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<SEC-DOCUMENT>0001104659-05-048741.txt : 20051017
<SEC-HEADER>0001104659-05-048741.hdr.sgml : 20051017
<ACCEPTANCE-DATETIME>20051017154720
ACCESSION NUMBER:		0001104659-05-048741
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20051017
ITEM INFORMATION:		Results of Operations and Financial Condition
FILED AS OF DATE:		20051017
DATE AS OF CHANGE:		20051017

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INNOVATIVE SOLUTIONS & SUPPORT INC
		CENTRAL INDEX KEY:			0000836690
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROGRAMMING SERVICES [7371]
		IRS NUMBER:				232507402
		STATE OF INCORPORATION:			PA
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-31157
		FILM NUMBER:		051140958

	BUSINESS ADDRESS:	
		STREET 1:		420 LAPP RD
		CITY:			MALVERN
		STATE:			PA
		ZIP:			19355
		BUSINESS PHONE:		6108899898

	MAIL ADDRESS:	
		STREET 1:		420 LAPP ROAD
		CITY:			MALVERN
		STATE:			PA
		ZIP:			19355
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>a05-17728_18k.htm
<DESCRIPTION>8-K
<TEXT>
<html>

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</head>

<body lang="EN-US">

<div style="font-family:Times New Roman;">

<div style="border:none;border-top:double windowtext 9.0pt;padding:0in 0in 0in 0in;">

<p align="center" style="border:none;margin:0in 0in .0001pt;padding:0in;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

</div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">UNITED
STATES<br>
</font></b><b><font size="5" style="font-size:18.0pt;font-weight:bold;">SECURITIES AND EXCHANGE COMMISSION</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Washington, DC 20549</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<div align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="1" width="25%" noshade color="black" align="center">

</font></div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">FORM&nbsp;8-K</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="3" face="Times New Roman" style="font-size:12.0pt;font-weight:bold;">CURRENT
REPORT</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="3" face="Times New Roman" style="font-size:12.0pt;font-weight:bold;">Pursuant
to Section&nbsp;13 or 15(d)&nbsp;of the</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="3" face="Times New Roman" style="font-size:12.0pt;font-weight:bold;">Securities
Exchange Act of 1934</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman">&nbsp;</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold;">Date of Report (Date of earliest event
reported):&nbsp;</font>
October&nbsp;17, 2005</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<div align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="1" width="25%" noshade color="black" align="center">

</font></div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">INNOVATIVE SOLUTIONS AND SUPPORT,
INC.</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Exact name of registrant as specified
in its charter)</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="32%" valign="top" style="padding:0in 0in 0in 0in;width:32.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Pennsylvania</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="32%" valign="top" style="padding:0in 0in 0in 0in;width:32.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">0-31157</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="32%" valign="top" style="padding:0in 0in 0in 0in;width:32.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">23-2507402</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="32%" valign="top" style="padding:0in 0in 0in 0in;width:32.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(State or other jurisdiction of<br>
  Incorporation)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="32%" valign="top" style="padding:0in 0in 0in 0in;width:32.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Commission File<br>
  Number)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="32%" valign="top" style="padding:0in 0in 0in 0in;width:32.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(I.R.S. Employer<br>
  Identification No.)</font></p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold;">720 </font>Pennsylvania Drive<br>
Exton, Pennsylvania 19341</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Address of Principal Executive
Offices) (Zip Code)</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">(610)
646-9800</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Registrant&#146;s telephone number,
including area code)</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Check the appropriate box below if the Form&nbsp;8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Written
communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR
230.425)</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Soliciting
material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14-12)</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Pre-commencement
communications pursuant to Rule&nbsp;14d-2(b)&nbsp;under the Exchange Act (17
CFR 240.14d-2(b))</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Wingdings" style="font-size:10.0pt;">o</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Pre-commencement
communications pursuant to Rule&nbsp;13e-4(c)&nbsp;under the Exchange Act (17
CFR 240.13e-4(c))</p>

<div style="border:none;border-bottom:double windowtext 9.0pt;padding:0in 0in 0in 0in;">

<p style="border:none;margin:0in 0in .0001pt;padding:0in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

</div>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div style="font-family:Times New Roman;">

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Item 2.02</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Results
of Operations and Financial Condition.</b></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On October 14,
2005, Innovative Solutions &amp; Support, Inc. conducted a conference call to
pre release its fourth quarter and year-to-date sales and earnings for the
period ended September 30, 2005.&#160; The
conference call also discussed new business recently received and addressed a
business outlook as well.&#160; A transcript
of that conference call is attached as Exhibit 99.1 to this report and
incorporated herein by reference.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The
information in this report (including Exhibit 99.1) is being furnished pursuant
to Item 2.02 and shall not be deemed to be &#147;filed&#148; for purposes of Section 18
of the Securities Exchange Act of 1934 (the &#147;Exchange Act&#148;) or otherwise
subject to the liabilities of that section, nor shall it be deemed to be
incorporated by reference in any filing under the Securities Act of 1933 or the
Exchange Act.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EXHIBIT
INDEX</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="8%" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:8.34%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Exhibit
  No.</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>
  </td>
  <td width="89%" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:89.46%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Description</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="8%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:8.34%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="89%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:89.46%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.34%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">99.1</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="89%" valign="top" style="padding:0in 0in 0in 0in;width:89.46%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Transcript of October 14, 2005 conference
  call that pre released fourth quarter and year to date sales and earnings as
  well as addressing new business recently received and a business outlook.</font></p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>

<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>
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<div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">SIGNATURE</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman">&nbsp;</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="50%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Innovative Solutions &amp; Support, Inc.</font></p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="50%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="50%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date:&nbsp;
  October 17, 2005</font></p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="23%" valign="top" style="border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 0in 0in;width:23.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ James J. Reilly</font></p>
  </td>
  <td width="23%" valign="top" style="padding:0in 0in 0in 0in;width:23.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in 0in 0in 0in;width:50.0%;">
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">James J. Reilly</font></p>
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  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>

