Good morning, welcome to the Share Series. I'm Dan Aldridge, founder and managing partner of the Share Series. With us today we have two individuals that will be speaking. We have the CEO, Shahram Askarpour, and CFO, Michael Linacre, both of IS&S. They're going to go through some opening comments, then I'll kick it back for questions. Remember to use the Ask Questions button at the top of the video player to submit questions throughout. Any questions that don't get asked, we'll follow up on. As we go through, there's also information on the right-hand side that has bio information and other pertinent company information. With that, I will turn it over to Shahram for opening comments. Shahram? Thank you, Dan. Welcome everyone. IS&S was founded in 1988 on an idea that aircraft operators will frequently upgrade their avionics as electronic technology grows. We are an IP-rich company that generates an average of 7 patents per year to protect our inventions and product technologies. We serve 3 market segments with our avionics products, being business aviation, air transport, and military. We also provide avionics on new aircraft production, which we refer to as OEM, as well as aftermarket or retrofit. A year ago, we had a transition in the leadership of the company from our founder to me. As a result, we have made some adjustments in our growth strategy. I've been with IS&S for 20 years, initially as head of engineering and later as the president, while playing a key role in product development and marketing strategy. Our previous growth strategy has been focused on organic product development. For example, we initially developed and certified the Utility Management System for the Pilatus PC-24, and we plan to utilize this existing certified system as our platform for autonomous flight. We also plan to leverage our strong financial position and our underutilized infrastructure to augment the successful organic growth with targeted product acquisitions that help accelerate our growth as our current production infrastructure can triple our sales with little to non-CapEx requirement. In the past 5 years, we've had top-line CAGR of 15%. As a result of our organic growth strategy, we have a rich product portfolio that has been designed and certified to the highest level of safety, Level A, and is utilized on some of the world's most prestigious aircraft, such as the Boeing 767. We are vertically integrated in our facility in Exton, Pennsylvania. We internally perform all aspects of product development and qualification. We manufacture all products, including all sub-assemblies in-house. We have an automated surface mount technology laboratory that produces all our electronic circuit cards. We machine our mechanical parts. We even paint our equipment in-house. Our direct cost of labor is less than 5% of our revenue. We achieve this through innovation in product design and automation in the factory. The reduced labor content is what allows us to achieve attractive gross margins of 60% as well as enable us to significantly increase our revenue without significant increase in skilled labor. As I mentioned before, we are currently at 30% capacity in our production. Our early products mainly consisted of individual primary flight instruments designed for military aircraft, such as our highly reliable and accurate Air Data Computers that sense and compute aircraft speed and altitude, as well as engine instruments that measure and display critical aircraft engine parameters. In early 2000s, there was a mandate by the FAA to reduce vertical separation of aircraft from 2,000 feet to 1,000 feet when flying at and above 29,000 feet. The IS&S air data products met and exceeded the accuracy requirements. Yet captured over 60% of the world business aircraft, generated $100 million in cash, and invested that money over the years to grow our product portfolio. Example of our system integration products range from business aviation aircraft to large air transport, civil and military aircraft. Our 757, 767 cockpit is installed in over 500 aircraft, including fleets of FedEx, Amazon, DHL, and American Airlines. We have integrated individual cockpit instruments inside the large LCD displays, adding high-performance navigation systems utilizing our precise Beta-3 GPS receiver. That allows for highest navigation level of accuracy of a tenth of a nautical mile in flight, as well as precision approach for landing, thus resulting in high integrated cockpit solutions. In the last 10 years, we've been developing products for flight control, such as our ADAHRS, which is an integrated computer that senses and provides all aircraft primary flight, including aircraft altitude, airspeed, outside air temperature and vertical speed. Our Utility Management System, or UMS, that replaces 22 control and monitoring subsystems in the aircraft, and our autothrottle product line that significantly reduces pilot workload, protects the engine and aircraft envelope from safety critical and over and under speed conditions. The Utility Management System, or UMS, and our autothrottle product line have provided us with unique actuation and monitoring technology that is the engine for our near-term organic growth strategy. We are currently in