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Loan Agreement | 6 Months Ended
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Mar. 31, 2026
Loan Agreement |
Loan Agreement | 9. Loan Agreement On September 30, 2024, in connection with the July 2024 Honeywell Asset Acquisition and the September 2024 Honeywell Agreement, the Company entered into the Loan 2024 Amendment with PNC, which amended certain terms of the Loan Agreement to increase the line of credit with PNC. Concurrently with the Loan 2024 Amendment, the Company entered into (i) the “A&R Revolving Line of Credit Note and (ii) the A&R Rider. The A&R Revolving Line of Credit Note provided for a senior secured revolving line of credit in an aggregate principal amount of $35 million, with an expiration date of December 19, 2028 (the “Revolving Line of Credit”). The interest rate applicable to loans outstanding under the Revolving Line of Credit was a rate per annum equal to the sum of (A) Daily SOFR (as defined in the A&R Revolving Line of Credit Note) plus (B) an unadjusted spread of the Applicable SOFR Margin plus (C) a SOFR adjustment of ten basis points. The Applicable SOFR Margin ranges from 1.5% to 2.5% depending on the Company’s funded debt to EBITDA ratio as defined in the A&R Revolving Line of Credit Note. The A&R Rider provided for how PNC will make advances to the Company under the A&R Revolving Line of Credit. On July 18th, 2025, the outstanding balance drawn on the A&R Revolving Line of Credit of $25,342,529 was fully paid. On July 18, 2025, Innovative Solutions and Support, Inc. (the “Company”), its wholly-owned subsidiary Innovative Solutions and Support, LLC (“Borrower”) and certain domestic subsidiaries entered into a Credit Agreement (the “2025 Credit Agreement”) with J.P. Morgan Chase Bank, N.A. (the “Bank”) and the other lender parties thereto, which Credit Agreement provides for the Bank to extend to the Borrower credit facilities in an aggregate principal amount of up to $100.0 million (the “New Credit Facilities”), consisting of the following: 1)a USD $25,000,000 initial term loan facility (the “Initial Term Loan”); 2)a USD $30,000,000 revolving credit facility (the “Revolving Facility”); and 3)a USD $45,000,000 delayed draw term loan facility (the “Delayed Draw Term Loan”). The New Credit Facilities replaced the Company’s existing $35 million Amended and Restated Revolving Line of Credit Note in favor of PNC. The New Credit Facilities provide expanded liquidity and improved flexibility, better enabling the Company to execute on its long-term growth strategy and capital allocation priorities, consistent with the Company’s focus on driving long-term value creation for its shareholders. Loans under the New Credit Facilities bear interest at the Borrower's option at either: (i)the Alternate Base Rate plus an applicable margin, or (ii)the Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin. The Alternate Base Rate is defined as the highest of (a) the Prime Rate, (b) the Federal Reserve Bank of New York rate for overnight funds plus 0.50%, and (c) the Adjusted Term SOFR Rate for a one-month period plus 1.00%, with a minimum rate of 1.00% per annum. The Adjusted Term SOFR Rate is the Term SOFR Rate plus 0.10%. An applicable margin is determined based on the Company's Total Net Leverage Ratio and ranges from 0.75% to 1.75% for Alternate Base Rate loans and from 1.75% to 2.75% for Adjusted Term SOFR Rate loans. The New Credit Facilities mature five years following the date of the initial advance, or July 18, 2030 (the “Maturity Date”). All outstanding balances are due on the Maturity Date. Under the New Term Loan and Revolving Facility, $25,000,000 and $2,000,000, respectively, were immediately drawn and used to pay $25,342,529 as payoff for the A&R Revolving Line of Credit and to pay $631,700 in transaction fees and expenses. The remaining $1,026,237.50 balance was deposited by the Company to the PNC Checking account. On August 18, 2025, the balance of $2,000,000 on the Revolving Facility was paid off. For the three and six months ended March 31, 2026, the Initial Term Loan had an effective interest rate of 6.0%, and 6.3%, respectively. Initial Term Loan The Initial Term Loan requires quarterly principal payments of $625,000 commencing September 30, 2025, with the remaining balance due on the Maturity Date. Revolving Facility Loan The Revolving Facility matures five years (i.e. July 18, 2030) following the date of the initial advance (the “Maturity Date”) with all outstanding balances due on the Maturity Date. The Revolving Facility principal is due on the Maturity Date. All amounts outstanding under the Credit Facilities will be due and payable upon the earlier of the Maturity Date, or the acceleration of the Credit Facilities upon