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<p align="right" style="margin:0in 0in .0001pt;text-align:right;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit 99.1</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Innovative
Solutions&nbsp;&amp; Support</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Moderator:
Geoffrey Hedrick</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">October&nbsp;14,
2005</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">10:00&nbsp;a.m.
EST</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OPERATOR:&#160; Good morning, ladies and gentlemen, my name
is India (ph), and I will be your conference facilitator today.&#160; At this time, I would like to welcome
everyone to the Innovative Solutions and Support Preliminary 2005 Sales and
Earnings and Business Outlook conference call.&#160;
All lines have been placed on mute to prevent any background noise.&#160; After the speaker&#146;s remarks, there will be a
question-and-answer period.&#160; If you would
like to ask a question during this time, please press star and the number one
on your telephone keypad.&#160; If you would
like to withdraw your question at any time, please press the pound key.&#160; Thank you.&#160;
It is now my pleasure to turn the floor over to your host, Mr.&nbsp;Geoffrey
Hedrick.&#160; Sir, the floor is yours.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK,
CHAIRMAN AND CEO, INNOVATIVE SOLUTIONS AND SUPPORT:&#160; Good morning, this is Geoff Hedrick, I&#146;m
Chairman and CEO of Innovative Solutions and Support, and I welcome you to our
conference call this morning, where in just a few minutes that we&#146;ll discuss
new business recently received, preliminary fourth quarter sales and earnings,
and our business outlook going forward.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This is preliminary to
our year-end conference call, which will occur around the 10th of
November.&#160; Joining me from our corporate
offices in Exton, Pennsylvania is Roman Ptakowski, our President, and Jim
Reilly, our CFO.&#160; Before we get started,
I want Jim to read into the conference call our Safe Harbor message.&#160; Jim, go ahead.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">JIM REILLY, PRINCIPAL
ACCOUNTING OFFICER AND CFO, INNOVATIVE SOLUTIONS AND SUPPORT:&#160; Geoff, thank you and good morning,
everybody.&#160; Certain matters discussed in
this conference call, including operating and financial results for future
periods, are forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially, either
better or worse, from those discussed, including other risks and uncertainties
reflected in the company&#146;s prospectus and 10-K on file with the SEC.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Geoff, back to you.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Thank you, Jim.&#160; I&#146;m pleased to report that the &#150; we are
beginning a successful product transition from predominantly data RBSM (ph)
product offerings, which satisfied the peak demand of the 2005 mandate.&#160; In the prior quarter, we booked in over $5
million worth of new flat panel business, including a significant order from
the Canadian National Defense for their C130 (ph) from Snow Aviation (ph).&#160; And importantly, initial orders from ABX Air
(ph) for 767 retrofits, as well as the Boeing 767 Tanker and LTAC (ph).</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This past June, we had
announced our flat panel display system was selected for royal Netherlands Air
Force KC10 (ph).&#160; During the quarter, we
received an order from Boeing for three ship sets valued at approximately a
million dollars.&#160; In addition, last June&nbsp;the
company announced that it teamed with ABX Air (ph) to upgrade 767 cockpits with
flat panel display systems.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Since that announcement,
ABX Air (ph) has placed orders for $1.6 million to retrofit their 767 presently
undergoing cargo tour (ph) modifications.&#160;
The first 767 has been upgraded with a primary white and navigation
display, we have successfully completed ground and flight testing, submitted
all data requirements for issuance of the TSO (ph) and STCs (ph), and the FAA
is presently clearing up the paperwork, we expect the &#150; both the TSO (ph) and
FCC for the 767 to be issued shortly, within the next seven to 10 days.&#160; We were advised by the FAA there were no
problems with our submittal.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Excuse me.&#160; I will comment on the significance of this
achievement later.&#160; Earlier, we announced
the company received T130 (ph) flat panel engine display systems from Lockheed
Martin&#146;s Spar (ph) Aerospace, the Royal New Zealand Air Force.&#160; Further, we were &#150; we were selected by
Marshalls of Cambridge (ph), a highly respected European systems integrator,
for their common core Avionics upgrade, meaning that whenever they do an ABIMX
(ph) upgrade, our flat panel system will be that core of that upgrade, so it&#146;ll
be broadly applicable to not only C130s (ph), but specifically it&#146;ll be used on
L1011s (ph) and other aircraft, that&#146;s a remarkable achievement.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">During the quarter, we
built on these successes with orders from Snow Aviation (ph), a systems
integrator, and the Canadian Department of National Defense for retrofit of
their C130s (ph).&#160; The initial D&amp;D
(ph) order is valued at approximately two and a half million, in addition the
order contains an option for an additional million dollars of equipment, and
provides a good basis from which orders for additional features and functions
will be generated.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We are &#150; we have pursued
C130 (ph) initially with this &#150; these panels, and we&#146;ll broadly apply new
systems to &#150; systems, including fuel gauging and control systems.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Boeing continues to
increase its requirements for 767 Tanker program, and has added an additional
half a million dollars to their basic contract with us.&#160; In addition, half a million dollars we
received for flat panels on the LK (ph) program.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">As noted in prior
communications, selection by Boeing, Lockheed Martin, and ABX Air (ph) provides
the company with fine positioning for additional opportunities, and is a good
leading indicator for future success.&#160; We&#146;re
just at the start of our growth curve.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We also enjoyed an
additional Air Data (ph) and RBSM (ph) business in the quarter, as Genesis
Three (ph) Engineering ordered over a million dollars worth of RBSM (ph)
equipment for the Falcon 20 (ph) airplane.&#160;
Various other Air Data (ph) business was received as well during the
quarter, and the total bookings were substantially more than last quarter,
upwards of $10 million.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Of that 10 booked, over
40 percent in backlog is now flat panel.&#160;
The lack of progress to the King Air (ph) program has caused us to
conservatively reduced some of our backlog, and as we pursue opportunities with
other customers who will proceed more quickly with this certification.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Preliminary fourth
quarter and fiscal 2000 results.&#160; The
results are preliminary, and only because our fourth quarter and year end
results are in process of being audited by D&amp;T (ph), and mid November&nbsp;we
will release audited numbers, including the bank &#150; the balance sheet, and cash
flow statement, and schedule&nbsp;our conference call to address the quarter
and update you with anything new.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Sales in Q4 were a
disappointing 8.2 million.&#160; This is &#150;
provides what we believe a low point in which we will build with our new
product line, and exploit opportunities in RBSM (ph) that have waited for us,
our new low cost solution.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">However, the gross
margins were still 62 percent, and for the fiscal year, our gross margin was a
record 67 percent.&#160; The net income for
the quarter was five cents, the net income for the fiscal year was a record