discussion with other aircraft manufacturers to incorporate our UMS product line in their various platforms, as well as expanding the platforms for autothrottle product line. Organic growth will also be realized through our aftermarket solutions that replace other obsolete and inadequate systems in all three market segments. The acquisition strategy is to incorporate established cockpit and cabin product lines in our production facility, gaining significant operating leverage. I would now like to talk about our long-term growth strategy. The future of aviation is in autonomous flight, with the 2 major milestones being, first, reduce the pilot count to 1, and second, to eliminate the pilot in the aircraft. Our focus is on the lucrative near-term opportunity of reducing the pilot count on Part 25 aircraft. That is aircraft with gross weight of over 2,500 lbs, which covers most of the multi-engine aircrafts out there. These aircraft are currently required to fly with 2 or more pilots on board. The business case is compelling. Starting at larger business aircraft, such as the Citation XLS and above, where the ROI is less than two years, to passenger and cargo airline operator-operations, where a typical passenger airliner has an average of 10 to 16 full-time pilots on staff per aircraft, and the ROI is less than a year. Reducing that count to half is a highly attractive proposition for all operators of Part 25 aircraft. The aircraft operators have been demanding a solution that reduces pilot count from two to one. The certification authorities are reacting to that demand. We look at the initial phase of the flight autonomy to be one pilot in the aircraft with fully autonomous system capable of performing all phases of flight and ground activities. The automated system communicates with a ground station that includes pilots monitoring many aircraft and assisting the flying pilot through the automated flight system. Two product lines developed by IS&S are the existing certified equipment that enable phase one operations of autonomous flight, being our integrated cockpit system and the Utility Management System. Our integrated cockpit system is a central display and control hub for all aircraft functionalities, including a highly accurate navigation computer. The system provides pilot commands in a digital format to all aircraft subsystems, making it ideal for automation of the pilot activities. The Utility Management System monitors and controls all aircraft functions and subsystems by directly monitoring sensors, as well as driving and monitoring the position of actuators that control the aircraft paths. This is the basis for the phase one of automation. Both systems have been successfully fielded on business jet aircraft for many years. As I mentioned, phase one is an achievable and highly lucrative proposition for the market, and we are well-positioned with our technology to take advantage of this opportunity. We believe that we are well-positioned, given our strong balance sheet and financial stability, to take advantage of the upcoming short-term changes in the industry, as well as accelerate our current growth by targeted acquisitions that yield similar to our 60% gross margin products. We have a strong balance sheet, being cash flow positive for the last four years. We have generated over $8 million in cash in 2022, with $6 million in free cash flows. We have over $17 million in cash, no debt. We own our facility, our airplane, and equipment, and our facility is at 30% utilization, allowing us to leverage acquiring products to accelerate the growth. Thank you for attending our seminar. I mean, I'll open the floor to questions. Shahram, that's a great overview. Thank you for that. Let's dig in a little bit. Let's talk about the key differentiators with IS&S, particularly in the products you sell and the end markets that you serve. Being a small business, competing with companies that are orders of magnitude larger than us, we tend to focus on developing products where we have a technological advantage. We take our IP seriously, protect it, and enforce our patents. In the aftermarket side, we take into consideration the ease of installation, minimizing the aircraft downtime, and reducing the pilot training time, since all these are factors that build the total cost to the operators. As I mentioned, we serve three market segments, being military, air transport, and business aviation. We have been staying away from the low end of the general aviation aircraft because there are relatively lower barriers to entry. Dan. Yeah, I got it. Thank you. You mentioned a couple of global customers that you already have. You know, how do we think about that in terms of potential growth? When you think about, you know, growth, how do you prioritize organic versus inorganic? In the new aircraft market, we see our main areas of growth being based on our standby instrument and Utility Management System product lines. We're marketing those aggressively to a number of international aircraft manufacturers. On the aftermarket side, our autothrottle install base is growing. We are launching a new Engine-Indicating and Crew-Alerting System for the 757, 767 aircraft. We are experiencing increased demand for our