aviation. Services sales for the three months ended June 30, 2025 increased $0.9 million, or 13.6%, compared to Services sales for the three months ended June 30, 2024. The increase in Services sales primarily reflects increases in engineering development services of $0.9 million and an increase in customer service sales from the product lines acquired from Honeywell of $0.2 million, partially offset by a decrease in legacy customer service revenue of $0.1 million.

Previous wording

Cost of sales. Cost of sales was $10.7 million, or 48.6% of Net sales, for the three months ended March 31, 2025 compared to $5.2 million, or 48% of Net sales, for the three months ended March 31, 2024. The increase in Cost of sales was primarily the result of an increase in overall sales volume. The Company’s overall gross margin for the three months ended March 31, 2025 was 51.4% compared to 52.0% for the three months ended March 31, 2024. The decrease in overall gross margin percentage for the three months ended March 31, 2025, compared to the three months ended March 31, 2024 is primarily the result of changes in product mix. The factors that have been, and will continue to, affect the Company’s gross margin capture include depreciation resulting from recent product line acquisitions and the increased weight of military sales in the Company’s sales mix.

Current wording

Cost of sales. Cost of sales was $15.6 million, or 64.4% of Net sales, for the three months ended June 30, 2025 compared to $5.5 million, or 46.6% of Net sales, for the three months ended June 30, 2024. The increase in Cost of sales was primarily the result of a significant increase in overall sales volume. The Company’s overall gross margin for the three months ended June 30, 2025 was 35.6 % compared to 53.4% for the three months ended June 30, 2024. The decrease in overall gross margin percentage for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 is primarily the result of unfavorable changes in product mix. The factors that have affected and will continue to affect the Company’s gross margins include depreciation resulting from recent product line acquisitions and the increased proportion of military sales in the Company’s sales mix.

Previous wording

Research and development. R&D expense decreased $0.2 million, or 15.9%, to $0.9 million for the three months ended March 31, 2025 from $1.0 million for the three months ended March 31, 2024. As a percentage of net sales, R&D expenses decreased to 4.0% of net sales for the three months ended March 31, 2025 from 9.6% of net sales for the three months ended March 31, 2024. The decrease in R&D expenses in the quarter was primarily the result of recharacterizing $0.2 million of R&D expense as Cost of sales related to the EDC sales.

Current wording

Research and development. R&D expense decreased $0.2 million, or 16.6 %, to $0.9 million for the three months ended June 30, 2025 from $1.1 million for the three months ended June 30, 2024. As a percentage of net sales, R&D expenses decreased to 3.8% of net sales for the three months ended June 30, 2025 from 9.3% of net sales for the three months ended June 30, 2024. The decrease in R&D expenses as a percentage of revenues in the quarter was primarily the result of additional revenues for the three months ended June 30, 2025 compared to the same period last year.

Previous wording

Selling, general, and administrative. SG&A expenses increased by $0.5 million or 17.4%, to $3.4 million from $2.9 million for the three months ended March 31, 2024. The increase in SG&A expense for the three months ended March 31, 2025 was primarily the result of third party and other fees of $0.1 million, $0.1 million related to the customer relationships and backlog intangible assets resulting from the combined acquisitions and $0.2 million due to employee related expenses and benefits resulting from increased headcount. As a percentage of Net sales, SG&A expenses were 15.6% for the three months ended March 31, 2025 compared to 27.1% for the three months ended March 31, 2024.

Current wording

Selling, general, and administrative. SG&A expense increased by $1.1 million or 32.1%, to $4.2 million from $3.1 million for the three months ended June 30, 2024. The increase in SG&A expense for the three months ended June 30, 2025 was primarily the result of third party and other fees of $0.1 million, $0.2 million related to the amortization of customer relationships and intangible assets resulting from the combined acquisitions, $0.4 million due to employee related expenses and benefits resulting from increased headcount, and a $0.3 million increase in other operating expenses. As a percentage of Net sales, SG&A expenses were 17.2% for the three months ended June 30, 2025 compared to 26.7% for the three months ended June 30, 2024.