18.4 million, or over a dollar a fully diluted share.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our cash increased by a
record 17.3 million, or &#150; and is now 95 cents per diluted share.&#160; The cash balance for the fiscal year was a record
83 million, or four and a half dollars, 4.55 business out.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Prospects for our flat
panel business are paramount to understanding our confidence for the continued
growth of Innovative Solutions and Support.&#160;
Our recent program wins attended flat panel orders, TSOs (ph), and most
significantly the long awaited STC (ph) for a larger transport aircraft has
provided remarkable stimulus to the &#150; to the general acceptance and our own
optimism for the future.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">IS&amp;S is successfully
positioning itself as a systems integrator.&#160;
Not only the flat panels, but other systems on board, including areas in
which we&#146;ll do inertial (ph) sensing will advance our product base and provide
more of a total cost fit (ph) solution.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">And working with other
suppliers who can supply us with products like flight management systems, we
can offer a broad and diverse product line.&#160;
We are positioned to provide increasing shelf (ph) of products for
retrofit (INAUDIBLE) programs like C130 (ph), KC10 (ph), 135 (ph), 5767 (ph),
and are in process of developing a standard cockpit configuration across the
Boeing 727, 37, 47, 57 and 67 fleets.&#160;
This will provide our customers with </font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">significant savings and
training, and provide us, we believe, with an extremely large business
opportunity going forward.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On the &#150; on the Boeing
757, 67 market potential is significant in itself.&#160; There are nearly 1,900 early generation
aircraft that are prime candidates.&#160; And
as recently in this &#150; as &#150; in the last 18 months, the value of the Boeing 757
specifically has gone up by a factor of almost two to one, it&#146;s because of the
demand.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">People are investing
significant amount of money in ringlets (ph) for these aircraft, and we expect
the same people to be compelled to buy our now STC (ph) upgrade.&#160; This is the first STC (ph) for a 767, the
only one to our &#150; for our retrofit STC (ph), the only one available.&#160; And our price point for the system, and its
ability to be installed in a matter of days instead of weeks make it a
compelling retrofit.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">As previously reported,
Marshalls of Cambridge (ph) in the U.K. selected IS&amp;S flat panel system for
their common core avionics upgrade offering.&#160;
We are &#150; we are currently in late stage negotiations for a number of
military programs with Marshalls of Cambridge (ph).&#160; We see flat panel demand building as we
expand our customer base.&#160; Our cockpit
and IP, or information portal flight deck system is compact lightweight, and
TSO&#146;d (ph) to the latest FAA air worthiness &#150; air worthiness circular
guidance.&#160; This allows the system to be
easily retrofitted, and certified to a broad range of aircraft types.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The &#150; obtaining the
initial STC (ph) significantly facilitates subsequent STCs (ph), and will allow
application to a broad range of aircraft relatively easily.&#160; The weight savings of more than 200 pounds in
the 767, as an example, saves dramatically on fuel, and increases the dispatch
reliability of the aircraft by a factor of 10 or more.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our cockpit IP is offered
at a price point that is uniquely attractive, not only in air transport and
military markets, but now has application in general aviation applications as
low as light twins and high performance singles (ph).&#160; We are impressively pursuing general
aviation, and have initially targeted a variety of aircraft, both turbo prop,
and turbo jet, like Learjet, Falcon (ph), and Citation.&#160; For all of these, we have solutions in hand
for flat panel retrofit.&#160; We are now in
discussions with retrofit service providers who can buy and install our
products.&#160; We anticipate that this will
be a source of orders and revenue during the current fiscal year.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We continue to see a
market for our air data systems, RBSM (ph) compliance for bus jets (ph) is just
over 70 percent at the last FAA audit released two months ago.&#160; As recently reported in trade press (ph),
many of the remaining operators have held off RBSM (ph) because they are
planning to sell their aircraft, or awaiting to &#150; for an opportune time to
perform the installation.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Aircrafts that are not
RBSM (ph) compliant are commanding many thousands of dollars less in resale
than similar aircraft that have undergone the upgrade.&#160; The cost benefit pendulum is swinging
strongly in favor of having the work done quickly.&#160; The high price of fuel, which continues to be
a problem at flying at low altitudes, provides additional pressure.&#160; As demand in pre-owned aircraft market rises,
operators of older air models appear to be ready for compliance.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We believe our latest
offering, which is a latest generation product that incorporates auto pilot
interface, and new technology which lowers the total installed cost and time
will satisfy this market.&#160; To address the
financial concern of smaller operators, IS&amp;S has produced a new low cost
generation for &#150; generation for integrated air data display system.&#160; And that product will satisfy, we believe,
these users that have been holding out and waiting.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The company expects
continued strong demand for air data systems in the market segment, as
variously continue to (INAUDIBLE) &#150; in the &#150; sorry &#150; excuse me &#150; let me get a
drink here &#150; sorry.&#160; Strong demand for
air data a equipment in the military segment has divariously (ph) continued to
replace aging equipment.&#160; We believe it&#146;s
a total market potential that we have identified for our flat panel systems is
well over a billion dollars over the next few years.&#160; This potential will allow us to continue to
grow revenues at rates similar to our historic rate of growth.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Keep in mind that our
business fluctuates to the nature of the customer base.&#160; We do not grow in a straight line, but rather
respond to customer patterns and product introductions, and will inevitably
oscillate on an upward trend.&#160; On balance,
we expect to make steady improvement near term, quarter comparisons may be
below our historic and planned growth rates.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I&#146;d like to answer any
questions and turn it over to you.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OPERATOR:&#160; Are you ready for questions at this time,
sir?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Yes, I am.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OPERATOR:&#160; Thank you.&#160;
At this time I&#146;d like to remind everyone that if you&#146;d like to ask a
question, please press star and the number one on your telephone keypad.&#160; Again, if you&#146;d like to ask a question, that&#146;s
star and then one on your telephone keypad at this time.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our first question is
coming from Kevin Wenck of Polynous Capital.&#160;
Please go ahead.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">KEVIN WENCK, POLYNOUS
CAPITAL:&#160; Morning, Geoff.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Good morning.&#160;
I&#146;m sorry, I got a cold, just came back from Europe.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">KEVIN WENCK:&#160; Well the &#150; well the Northeast isn&#146;t treating
you very well either with all the rain.&#160;
But the &#150; on one hand, the outlook for the business sounds bright with
new product introductions, backlog and things like that.&#160; As you know yourself, the current &#150; or the