display and Air Data products for the military market. In terms of inorganic growth, we have hired a business development professional that leads the team that identifies and evaluates product opportunities for acquisitions. In terms of how we prioritize, each year we allocate funding for IR&D. That is the source of our organic growth. We plan to use the excess cash for product acquisitions. Sorry, I keep going on mute. We've had a dog in the neighborhood barking. Let's kick it over to Mike so he can get some questions in. Mike, can you walk us through revenue mix a little bit? How much is commercial versus defense, you know, government? How has that evolved over time? Yeah. Thanks, Dan. Yeah, when you look at our revenue mix, you really can look at this in a couple different ways. Our OEM was our new manufacturing airplane business, our aftermarket and our repairs. When you kinda slice it those three ways, it's about 40% OEM, 40% aftermarket, 20% repairs. You can also look at it by business aviation, air transport and military, really is the defense government portion. Really, when you look at it that way, it's about a third, a third, a third. Really how this has evolved over time, if you look at our financial results, I guess pre-2018, there was a lot of revenue fluctuations from year to year. A lot of that is in the air transport aftermarket segment where it really changes from year to year depending on industry mandates and items such as that. Since 2018, we've invested in product development and developed relationships to get more in the OEM business where the revenue is more steady and predictable. In the history, you know, historically, the OEM portion, business aviation, those parts were a little bit lower as a percent of total sales. But with OEM, we have that more predictability, and actually with OEM and repairs, roughly 60% of our business is relatively predictable, with the other 40% changing slightly from period to period. Okay. Mike, we'll stick with you for the next one. Given your strong financial position and liquidity, you know, what are your priorities for capital allocation as we move forward? Yeah. I guess in short, we really want to take the capital and reinvest it back into the business. That's where we see the most value created to the company. Shahram mentioned some of our long-term and short-term growth strategies, organic and non-organic. You know, mainly with our inorganic strategies of growing via acquisitions of product lines, we certainly plan on putting funds aside for that. I mentioned we have $17 million in cash. We also plan on continuing our product development as part of our organic short-term and long-term goals. We plan on increasing our R&D to add that value. We've seen recently more R&D of about 10%, but really that needs to be around 13%-15%. Overall, our business doesn't really require a whole lot of capital on an annual basis as far as machinery and equipment. A lot of our capital will be dedicated to achieve both our, as mentioned, long-term and short-term organic and inorganic strategies. All right. Shahram, let's switch back over to the product side. Can you talk a little bit about what you're most excited about in the portfolio? Sure. Our autothrottle product lines have many valuable and unique features that make them desirable for the market. We provide protection for the engine that has significant cost-saving potentials on these non-feathered turboprop aircraft. We provide for safety-critical aircraft underspeed and overspeed protection. In the twin-engine turboprop, props like the King Airs, we provide what we call VMCA protection. That is, in case of loss of an engine, we control the power of the remaining engine to avoid deadly loss of control due to unbalanced thrust. These are all patented algorithms that we have that provide us with a lot of rich IP in the market. When we look at our long-term product strategy, the Utility Management System or our UMS is the exciting product. We see a lot of potentials for this unique product. Essentially, it provides the aircraft manufacturers with an open architecture platform to integrate their aircraft controls into one system, replacing as much or over 22 federated boxes in the aircraft. As a result of that, it provides weight savings, power savings, significantly improves the aircraft reliability. It handles a lot of obsolescence issues that some of the aircraft manufacturers struggle with. It increases the mission readiness of the aircraft. Long-term benefits of this product is that it makes the aircraft ready for autonomous flight. As we talked earlier, autonomous flight is you know, pilot reduction is I guess, is the kind of the keyword these days at certification authorities. you know, handling the pilot shortages and increased demand in air transport flights. autonomy and flight automation is key. and the Utility Management System is designed to ease that transition. Our system is certified to the highest level of safety. It's all certified to Level A design for flight controls. We've got over 1,000 units fielded and flying. you know, every year we deliver, you know, 200 more of these things. there is a good foundation there for that product. we see a lot of potentials there. That kind