What changed in this filing

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Item 1. Financial Statements

2025-02-12 compared with 2024-11-12 · 190 added, 142 removed, 685 unchanged (33% of the section changed)

3 unchanged sentences

(In thousands, except per share data) Three Months Ended

September 30, Six Months Ended

September 30,

December 31, Nine Months Ended

2024 2023 2024 2023

13 unchanged sentences

76,064 65,364 220,398 214,343

Operating Income 3,899 761 3,321 1,422

Operating Income (Loss) 1,816 ( 1,608 ) 5,137 ( 189 )

Non-operating (Expense) Income:

3 unchanged sentences

( 2,712 ) ( 348 ) ( 2,632 ) ( 2,704 )

Income (Loss) before income taxes 3,299 ( 1,121 ) 3,402 ( 937 )

(Loss) Income before income taxes ( 896 ) ( 1,956 ) 2,505 ( 2,893 )

Income Tax Expense 347 153 754 851

Net Income (Loss) 2,963 ( 1,608 ) 2,995 ( 1,635 )

Net (Loss) Income ( 1,243 ) ( 2,109 ) 1,751 ( 3,744 )

Net Income Attributable to Non-controlling Interests ( 54 ) ( 870 ) ( 863 ) ( 1,375 )

Net Income (Loss) Attributable to Air T, Inc.

Net (Loss) Income Attributable to Air T, Inc.

Stockholders $ ( 1,297 ) $ ( 2,979 ) $ 888 $ ( 5,119 )

Income (Loss) per share (Note 5)

(Loss) Income per share (Note 5)

Basic $ ( 0.47 ) $ ( 1.06 ) $ 0.32 $ ( 1.82 )

7 unchanged sentences

Three Months Ended

September 30, Six Months Ended

September 30,

December 31, Nine Months Ended

(In Thousands) 2024 2023 2024 2023

Net Income (Loss) $ 2,963 $ ( 1,608 ) $ 2,995 $ ( 1,635 )

Foreign currency translation gain (loss) 719 ( 170 ) 669 ( 235 )

Net (Loss) Income $ ( 1,243 ) $ ( 2,109 ) $ 1,751 $ ( 3,744 )

Foreign currency translation (loss) gain ( 615 ) 216 54 ( 19 )

Reclassification of interest rate swaps into earnings ( 207 ) ( 188 ) ( 558 ) ( 568 )

1 unchanged sentence

Other 539 ( 38 ) 359 2

Total Other Comprehensive Income (Loss) 390 ( 342 ) 284 ( 575 )

Total Comprehensive Income (Loss) 3,353 ( 1,950 ) 3,279 ( 2,210 )

Total Other Comprehensive (Loss) Gain ( 283 ) ( 10 ) 1 ( 585 )

Total Comprehensive (Loss) Income ( 1,526 ) ( 2,119 ) 1,752 ( 4,329 )

Comprehensive Income Attributable to Non-controlling Interests ( 54 ) ( 870 ) ( 863 ) ( 1,375 )

Comprehensive Income (Loss) Attributable to Air T, Inc.

Comprehensive (Loss) Income Attributable to Air T, Inc.

Stockholders $ ( 1,580 ) $ ( 2,989 ) $ 889 $ ( 5,704 )

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts) September 30, 2024 March 31, 2024

(In thousands, except share amounts) December 31, 2024 March 31, 2024

Current Assets:

11 unchanged sentences

("Lendway") 3,500 —

Equity method investments 17,592 16,653

Notes Receivable - CAM 2,500 —

Assets on lease or held for lease, net of accumulated depreciation of $ 915 and $ 8

2 unchanged sentences

Intangible assets, net of accumulated amortization of $ 5,943 and $ 5,119

10,741 10,978

Right-of-use ("ROU") assets 13,597 11,376

Equity method investments 18,743 16,653

Other assets (includes $ 735 and $ 1,909 measured at fair value)

26 unchanged sentences

Retained earnings 9,158 8,192

Accumulated other comprehensive income (loss) 204 ( 80 )

Accumulated other comprehensive loss ( 79 ) ( 80 )

Total Air T, Inc.

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands) Six Months Ended

September 30,

(In Thousands) Nine Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

25 unchanged sentences

Payments on term loan ( 28,667 ) ( 17,116 )

Proceeds from issuance of Trust Preferred Securities ("TruPs") 548 7,285

Other ( 868 ) ( 629 )

10 unchanged sentences

Related-party note payable for Contrail redeemed interest 4,570 —

Due from CAM expense reimbursements converted into notes receivable - CAM 2,500 —

See notes to condensed consolidated financial statements.

