Innovative Solutions & Support (IA) risk factors, FY2025 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 could become obsolete rapidly
3. 03These factors may be costly to the Company, and there is no assurance that the Company will be successful in its strategy58% rewritten
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. 08The F-16 program comprises a material portion of our revenue and reductions or delays in funding for this program and risks related to performance, schedule, cost and requirements of the program could adversely affect our performanceNew
9. 09funding for contracts on a timely basis, the level of cost associated with life cycle operations, sustainment and potential contractual obligations, inflation-related cost pressures, the ability to improve affordability and potential competition from next-generation or other platformsNew
10. 10Public health events and conditions could adversely affect our business, financial condition and operating resultsNew
11. 11Due 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
12. 12We serve a limited number of customers and face customer concentration risk
13. 13Our customers may terminate their contracts with us at any time which would adversely affect our business
14. 14Changes 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 contracting50% rewritten
15. 15Geopolitical factors and changes in policies and regulations could adversely affect our business50% rewritten
16. 16predict, any one or more of them could have a material adverse effect on our competitive position, results of operations, financial condition or liquidityNew
17. 17Government contracts are subject to special risks as a result of the U.S. government’s audit practices
18. 18The Company could be subjected to unanticipated 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
19. 19The 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
20. 20The impacts of global supply chain and labor market disruptions on our supply chain have negatively affected and will continue to negatively affect our business
21. 21Additionally, 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
22. 22Our subcontractors and third-party suppliers may fail to deliver high quality materials, products or services, which may result in a failure of our products or services and a violation of applicable law
23. 23Our 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
24. 24The Company depends on key personnel to manage its business effectively, and an inability to attract and retain key employees and plan for management succession could adversely impact the Company’s ability to compete
25. 25We self-insure a significant portion of our employee medical insurance program, which may expose us to unpredictable costs and negatively affect our financial performance
26. 26The Company has limited experience in marketing and distributing its products internationally, which may limit the Company’s ability to penetrate international markets and increase international sales

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

1. 27Our 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. 28Certain of our products incorporate and rely upon licensed third-party technology
3. 29A cyber security incident or other technology disruption could have a negative impact on our business

Legal and Regulatory Risks

1. 30The 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 negative impact on the Company’s business and operations
2. 31Exports 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. 32Litigation with customers, employees and others could harm our reputation and impact operating results
4. 33Tax changes could affect the Company’s effective tax rate and future profitability
5. 34Tariffs and other trade policies could have a substantial impact on our business

Risks Related to Our Common Stock, Capital Markets and Indebtedness

1. 35Our common stock may be affected by limited trading volume and may fluctuate significantly
2. 36Our common stock has experienced and may continue to experience significant price fluctuations, which could cause you to lose a significant portion of your investment and interfere with our efforts to grow our business
3. 37Because 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. 38Volatility and weakness in capital markets may adversely affect credit availability and related financing costs, which could adversely affect the Company
5. 39There are risks associated with our outstanding and future indebtedness