ISSC Innovative Solutions and Support Inc

Reports Cash Flow from Operations of $150,000 for Quarter, $913,000 for Year-to-Date, increases of approximately $950,000 and $2.5 million, respectively, from year earlier periods

Innovative Solutions & Support, Inc. (NASDAQ: ISSC) today announced its financial results for the third quarter of fiscal 2015 ended June 30, 2015.

For the third quarter of fiscal 2015, the Company reported revenues of $4.9 million, compared to revenues of $10.6 million for the third quarter of fiscal 2014. Cash provided by operating activities was $150,000 for the quarter, a significant turnaround from $813,000 used in operating activities in the third quarter of fiscal 2014. The Company reported a third quarter 2015 operating loss of $0.3 million, which included an increased investment in internal research and development and new product development, and a net loss of $3.5 million, or $0.21 per share, of which $3.3 million was attributable to a non-cash, valuation allowance of the Company’s deferred tax assets.

In the third quarter of 2014, the Company reported net income of $497,000, or $0.03 per share.

Geoffrey Hedrick, Chairman and Chief Executive Officer of Innovative Solutions & Support, Inc. said, “On the strength of growing interest in our expanding portfolio of products that we believe provide the industry's best price-for-performance, we were able to increase our product revenues in the quarter versus the quarter ended March 31, 2015. Gross margins in the quarter were up from a year ago as production volume increased and development contracts continue to wind down. We also further reduced operating expenses in the quarter. While we reported an operating loss for the quarter, we increased cash flow from operations by nearly a million dollars from the third quarter of last year, adding to our already strong balance sheet. We are focused on rebuilding our backlog through aggressive marketing and product innovation. During the quarter we introduced our new Integrated Global Navigation System (IGNS) that we believe addresses the need for an economical solution that enables aging Flight Management Systems to be updated to today's NexGen standards without the downtime or expense of replacing the entire system. This is just another example of Innovative Solutions and Support's legacy of developing exciting new technologies that provide cost effective solutions to the military, commercial air transport, and business jet markets.”

At June 30, 2015, the Company had $15.8 million of cash on hand and remained debt free.

New orders for the quarter were $3.4 million, and backlog at June 30, 2015 was $4.8 million, compared to backlog of $6.3 million at March 31, 2015. Backlog excludes potential future sole-source production orders from products in development under the Company’s engineering development contracts, including the Eclipse 550, the Pilatus PC-24, and the KC-46A, all of which the Company expects to remain in production for a decade following completion of their development phases. The Company expects that these sole-source contracts will add to production sales already in backlog.

Nine Months Results

Total sales for the nine months ended June 30, 2015 were $16.9 million compared to sales of $34.2 million for the nine months ended June 30, 2014. Net loss for the nine months ended June 30, 2015 was $3.3 million, compared to net income of $2.3 million in the comparable year earlier period. The company had a $0.20 loss per share for the first nine months of fiscal 2015, compared to earnings per share of $0.13 for the first nine months of fiscal 2014. Cash provided by operating activities was $913,000 for the first nine months of fiscal 2015, up significantly from $1.6 million of cash used in operations during the first nine months of fiscal 2014.

Shahram Askarpour, President of ISSC, commented, "Our focus is on rebuilding backlog, particularly new production contracts, while continuing to improve operational efficiencies. Consequently, during the quarter we reduced total operating expenses while still increasing our investment in internal research and development. Those efforts yielded the rapid and timely development of our latest new product, the IGNS. On the new business front, we are experiencing increased activity levels in select markets, such as Europe, where we are seeing a concerted sales and marketing effort turn into new orders and opportunities. Our goal is to build on the success we have achieved introducing new technologies that have been employed by industry leaders such as Boeing, Lockheed and others and to expand our product portfolio into new and emerging applications that help owners and operators improve safety, increase efficiency and reduce costs."

Conference Call

The Company will be hosting a conference call August 6, 2015 at 10:00 AM ET to discuss these results and its business outlook. Those planning to dial in to the call should dial the following number and register their names and company affiliations: 1-877-883-0383 and enter the PIN Number 5343401. The call will also be carried live on the Investor Relations page of the Company web site at www.innovative-ss.com.