16 unchanged sentences

Net loss* — — — — — ( 1,609 ) — ( 19 ) ( 1,628 )

Repurchase of common stock — — — — — — — — —

Exercise of stock options 3 1 — — 25 — — — 26

5 unchanged sentences

Balance, September 30, 2023 3,030 758 209 ( 4,098 ) 911 12,092 241 1,050 10,954

Net (loss) income* — — — — — ( 2,979 ) — 9 ( 2,970 )

Stock compensation expense — — — — 79 — — — 79

Foreign currency translation gain — — — — — — 216 — 216

Adjustment to fair value of redeemable non-controlling interest — — — — — ( 99 ) — — ( 99 )

Unrealized gain on interest rate swaps, net of tax — — — — — — ( 38 ) — ( 38 )

Reclassification of interest rate swaps into earnings — — — — — — ( 188 ) — ( 188 )

Balance, December 31, 2023 3,030 $ 758 209 $ ( 4,098 ) $ 990 $ 9,014 $ 231 $ 1,059 $ 7,954

(In Thousands) Common Stock Treasury Stock Additional

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Net income (loss)* — — — — — 2,520 — ( 1 ) 2,519

Repurchase of common stock — — — — — — — — —

Stock option forfeiture (Note 16) — — — — ( 28 ) — — — ( 28 )

6 unchanged sentences

Balance, September 30, 2024 3,030 758 270 ( 5,260 ) 878 10,455 204 1,774 8,809

Net (loss) income* — — — — — ( 1,297 ) — 17 ( 1,280 )

Repurchase of common stock — — 18 ( 371 ) — — — — ( 371 )

Stock compensation expense — — — — 30 — — — 30

Foreign currency translation loss

— — — — — — ( 615 ) — ( 615 )

Reclassification of interest rate swaps into earnings — — — — — — ( 207 ) — ( 207 )

Allocation of comprehensive income from unconsolidated investments — — — — — — 8 — 8

Allocation of comprehensive income to redeemable non-controlling interests — — — — — — 531 — 531

Balance, December 31, 2024 3,030 $ 758 288 $ ( 5,631 ) $ 908 $ 9,158 $ ( 79 ) $ 1,791 $ 6,905

* Excludes amount attributable to redeemable non-controlling interests in Contrail Aviation Support, LLC ("Contrail") and Shanwick B.V.

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These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 2024.

The unaudited results of operations for the period ended September 30, 2024 are not necessarily indicative of the operating results for the full year.

The unaudited results of operations for the period ended December 31, 2024 are not necessarily indicative of the operating results for the full year.

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

11 unchanged sentences

The Company is currently evaluating the impact of this amendment on its consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU 2024-03- Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The amendments in this Update require disaggregated disclosure of income statement expenses for public business entities.

The Update does not change the expense captions an entity presents on the face of the income statement;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

The Company is currently evaluating the impact of this amendment on its condensed consolidated financial statements and disclosures.

Revenue Recognition

28 unchanged sentences

The following table summarizes disaggregated revenues by type (in thousands):

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2024 2023 2024 2023

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Contract liabilities relate to deferred revenue, our unconditional right to receive consideration in advance of performance with respect to subscription revenue and advanced customer deposits with respect to product sales.

The following table presents outstanding contract liabilities as of April 1, 2024 and September 30, 2024 and the amount of contract liabilities as of April 1, 2024 that were recognized as revenue during the six-month period ended September 30, 2024 (in thousands):

The following table presents outstanding contract liabilities as of April 1, 2024 and December 31, 2024 and the amount of contract liabilities as of April 1, 2024 that were recognized as revenue during the nine-month period ended December 31, 2024 (in thousands):

Outstanding contract liabilities Outstanding contract liabilities as of April 1, 2024

Recognized as Revenue

As of September 30, 2024 $ 4,134

As of December 31, 2024 $ 3,956

As of April 1, 2024 $ 4,359

For the six months ended September 30, 2024 $ ( 3,217 )

For the nine months ended December 31, 2024 $ ( 3,613 )

Accrued Expenses and Other

(In thousands) September 30, 2024 March 31, 2024

(In thousands) December 31, 2024 March 31, 2024

Salaries, wages and related items $ 6,761 $ 5,296

4 unchanged sentences

Total $ 16,296 $ 15,511

During the three-month period ended September 30, 2024, the Company recorded $ 0.3 million in income tax expense at an effective rate ("ETR") of 10.2 %.

During the three-month period ended December 31, 2024, the Company recorded $ 0.3 million in income tax expense at an effective rate ("ETR") of ( 38.7 )%.

The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting.

The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended September 30, 2024 were the valuation allowance related to the Company’s U.S.

The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended December 31, 2024 were the valuation allowance related to the Company’s U.S.

consolidated group, Delphax Technologies, Inc.

1 unchanged sentence

("DSI") and BCCM Advisors (Kenya) Limited ("BCCM Kenya"), and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

During the three-month period ended September 30, 2023, the Company recorded income tax expense of $ 0.5 million at an ETR of ( 43.4 )%.

During the three-month period ended December 31, 2023, the Company recorded income tax expense of $ 0.2 million at an ETR of ( 7.8 )%.

The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended September 30, 2023 were the valuation allowance related to the Company’s U.S.

consolidated group, DSI, DTI, and LGSS, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

During the six-month period ended September 30, 2024, the Company recorded $ 0.4 million in income tax expense at an ETR of 12.0 %.

The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended December 31, 2023 were the valuation allowance related to the Company’s U.S.

consolidated group, DTI, LGSS, DSI and BCCM Kenya, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

During the nine-month period ended December 31, 2024, the Company recorded $ 0.8 million in income tax expense at an ETR of 30.1 %.

The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the six-month period ended September 30, 2024, were the valuation allowance related to the Company’s U.S.

The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the nine-month period ended December 31, 2024, were the valuation allowance related to the Company’s U.S.

consolidated group, DTI, LGSS, DSI and BCCM Kenya, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

During the six-month period ended September 30, 2023, the Company recorded income tax expense of $ 0.7 million at an ETR of ( 74.5 )% The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting.