an event of default. There were no borrowings drawn on the Revolving Facility during the three and six months ending March 31, 2026. Delayed Draw Term Loan The Delayed Draw Term Loan requires quarterly principal payments equal to 2.50% of the original aggregate principal amount commencing with the first scheduled payment date after January 18, 2026, with the remaining balance due on the Maturity Date. In March 2026, the Company borrowed $32.0 million of the available Delayed Draw Term Loan facility to finance the Honeywell Autopilot Agreement and the Honeywell Generators Agreement acquisitions. ​ Debt Issuance Costs For the Initial Term Loan, debt issuance costs of $246,148 were capitalized as contra-liabilities and are amortized as interest expense on a basis that approximates the effective interest method over the term of the Initial Term Loan debt. Contra-liabilities are netted against and presented as a direct deduction from the carrying amount of debt. The unamortized balance of the Initial Term Loan contra-liabilities as of December 31, 2025 was $220,143. For the Revolving Facility and the Delayed Draw Term Loan, debt issuance costs of $295,378 and $443,066, respectively, were capitalized as assets and are amortized using straight-line amortization to interest expense over the terms of the respective debt. The current and non-current capitalized assets related to the Revolving Facility and the Delayed Draw Term Loan are aggregated to Current Other Assets and Non-Current Other Assets on the Consolidated Balance Sheet. The unamortized balances of the Revolving Facility and the Delayed Draw Term Loan included in current and non-current other assets as of March 31, 2026 were $253,504 and $380,256, respectively. ​ Future borrowings under the Initial Term Loan and Revolving Facility may be used for working capital and general corporate purposes, including permitted acquisitions. The Delayed Draw Term Loan may only be used for permitted acquisitions. Debt Collateral and Covenants The Company’s obligations under the 2025 Credit Agreement are secured by substantially all of the assets of the Company and certain of its subsidiaries, including a first priority lien on the Company's Exton facility. The Company’s Initial Term Loan Facility, Revolving Facility and Delayed Term Loan facility contain affirmative and negative covenants that, among other things, may limit or restrict the Company’s ability to: create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or transfer assets; change the nature of our business; engage in certain transactions with affiliates; and enter into hedging transactions, in each case, subject to certain qualifications and exceptions. In addition, we are required to maintain a maximum net leverage ratio and a minimum fixed charge coverage ratio. The Company was in compliance with all debt covenants as of March 31, 2026. Commitment Fees The 2025 Credit Agreement terms include Revolving Facility and Delayed Draw Term Loan Facility commitment fees. For the three months ended March 31, 2026, unused line of credit fees of $17,541 under the Revolving Facility and $24,985 under the Delayed Draw Term Loan were included in interest expense. For the six months ended March 31, 2026, unused line of credit fees of $36,708 under the Revolving Facility and $53,735 under the Delayed Draw Term Loan were included in interest expense. Long-term debt, excluding contra-liabilities, consisted of the following: ​
​ | ​ | ​ | ​ | ​ | ​
​ | March 31, | ​ | September 30,
​ | 2026 | ​ | 2025
Total Debt | $ | 55,125,000 | ​ | $ | 24,375,000
Less current maturities (b) | ​ | 5,700,000 | ​ | ​ | 2,500,000
Total Long Term Debt (a) | $ | 49,425,000 | ​ | $ | 21,875,000
(a) | As of March 31, 2026, Total Long Term Debt comprised $23.1 million of Initial Term Loan and $32.0 million of Delayed Draw Term Loan, respectively
(b) | As of March 31, 2026, Current Maturities of Debt comprised $2.5 million of Initial Term Loan and $3.2 million of Delayed Draw Term Loan, respectively.
​ As of March 31, 2026, scheduled annual payments based on the maturities of debt are expected to be as follows:
​ | ​
Fiscal year | Annual payments
2026 (Six months remaining) | $ 2,850,000
2027 | 5,700,000
2028 | 5,700,000
2029 | 5,700,000
2030 | 35,175,000
Total | $ 55,125,000
​ * Excludes interest payments payable at each debt reset date Loan Facilities Availability As of March 31, 2026, the Company had availability of $30,000,000 under the Revolving Facility and $13,000,000 under the Delayed Draw Term Loan facility. The Company has the right to request up to $25,000,000 in additional revolving commitments or incremental term loans, subject to lender approval and satisfaction of certain conditions.

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