Previous wording

Income taxes. Income tax expense was $1.3 million for the three months ended March 31, 2025 as compared to income tax expense of $0.3 million for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2025 was 19.2 % as compared to 21.2% for the three months ended March 31, 2024. The increase in income tax expense was primarily due to higher taxable earnings for the three months ended March 31, 2025, compared to the same period last year.

Current wording

Income taxes. Income tax expense was $0.7 million for the three months ended June 30, 2025 as compared to income tax expense of $0.3 million for the three months ended June 30, 2024. The effective tax rate for the three months ended June 30, 2025 was 21.5% as compared to 17.6% for the three months ended June 30, 2024. The increase in income tax expense was primarily due to higher taxable earnings for the three months ended June 30, 2025, compared to the same period last year.

Previous wording

Net income. As a result of the factors described above, the Company’s net income for the three months ended March 31, 2025 was $5.3 million compared to net income of $1.2 million for the three months ended March 31, 2024. On a fully diluted basis, net income

Current wording

Net income. As a result of the factors described above, the Company’s net income for the three months ended June 30, 2025 was $2.4 million compared to net income of $1.6 million for the three months ended June 30, 2024. On a fully diluted basis, net income per

Previous wording

per share was $0.30 for the three months ended March 31, 2025, compared to a net income of $0.07 per share for the three months ended March 31, 2024.

Current wording

share was $0.14 for the three months ended June 30, 2025, compared to a net income of $0.09 per share for the three months ended June 30, 2024.

Previous wording

Net sales. Net sales for the six months ended March 31, 2025 increased by $17.9 million, or 89.1%, to $37.9 million from $20.0 million for the six months ended March 31, 2024. Net sales of $37.9 million for the six months ended March 31, 2025 was comprised of $21.2 million in organic Net sales and $16.7 million in Net sales related to the September 2024 Honeywell Agreement. The increase in Net sales was driven primarily by a $13.8 million, or 147.6%, increase in Product sales derived from the September 2024 Honeywell Agreement. and an increase in commercial air transport sales of $5.0 million, offset by $3.5 million of reduced shipsets in business aviation and $1.5 million of reduced shipsets in military. Service sales for the six months ended March 31, 2024 increased $4.0 million, or 37.4%, compared to Services sales for the six months ended March 31, 2024. The increase in service sales primarily reflects increases in engineering development services of $1.2 million and an increase in customer service sales from the product lines acquired from Honeywell of $3.8 million, partially offset by lower legacy customer service revenue of $1.0 million.

Current wording

Net sales. Net sales for the nine months ended June 30, 2025 increased by $30.2 million, or 95.0%, to $62.0 million from $31.8 million for the nine months ended June 30, 2024. Net sales of $62.0 million for the nine months ended June 30, 2025 comprised $32.7 million in organic Net sales and $29.3 million in Net sales related to the September 2024 Honeywell Agreement. The increase in Net sales was driven primarily by a $25.3 million, or 175.3%, increase in Product sales derived from the September 2024 Honeywell Agreement, an increase in commercial air transport sales of $0.3 million, an increase of $1.3 million in sales in business aviation. Service sales for the nine months ended June 30, 2025 increased $5.4 million, or 28.3%, compared to Services sales for the nine months ended June 30, 2024. The increase in Service sales primarily reflects increases in engineering development services of $2.0 million and an increase in customer service sales from the product lines acquired from Honeywell of $3.8 million, partially offset by lower legacy customer service revenue of $0.5 million.

Previous wording

Cost of sales. Cost of sales was $20.0 million, or 52.8% of Net sales, for the six months ended March 31, 2025 compared to $8.9 million, or 44.6% of Net sales, for the six months ended March 31, 2024. The increase in Cost of sales was primarily the result of an increase in overall sales volume. The Company’s overall gross margin for the six months ended March 31, 2025 was 47.2% compared to 55.4% for the six months ended March 31, 2024. The decrease in overall gross margin percentage for the six months ended March 31, 2025, compared to the six months ended March 31, 2024 is primarily the result of changes in product mix, increased depreciation and cost inefficiencies due to hiring and training of additional personnel and other integration costs associated with the September 2024 Honeywell Agreement. The factors that have been, and will continue to effect the Company’s gross margin capture include depreciation resulting from recent product line acquisitions and the increased weight of military sales in the Company’s sales mix.