The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the six-month period ended September 30, 2023 were the valuation allowance related to the Company’s U.S.

consolidated group, DSI, DTI, and LGSS, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

During the nine-month period ended December 31, 2023, the Company recorded income tax expense of $ 0.9 million at an ETR of ( 29.4 )% The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting.

The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the nine-month period ended December 31, 2023 were the valuation allowance related to the Company’s U.S.

consolidated group, DTI, LGSS, DSI, and BCCM Kenya, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

Net Earnings (Loss) Per Share

Basic earnings (loss) per share has been calculated by dividing net income (loss) attributable to Air T, Inc.

Basic earnings (loss) per share has been calculated by dividing net (loss) income attributable to Air T, Inc.

stockholders by the weighted average number of common shares outstanding during each period.

For purposes of calculating diluted earnings (loss) per share, shares issuable under stock options were considered potential common shares and were included in the weighted average common shares unless they were anti-dilutive.

As of September 30, 2023, all stock options under the Air T's 2012 Stock Option Plan have either been exercised or expired.

Further, of the 202,400 options outstanding as of September 30, 2024 under the Air T's 2020 Omnibus Stock and Incentive Plan, none were exercisable.

As of December 31, 2023, all stock options under the Air T's 2012 Stock Option Plan have either been exercised or expired.

Further, of the 203,000 options outstanding as of December 31, 2024 under the Air T's 2020 Omnibus Stock and Incentive Plan, none were exercisable.

The computation of basic and diluted earnings per common share is as follows (in thousands, except for per share figures):

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2024 2023 2024 2023

Net income (loss) $ 2,963 $ ( 1,608 ) $ 2,995 $ ( 1,635 )

Net (loss) income $ ( 1,243 ) $ ( 2,109 ) $ 1,751 $ ( 3,744 )

Net income attributable to non-controlling interests ( 54 ) ( 870 ) ( 863 ) ( 1,375 )

Net income (loss) attributable to Air T, Inc.

Net (loss) income attributable to Air T, Inc.

Stockholders $ ( 1,297 ) $ ( 2,979 ) $ 888 $ ( 5,119 )

Income (loss) per share:

(Loss) income per share:

Basic $ ( 0.47 ) $ ( 1.06 ) $ 0.32 $ ( 1.82 )

Diluted $ ( 0.47 ) $ ( 1.06 ) $ 0.32 $ ( 1.82 )

Antidilutive shares excluded from computation of income (loss) per share — — — —

Antidilutive shares excluded from computation of (loss) income per share — — — —

Weighted Average Shares Outstanding:

2 unchanged sentences

Intangible Assets and Goodwill

Intangible assets as of September 30, 2024 and March 31, 2024 consisted of the following (in thousands):

September 30, 2024

Intangible assets as of December 31, 2024 and March 31, 2024 consisted of the following (in thousands):

December 31, 2024

Gross Carrying Amount Accumulated Amortization Net Book Value

19 unchanged sentences

Intangible assets, total $ 16,097 $ ( 5,119 ) $ 10,978

Based on the intangible assets recorded at September 30, 2024 and assuming no subsequent additions to, or impairment of the underlying assets, the remaining estimated annual amortization expense is expected to be as follows:

Based on the intangible assets recorded at December 31, 2024 and assuming no subsequent additions to, or impairment of the underlying assets, the remaining estimated annual amortization expense is expected to be as follows:

(In thousands)

Year ending March 31, Amortization

2025 (excluding the six months ended September 30, 2024) $ 594

2025 (excluding the nine months ended December 31, 2024) $ 279

Thereafter 4,482

The carrying amount of goodwill as of September 30, 2024 and March 31, 2024 was $ 10.7 million and $ 10.5 million, respectively.

The increase from the prior fiscal year end balance is attributable to foreign currency translation adjustments related to the goodwill balance at Shanwick.

There was no impairment on goodwill during the six months ended September 30, 2024.

The carrying amount of goodwill as of December 31, 2024 and March 31, 2024 was $ 10.4 million and $ 10.5 million, respectively.

The decrease from the prior fiscal year end balance is attributable to foreign currency translation adjustments related to the goodwill balance at Shanwick.

There was no impairment on goodwill during the nine months ended December 31, 2024.

Investments in Securities and Derivative Instruments

15 unchanged sentences

As a result of this prepayment, the Company determined that the interest rate swap on Contrail - Term Note G was no longer an effective hedge.

The Company will amortize the fair value of the interest-rate swap contract included in accumulated other comprehensive income (loss) associated with Contrail - Term Note G at the time of de-designation into earnings over the remainder of its term.

The Company amortizes the fair value of the interest-rate swap contract included in accumulated other comprehensive income (loss) associated with Contrail - Term Note G at the time of de-designation into earnings over the remainder of its term.

In addition, any changes in the fair value of Contrail - Term Note G's swap after March 30, 2023 are recognized directly into earnings.

When the interest rate swaps were designated as effective hedges, the effective portion of changes in the fair value on these instruments were recorded in other comprehensive income (loss) and reclassified into the consolidated statement of income (loss) as interest expense in the same period in which the underlying hedged transaction affected earnings.

The changes in the fair value of the instruments during the three and six months ended September 30, 2024 and 2023, inclusive of Term Note D - MBT due to its effective hedge designation at the time, were not material.