About Innovative Solutions & Support, Inc.

Headquartered in Exton, Pa., Innovative Solutions & Support, Inc. (www.innovative-ss.com) is a systems integrator that designs and manufactures flight guidance and cockpit display systems for Original Equipment Manufacturers (OEM’s) and retrofit applications. The company supplies integrated Flight Management Systems (FMS) and advanced GPS receivers for precision low carbon footprint navigation.

Certain matters contained herein that are not descriptions of historical facts are “forward-looking” (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in filings made by the Company with the Securities and Exchange Commission. Many of the factors that will determine the Company’s future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

    Innovative Solutions and Support, Inc. Consolidated Balance Sheets     June 30, September 30, 2015 2014 (unaudited)

ASSETS

Current assets Cash and cash equivalents $ 15,759,516 $ 15,214,584 Accounts receivable 3,903,094 4,419,863 Unbilled receivables, net 4,865,158 7,425,728 Inventories 4,138,705 5,470,786 Deferred income taxes 471,387 3,245,223 Prepaid expenses and other current assets 827,426 750,108     Total current assets 29,965,286 36,526,292   Property and equipment, net 7,225,633 7,467,663 Non-current deferred income taxes - 57,707 Other assets 168,949 110,848     Total assets $ 37,359,868   $ 44,162,510    

LIABILITIES AND SHAREHOLDERS' EQUITY

  Current liabilities Accounts payable $ 359,498 $ 2,402,652 Accrued expenses 2,298,990 4,077,290 Deferred revenue 739,538 526,320     Total current liabilities 3,398,026 7,006,262   Deferred income taxes 139,344 132,999 Other liabilities 11,991 11,725     Total liabilities   3,549,361     7,150,986     Commitments and contingencies - -   Shareholders' equity

Preferred stock, 10,000,000 shares authorized, $.001 par value, of which 200,000 shares are authorized as Class A Convertible stock. No shares issued and outstanding at June 30, 2015 and September 30, 2014

- -  

Common stock, $.001 par value: 75,000,000 shares authorized, 18,736,089 and 18,714,449 issued at June 30, 2015 and September 30, 2014, respectively

18,736 18,715   Additional paid-in capital 51,052,953 50,697,497 Retained earnings 3,382,580 6,684,902

Treasury stock, at cost, 1,846,451 shares at June 30, 2015 and 1,756,807 at September 30, 2014

  (20,643,762 )   (20,389,590 )   Total shareholders' equity   33,810,507     37,011,524     Total liabilities and shareholders' equity $ 37,359,868   $ 44,162,510             Innovative Solutions and Support, Inc. Consolidated Statements of Operations (unaudited)   Three months ended Nine months ended June 30, June 30, 2015 2014 2015 2014   Net sales $ 4,919,689 $ 10,575,976 16,929,995 34,176,802   Cost of sales   2,988,044     7,413,849   10,653,149     23,449,115   Gross profit 1,931,645 3,162,127 6,276,846 10,727,687   Operating expenses: Research and development 799,340 647,894 2,101,812 1,935,692 Selling, general and administrative   1,397,165     1,854,332   4,911,546     5,633,832 Total operating expenses 2,196,505 2,502,226 7,013,358 7,569,524   Operating income (loss) (264,860 ) 659,901 (736,512 ) 3,158,163   Interest income 6,372 5,280 18,269 16,246 Other income   11,173     7,939   31,405     27,307 Income (loss) before income taxes (247,315 ) 673,120 (686,838 ) 3,201,716   Income tax expense   3,284,658     176,090   2,615,484     911,874   Net income (loss) $ (3,531,973 ) $ 497,030 $ (3,302,322 ) $ 2,289,842   Net income (loss) per common share: Basic $ (0.21 ) $ 0.03 $ (0.20 ) $ 0.14 Diluted $ (0.21 ) $ 0.03 $ (0.20 ) $ 0.13   Weighted average shares outstanding: Basic   16,910,475     16,951,360   16,930,522     16,918,423 Diluted   16,910,475     17,177,572   16,930,522     17,141,532  

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Innovative Solutions & Support, Inc.Relland Winand, Chief Financial Officer610-646-0350