Innovative Solutions & Support (IA) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01Growth of the Company’s customer base could be limited by delays or difficulties in completing development and introduction of planned products or product enhancements
2. 02If the Company fails to modify or improve its products in response to evolving industry standards and government regulations, its products rapidly could become obsolete
3. 03These factors may be costly to the Company, and there is no assurance that the Company will be successful in its strategy
4. 04We design, manufacture and service products that incorporate advanced technologies; the introduction of new products and technologies involves risks, and we may not realize the degree or timing of benefits initially anticipated
5. 05The Company’s revenue and operating results may vary significantly from quarter to quarter, which may cause its stock price to decline
6. 06costs related to possible acquisition of technologies or businesses, including the cost to pursue and negotiate acquisitions and integrate such products and business thereafter
7. 07Our sales in the commercial aircraft market are subject to downturns affecting the aerospace industry generally
8. 08Due to the inherent nature of our products and the industry in which we operate, a product safety failure or quality issue could seriously harm our business
9. 09We serve a limited number of customers and face customer concentration risk
10. 10Our customers may terminate their contracts with us at any time
11. 11Changes in U.S. government priorities, spending levels and response to world events could adversely affect the Company’s ability to maintain or grow the revenue the Company receives through government contracting
12. 12Geopolitical factors and changes in policies and regulations could adversely affect our internal business
13. 13Government contracts are subject to special risks as a result of the U.S. government’s audit practices
14. 14The Company could be subjected to losses in the event that the Company suffers cost overruns or contractual penalties in connection with fixed-price contracts or service arrangements to perform specified design and EDC services
15. 15We currently operate without a substantial backlog
16. 16The Company relies on third-party suppliers for components of its products, including several sole source suppliers, and any interruption in the supply of these components could hinder its ability to deliver products on a timely basis
17. 17The impacts of global supply chain and labor market disruptions on our supply chain have negatively affected and will continue to negatively affect our business
18. 18Additionally, an open conflict or war across any region, including, but not limited to, the conflicts in Ukraine and Israel, could affect our ability to obtain raw materials
19. 19Our subcontractors and third-party suppliers may fail to produce high quality work, which may result in a failure of our products or services and a violation of applicable law
20. 20Our competitors have greater resources and experience than us, and if we are not able to compete, our business, financial condition and results of operations will be substantially adversely affected
21. 21The Company depends on key personnel to manage its business effectively, and an inability to retain its key employees and plan for management succession could adversely impact the Company’s ability to compete
22. 22We self-insure a significant portion of our employee medical insurance program, which may expose us to unpredictable costs and negatively affect our financial performance
23. 23The Company has limited experience in marketing and distributing its products internationally

Risks Related to Intellectual Property, Privacy, Cybersecurity, and Technical Infrastructure

1. 24Our intellectual property rights are important to our operations, and we could suffer loss if they infringe upon others’ rights or are infringed upon by others
2. 25Certain of our products incorporate and rely upon licensed third-party technology
3. 26A cyber security incident or other technology disruption could have a negative impact on our business

Legal and Regulatory Risks

1. 27The Company is subject to various laws and regulations. Changes to, or failure by the Company to comply with, these laws and regulations could have a significant impact on the Company’s business and operations
2. 28Exports and imports of certain of our products are subject to various export control, sanctions and import regulations and may require authorization from regulatory agencies of the U.S. or other countries
3. 29Litigation with customers, employees and others could harm our reputation and impact operating results
4. 30Tax changes could affect the Company’s effective tax rate and future profitability
5. 31Tariffs and other trade policies could have a substantial impact on our business

Risks Related to Our Common Stock, Capital Markets and Indebtedness

1. 32Our common stock may be affected by limited trading volume and may fluctuate significantly
2. 33Our common stock has experienced and may continue to experience price fluctuations, which could cause you to lose a significant portion of your investment and interfere with our efforts to grow our business
3. 34Because we do not intend to declare cash dividends on our shares of common stock in the foreseeable future, shareholders must rely on appreciation of the value of our common stock for any return on their investment
4. 35Volatility and weakness in capital markets may adversely affect credit availability and related financing costs, which could adversely affect the Company
5. 36There are risks associated with our outstanding and future indebtedness