The changes in the fair value of the instruments during the three and nine months ended December 31, 2024 and 2023, inclusive of Term Note D - MBT due to its effective hedge designation at the time, were not material.

The interest rate swaps are considered Level 2 fair value measurements.

As of September 30, 2024 and March 31, 2024, the fair value of these interest-rate swap contracts was an asset of $ 0.8 million and $ 1.9 million, respectively, which is included within other assets in the condensed consolidated balance sheets.

As of December 31, 2024 and March 31, 2024, the fair value of these interest-rate swap contracts was an asset of $ 0.7 million and $ 1.9 million, respectively, which is included within other assets in the condensed consolidated balance sheets.

We estimate that $ 0.8 million of net unrealized gains related to the interest rate swaps included in accumulated other comprehensive income (loss) will be reclassified into earnings within the next twelve months.

2 unchanged sentences

The fair market value of marketable equity securities is determined based on quoted market prices in active markets and are therefore, considered Level 1 fair value measurements.

The Company's gross unrealized gains and losses on equity securities for the three and six months ended September 30, 2024 and 2023 are as follows (in thousands):

The Company's gross unrealized gains and losses on equity securities for the three and nine months ended December 31, 2024 and 2023 are as follows (in thousands):

Three Months Ended

September 30,

Six Months Ended

September 30,

December 31, Nine Months Ended

2024 2023 2024 2023

2 unchanged sentences

These unrealized gains and losses are included in other income (loss) on the condensed consolidated statement of income (loss).

As of September 30, 2024 and March 31, 2024, the fair value of these marketable equity securities was an asset of $ 1.4 million and $ 1.9 million, respectively, which is included within restricted investments and other current assets in the condensed consolidated balance sheets.

As of December 31, 2024 and March 31, 2024, the fair value of these marketable equity securities was an asset of $ 1.6 million and $ 1.9 million, respectively, which is included within restricted investments and other current assets in the condensed consolidated balance sheets.

Equity Method Investments

7 unchanged sentences

("Bloomia"), marking its first investment in specialty agriculture and underscoring its strategy of targeting high-quality agricultural assets and enterprises.

As of September 30, 2024, the Company owned 487,000 Lendway shares, representing approximately 27.5 % of Lendway's outstanding shares.

As of December 31, 2024, the Company owned 487,000 Lendway shares, representing approximately 27.5 % of Lendway's outstanding shares.

On August 15, 2024, the Company entered into a delayed draw term loan with Lendway for up to $ 2.5 million with an interest rate of 8.0 %.

On September 27, 2024 the borrowing limit was increased to $ 3.5 million and as of September 30, 2024, $ 2.0 million has been drawn.

On September 27, 2024 the borrowing limit was increased to $ 3.5 million and as of December 31, 2024, $ 3.5 million has been drawn.

All outstanding principal and accrued interest will become due and payable to the Company on the maturity date, which is the earlier of August 15, 2029 or by written demand of the Company after February 15, 2026.

4 unchanged sentences

Due to the differing fiscal year-ends, the Company has elected a three-month lag to record the CCI investment, with a basis difference decrease of $ 0.3 million.

The Company recorded a basis difference adjustment of $ 12.0 thousand and $ 25.0 thousand in each of the three and six months ended September 30, 2024.

CCI and Lendway's combined summarized unaudited financial information for the three and six months ended June 30, 2024 and 2023 is as follows (in thousands):

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

The Company recorded a basis difference adjustment of $ 12.0 thousand and $ 37.0 thousand in each of the three and nine months ended December 31, 2024.

CCI and Lendway's combined summarized unaudited financial information for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands):

Three Months Ended Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Revenue $ 37,580 $ 34,365 $ 135,999 $ 133,427

Gross Profit 2,051 2,746 15,489 18,076

Operating income 1,823 3,984 3,029 9,245

Net income 755 3,295 2,081 8,410

Operating (loss) income ( 2,115 ) ( 124 ) 928 9,100

Net (loss) income ( 2,383 ) 2,050 ( 311 ) 10,439

Crestone Asset Management, LLC investment

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This approach provides a more accurate reflection of the Company's investment in CAM, compared to recording its proportionate share of income or loss.

CAM's HLBV net assets, including common interests and investor interests, was $ 29.9 million and $ 22.5 million as of September 30, 2024 and 2023, respectively.

Additionally, contributions from and distributions to both Air T and MRC for the three and six months ended September 30, 2024 and 2023 is as follows (in thousands):

Three Months Ended Six Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

On October 18, 2024, the Company entered into an unsecured promissory note with CAM for $ 2.5 million with an interest rate of 10.0 %, through conversion of a portion of the Company's accounts receivable from CAM.

All outstanding principal and accrued interest will become due and payable to the Company on the maturity date, which is October 15, 2027.

Prior to the maturity, CAM may prepay any accrued interest or principal outstanding without penalty.

CAM's HLBV net assets, including common interests and investor interests, was $ 35.4 million and $ 21.8 million as of December 31, 2024 and 2023, respectively.