Current wording

Cost of sales. Cost of sales was $35.6 million, or 57.3% of Net sales, for the nine months ended June 30, 2025 compared to $14.4 million, or 45.4% of Net sales, for the nine months ended June 30, 2024. The increase in Cost of sales was primarily the result of a significant increase in overall sales volume. The Company’s overall gross margin for the nine months ended June 30, 2025 was 42.7% compared to 54.6% for the nine months ended June 30, 2024. The decrease in overall gross margin percentage for the nine months ended June 30, 2025, compared to the nine months ended June 30, 2024, is primarily the result of unfavorable changes in product mix, increased depreciation and cost inefficiencies due to hiring and training of additional personnel and other integration costs associated with the September 2024 Honeywell Agreement. The factors that have affected and will continue to effect the Company’s gross margin include depreciation resulting from recent product line acquisitions and the increased proportion of military sales in the Company’s sales mix.

Previous wording

Research and development. R&D expense increased less than $0.1 million, or 2.2%, to $2.0 million for the six months ended March 31, 2025 from $1.9 million for the six months ended March 31, 2024. As a percentage of net sales, R&D expenses decreased to 5.3% of net sales for the six months ended March 31, 2025 from 9.6% of net sales for the six months ended March 31, 2024. The decrease in R&D expense as a percent of sales for the six months ended March 31, 2025 compared to the same period last year was primarily the result of recharacterizing $0.4 million of R&D expenses as Cost of sales related to the EDC sales.

Current wording

Research and development. R&D expense decreased $0.1 million, or 4.6%, to $2.9 million for the nine months ended June 30, 2025 from $3.0 million for the nine months ended June 30, 2024. As a percentage of net sales, R&D expenses decreased to 4.8% of net sales for the nine months ended June 30, 2025 from 9.5% of net sales for the nine months ended June 30, 2024. The decrease in R&D expenses as a percentage of revenues in the quarter was primarily the result of additional revenues for the nine months ended June 30, 2025 compared to the same period last year.

Previous wording

Selling, general, and administrative. SG&A expenses increased $1.7 million or 28.0%, to $7.6 million from $5.9 million for the six months ended March 31, 2024. The increase in SG&A expense for the six months ended March 31, 2025 was primarily the result of increases in professional services fees and other related fees of $0.3 million primarily due to acquisition related expenses and corporate initiatives. In addition, the Company incurred increased depreciation and amortization expenses of $0.6 million related to the customer relationships and backlog intangible assets resulting from the combined acquisitions and $0.6 million due to employee related expenses and benefits resulting from increased headcount. As a percentage of Net sales, SG&A expenses were 20.0% for the six months ended March 31, 2025 compared to 29.5% for the six months ended March 31, 2024.

Current wording

Selling, general, and administrative. SG&A expenses increased $2.6 million or 29.4%, to $11.7 million from $9.1 million for the nine months ended June 30, 2024. The increase in SG&A expense for the nine months ended June 30, 2025 was primarily the result of increases in professional services fees and other related fees of $0.3 million primarily due to acquisition related expenses and corporate initiatives. In addition, the Company incurred increased depreciation and amortization expenses of $0.8 million related to the customer relationships and intangible assets resulting from the combined acquisitions and $1.2 million due to employee related expenses and benefits resulting from increased headcount, and $0.3 million increase in other operating expenses. As a percentage of Net sales, SG&A expenses were 18.9% for the nine months ended June 30, 2025 compared to 28.5% for the nine months ended June 30, 2024.

Previous wording

Interest income. Interest income was negligible for the six months ended March 31, 2025 and decreased by $0.1 million as compared to the six months ended March 31, 2024. The decrease in interest income was primarily the result of a general decrease in interest rates as compared to the six months ended March 31, 2024.

Current wording

Interest income. Interest income was negligible for the nine months ended June 30, 2025 and decreased by $0.1 million as compared to the nine months ended June 30, 2024. The decrease in interest income was primarily the result of a general decrease in interest rates as compared to the nine months ended June 30, 2024.