latest quarter&#146;s revenues are below expectations, and I just wondered what your
thoughts were as to, you know, how long you may be in a somewhat depressed
revenue position, regardless of the backlog increases and indications of
interest about new products.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Thank you for the question.&#160; We obviously are not pleased with the outcome
of this last quarter as far as the shipments were concerned.&#160; I would tell you that the third month of the
quarter we shipped about $5 million of the &#150; of the eight that we shipped, and
it&#146;s not an insignificant amount of that, something on the order of a million
and a half dollars was shipped on orders received in that month in flat
panels.&#160; And that&#146;s the good news.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I have &#150; I would like to
defer forward projections on our &#150; until our year end normal conference call,
and the reason I&#146;m &#150; I would like to defer them is we are in the process of
doing a more accurate assessment of the &#150; what we see as remarkable recent
demand.&#160; And there&#146;s clearly a tendency
when you look at the initial &#150; the recent demand to extrapolate it and be
potentially overly confident.&#160; So I am
deferring that, if you &#150; until next month, about three weeks from now, when we
will have a more accurate look.&#160; It
clearly &#150; our object is to continue to grow this business on a long-term growth
rate at &#150; in the double-digits, as I&#146;ve always talked about.&#160; And that is what is in our sites.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We believe that we have
with this recent breakthrough with STCs (ph) and business that supports that
enthusiasm, see not simply a replacement for RBSM (ph) in flat panels, but
rather an offering of a broader range of products, which the flat panel design
and STC (ph) is a facilitator.&#160; As an
example, we have recently gotten an order from the &#150; as you know, from the
Canadian airforce, and they are now extremely interested in our ability to
broaden the application of our equipment to other systems on board their
airplanes, and we&#146;re in discussions on that.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">So it becomes a
facilitator for a broader systems integration approach.&#160; So a summary is, I&#146;d like to defer that
question, I would tell you that I don&#146;t expect anything but an upward trend
going forward, and within a matter of &#150; near the end of this year, we have &#150;
certainly at this point we&#146;re very optimistic, but I am withholding just any
kind of real guidance until we do a careful analysis of the market demand.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">KEVIN WENCK:&#160; OK.&#160;
Two other general questions.&#160; One,
is although the weight saving features of your equipment would suggest in an
era of higher fuel prices that they&#146;re going to be in demand, but in the short
term, are you seeing any behavior of people just parking aircrafts that they
might have been using on a discretionary basis where they&#146;re just not
upgrading?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Well actually we don&#146;t see that, in fact we
had one customer specifically who &#150; and like to withhold their name &#150; but they
have a large fleet of 767s, and very low money, like most airlines, to
retrofit.&#160; But </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">their compelling feature to
retrofit aircraft is to reduce training costs and increase dispatch
reliability, and reduce the number of spares they&#146;ve got to maintain in their
fleet structure.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">To give you some idea
what this product does, is it reduces a &#150; I think it&#146;s 20 &#150; roughly 25
independent part numbers and parts replaces them with two.&#160; So that means that this bearing (ph)
requirements are much less, and the FAA has in their &#150; in their STC (ph)
approval has permitted dispatch with one of our displays out, which increases
the dispatch reliability, dependent &#150; again dependent on avionics by a factor
of more than 10.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The biggest thing though
is the common &#150; a common look in the cockpit.&#160;
We can now &#150; we will provide retrofits that allow fleet operators that
operate everything from 27s to 67s, across the board to have a common looking
cockpit, and significantly profoundly reducing their training of their crews,
which are extremely costly, and limiting in their structure.&#160; So the compelling feature is not clearly
weight savings, that&#146;s a nice byproduct.&#160;
The real value in this is the immense reliability that the &#150; they have
on many cases have unsupportable equipment on board the airplane, and that is
all replaced by this new equipment.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">KEVIN WENCK:&#160; OK, thanks for that.&#160; And one other general question.&#160; Is in a transition period where your revenues
might be somewhat lower than originally expected, are you doing anything to
more tightly control operating expenses?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Yes.&#160;
That&#146;s a &#150; that&#146;s an emphatic yes.&#160;
We do that &#150; and I think if you &#150; if you &#150; and I can only ask you to
look at a historical cases in which we &#150; our revenues dropped precipitously
after 9/11, and we maintained our margins.&#160;
And we did that through very tight financial controls, we continue to
plan on doing that.&#160; But I would tell you
that this past quarter, our engineering expenses were almost 20 percent higher,
eight &#150; 17 percent higher than they were in the previous quarter, which was &#150;
and represented, by the way, 23 percent of sales in support of our STC (ph)
effort, and we still made money, that was a very high expense.&#160; We &#150; I come from a &#150; I come from a background
of starting a few businesses, and I&#146;m acutely aware that if you don&#146;t make
money and don&#146;t have cash, you don&#146;t have a business.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">KEVIN WENCK:&#160; Well thanks for your help, and I hope you get
over your cold soon.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Thank you very much.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OPERATOR:&#160; Our next question is coming from Mark
Deganhart of Oppenheimer Capital.&#160; Please
go ahead.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Good morning, Mark.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">MARK DEGANHART,
OPPENHEIMER CAPITAL:&#160; Good morning.&#160; Can you give us any sort of sense as to the
competitive landscape, if you see your win rate changing much on both sides of
the product &#150; both sides of the business?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; I will tell you that &#150; and this is a
preliminary snapshot, and again that&#146;s one of the reasons I&#146;m delaying a more
accurate forward guidance.&#160; But I will
tell you, this preliminary snapshot continues to show us as having products in
the &#150; excuse me &#150; in the military transport area as being half the price, or a
third of the price.&#160; It&#146;s huge difference
in costs, and while maintaining good margin.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We expect our competitors
to come down, but when you have that kind of advantage, it&#146;s difficult for your
competitors to simply drop their prices by 10 or 20 percent.&#160; They &#150; and somehow achieve a more competitive
posture.&#160; I would add one other thing, as
far as competitive posture, you may &#150; we eluded to a for, but the FAA has
issued a guidance paper, which has specifically said that the use of commercial
graphics chips, as in the computers, there has to be some feature, if you
intend to apply them to assure the integrity of the system.&#160; Because, as you might imagine, the equipment
that goes in a PC is not intended necessarily to have very high integrity.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We were granted a patent
that allows us to do that, and most significantly the FAA issued our last TSO
(ph) with a specific statements saying that our system complies to this
guidance, I believe we&#146;re the only people that do.&#160; So we think our competitive posture is very