Additionally, contributions from and distributions to both Air T and MRC for the three and nine months ended December 31, 2024 and 2023 is as follows (in thousands):

Three Months Ended Nine Months Ended

December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023

Contributions $ 2,293 $ 91 $ 2,293 $ 548

Distributions $ 5,564 $ 2,112 $ 7,841 $ 3,460

Investment balances for the Company's equity method investees as of September 30, 2024 and March 31, 2024 is as follows (in thousands):

Investment September 30, 2024 March 31, 2024

Investment balances for the Company's equity method investees as of December 31, 2024 and March 31, 2024 is as follows (in thousands):

Investment December 31, 2024 March 31, 2024

Lendway $ 1,534 $ 2,339

4 unchanged sentences

Net income (loss) attributable to Air T, Inc.

stockholders for the Company's equity method investees, included in non-operating (expense) income on the condensed consolidated statements of income (loss), including basis difference adjustments, during the three and six months ended September 30, 2024 and 2023 is as follows (in thousands):

Three Months Ended Six Months Ended

Investment September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

stockholders for the Company's equity method investees, included in non-operating (expense) income on the condensed consolidated statements of income (loss), including basis difference adjustments, during the three and nine months ended December 31, 2024 and 2023 is as follows (in thousands):

Three Months Ended Nine Months Ended

Investment December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023

Lendway $ ( 320 ) $ 313 $ ( 816 ) $ 750

4 unchanged sentences

The Company's equity method investees may, from time to time, make distributions and dividends to the Company in accordance with accumulated earnings at the investee.

For the three and six months ended September 30, 2024 and 2023, the Company received distributions and dividends from equity method investees as follows (in thousands):

Three Months Ended Six Months Ended

Investment September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

For the three and nine months ended December 31, 2024 and 2023, the Company received distributions and dividends from equity method investees as follows (in thousands):

Three Months Ended Nine Months Ended

Investment December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023

Lendway $ — $ — $ — $ —

4 unchanged sentences

Inventories consisted of the following (in thousands):

September 30,

2024 March 31,

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For the assets currently on lease, there are no options for the lessees to purchase the assets at the end of the lease term.

The Company depreciates the aircrafts and engines on a straight-line basis over the assets' useful life from the acquisition date to an estimated residual value.

During the three and six months ended September 30, 2024, the Company recognized depreciation expense relating to equipment leases of $ 0.2 million and $ 0.3 million, respectively.

Depreciation expense relating to equipment leases for the three and six months ended September 30, 2023 was not material.

The Company depreciates the aircraft and engines on a straight-line basis over the assets' useful life from the acquisition date to an estimated residual value.

During the three and nine months ended December 31, 2024, the Company recognized depreciation expense relating to equipment leases of $ 0.6 million and $ 0.9 million, respectively.

Depreciation expense relating to equipment leases for the three and nine months ended December 31, 2023 was not material.

Future minimum rental payments to be received do not include contingent rentals that may be received under certain leases because amounts are based on usage.

During the respective three and six months ended September 30, 2024, earned contingent rent on equipment leases totaled approximately $ 0.1 million.

The Company had no contingent rent earned on equipment leases during the three and six months ended September 30, 2023.

As of September 30, 2024, future minimum rental payments to be received under non-cancelable leases are as follows (in thousands):

During the respective three and nine months ended December 31, 2024, earned contingent rent on equipment leases totaled approximately $ 0.7 million.

The Company had no contingent rent earned on equipment leases during the three and nine months ended December 31, 2023.

As of December 31, 2024, future minimum rental payments to be received under non-cancelable leases are as follows (in thousands):

Year ended March 31,

2025 (excluding the six months ended September 30, 2024) $ 968

2025 (excluding the nine months ended December 31, 2024) $ 480

Total $ 9,989

5 unchanged sentences

The Company depreciates the assets on a straight-line basis over the assets' useful life.

During the respective three months ended September 30, 2024 and 2023, depreciation expense relating to office leases was $ 0.1 million.

During the respective six months ended September 30, 2024 and 2023, depreciation expense relating to office leases was $ 0.2 million.

During the three and six months ended September 30, 2024, the Company recognized rental and other revenues related to operating lease payments of $ 0.4 million and $ 0.9 million, respectively, of which variable lease payments were $ 0.2 million and $ 0.4 million, respectively.

During the three and six months ended September 30, 2023, the Company recognized rental and other revenues related to operating lease payments of $ 0.4 million and $ 0.8 million, respectively, of which variable lease payments were $ 0.2 million and $ 0.3 million, respectively.

During the three months ended December 31, 2024 and 2023, depreciation expense relating to office leases was $ 0.1 million.

During the nine months ended December 31, 2024 and 2023, depreciation expense relating to office leases was $ 0.2 million.

During the three and nine months ended December 31, 2024, the Company recognized rental and other revenues related to operating lease payments of $ 0.4 million and $ 1.3 million, respectively, of which variable lease payments were $ 0.2 million and $ 0.6 million, respectively.

During the three and nine months ended December 31, 2023, the Company recognized rental and other revenues related to operating lease payments of $ 0.4 million and $ 1.2 million, respectively, of which variable lease payments were $ 0.2 million and $ 0.5 million, respectively.

Future minimum rental payments to be received do not include variable lease payments that may be received under certain leases because amounts are based on usage.