Previous wording

Other income. The Company had no material other income for the six months ended March 31, 2025 and 2024, respectively.

Current wording

Other income. The Company had no material other income for the nine months ended June 30, 2025 and 2024, respectively.

Previous wording

Income taxes. Income tax expense was $1.5 million for the six months ended March 31, 2025 as compared to income tax expense of $0.6 million for the six months ended March 31, 2024. The effective tax rate for the six months ended March 31, 2025 was 19.3% as compared to 21.5% for the six months ended March 31, 2024. The increase in income tax expense was primarily due to a higher taxable earnings for the six months ended March 31, 2025, compared to the same period last year.

Current wording

Income taxes. Income tax expense was $2.1 million for the nine months ended June 30, 2025 as compared to income tax expense of $1.0 million for the nine months ended June 30, 2024. The effective tax rate for the nine months ended June 30, 2025 was 19.9%, in line with the effective tax rate for the nine months ended June 30, 2024.

Previous wording

Net income. As a result of the factors described above, the Company’s net income for the six months ended March 31, 2025 was $6.1 million compared to net income of $2.3 million for the six months ended March 31, 2024. On a fully diluted basis, net income per share was $0.34 for the six months ended March 31, 2025, compared to a net income of $0.13 per share for the six months ended March 31, 2024.

Current wording

Net income. As a result of the factors described above, the Company’s net income for the nine months ended June 30, 2025 was $8.5 million, compared to net income of $3.8 million for the nine months ended June 30, 2024. On a fully diluted basis, net income per share was $0.48 for the nine months ended June 30, 2025, compared to a net income of $0.22 per share for the nine months ended June 30, 2024.

Previous wording

On September 30, 2024, in connection with the July 2024 Honeywell Asset Acquisition and the September 2024 Honeywell Agreement, the Company entered into the Loan 2024 Amendment with PNC, which amends certain terms of the Loan Agreement to increase the line of credit with PNC. Concurrently with the Loan 2024 Amendment, the Company entered into (i) A&R Revolving Line of Credit Note, and (ii) A&R Rider. The A&R Revolving Line of Credit Note provides for a senior secured revolving line of credit in an aggregate principal amount of $35,000,000, with an expiration date of December 19, 2028 (the “Revolving Line of

Current wording

On September 30, 2024, in connection with the July 2024 Honeywell Asset Acquisition and the September 2024 Honeywell Agreement, the Company entered into the Loan 2024 Amendment with PNC, which amends certain terms of the Loan Agreement to increase the line of credit with PNC. Concurrently with the Loan 2024 Amendment, the Company entered into (i) A&R Revolving

Previous wording

Credit”). The interest rate applicable to loans outstanding under the Revolving Line of Credit is a rate per annum equal to the sum of (A) Daily SOFR (as defined in the A&R Revolving Line of Credit Note) plus (B) an unadjusted spread of the Applicable SOFR Margin plus (C) a SOFR adjustment of ten basis points. The Applicable SOFR Margin ranges from 1.5% to 2.5% depending on the Company’s funded debt to EBITDA ratio, as defined in the A&R Revolving Line of Credit Note. The A&R Rider provides for how PNC will make advances to the Company under the Revolving Line of Credit.

Current wording

Line of Credit Note, and (ii) A&R Rider. The A&R Revolving Line of Credit Note provides for a senior secured revolving line of credit in an aggregate principal amount of $35,000,000, with an expiration date of December 19, 2028 (the “Revolving Line of Credit”). The interest rate applicable to loans outstanding under the Revolving Line of Credit is a rate per annum equal to the sum of (A) Daily SOFR (as defined in the A&R Revolving Line of Credit Note) plus (B) an unadjusted spread of the Applicable SOFR Margin plus (C) a SOFR adjustment of ten basis points. The Applicable SOFR Margin ranges from 1.5% to 2.5% depending on the Company’s funded debt to EBITDA ratio, as defined in the A&R Revolving Line of Credit Note. The A&R Rider provides for how PNC will make advances to the Company under the Revolving Line of Credit.

Previous wording

As of March 31, 2025, the outstanding balance drawn on the A&R Revolving Line of Credit was $27,401,323 with an effective interest rate of 5.9 percent. As of March 31, 2025, the Company had availability of $7,598,677 under the A&R Revolving Line of Credit.

Current wording

As of June 30, 2025, the outstanding balance drawn on the A&R Revolving Line of Credit was $23,258,511 with an effective interest rate of 6.4 percent. As of June 30, 2025, the Company had availability of $11,741,489 under the A&R Revolving Line of Credit.

Previous wording

The Company’s existing cash balances, anticipated cash flows from operations and current banking facility are expected to be adequate to satisfy the Company’s liquidity needs for at least the next 12 months, which include funding requirements for working capital, construction in process related to progress payments in support of the Company’s facilities expansion as well as computer software integration associated with the Company’s Netsuite ERP system.

Current wording

The Company’s existing cash balances, anticipated cash flows from operations and current banking facility are expected to be adequate to satisfy the Company’s liquidity needs for at least the next 12 months, which include funding requirements for working capital, construction in process related to progress payments in support of the Company’s facilities expansion as well as computer software integration associated with the Company’s ERP system.

Previous wording

Net cash provided by operating activities was $3.1 million for the six months ended March 31, 2025 and consisted primarily of funding from net income of $6.1 million and changes in working capital.

Current wording

Net cash provided by operating activities was $10.3 million for the nine months ended June 30, 2025 and consisted primarily of funding from net income of $8.5 million and changes in working capital.

Previous wording

Net cash used in investing activities was $1.8 million for the six months ended March 31, 2025 and consisted of expenditures related to additions and improvements in the Company’s facilities and purchases of equipment and computer hardware.

Current wording

Net cash used in investing activities was $5.5 million for the nine months ended June 30, 2025 and consisted of expenditures related to additions and improvements in the Company’s facilities, purchases of equipment and computer software investment related to the Company’s ERP (“Enterprise Resource Planning”) implementation.

Previous wording

Net cash used in financing activities was $0.6 million for the six months ended March 31, 2025 and consisted of payments against the Company’s line of credit.

Current wording

Net cash used in financing activities was $4.8 million for the nine months ended June 30, 2025 and consisted of payments against the Company’s line of credit.

Previous wording

Future capital requirements depend upon numerous factors, including market acceptance of the Company’s products, the timing and rate of expansion of business, acquisitions, joint ventures and other factors. IS&S has experienced increases in expenditures since its inception and anticipates that expenditures will continue in the foreseeable future. The Company believes that its cash and cash equivalents will provide sufficient capital to fund operations for at least the next twelve months. However, the Company may need to develop and introduce new or enhanced products, respond to competitive pressures, invest in or acquire businesses or technologies, or respond to unanticipated requirements or developments. If insufficient funds are available, the Company may not be able to introduce new products or compete effectively.

Current wording

Future capital requirements depend upon numerous factors, including market acceptance of the Company’s products, the timing and rate of expansion of business, acquisitions, joint ventures and other factors. IS&S has experienced increases in expenditures since its inception and anticipates that expenditures will continue in the foreseeable future. The Company believes that its cash and cash equivalents will provide sufficient capital to fund operations for at least the next twelve months. However, the Company may need to develop and introduce new or enhanced products, respond to competitive pressures, invest in or acquire businesses or technologies, or

Previous wording

At March 31, 2025, our backlog was $79.6 million compared with $89.2 million at September 30, 2024. Backlog at March 31, 2025 included $66.0 million of acquired backlog as a result of the September 27, 2024 acquisition. Backlog is converted into sales in future periods as work is performed or deliveries are made. We expect to recognize approximately 59% of our backlog over the next 12 months and approximately 81% over the next 24 months as revenue, with the remainder recognized thereafter.

Current wording

At June 30, 2025, our backlog was $72.4 million compared with $89.2 million at September 30, 2024. Backlog is converted into sales in future periods as work is performed or deliveries are made. We expect to recognize approximately 60% of our backlog over the next 12 months and approximately 90% over the next 24 months as revenue, with the remainder recognized thereafter.