of what makes me excited. It's, you know, it's a great product for the market and, you know, we see good potential there. Obviously, there's been a lot of progress, you know, in the eVTOL market. You know, is there an opportunity for you guys to capture additional market share right as they come online? me online, we have a number of certified products that, you know, takes that market. For example, our ADAHRS provides all primary flight data in the aircraft. And that's a universal product that some of these I guess eVTOL initiatives are utilizing that product line as part of their platform. If, you know, if and when they become a reality, you know, we're there. Also our Utility Management System product line, again, it's a very versatile basis for flight controls. It's very integrated, and it's already certified to the highest level of safety and can be utilized for those kind of platforms. We talked about growth through M&A a little bit earlier. Can you talk a little bit about opportunities or the types of assets that you're looking at? I mean, the key thing for us is to bring in product lines that, one, we can gain the same gross margins as we have in our existing internally developed products, utilizing and leveraging the existing infrastructure. Essentially there's no overhead associated with that and the product gross margins would drop to the bottom line for us. In those terms, we're looking at cabin products as well as cockpit products that again, achieve similar gross margins. Whether there's direct product divestitures from existing companies or whether we can identify companies that are out for sale that we could bring their products in-house. I'm not looking at this time to run somebody's business somewhere else. kind of mainly looking at focusing at our own initiatives and our growth initiatives. If we can identify products that we can bring in-house to take advantage of the kind of 70% or so capacity, extra capacity that we have in our factory. Okay. Thanks. Mike, let's talk about supply chain, right? A big topic for a lot of companies, you know. Did you guys have any major impacts? Then what are you doing to mitigate those? Yeah. We haven't really seen significant impacts from the prolonged supply chain issues, which are still ongoing. We're able to buy ahead. We built our inventory, we've built safety stock. If you see it look at our inventory from the last fiscal year, we're about $5.5 million. Where historically, you know, we ran about $4.5 million. Some of that is because we've grown, but, you know, another part of it is that we're, you know, we do have higher amounts on hand to add that flexibility. We also work with multiple vendors to get items in-house. In addition, we can also build some of the items in-house that we buy, so we have that, also that level of flexibility as well. Okay. Let's talk about margins a little bit. You know, you're obviously gonna be expanding capacity utilization, you know, as you move forward, you know, to take up that 70% that's there. You know, what kind of impact is that gonna have on margins, and how should investors think about that? Yes. I mean, this is our largest financial potential here, the opportunity. As Shahram mentioned, we're currently at 60% gross margins, and our plant is only at 30% capacity. The more we grow, the more operating leverage we're going to achieve. This is assuming that we're producing items that are similar in gross margin and similar cost structure. As long as we continue to grow, we should continue to see that leverage. You know, as Shahram also mentioned that gross margin will drop right to the bottom line without really expecting a lot of incremental overhead type costs with this growth. Okay. We're about out of time. Mike, I'm gonna ask you one more, and then I'm gonna kick it back over to Shahram for final comments. We've talked a lot about M&A, you know, the opportunities that you have there. What's your preference for financing in terms of the capital structure? Debt, equity, hybrid, convertible? We're, I mean, we're open to, you know, a few options here. I mean, we have $17 million in cash, that's our first choice if we can fund an acquisition with our cash. Especially, the acquisitions we've been looking at have been on the relatively small side, between $5 million-$15 million in revenue. You know, we'd also be willing to take on debt responsibly, not to over-leverage, as far as, you know, taking on any kind of line of credit or term. Also, you know, we're open to issuing stock, you know, hybrid or convertible. We're really open to all options as far as growth. That's kind of our preference. Okay. Thanks. Shahram, I'm gonna kick it back to you for closing comments. I'll wrap with a couple logistics. Okay. Well, thank you all for joining us and listening to our presentation here. Really look forward to talking to you in the near future as the company progresses. That's all we got. Well, thanks, guys. Mike, Shahram, this was great. Thank you to the audience for listening. Stay tuned for the next session that starts immediately after this with X-energy. Please tuned in for the next event on February twenty-sixth. With that, thank you much for your interest and your participation. Have a great day.