The following table sets forth the undiscounted cash flows for future minimum base rents to be received from customers for office leases in effect as of September 30, 2024:

The following table sets forth the undiscounted cash flows for future minimum base rents to be received from customers for office leases in effect as of December 31, 2024:

Year ended March 31,

2025 (excluding the six months ended September 30, 2024) $ 483

2025 (excluding the nine months ended December 31, 2024) $ 237

Thereafter 1,824

11 unchanged sentences

The interest rate implicit in lease contracts is typically not readily determinable, and as such the Company utilizes the incremental borrowing rate to calculate lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The components of lease cost for the three and six months ended September 30, 2024 and 2023 are as follows (in thousands):

Three Months Ended September 30, Six Months Ended September 30,

The components of lease cost for the three and nine months ended December 31, 2024 and 2023 are as follows (in thousands):

Three Months Ended December 31, Nine Months Ended December 31,

2024 2023 2024 2023

3 unchanged sentences

Total lease cost $ 1,361 $ 965 $ 3,824 $ 3,135

Amounts reported in the consolidated balance sheets for leases where we are the lessee as of September 30, 2024 and March 31, 2024 were as follows (in thousands):

September 30, 2024 March 31, 2024

Amounts reported in the consolidated balance sheets for leases where we are the lessee as of December 31, 2024 and March 31, 2024 were as follows (in thousands):

December 31, 2024 March 31, 2024

Operating leases

5 unchanged sentences

Operating leases 5.64 % 5.09 %

During the six months ended September 30, 2024, the Company had ROU assets that were obtained in exchange for new operating lease liabilities in the amount of $ 3.8 million.

Maturities of lease liabilities under non-cancellable leases where we are the lessee as of September 30, 2024 are as follows (in thousands):

During the nine months ended December 31, 2024, the Company had ROU assets that were obtained in exchange for new operating lease liabilities in the amount of $ 3.8 million.

Maturities of lease liabilities under non-cancellable leases where we are the lessee as of December 31, 2024 are as follows (in thousands):

Operating Leases

2025 (excluding the six months ended September 30, 2024) $ 1,563

2025 (excluding the nine months ended December 31, 2024) $ 777

Thereafter 7,669

3 unchanged sentences

Financing Arrangements

Borrowings of the Company and its subsidiaries are summarized below at September 30, 2024 and March 31, 2024, respectively.

Borrowings of the Company and its subsidiaries are summarized below at December 31, 2024 and March 31, 2024, respectively.

On May 30, 2024, Contrail, a majority-owned subsidiary of the Company, entered into a Membership Interest Redemption and Earnout Agreement (the “Redemption Agreement”) with OCAS, Inc., a corporation owned by the Chief Executive Officer of Contrail, Joe Kuhn (the “Seller”).

42 unchanged sentences

entered into a subordination agreement dated September 12, 2024 to address certain loan matters and to establish the priority of repayment of Contrail’s debt to ONB over the OCAS Loan in the original principal amount of $ 4.6 million.

The following table provides certain information about the current financing arrangements of the Company and its subsidiaries (other than related party obligations) as of September 30, 2024:

(In Thousands) September 30,

On October 16, 2024, the Company and AAM 24-1, LLC, a wholly-owned subsidiary of the Company ("AAM 24-1") entered into a Second Note Purchase Agreement (the “Second NPA”) with Honeywell Common Investment Fund and Honeywell International Inc.

Master Retirement Trust ("Honeywell").

The Second NPA amended and restated the terms of the Company’s previously disclosed Note Purchase Agreement (the “Original NPA”), which was filed in a Current Report on Form 8-K on February 26, 2024.

Under the Original NPA, AAM 24-1 had issued and sold $ 15.0 million of 8.5 % senior secured notes.

The Second NPA amended and restated the amount issued and sold to $ 30.0 million of 8.5 % senior secured notes (collectively the "Notes") to Honeywell, which includes the $ 15.0 million from the Original NPA bringing the total indebtedness to $ 30.0 million.

The Notes mature on March 1, 2031 and bear an annual interest at a rate of 8.5 %.

In addition to the 160,000 previously pledged TruPs, 160,000 newly-issued shares of TruPs held by AAM 24-1 are now pledged to Honeywell, in connection with the closing of the Second NPA.

The following table provides certain information about the current financing arrangements of the Company and its subsidiaries (other than related party obligations) as of December 31, 2024:

(In Thousands) December 31,

2024 March 31,

2024 Maturity Date Interest Rate Unused commitments at September 30, 2024 Type of Debt

2024 Maturity Date Interest Rate Unused commitments at December 31, 2024 Type of Debt

Revolver - MBT 1 $ — $ — 8/31/2024 SOFR + range of 2.25 % - 3.25 %

47 unchanged sentences

Total Debt, net $ 122,875 $ 112,926

At September 30, 2024, our contractual financing obligations, including payments due by period, are as follows (in thousands):

At December 31, 2024, our contractual financing obligations, including payments due by period, are as follows (in thousands):

Due by Amount

September 30, 2025 $ 12,390

September 30, 2026 38,064

September 30, 2027 8,874

September 30, 2028 4,429

September 30, 2029 6,693

December 31, 2025 $ 17,519

December 31, 2026 14,688

December 31, 2027 8,616

December 31, 2028 3,807

December 31, 2029 6,290

Thereafter 72,550

Unamortized Premiums and Debt Issuance Costs ( 595 )

Interest Expense, net - Net interest expense for the Company and its subsidiaries were as follows for the three and nine months ended December 31, 2024 and 2023:

Three Months Ended

December 31, Nine Months Ended

2024 2023 2024 2023

Air T $ 717 $ 1,041 $ 2,670 $ 2,846

Jet Yard — 19 31 58

Alerus Loan Parties 459 — 636 —

Contrail 602 224 1,293 1,270

AirCo 1 113 144 363 437

Wolfe Lake 87 89 262 268

Air T Acquisition 22.1 50 85 200 243

WASI 10 ( 80 ) 32 53

AAM 24-1 551 — 1,196 —

Other ( 28 ) 6 ( 13 ) 14

Total $ 2,561 $ 1,528 $ 6,670 $ 5,189

1 The revolver and term notes with MBT were fully paid off with the proceeds from the new credit agreement with Alerus.

1 unchanged sentence

2 Does not include $ 13.0 million held by wholly-owned subsidiaries of the Company.

3 The maturity date for this arrangement was extended to August 28, 2026 as part of an amendment finalized on January 21, 2025 subsequent to the reporting period end date.