strong.&#160; Hopefully our analysis over the
next three weeks will confirm that.</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">MARK DEGANHART:&#160; OK, and just a quick follow-up to that.&#160; When you make the comment about your pricing
being one half to one third while maintaining good margins, is that on an
apples to apples basis, flat panel to flat panel, or ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; No, that&#146;s flat panel to flat panel.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">MARK DEGANHART:&#160; OK.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; And why &#150; and you might reasonably say, well
why the hell would you want to drop the price that low?&#160; And that is even though there&#146;s &#150; it&#146;s the
all bulls and bears and pigs system.&#160; We
make exceptionally good margins at that &#150; at those prices.&#160; It also makes clear to the industry what
price point they would have to achieve were they to invest in a new
design.&#160; Like to &#150; we would like to &#150; our
competitors to save the money on development before they get into building a product
that in the end might not be competitive anyway, but simply be a pain in the
neck.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">MARK DEGANHART:&#160; And my last question, did you say cash rose
$17 million in the quarter?&#160; Or was that
for the year?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; For the year, I&#146;m sorry.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">MARK DEGANHART:&#160; OK.&#160;
And ending at a total of what?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Eighty ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UNKNOWN MALE #1:&#160; Eighty-three.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; ... 83 million.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">MARK DEGANHART:&#160; OK.&#160;
That&#146;s all I have.&#160; Thank you.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OPERATOR:&#160; Our next question is coming from David
Campbell of Thompson&nbsp;&amp; Davis.&#160;
Please go ahead.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; Yes, thanks, Geoff.&#160; What about the September&nbsp;quarter
revenues of $8 million?&#160; How much &#150;
roughly how much of that was in flat panels?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; What was the exact number &#150; what did we have?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UNKNOWN MALE #1:&#160; Yes, revenues in the fourth &#150; in the fourth
quarter, David (ph) ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Flat panels ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UNKNOWN MALE #1:&#160; ... about $5 million was for flat panel &#150;
three million for flat panel, five million for RBSM (ph) in the &#150; in the ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Forty &#150; it was 40 percent.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UNKNOWN MALE #1:&#160; Yes.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; OK, so basically you went from about 500,000
in the June&nbsp;quarter flat panels to three million in the September&nbsp;quarter?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UNKNOWN MALE #1:&#160; That&#146;s correct.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; And by the way, because we received some
orders fairly late, we were unable to ship an additional million and a half, so
we&#146;re going to ship that in this month.&#160;
It is still remarkable that we got orders near </font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">the &#150; in the middle of
the month, and still manage to ship some significant parts of those.&#160; Manufacturing seems to be coming up quickly
to the ramp rate we hope.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; Right, well you had said you booked roughly
10 million of business in the quarter.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; That&#146;s correct.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; And you &#150; how much of that did you ship?&#160; Or is that the three &#150; basically the $3
million that you shipped?&#160; Or did you not
ship much of that 10 million?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; We didn&#146;t ship much of that 10 million, but
we did ship some of that ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UNKNOWN MALE #1:&#160; Right.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; ... 10 million.&#160; And I&#146;m trying to avoid giving the exact
numbers, because that gives us all of the other numbers that I expect to
release in three weeks.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; So of the 10 million, how much of that was in
flat panels?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(INAUDIBLE)</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Over 50 percent.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; Right.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; We&#146;re seeing very &#150; we&#146;re seeing &#150; and again,
I baited the question on the forward outlook, based on a &#150; virtually that all
occurred in the last month of the quarter, all but about a half a million
dollars worth of that flat panel business occurred in the last &#150; in the month
of September.&#160; If we look at that and
extrapolate, we could come up with a extremely optimistic perspective, that&#146;s
why I&#146;m being a little cautious about looking forward.&#160; But we all tend to be very optimistic,
especially because the STC (ph), if it went so smoothly, was quite
remarkable.&#160; We did &#150; from start to
finish we did it in less than three months.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; So it&#146;s not just flat panels that&#146;s going up
....</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; No, it&#146;s a broad range of products, we&#146;re
talking about significant amount of other products that&#146;ll also be part of this
packet.&#160; We call it a &#150; we call it a
cockpit IP, or information portal, because it really gives us a perspective
into a broader range of systems in the aircraft, and that includes things like
engine monitoring, not just the display that shows it to you, but the computers
that we build tripley (ph) redundant fail operative computers that we have
already sold to them &#150; to the Canadian airforce.&#160; Tripley (ph) redundant computers that monitor
as much as 41 independent functions.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">So we had always hoped
and expected the flat panels would be a facilitator for us to sell a broad
range of other products, and it is in fact turning out to do exactly that.&#160; So that&#146;s why not only the flat panels, but
associated equipment is making it &#150; the whole program look very &#150; be very
optimistic.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; So then looking forward, we probably should
focus a lot on in general air data sales rather than RBSM (ph) sales?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; It will be &#150; we will get some RBSM (ph)
sales, because some of our &#150; there are a significant number of people out
there, but right now our forecast, or forward look for large &#150; or significant
revenues from air data have more to do with air data than they do RBSM
(ph).&#160; Again, virtually everything we
build at this point is compliant to RBSM (ph), but it is being put into the
airplane primarily to support aging technology that&#146;s fundamentally
unsupportable.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; Right, I know.&#160; So I&#146;m just trying to &#150; trying to get the
direction right, I have &#150; you just have to focus on that, your core air data
sale business, which has been described as $30 million sort of annually in </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">the past, that probably
is going up, and your &#150; and your RBSM (ph) is going down, that&#146;s a good way to
look at it, right?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Well I would suggest that we expect the RBSM
(ph) business to be an ongoing sort of &#150; not the kind of peak demand that we
had versus the compliance date, but the &#150; some continued demand for RBSM (ph)
alone, but then a strong air data core business that we see in both military
and air transport.&#160; And interestingly