Refer to Note 18 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q.

4 Includes Air T's guarantee of approximately $ 1.6 million.

1 unchanged sentence

On May 14, 2014, the Company announced that its Board of Directors had authorized a program to repurchase up to 750,000 (retrospectively adjusted to 1,125,000 after the stock split on June 10, 2019) shares of the Company’s common stock from time to time on the open market or in privately negotiated transactions, in compliance with SEC Rule 10b-18, over an indefinite period.

No shares were repurchased during the quarter ended September 30, 2024.

The excise tax incurred in connection with the Company's stock repurchases during the six months ended September 30, 2024 was not material.

During the nine months ended December 31, 2024, the Company repurchased 31,136 shares at an aggregate cost of $ 0.7 million.

All of these repurchased shares were recorded as treasury shares as of December 31, 2024.

On August 16, 2022, President Biden signed the Inflation Reduction Act ("IRA") into law.

The IRA enacted a 15% corporate minimum tax rate, a 1% excise tax on share repurchases made after December 31, 2022 (subject to certain thresholds being met), and created and extended certain tax-related energy incentives.

As a result of the IRA's enactment into law, the Company is now subject to a 1% excise tax on share repurchases, effective for share repurchases made after December 31, 2022.

This excise tax may be reduced for the value of certain share issuances.

The excise tax incurred in connection with the Company's stock repurchases during the nine months ended December 31, 2024 was not material.

Geographical Information

Total tangible long-lived assets, which include property and equipment as well as assets on lease, net of accumulated depreciation, located in the United States, the Company's country of domicile, and held outside the United States, are summarized in the following table as of September 30, 2024 and March 31, 2024 (in thousands):

September 30, 2024 March 31, 2024

Total tangible long-lived assets, which include property and equipment as well as assets on lease, net of accumulated depreciation, located in the United States, the Company's country of domicile, and held outside the United States, are summarized in the following table as of December 31, 2024 and March 31, 2024 (in thousands):

December 31, 2024 March 31, 2024

United States $ 20,473 $ 20,807

1 unchanged sentence

Total tangible long-lived assets, net $ 35,813 $ 21,113

The net book value of tangible long-lived assets located within each individual foreign country at September 30, 2024 and March 31, 2024 is listed below (in thousands):

September 30, 2024 March 31, 2024

The net book value of tangible long-lived assets located within each individual foreign country at December 31, 2024 and March 31, 2024 is listed below (in thousands):

December 31, 2024 March 31, 2024

Bulgaria $ 15,017 $ —

1 unchanged sentence

Total tangible long-lived assets, net $ 15,340 $ 306

Total revenue, in and outside the United States, is summarized in the following table for the six months ended September 30, 2024 and September 30, 2023 (in thousands):

Six Months Ended September 30,

Total revenue, in and outside the United States, is summarized in the following table for the nine months ended December 31, 2024 and December 31, 2023 (in thousands):

Nine Months Ended December 31,

United States $ 188,075 $ 182,334

6 unchanged sentences

(In Thousands) Three Months Ended

September 30, Six Months Ended

September 30,

December 31, Nine Months Ended

2024 2023 2024 2023

37 unchanged sentences

Put/Call Options and Earnout

Contrail entered into an Operating Agreement (the “Contrail Operating Agreement”) in connection with the acquisition of Contrail providing for the governance of and the terms of membership interests in Contrail and including put and call options with the Seller to require Contrail to purchase all of the Seller’s equity membership interests in Contrail commencing on the fifth anniversary of the acquisition, which occurred on July 18, 2021.

Contrail entered into an Operating Agreement (the “Contrail Operating Agreement”) in connection with the acquisition of Contrail providing for the governance of and the terms of membership interests in Contrail and including put and call options with the Seller to require Contrail to purchase all of the Seller’s equity membership interests in Contrail, such options commencing on the fifth anniversary of the acquisition, which occurred on July 18, 2021.

On May 30, 2024, Contrail entered into a Membership Interest Redemption and Earnout Agreement (the "Redemption Agreement") with the Seller.

3 unchanged sentences

Pursuant to the Redemption Agreement, Contrail is required to calculate the earnout payments annually within 30 days following the completion of the annual audits of the Company and Contrail and payment of any amount due is required following satisfaction of a procedure to address any objections to the calculated amount.

The earnout pursuant to the Redemption Agreement is a Level 3 fair value measurement that is valued at $ 1.4 million as of September 30, 2024 with an increase in value from the effective date of April 1, 2024 in the amount of $ 0.3 million included as part of other non-operating income in the condensed consolidated statements of income (loss).

The earnout pursuant to the Redemption Agreement is a Level 3 fair value measurement that is valued at $ 1.8 million as of December 31, 2024.