enough, some of the systems like air data and other systems are being
facilitated when we do these cockpit upgrades with flat panels.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Again, the flat panels
are &#150; provide significant savings to the operators in allowing a common face on
the &#150; on the aircraft.&#160; You might
remember that one of the strongest sales features of Airbus airplanes was that
all of their airplanes had the identical cockpits, with the exception of Mal
the 380 (ph), and notably &#150; and I just returned from Europe &#150; notably the 380
(ph) has exactly the same displaced format as we would on our flat panels that
we&#146;re putting in the 767.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; So does that mean you could have got some
8380 (ph) business?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UNKNOWN MALE #1:&#160; No, not 380 (ph).</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; What about the Airbus business, and how it
might &#150; how it might develop for you?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; I think it&#146;s very premature, even though I&#146;ve
had a couple of meetings, more importantly we&#146;re looking at a broad range of &#150;
a broad range of business opportunities in Europe, everything from Raytheon
Hawkers (ph) to ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UNKNOWN MALE #1:&#160; (INAUDIBLE) making a point on the common
cockpit ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Oh, I was &#150; yes, and the point I did make
about the Airbus airplanes were that their claim to fame was of course the
common cockpit architecture, and we&#146;re &#150; our flat panel system enables you to
do exactly the same thing with Boeing.&#160;
There is an &#150; there is an opportunity with somebody that operates both
27s, 37s, and 67s, and that will be our first attempt to come up with an
application across the fleet with a common look.&#160; It&#146;s a very compelling justification for this
kind of retrofit.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UNKNOWN MALE #1:&#160; Simplified ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Against the retrofit is &#150; again the retrofit
is not &#150; because it looks good, but because there are new demand coming up that
require systems to be displayed, and not &#150; none the least of which are things
like ADSB (ph), and other significant systems looking forward.&#160; And our flat panel allows it.&#160; As an example, we&#146;re in a program where
somebody recently put some small flat panel display systems, and now they want
to do Tcas (ph) and TOZ (ph), that&#146;s collision avoidance and terrain
avoidance.&#160; And they have to put in a
whole new display, because the existing equipment that they put in did not have
the features ours does.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">So even that&#146;s an
opportunity to retrofit.&#160; So we see a
very &#150; right now, again, I want to wait three &#150; I want to do our work over the
next three to four weeks.&#160; But first
flush is we&#146;re very optimistic.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; Oh, and another subject, Geoff, can you tell
us if you have any plans for the cash you have on hand, either to start a cash
dividend, or buy back stock, or just what your thoughts are there?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Well we constantly look at the stock and
obviously we believe it&#146;s very strong, so there&#146;s always the review of a
buyback program, which we&#146;ve discussed many times on the &#150; at the board level.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I would tell you right
now, we are in discussions and review of a potentially use of that cash, not
all of it, but some of it.&#160; And we would
&#150; we strongly believe that it can be best invested in an acquisition that would
be sufficiently synergistic, that it would vastly enhance our &#150; the value of the
company.</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If we &#150; you know, if we
thought that we didn&#146;t have anything else, we would clearly distribute it to
our stockholders in the form of a dividend, we don&#146;t believe that&#146;s appropriate
at this point.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DAVID CAMPBELL:&#160; OK, thank you.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; By the way, being a large stockholder, I
wouldn&#146;t mind it, but I hate &#150; I think it can be better used in the &#150; in a
variety of other ways.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Next question, please.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OPERATOR:&#160; Our next question is coming from Selman Akyol
of Stifel Nicolaus.&#160; Please go ahead.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL, STIFEL
NICOLAUS:&#160; Thank you, good morning.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Good morning, Selman.&#160; How are you?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; Good.&#160;
Yourself?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; I&#146;ve been better.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; Couple of quick questions, if I may.&#160; First of all, setting RBSM (ph) aside, and
you just take a look at air data revenue, it looks like that was five million
in the quarter.&#160; Is &#150; was that below your
expectations?&#160; And if so, why?&#160; Or is there anything on that number?&#160; Because I find that number low, or
surprising, I mean that was definitely different than what we were looking for.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; It was &#150; it was less than we anticipated, and
we think it&#146;s not business that&#146;s gone away, but again business has slid to the
right, and we would hope to have a better and a more accurate forecast at the
end of early next month when we come out with our review.&#160; I can tell you that we have revised both
people and strategy in our marketing to be far more strategic, and less
dependent on opportunistic approach to the market.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We need a good balance of
both, but we believe the demand &#150; we think the demand will grow and grow
quickly, but we don&#146;t &#150; the magnitude of that, we don&#146;t know.&#160; And yes, we are disappointed and expected
more.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; OK.&#160;
Are higher fuel prices having impacts on upgrades?&#160; I mean is that &#150; do you think that&#146;s
impacting your business at all in terms of people postponing doing business?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; I &#150; let me back up for a second, Selman.&#160; Just &#150; most of that RBSM (ph) business came
in, in the &#150; in the end of last quarter, and if you annualize that, it&#146;s almost
60 million a year.&#160; So we are seeing a
strong &#150; after a fairly &#150; in fact, a very weak demand pattern, we&#146;re starting
to see a very strong resurgence.&#160; And
again, the reason I&#146;m putting off a forward projection is I want to be &#150; if I
just looked at September, I could say gee, we bounced back, and we&#146;re going to
have a booming year, I want to be more accurate than that. &#160;But there is clear indication that we are on
the up side in our recovery.&#160; And I&#146;ll
get back to your question if you would be kind enough to repeat it.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; OK, the second question was, you know, are
higher fuel prices out there having an impact on what your customers are doing
in terms of upgrades?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Actually higher prices should probably
increase demand, certainly for our DSM (ph) equipment, because flying at lower
altitudes is punitive at this point.&#160; And
from a flat panel standpoint, we &#150; it clearly doesn&#146;t &#150; it doesn&#146;t
significantly ameliorate increased costs, although in the case of a 767, we
save almost 250 pounds is &#150; that is a significant fuel saver in itself.&#160; And hopefully the increased facility of
guidance in the &#150; in the flat panel will also reflect in fuel savings.&#160; But our primary payback has to do with
dispatch reliability, and training, common cockpit training potential.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; OK.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9</font></p>

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<div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; The answer is, no it hasn&#146;t negatively
impacted.&#160; If anything, it has the
potential of positively impacting.&#160; But
again, that&#146;s being analyzed in the equation, because it is a significant
parameter.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; Got you.&#160;
And then can you say what backlog was at the end of the quarter?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; What?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UNKNOWN MALE #1:&#160; Thirteen million (INAUDIBLE).</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; We&#146;re going to release that in February.&#160; But it was strong.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; OK.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; And the reason we&#146;re doing that is that we &#150;
we&#146;re looking at &#150; we&#146;re looking at every single order we have, and reviewing
its long-term potential and strength, et cetera, so that&#146;s why we&#146;re
doing.&#160; But I can tell you, we booked
over 10 million.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; All right.&#160;
If I go back to Q1 &#145;04 ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Yes.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; ... you did eight and a half million that
quarter, and you brought nine cents to the bottom line, and here you&#146;re just
slightly less than that, but your margins are at 62 percent, which was higher than
it was back then.&#160; Is the rest of that
just the R&amp;D expense that you were talking about earlier?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; It&#146;s huge.&#160;
I mean &#150; what was &#150; what was &#150; we&#146;re going to look at the numbers, but I
can tell you that our engineering this quarter on a quarterly basis represented
a little over 20 percent.&#160; So it is
associated with the engineering, and primarily with the completion of the STC
(ph).</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; I got you.&#160;
And then lastly, if you could just touch on &#150; if you&#146;d be so kind &#150; on
the &#150; on the gross margins, you came in at 62 percent this quarter, on what I
would say, you know, flat panel was significantly higher in terms of your
product mix compared to air data revenue.&#160;
And so when you took a look at last quarter, you came in at 65 percent,
then it was predominantly air data revenue, you know, like 90, 95 percent, and
then you know, as you said, a half a million dollars in flat panel.&#160; Anything going on there as we see &#150; as we see
the product shift mix change?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Not appreciably.&#160; And it would be far too premature to sort of
project on one month&#146;s worth of revenue, and especially considering this is the
ramp up period.&#160; I would not &#150; I believe
that&#146;s not significant.&#160; But we also have
a &#150; continually have said that &#150; we continue to say that our margins &#150; what we&#146;re
looking for is bottom line margins, not top line margins, but not necessarily
the gross margins.&#160; Other than
maintaining them above 50 percent, and guaranteeing EPS growth.&#160; We&#146;ve been fortunate to have the same kind of
margins in our other products, so &#150; and that&#146;s always been intended to do that,
but depreciate the first month&#146;s volume production in a product is not
something that you want to extrapolate from.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">SELMAN AKYOL:&#160; All right, thank you.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Thank you.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OPERATOR:&#160; Our next question is coming from Don Hamilton
of Catalyst Associates.&#160; Please go ahead.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DON HAMILTON, CATALYST
ASSOCIATES:&#160; Hey, Geoff.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Hi, good morning.&#160; I&#146;m about to run out of voice, so if somebody
else could (INAUDIBLE) the conversation, I apologize.&#160; Go ahead.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DON HAMILTON:&#160; No problem.&#160;
We&#146;d like to &#150; I&#146;d like to sort of dig into the demand and the market
dynamics a little bit in terms of what is creating a fleet operator or
transport company, or the military to convert.&#160;
What are the various factors that create the time of conversion?&#160; If you could rank them in order of importance,
maybe have to go market by market, but in terms of the number of airplanes that
might come up for consideration.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">And then &#150; and then
secondly, how do you &#150; how do you know this?&#160;
That is, how do you connect with the final customer?&#160; And is that changing in terms of your
approach to understanding and stimulating, or at least giving feedback on what
&#150; when people start to look seriously at making large significant fleet
conversions?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Let me address in a &#150; in a couple of pieces,
and also suggest that a final answer will again be more appropriate in three or
four weeks.&#160; But I will give you, you
ask, how do we know, and what are the &#150; what kinds of things precipitate
somebody doing an upgrade?&#160; Let me &#150; let
me give you an example with Canadian Airforce did their fleet of 30 odd
airplanes &#150; 30 &#150; about 30 airplanes.&#160; And
they made that decision over a six-month period.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I might add &#150; and I have
not suggested, we have obtained as well a NATO stock number, that&#146;s really
important.&#160; That tell us that any member
of NATO can now specifically just order a number, in most cases without
competitive bids, and obtain our equipment directly off of this NATO stock
number, we&#146;re delighted with it.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Let me go back
specifically and tell you what happened at Canadian Airforce.&#160; We ended up replacing with our flat panel
system 41 discreet gauges, 41, with essentially three parts.&#160; The down time on those discreet gauges were
so significant that they lost a huge amount of fleet availability simply
because they were trying to fix or repair 30-year-old gauges.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I will reflect back on &#150;
I was in the &#150; IS&amp;S made the last three years of production of an
electronic replacement gauge for the engine displays on the T130 (ph).&#160; Prior to that, in the 18-month manufacturing
cycle, 100 percent of all the gauges had to be replaced while they were in the
factory.&#160; That kind of reliability
Lockheed addressed, and addressed on &#150; at Pakistan, and it&#146;s a compelling
feature on the aircraft, so it was that kind of decision that made it easy to
select our upgrade.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The common training has
been a prevailing theme, and the &#150; and that has &#150; again was one of the strong
selling features of Airbus equipment, and we can now provide that on Boeing
aircraft, and for that matter even have across significant aircraft like RJs
(ph) look like 737s.&#160; So the reduction in
training costs makes that a compelling retrofit.&#160; Ignoring for a moment that most of the
equipment on these fleet are unsupportable, you can no longer get parts, so the
cost to repair has gone up, their reliability is significantly lower, and they
&#150; and cause &#150; continues to cause departure delays and gate delays.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">So it&#146;s those features
that make the retrofit compelling.&#160; We
can give you more detail we hope in about four weeks.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DON HAMILTON:&#160; Well just ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; And how &#150; and how it relates specifically to
our problem.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DON HAMILTON:&#160; Well that&#146;s a &#150; that&#146;s very helpful.&#160; And just a &#150; just a quick follow-up, if &#150;
assuming that the industry &#150; various industry segments running from military to
private to commercial, appreciate this and understand it, assuming that&#146;s true,
which I&#146;m not sure we can assume, then is there &#150; is there &#150; are there other
events that actually precipitate the actual placement of the order and the
actual decision to convert?&#160; Is it &#150; is &#150;
are they always related to engine overhauls?&#160;
Are &#150; is it &#150; are there other patterns that might be common to the &#150; to
the decision to actually go in and place the order on a retrofit?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; It&#146;s probably driven &#150; it&#146;s driven by cost, I
think in the end.&#160; I would tell you that
if our price point was more in line with prevailing competitive levels,
specifically two to three times higher, I would say the market &#150; it was &#150; it
was basically not there, because as unpleasant, as painful, and as difficult as
some of these features are, you could not justify it in a &#150; from a cost
standpoint.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DON HAMILTON:&#160; Right.</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; The whole key with opening up markets that
heretofore did not exist is because we have a low cost very easy install.&#160; This is an amazing product line, in the 767
we&#146;re looking at probably two days or less to install a flight deck
upgrade.&#160; Heretofore, it was typically
three to four weeks, the amazing, amazing change.&#160; So to your point, I think the thing that
drives it is a lower cost, and then the decision may &#150; it comes when the &#150; when
the &#150; when adequate funds are available to do it, but by having &#150; by being able
to offer it at a much, much lower cost opens up opportunities that just were
not there, markets that literally were not there.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DON HAMILTON:&#160; Is the actual conversion oftentimes or always
done in conjunction with either scheduled or &#150; in other words, is a decision
made, and then they wait for either scheduled or unscheduled maintenance to bring
the plane in for two days?</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; It&#146;s a good question.&#160; A normal &#150; a normal &#150; normally this kind of
retrofit is scheduled for heavy maintenance in which the airplane would be down
for several weeks, and they would be able to do this modification.&#160; In our case, we are driving toward a less
than two day, you know, maybe even one day, so that there would not &#150; you would
not have to put down the airplane on a scheduled maintenance necessarily.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">It could be a simple A
check, a 100-hour check, or something like that.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DON HAMILTON:&#160; OK.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; And that&#146;s what we&#146;re driving for.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DON HAMILTON:&#160; That&#146;s ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; To give you &#150; this was designed from day one
to be an extremely easy retrofit, and our internal targets were a less than 24-hour
return to service.&#160; But we &#150; until we do
a bunch of airplanes that refine the process, we can&#146;t guarantee that, but
clearly that was the direction.&#160; And the
reason we did that is so that this could be done without putting the airplane
down for any extended period of time, which as you know is very costly.&#160; Or &#150; and &#150; or be forced to wait for C&amp;D
(ph) checks.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DON HAMILTON:&#160; Great.&#160;
Thanks.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; Just as an aside, we use &#150; in the
installation, we use about 90 to 95 percent of the existing wiring with no
changes, that&#146;s in a huge, huge &#150; it&#146;s almost unbelievable, just
wonderful.&#160; And we were able to
successfully do that and get an STC (ph).&#160;
And that has broader ramifications, it takes less time, it doesn&#146;t &#150; it
doesn&#146;t precipitate new certifications for Herf (ph), et cetera.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">DON HAMILTON:&#160; I apologize for extending it.&#160; But just &#150; the &#150; what sort of contact do you
have with the person who is making the conversion decision?&#160; Is it indirect?&#160; Is it always direct?&#160; Is there a lag?&#160; I mean how much &#150; how in touch are you?&#160; And how &#150; what is the relationship between
you and the decision maker at the &#150; at the airplane transport company, or the &#150;
or the ...</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GEOFFREY HEDRICK:&#160; It varies, but it&#146;ll vary anywhere &#150; as a
decision-maker being in engineering and procurement manager, to in some cases
the chief executive to the &#150; of the airline.&#160;
So it&#146;s been a combination of both.&#160;
It &#150; there isn&#146;t a large lag time, it&#146;s quite different than RBSM (ph),
which was RBSM (ph) we sold to installers who in turn sold to the end users,
and here we &#150; here we intend to sell either through our partner, ABX Air (ph),
which we already successfully did enormously successfully on our DC9 (ph), they
are pursuing exactly the same thing on the 767, and talking directly to the end
users.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">And would provide a
turnkey installation, which is unheard of in this industry.&#160; Literally they have two large runways in the
middle of Ohio, bring an airplane in, and it&#146;s certainly my target, they&#146;re &#150;
they&#146;ve been a great partner, and I think they&#146;re trying to drive for the
fastest turnaround they can get.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I got to end the call,
because I&#146;m about to drop.&#160; And it is an
hour, I appreciate your time, and I appreciate your interest.&#160; If you have further questions, you can call
Jim Reilly or Roman on a selected basis, we&#146;re happy to answer </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">12</font></p>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">any other specific
questions.&#160; But I will tell you that when
we come out with our year end results, we intend to be a bit more specific in
the opportunities that we see going forward.&#160;
And I thank you very much for your time.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">OPERATOR:&#160; Thank you.&#160;
This does conclude today&#146;s Innovative Solutions and Support conference
call.&#160; You may now disconnect your lines.</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">END</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">13</font></p>

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