For the three and nine months ended December 31, 2024, a loss has been recorded due to an increase in fair value of $ 0.4 million and $ 0.7 million, respectively, and included as part of other non-operating income in the condensed consolidated statements of income (loss).

In connection with the Redemption Agreement, the parties agreed to certain technical amendments to the First Amended and Restated Operating Agreement of Contrail and entered into a new Put and Call Agreement with respect to the remaining 5 % interest in Contrail held by the Seller.

15 unchanged sentences

The Shanwick RNCI and Contrail RNCI are measured at the higher of their carrying value or their redemption value.

As of September 30, 2024, the balances were comprised of the following (in thousands):

As of December 31, 2024, the balances were comprised of the following (in thousands):

Shanwick RNCI Contrail RNCI Total

6 unchanged sentences

Redemption of non-controlling interests — ( 5,899 ) ( 5,899 )

Ending Balance as of September 30, 2024 $ 5,525 $ 1,742 $ 7,267

Ending Balance as of December 31, 2024 $ 5,275 $ 1,820 $ 7,095

Crestone Asset Management, LLC and CJVII, LLC

6 unchanged sentences

Participation in each is determined solely based on whether a potential investment at the CJVII Series is a domestic (Onshore) or international (Offshore) investment.

As of September 30, 2024, for its Investment Function, the Company has contributed $ 10.6 million to CAM’s Offshore Series and $ 1.0 million to CAM’s Onshore Series.

As of December 31, 2024, for its Investment Function, the Company has contributed $ 12.9 million to CAM’s Offshore Series and $ 1.0 million to CAM’s Onshore Series.

The Company fulfilled its Investment Function initial commitment to CAM in fiscal year 2023.

6 unchanged sentences

The total number of shares authorized under the Plan is 420,000 .

Through September 30, 2024, options to purchase up to 326,000 shares have been granted under the Plan.

Through December 31, 2024, options to purchase up to 326,000 shares have been granted under the Plan.

The options vest annually over a period of ten years based on a specified service condition ("vested awards") and expire ten years after vesting.

1 unchanged sentence

If the market condition is not fulfilled at the annual vesting period on June 30 of every year, the vested awards may not be exercisable at any subsequent point.

On the preceding two vesting dates, June 30, 2024 and June 30, 2023, a total of 33,000 shares satisfied the service condition;

On the preceding three vesting dates, June 30, 2024, 2023 and 2022, a total of 97,000 shares satisfied the service condition;

however, they did not meet the market condition to become exercisable.

For the three and six months ended September 30, 2024, 18,000 and 26,000 unvested shares, respectively, were forfeited due to employee departures resulting in the reversal of previously recognized expense of $ 28.0 thousand and $ 53.0 thousand, respectively.

For the three and six months ended September 30, 2024, total compensation cost recognized under the Plan was $ 30.0 thousand and $ 72.0 thousand.

As of September 30, 2024, options to purchase up to 202,400 shares are outstanding under the Plan.

No options were exercisable as of September 30, 2024.

For the three and nine months ended December 31, 2024, no unvested shares and 26,000 unvested shares, respectively, were forfeited due to employee departures resulting in the reversal of previously recognized expense of $ 0 and $ 53.0 thousand, respectively.

For the three and nine months ended December 31, 2024, total compensation cost recognized under the Plan was $ 30.0 thousand and $ 0.1 million.

As of December 31, 2024, there were 203,000 granted options that may become exercisable on future vesting dates under the Plan.

No options were exercisable as of December 31, 2024.

Nonfinancial Guarantees

3 unchanged sentences

We regularly review our performance risk under these arrangements, and in the event it becomes probable that we will be required to perform under a guarantee or indemnity, the amount of probable payment will be recorded.

The maximum potential payments for nonfinancial guarantees were $ 4.8 million and $ 10.1 million at September 30, 2024 and March 31, 2024, respectively.

The maximum potential payments for nonfinancial guarantees were $ 4.5 million and $ 10.1 million at December 31, 2024 and March 31, 2024, respectively.

The reduction in the maximum potential payments required for nonfinancial guarantees this quarter, compared to March 31, 2024, stems from a strategic decision to sell the aircraft instead of maintaining it on lease, thereby mitigating future payment obligations for the underlying asset.

The carrying value of recorded liabilities related to nonfinancial guarantees was $ 0 at both September 30, 2024 and March 31, 2024.

The carrying value of recorded liabilities related to nonfinancial guarantees was $ 0 at both December 31, 2024 and March 31, 2024.

Subsequent Events

Master Retirement Trust ("Honeywell").

Under the Original NPA, AAM 24-1 had issued and sold $ 15.0 million of 8.5 % senior secured notes.

The Notes mature on March 1, 2031 and bear an annual interest at a rate of 8.5 %.

In addition to the 160,000 previously pledged TruPs, 160,000 newly-issued shares of TruPs held by AAM 24-1 are now pledged to Honeywell, in connection with the closing of the S econd NPA.

On January 21, 2025, the Company and the Alerus Loan Parties entered into Amendment No.

1 to Credit Agreement and Other Loan Documents (“Amendment No.

1”) with Alerus.

Amendment No.

1 extends the term of the revolving credit agreement from February 28, 2026 to August 28, 2026.

All other terms of the Credit Agreement and other Loan Documents remain the same.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements