What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-06-27 compared with 2024-06-26 · 747 added, 472 removed, 742 unchanged (62% of the section changed)

34 unchanged sentences

Critical Audit Matter Description

The Company has a 79% controlling interest in Contrail Aviation Support, LLC and is party to an operating agreement with the owner of the remaining 21% ownership interest in Contrail Aviation Support, LLC, that contains certain future redemption features that are outside the control of the Company.

This arrangement is recorded and disclosed as a redeemable non-controlling interest at fair value of $7.4 million as of March 31, 2024.

The Company adjusts the redeemable non-controlling interest each reporting period to the higher of the redemption value or carrying value, using a combination of the income approach, utilizing a discounted cash flow analysis, and the market approach, utilizing the guideline public company method.

The determination of fair value includes estimation uncertainty under both approaches.

The income approach requires significant management judgment with respect to forecasts of future revenue, operating margins, and capital expenditures, and the selection and use of an appropriate discount rate.

The market approach requires management to make significant assumptions related to market multiples of earnings derived from comparable publicly traded companies with similar operating characteristics as Contrail Aviation Support, LLC.

We identified the valuation of redeemable non-controlling interest in Contrail Aviation Support, LLC as a critical audit matter given the significant judgments and assumptions required by management to estimate the fair value of the redeemable non-controlling interest, as well as the fact that performing audit procedures required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

Inventories are carried at the lower of cost or net realizable value.

Within the commercial aircraft, engines, and parts reportable segment, the Company is required to make assumptions about expected profit margins used in the relief of inventory as parts are sold from established groups of parts from one engine or airframe purchase.

Additionally, in its periodic evaluation of the carrying value of the inventories, the Company is required to make estimates regarding the net realizable value.

These estimates include assumptions about sales patterns, expected future demand and costs to refurbish.

Changes in these assumptions could have a significant impact on the valuation of inventory held by the Company’s commercial aircraft, engines and parts reportable segment.

We identified the valuation of certain inventory held by the Company’s commercial aircraft, engines and parts reportable segment as a critical audit matter.

Given the magnitude of the inventories at certain business units, coupled with the significant judgments necessary to estimate the expected profit margins and to project sales patterns, expected future demand and costs to refurbish, auditing such estimates required a high degree of auditor judgment and an increased extent of effort when performing audit procedures and evaluating the results of those procedures

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the significant judgments and assumptions utilized in the valuation of the redeemable non-controlling interest in Contrail Aviation Support, LLC, included the following, among others:

• We evaluated the reasonableness of management’s forecasts of future revenue and operating margins by comparing the forecasts to:

▪ Historical results of Contrail Aviation Support, LLC, and

▪ Forecasted information included in industry reports.

• We considered the impact of industry and market conditions on management’s forecasts for Contrail Aviation Support, LLC.

• We involved our fair value specialists to assist in the evaluation of:

▪ The valuation methodologies used by the Company to determine whether they were consistent with generally accepted valuation practices, and reasonably weighted.

▪ The discount rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rate selected by management.

▪ Earnings multiples, including testing the underlying source information and mathematical accuracy of the calculations, and evaluating the appropriateness of the Company’s selection of companies in its industry comparable groups.

• We performed sensitivity analyses with regard to forecasted revenue and the discount rate to evaluate the changes in the fair value of the redeemable non-controlling interest in Contrail Aviation Support, LLC, that would result from changes in those significant assumptions.

• We evaluated whether the business and valuation assumptions used were consistent with evidence obtained in other areas of the audit, including a redemption agreement entered into by Contrail Aviation Support, LLC subsequent to year-end.

Our audit procedures related to expected profit margins utilized in the relief of inventory, and related to the sales patterns, expected future demand and costs to refurbish used in estimating the net realizable value of inventory, included the following, among others:

• We assessed the reasonableness of management’s estimates of expected profit margins for a representative sample of inventories by:

◦ Comparing the life-to-date profit margin on sales from the group of parts to management’s initial profit margin assessment.

◦ Evaluating the reasonableness of management’s judgments about changes to the initial profit margin estimates, if any.

• We assessed the reasonableness of management’s projections of sales patterns, expected future demand and costs to refurbish by:

◦ Comparing the information to historical results of those business units.

◦ Evaluating the methodology and assumptions used by, and the qualifications of, the Company’s third-party valuation specialist.

◦ Performing the following procedures for a representative sample of inventories:

◦ Evaluating the key assumptions underlying the valuation by examining recent sales of comparable parts and component condition.

◦ Utilizing historical costs to develop an independent estimate of costs necessary to refurbish the parts.

▪ We compared management’s assumptions to market data and industry forecasts.

/s/ Deloitte & Touche LLP

8 unchanged sentences

Overnight air cargo $ 124,031 $ 115,546

Ground equipment sales 37,168 48,485

Commercial jet engines and parts 125,535 101,737

Ground support equipment 38,940 37,168

Commercial aircraft, engines and parts 118,215 125,535

Digital solutions 7,268 5,783

Corporate and other 3,396 2,802

2 unchanged sentences

Overnight air cargo 104,760 97,690

Ground equipment sales 31,834 39,328

Commercial jet engines and parts 98,027 75,288

Ground support equipment 33,994 31,834

Commercial aircraft, engines and parts 84,896 99,222

Digital solutions 2,462 1,710

Corporate and other 1,191 1,202

1 unchanged sentence

Depreciation and amortization 4,356 2,798

Inventory write-down 1,195 7,324

Impairment of long-lived assets — 516

Loss on sale of property and equipment 18 8

Earnout remeasurement 435 —

289,942 285,570

Operating Income (Loss) 1,264 ( 4,407 )

Operating Income 1,908 1,264

Non-operating (Expense) Income:

Interest expense, net ( 6,916 ) ( 7,935 )

Interest expense ( 8,387 ) ( 6,916 )

Income from equity method investments 1,700 1,689

17 unchanged sentences

Year Ended March 31,

(In thousands) 2024 2023

Net Loss $ ( 5,411 ) $ ( 4,684 )

Other Comprehensive (Loss) Income:

Foreign currency translation (loss) income ( 93 ) 4

Unrealized gain on interest rate swaps, net of tax of $ 0 and $ 332

Foreign currency translation income (loss) 407 ( 93 )

Unrealized gain on interest rate swaps — 20

Reclassification of interest rate swaps into earnings ( 1,351 ) ( 823 )

Total Other Comprehensive (Loss) Income ( 896 ) 1,079

Redemption of non-controlling interest 146 —

Total Other Comprehensive Loss ( 567 ) ( 896 )

Total Comprehensive Loss ( 5,978 ) ( 5,580 )

8 unchanged sentences

Cash and cash equivalents $ 5,932 $ 7,100

Marketable securities 422 531

Restricted cash 575 743

2 unchanged sentences

23,917 22,911

Income tax receivable 681 561

Inventories, net 38,516 60,720

Employee retention credit receivable — 940

Prepaid expenses 3,103 2,351

Due from CAM for expense reimbursements 3,093 2,261

Due from Crestone Asset Management, LLC for expense reimbursements 180 3,093

Other current assets 4,498 3,475

Total Current Assets 78,507 102,877

Notes Receivable - Lendway 3,350 —

Notes Receivable - CAM 2,500 —

Assets on lease or held for lease, net of accumulated depreciation of $ 1,451 and $ 8

3 unchanged sentences

10,020 10,978

Right-of-use assets 11,376 11,666

Right-of-use ("ROU") assets 13,274 11,376

Equity method investments 19,003 16,653

Other assets (includes $ 0 and $ 1,909 measured at fair value)

Goodwill 10,542 10,540

Other assets 3,630 3,921

Total Assets 173,778 177,167

2 unchanged sentences

Accounts payable $ 17,782 $ 15,072

Income tax payable 139 304

Accrued expenses and other (Note 10) 16,691 15,650

Current portion of long-term debt 9,099 14,358

Current portion of long-term debt - related party (Note 12) 1,282 —

Current portion of earnout liability

Short-term lease liability 2,377 1,761

1 unchanged sentence

Long-term debt 101,226 98,568

Long-term debt - related party (Note 12) 3,288 —

Deferred income tax liabilities, net 2,249 2,447

Long-term lease liability 11,843 10,515

Other non-current liabilities — 47

Long-term earnout liability

Other non-current liabilities (includes $ 44 and $ 0 measured at fair value)

Total Liabilities 168,242 158,371

1 unchanged sentence

Commitments and contingencies (Note 21)

Stockholders' Equity:

Stockholders' (Deficit) Equity:

Preferred stock, $ 1.00 par value, 2,000,000 shares authorized

Common stock, $ 0.25 par value;

4,000,000 shares authorized, 3,030,245 shares issued, 2,775,163 and 2,818,374 shares outstanding

Treasury stock, 256,850 at $ 19.31 and 208,121 shares at $ 19.62

4,000,000 shares authorized, 3,030,245 and 3,030,245 shares issued, 2,702,639 and 2,775,163 shares outstanding

Treasury stock, 327,606 shares at $ 19.55 and 256,850 shares at $ 19.31

( 6,404 ) ( 4,959 )

1 unchanged sentence

Retained earnings 2,130 8,192

Accumulated other comprehensive (loss) income ( 80 ) 816

Accumulated other comprehensive loss ( 647 ) ( 80 )

Total Air T, Inc.

Stockholders' Equity 4,770 11,904

Stockholders' (Deficit) Equity ( 3,216 ) 4,770

Non-controlling Interests 1,698 1,050

Total Equity 5,820 12,982

Total Liabilities and Equity $ 177,167 $ 189,562

Total (Deficit) Equity ( 1,518 ) 5,820

Total Liabilities and (Deficit) Equity $ 173,778 $ 177,167

See notes to consolidated financial statements.

9 unchanged sentences

Inventory write-down 1,463 1,195

Impairment of long-lived assets — 516

Other 2,369 1,294

9 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of businesses, net of cash acquired — ( 2,498 )

Investment in unconsolidated entities ( 7,027 ) ( 4,633 )

1 unchanged sentence

Capital expenditures related to property & equipment ( 1,081 ) ( 1,076 )

Other 18 ( 111 )

Capital expenditures related to assets on lease or held for lease ( 14,598 ) —

Disbursements for note receivable - Lendway ( 3,750 ) —

Net cash used in investing activities ( 20,189 ) ( 2,499 )

5 unchanged sentences

Proceeds received from issuance of TruPs 910 8,780

Repurchase of common stock

( 1,445 ) ( 876 )

Other 758 ( 616 )

1 unchanged sentence

Effect of foreign currency exchange rates on cash and cash equivalents 408 ( 16 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 753 ( 1,278 )

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 1,086 ) 753

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 7,843 7,090

1 unchanged sentence

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

Assumption of liabilities to acquire assets on lease 720 —

Non-cash contribution from non-controlling interest 475 —

Contingent earnout for Contrail Aviation Support, LLC ("Contrail") redeemed interest 1,104 —

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

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

Equipment leased or held for lease transferred to inventory — 73

4 unchanged sentences

Cash paid during the year for income taxes $ 983 $ 917

1 The following table includes a reconciliation of "Cash and cash equivalents and restricted cash at end of period":

Cash and cash equivalents $ 5,932

Restricted cash, current

Restricted cash, long-term (a)

Total cash and cash equivalents and restricted cash at end of period

(a) Included in other assets on the consolidated balance sheets.

See notes to consolidated financial statements.

2 unchanged sentences

(In thousands) Common Stock Treasury Stock

Shares Amount Share Amount Additional

Shares Amount Shares Amount Additional

Capital Retained

8 unchanged sentences

Stock compensation expense — — — — 106 — — — 106

Foreign currency translation income — — — — — — 4 — 4

Foreign currency translation loss — — — — — — ( 93 ) — ( 93 )

Adjustment to fair value of redeemable non-controlling interest — — — — — 1,325 — — 1,325

Unrealized gain of interest rate swaps, net of tax — — — — — — 998 — 998

Reversal of Put option issued to co-investor in CAM (Note 22) — — — — — 1,000 — — 1,000

Unrealized gain of interest rate swaps — — — — — — 20 — 20

Reclassification of interest rate swaps into earnings — — — — — — ( 823 ) — ( 823 )

Balance, March 31, 2024 3,030 $ 758 257 $ ( 4,959 ) $ 859 $ 8,192 $ ( 80 ) $ 1,050 $ 5,820

*Excludes amount attributable to redeemable non-controlling interest in Contrail and Shanwick.

(In thousands) Common Stock Treasury Stock

Share Amount Share Amount Additional

Shares Amount Shares Amount Additional

Capital Retained

5 unchanged sentences

Net loss* — — — — — ( 6,140 ) — 16 ( 6,124 )

Declared distributions to non-controlling interests

— — — — — — — ( 98 ) ( 98 )

Repurchase of common stock — — 71 ( 1,445 ) — — — — ( 1,445 )

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

Stock option forfeiture (Note 14) — — — — ( 54 ) — — — ( 54 )

Stock compensation expense — — — — 142 — — — 142

Foreign currency translation loss — — — — — — ( 93 ) — ( 93 )

Adjustment to fair value of redeemable non-controlling interest — — — — — 1,325 — — 1,325

Unrealized gain on interest rate swaps — — — — — — 20 — 20

Foreign currency translation gain — — — — — — 407 — 407

Redemption of non-controlling interest — — — — — 78 146 — 224

Reclassification of interest rate swaps into earnings — — — — — — ( 1,351 ) — ( 1,351 )

Initial consolidation of CASP, LLC — — — — — — — 730 730

Allocation of comprehensive income from unconsolidated investments — — — — — — ( 3 ) — ( 3 )

Allocation of comprehensive income to redeemable non-controlling interests — — — — — — 234 — 234

Balance, March 31, 2025 3,030 $ 758 328 $ ( 6,404 ) $ 947 $ 2,130 $ ( 647 ) $ 1,698 $ ( 1,518 )

6 unchanged sentences

Our goal is to prudently and strategically diversify Air T’s earnings power, compounding its free-cash-flow per share over time.

We currently operate in four industry segments:

We currently operate in four reportable segments:

• Overnight air cargo, which operates in the air express delivery services industry;

• Ground equipment sales, which manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers;

• Ground support equipment, which manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers;

• Commercial aircraft, engines and parts, which manages and leases aviation assets;

3 unchanged sentences

procurement services and overhaul and repair services to airlines and;

• Corporate and other, which acts as the capital allocator and resource for other consolidated businesses.

• Digital solutions, which develops and provides digital aviation and other business services to customers within the aviation industry to generate recurring subscription revenues.

The Company additionally has a central corporate function that acts as the capital allocator and resource for other consolidated businesses, referred to as Corporate and other.

Further, Corporate and other also comprises insignificant businesses and business interests.

Each business segment has separate management teams and infrastructures that offer different products and services.

We evaluate the performance of our business segments based on operating income (loss) and Adjusted EBITDA.

Each reportable segment has separate management teams and infrastructures that offer different products and services.

We evaluate the performance of our reportable segments based on operating income (loss) and Adjusted EBITDA.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2 unchanged sentences

Certain reclassifications have been made to the prior period amounts to conform to the current presentation.

Reportable Segments and Reclassification of Prior Year Presentation – Effective as of the fourth quarter of fiscal year 2025, the Company renamed our ground equipment sales segment to ground support equipment and renamed out commercial jet engines and parts segment to commercial aircraft, engines and parts to better align the descriptions of the segments with their activities.

The Company has elected to separately disclose the digital solutions segment, as of the fourth quarter of fiscal year 2025, to align presentation in the financial statements with a key long-term growth area for the Company.

Digital solutions was previously classified as part of insignificant business activities.

As a result of this change, prior period segment information has been recast to conform to our current presentation in our financial statements.

Refer to Note 19 for additional details.

Accounting Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Future economic developments such as inflation and increased interest rates as well as further business issues such as supply chain issues present uncertainty and risk with respect to our financial condition and results of operations.

The fluidity of this situation precludes any prediction as to the ultimate adverse impact of these issues on economic and market conditions and our businesses in particular, and, as a result, presents material uncertainty and risk with respect to us and our results of operations.

Future economic developments such as inflation, along with evolving trade policies and the potential for new or increased tariffs, may impact our financial condition and operating results.

The unpredictable nature of these developments makes it difficult to assess their full effect on economic and market conditions or on our business specifically.

The Company believes the estimates and assumptions underlying the Company’s consolidated financial statements are reasonable and supportable based on the information available as of March 31, 2025.

Segments - The Company has four reportable operating segments:

overnight air cargo, ground equipment sales, commercial jet engine and parts and corporate and other.

overnight air cargo, ground support equipment, commercial aircraft, engines and parts, and digital solutions.

The Company assesses the performance of these segments on an individual basis (see Note 19 ).

1 unchanged sentence

The Company’s chief operating decision maker is its Chief Executive Officer.

The Company’s Chief Executive Officer reviews financial information by business segment for purposes of allocating resources and evaluating financial performance.

Each business segment has separate management teams and infrastructures that offer different products and services.

We evaluate the performance of our business segments based on operating income (loss) and Adjusted EBITDA.

The Company’s Chief Executive Officer reviews financial information by reportable segment for purposes of allocating resources and evaluating financial performance.

Each reportable segment has separate management teams and infrastructures that offer different products and services.

We evaluate the performance of our reportable segments based on operating income (loss) and Adjusted EBITDA.

Variable Interest Entities – In accordance with the applicable accounting guidance for the consolidation of variable interest entities, the Company analyzes its variable interests to determine if an entity in which we have a variable interest is a variable interest entity.

26 unchanged sentences

They are subsequently measured at fair value through the income statement at each reporting date with gains and losses on securities.

Interest on the short positions are accrued periodically and reported as interest expense.

Interest on the short

positions are accrued periodically and reported as interest expense.

The market value of the Company’s equity securities and cash held by the broker are used as collateral against any outstanding margin account borrowings for purposes of short selling equities.

1 unchanged sentence

The Company reports all cash receipts and payments resulting from the purchases and sales of securities, loans, and other assets that are acquired specifically for resale as operating cash flows.

Accounts Receivable – Accounts receivable include trade receivables from customers with stated collection terms of less than one year from the date of origination.

Accounts receivable are stated net of estimated allowance for uncollectible balances.

We measure expected credit losses primarily utilizing credit loss history.

In addition, our credit loss estimates consider current conditions.

We charge off receivables against the allowances after reasonable collection efforts are exhausted.

Below is t he reconciliation for allowance for credit losses on accounts receivables for the years ended March 31, 2025 and 2024 (in thousands):

Year Ended Year ended March 31,

Balance at the beginning of the year $ 1,420 $ 1,160

Provision for credit losses 802 288

Charge-offs, net of recoveries ( 884 ) ( 28 )

Balance at March 31 $ 1,338 $ 1,420

Inventories – Inventories are carried at the lower of cost or net realizable value.

2 unchanged sentences

Consistent with aviation industry practice, the Company includes expendable aircraft parts and supplies in current assets, although a certain portion of these inventories may not be used or sold within one year.

Within the Company’s commercial aircraft, engines and parts segment, there are various estimates and judgments made in relief of inventory as parts are sold from established groups of parts from one engine or airframe purchase.

The estimates and judgments made in relief of inventory are based on assumptions that are consistent with a market participant’s future expectations for the commercial aircraft, jet engines and parts industry and the economy in general and our expected intent for the inventory.

These assumptions and estimates are complex and subjective in nature.

Changes in economic and operating conditions could impact the assumptions and result in future losses to our inventory.

The Company periodically evaluates the carrying value of inventory.

9 unchanged sentences

Changes in economic and operating conditions that occur subsequent to a current impairment analysis and the Company’s ultimate use of the investment could impact the assumptions and result in future impairment losses to the investments.

If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value.

The fair value is determined through quoted prices in active

markets or various valuation techniques, including internally developed discounted cash flow models or comparable market transactions.

If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for

the amount by which the carrying value exceeds the fair value.

The fair value is determined through quoted prices in active markets or various valuation techniques, including internally developed discounted cash flow models or comparable market transactions.

Goodwill - The Company evaluates goodwill on an annual basis or anytime events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

5 unchanged sentences

The Company will recognize an impairment charge for the amount by which the carrying value of the reporting unit exceeds its fair value, if any.

Goodwill consisted of the following (in thousands):

Goodwill for relevant segments and corporate and other, at original cost, consisted of the following (in thousands):

Year Ended March 31,

Goodwill, at original cost $ 10,916 $ 10,939

Accumulated impairment ( 376 ) ( 376 )

Overnight air cargo

Commercial aircraft, engines and parts

Digital solutions

Total reportable segment goodwill, at cost

10,542 10,540

Corporate and other

Less accumulated impairment ( 376 ) ( 376 )

Goodwill, net of impairment $ 10,542 $ 10,540

As of March 31, 2024, $ 4.2 million of the goodwill balance is attributable to the acquisition of Contrail in July 2016.

$ 6.2 million of the goodwill balance is attributable to the acquisition of Shanwick in February 2022.

$ 0.1 million of the goodwill balance is attributable to the acquisition of WASI in January 2023.

The decrease from the prior fiscal year's balance of $ 10.6 million to the current fiscal year's balance of $ 10.5 million is attributable to foreign currency translation adjustments related to the goodwill balance at Shanwick.

As of March 31, 2025, the $ 4.2 million goodwill balance in commercial aircraft, engines and parts is attributable to the acquisition of Contrail in July 2016.

The $ 6.2 million goodwill balance in digital solutions is attributable to the acquisition of Shanwick in February 2022.

The $ 0.1 million goodwill balance in overnight aircraft cargo is attributable to the acquisition of WASI in January 2023.

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

Based on the results of our annual assessment of qualitative factors conducted as of March 31, 2025, management determined that it was more likely than not that the fair value of our reporting units exceeded its carrying value, including goodwill.

33 unchanged sentences

In the event it is determined that the carrying values of long-lived assets are in excess of the estimated undiscounted cash flows from those assets, the Company then will write-down the value of the assets by the excess of carrying value over fair value.

Accounting for Debt - Trust Preferred Securities and Warrant Liability – On June 10, 2019, the Company issued an aggregate of 1.6 million TruPs in the amount of $ 4.0 million in a non-cash transaction.

In connection with the issuance of these TruPs, the Company also issued an aggregate of 8.4 million warrants (representing warrants to purchase $ 21.0 million in stated value of TruPs).

A warrant for mandatorily redeemable shares conditionally obligates the issuer to ultimately transfer assets—the obligation is conditioned only on the warrant's being exercised because the shares will be redeemed.

Thus, warrants for mandatorily redeemable shares are liabilities under ASC 480.

In total, 5.3 million Warrants were exercised and the remaining 3.1 million Warrants expired on August 30, 2021.

On April 24, 2024, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with Ascendiant Capital Markets, LLC (the “sales agent” or “Ascendiant”), pursuant to which it may sell and issue its TruPs having an aggregate offering price of up to $ 8.0 million from time to time.

Accounting for Debt - Trust Preferred Securities and Warrant Liability – On April 24, 2024, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with Ascendiant Capital Markets, LLC (the “sales agent” or “Ascendiant”), pursuant to which it may sell and issue its TruPs having an aggregate offering price of up to $ 8.0 million from time to time.

The Company has no obligation to sell any TruPs, and may at any time suspend offers under the ATM Agreement or terminate the ATM Agreement.

These TruPs are mandatorily redeemable preferred security obligations of the Company.

In accordance with ASC 480, the Company presented mandatorily redeemable preferred securities that do not contain a conversion option as a liability on the

balance sheet.

In accordance with ASC 480, the Company presented mandatorily redeemable preferred securities that do not contain a conversion option as a liability on the balance sheet.

Further, as the redemption date and the redemption amount are both fixed, in accordance with ASC 825, we measured these TruPs at the present value of the amount to be paid at settlement, discounted by using the implicit rate at inception.

1 unchanged sentence

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Deferred tax assets and liabilities are measured using enacted tax

laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

8 unchanged sentences

The Contrail Put/Call Option permits 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 was on July 18, 2021.

Per the agreement, the price is to be agreed upon by the parties or, failing such agreement, to be determined pursuant to third-party appraisals in a process specified in the agreement.

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

Pursuant to the Redemption Agreement, Contrail agreed to purchase and redeem from the Seller, 16 % of its 21 % interest in Contrail, with the earnout period being retroactive to April 1, 2024.

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.

Per the Operating Agreement, Contrail's non-controlling interest is redeemable at an amount other than fair value, which is equal to 5 % of the Contrail Equity Value, which is defined as an amount equal to nine times the average Adjusted EBITDA of Contrail's most recent three completed fiscal years at the time an option notice is delivered.

The purchase price for the 5 % interest is to be paid in equal quarterly installments over a three-year period, together with interest at the then current ten-year Treasury bond yield plus 2.5 % adjusted annually.

In February 2022, in connection with the Company's acquisition of GdW, a consolidated subsidiary of Shanwick, the Company entered into a shareholder agreement with the 30.0 % non-controlling interest owners of Shanwick, providing for the governance of and the terms of membership interests in Shanwick.

The shareholder agreement includes the Shanwick Put/Call Option with regard to the 30.0 % non-controlling interest.

The non-controlling interest holders are the executive management of the underlying business.

The Shanwick Put/Call Option grants the Company an option to purchase the 30.0 % interest at the call option price that equals the average EBIT over the three Financial Years prior to the exercise of the Call Option multiplied by eight .

In addition, the Shanwick Put/Call Option also grants the non-controlling interest owners an option to require the Company to purchase from them their respective ownership interests at the Put Option price, that is equal to the average EBIT over the three Financial Years prior to the exercise of the Put Option multiplied by seven and one-half.

The Call Option and the Put Option may be exercised at any time from the fifth anniversary of the shareholder agreement and then only at the end of each fiscal year of Air T ("Shanwick RNCI").

Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer.

As a result of this feature, the Company recorded the non-controlling interests as redeemable and classified them in temporary equity within its Consolidated Balance Sheets initially at their acquisition-date estimated redemption value or fair value.

Per the Operating Agreement, Contrail's non-controlling interest is redeemable at fair value, which is determined using a combination of the income approach, utilizing a discounted cash flow analysis, and the market approach, utilizing the guideline public company method.

Contrail's discounted cash flow analysis requires significant management judgment with respect to forecasts of revenue, operating margins, capital expenditures, and the selection and use of an appropriate discount rate.

The forecasts and assumptions are based on our annual and long-term business plans.

Contrail’s market approach requires management to make significant assumptions related to market multiples of earnings derived from comparable publicly-traded companies with similar operating characteristics as Contrail.

Contrail's non-controlling interest is adjusted each reporting period for income (or loss) attributable to the non-controlling interest as well as any applicable distributions made.

A measurement period adjustment, if any, is then made to adjust the non-controlling interest to the higher of the redemption value (fair value) or carrying value each reporting period.

These fair value adjustments are recognized through retained earnings and are not reflected in the Company's Consolidated Statements of Income (Loss).

When calculating earnings per share attributable to the Company, the Company adjusts net income attributable to the Company for the measurement period adjustment to the extent the redemption value exceeds the fair value of the non-controlling interest on a cumulative basis.

As of March 31, 2024, the fair value of the Contrail's redeemable non-controlling interest was $ 7.4 million.

See Note 22 , Commitments and Contingencies.

As a result of this feature, the Company recorded the non-controlling interests as redeemable and classified them in temporary equity within its Consolidated Balance Sheets.

Initial measurement of the redeemable non-controlling interests is at their acquisition-date fair value.

Because the redeemable non-controlling interests are redeemable at an amount other than fair value, subsequent measurement is to be measured at the greater of the carrying value in accordance with ASC 810-10 measurement guidance or the redemption value in accordance with ASC 480-10 .

Refer to Note 21 for further information.

Revenue Recognition – Substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less.

As a result, the Company has applied the practical expedient to exclude consideration of significant financing components from the determination of transaction price, to expense costs incurred to obtain a contract, and to not disclose the value of unsatisfied performance obligations.We evaluate gross versus net presentation on revenues from products or services purchased and resold in accordance with the revenue recognition criteria outlined in ASC 606-10, Principal Agent Considerations.

We evaluate gross versus net presentation on revenues from products or services purchased and resold in accordance with the revenue recognition criteria outlined in ASC 606-10, Principal Agent Considerations.

The Company, under the terms of its overnight air cargo dry-lease service contracts, passes through to its air cargo customer certain cost components of its operations without markup.

The cost of fuel, landing fees, outside maintenance, parts and certain other direct operating costs are included in operating expenses and billed to the customer, at cost, and included in overnight air

cargo revenue on the accompanying statements of income (loss).

These pass-through costs totaled $ 39.9 million and $ 36.4 million for the years ended March 31, 2025 and 2024, respectively.

Recently Adopted Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04- Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The amendments in this Update provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

In December 2022, the FASB issued ASU 2022-06- Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848.

The amendments in this Update deferred the implementation deadline of Topic 848 from December 31, 2022, to December 31, 2024.

The Company completed the process of converting its material LIBOR-based contracts, hedging relationships, and other transactions to other reference rates as of September 30, 2023.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07- Segment Reporting (Topic 848):

3 unchanged sentences

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 31, 2023 and interim periods within fiscal years beginning after December 15, 2024.

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

The Company adopted this guidance for the fiscal year ended March 31, 2025.

Refer to Note 19 for more information.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09- Income Taxes (Topic 740):

3 unchanged sentences

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

Worldwide Aviation Services, Inc.

On January 31, 2023, the Company acquired Worldwide Aircraft Services, Inc.

("WASI"), a Kansas corporation that services the aircraft industry across the United States and internationally through the operation of a repair station which is located in Springfield, Missouri at the Branson National Airport.

The acquisition was funded with cash and the loans described in Note 13 of this report.

WASI is included within the Overnight air cargo segment.

The acquisition date's fair value of the consideration is summarized in the table below (in thousands):

January 31, 2023

Cash consideration $ 1,628

Seller's Note 1,370

Total consideration $ 2,998

The transaction was accounted for as a business combination in accordance with ASC Topic 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their fair values as of January 31, 2023, with the excess of total consideration above fair value of net assets acquired recorded as goodwill.

The following table outlines the consideration transferred and purchase price allocation at the respective fair values as of January 31, 2023 (in thousands):

January 31, 2023

Accounts receivable $ 1,037

Inventory 517

Other current assets 97

Property, plant and equipment, net 403

Intangible -Trade Name 342

Intangible - Non-competition Agreement 19

Intangible - Customer Relationships 683

Other assets 20

Total assets $ 3,118

Accounts payable 61

Accrued expenses and deferred revenue 635

Total liabilities $ 696

Net assets acquired $ 2,422

Consideration paid 2,998

Cash acquired ( 500 )

Net assets acquired ( 2,422 )

Goodwill $ 76

As of March 31, 2023, the purchase price allocation is final.

The following table sets forth the revenue and expenses of WASI that are included in the Company’s consolidated statement of income (loss) for the fiscal year ended March 31, 2023 (in thousands):

Income Statement

Post-Acquisition

Revenue $ 929

Cost of Sales 676

Operating Expenses 425

Operating Loss ( 172 )

Non-operating expense ( 22 )

Net loss $ ( 194 )

Pro forma financial information is not presented as the results are not material to the Company’s consolidated financial statements.

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.

MAJOR CUSTOMER

Approximately 36 % of the Company’s consolidated revenues were derived from services performed for FedEx Corporation in fiscal 2024 and 2023.

Approximately 39 % and 36 % of the Company’s consolidated revenues were derived from services performed for FedEx Corporation by the Company's Overnight Air Cargo segment during the fiscal years ended March 31, 2025 and 2024, respectively.

Approximately 35 % and 21 % of the Company’s consolidated accounts receivable at March 31, 2025 and 2024, respectively, were due from FedEx Corporation.

Approximately 10 % and 9 % of the Company’s consolidated revenues were derived from services performed for American Airlines Corporation in fiscal 2024 and 2023, respectively.

Approximately 13 % and 10 % of the Company’s consolidated revenues were derived from services performed for American Airlines Corporation by the Company's Commercial Aircraft, Engines and Parts and Ground Support Equipment segments in fiscal 2025 and 2024, respectively.

Approximately 19 % and 24 % of the Company’s consolidated accounts receivable at March 31, 2025 and 2024, respectively, were due from American Airlines Corporation.

9 unchanged sentences

Marketable securities (including restricted investments) (Level 1) $ 1,105 $ 1,923

Interest rate swaps (Level 2) 1,909 2,420

Interest rate swaps (liability) asset (Level 2) ( 44 ) 1,909

Contrail's earnout (Level 3) $ 1,539 $ —

Contrail's redeemable non-controlling interest (Level 3)

2 unchanged sentences

Since these inputs are observable in active markets over the terms that the instruments are held, the derivatives are classified as Level 2 in the hierarchy.

The fair value of Contrail's redeemable non-controlling interest is based on a combination of market approach and income approach and is classified as Level 3 in the hierarchy.

The fair value of Contrail's earnout is valued using an income approach and is classified as Level 3 in the hierarchy.

See Note 21 .

The fair value measurements which use significant observable inputs (Level 3), changed due to the following (in thousands):

Contrail's Redeemable Non-Controlling

Beginning Balance as of April 1, 2023 $ 7,972

Contribution from non-controlling member —

Distribution to non-controlling member ( 245 )

Net income attributable to non-controlling interests 1,035

Fair value adjustment - Contrail (Note 22) ( 1,325 )

Ending Balance as of March 31, 2024 $ 7,437

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, notes receivable and accounts payable approximate their fair values at March 31, 2025 and 2024.

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

The Company determines fair value of engine assets on lease or held for lease by reference to independent appraisals, quoted market prices (e.g.

an offer to purchase) and other factors such as current data from manufacturers as well as specific market sales.

An impairment charge is recorded in the fiscal quarter in which the carrying value of the asset exceeds its fair value.

The Company used Level 2 inputs to measure write-downs of engine assets on lease or held for lease.

As of March 31, 2024, as a result of our year-end valuation, we did not identify any impairment on our engine assets on lease or held for lease.

Inventories consisted of the following (in thousands):

Year Ended March 31,

Overnight air cargo:

Finished goods $ 893 $ 546

Ground equipment manufacturing:

Raw materials 6,928 6,174

1 unchanged sentence

Finished goods 5,358 4,387

Corporate and other:

Raw materials 1,003 794

Finished goods 724 726

Commercial jet engines and parts:

Whole engines available for sale or tear-down — 10,141

Parts 49,522 50,813

Aircraft parts 28,794 49,522

Total inventories 43,422 65,327

1 unchanged sentence

Total inventories, net of reserves $ 38,516 $ 60,720

A write-down of $ 1.2 million was recorded on the inventory of the commercial jet engines and parts segment during the fiscal year ended March 31, 2024.

A write-down of $ 1.5 million was recorded on the inventory of the commercial aircraft, engines and parts segment during the fiscal year ended March 31, 2025.

The write-down was attributable to our evaluation of the carrying value of inventory as of March 31, 2025, where we compared its cost to its net realizable value and considered factors such as physical condition, sales patterns and expected future demand to estimate the amount necessary to write down any slow moving, obsolete or damaged inventory.

LESSOR ARRANGEMENTS

Equipment Leases

The Company leases equipment to third-parties, primarily through Contrail.

Leases for aircraft and engines to aviation customers typically have terms ranging from 1 and 4 years under operating lease agreements.

On August 26, 2024, Contrail executed the operating agreement for CASP Leasing 1, LLC ("CASP"), a newly-created and 95 % owned subsidiary of Contrail.

On August 29, 2024, CASP entered into two purchase agreements to acquire and subsequently lease two Airbus Model A321-111 aircraft.

The lease term for these two leased assets ends December 31, 2027.

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

During the fiscal year ended March 31, 2025, the Company recognized depreciation expense relating to equipment leases of $ 1.5 million.

Depreciation expense relating to equipment leases for the fiscal year ended March 31, 2024 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 fiscal year ended March 31, 2025, earned contingent rent on equipment leases totaled approximately $ 1.1 million.

The Company had no contingent rent earned on equipment leases during the fiscal year ended March 31, 2024.

As of March 31, 2025, future minimum rental payments to be received under non-cancelable leases are as follows (in thousands):

Year ended March 31,

Total $ 9,606

Office leases

5 unchanged sentences

Depreciation expense relating to office leases was $ 0.3 million for the fiscal years ended March 31, 2025 and 2024, respectively.

We recognized rental and other revenues related to operating lease payments of $ 1.6 million and $ 1.4 million, respectively, of which variable lease payments were $ 0.7 million and $ 0.6 million during the fiscal years ended March 31, 2024 and 2023, respectively.

We recognized rental and other revenues related to operating lease payments of $ 1.7 million and $ 1.6 million, of which variable lease payments were $ 0.7 million during both fiscal years ended March 31, 2025 and 2024, 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.

8 unchanged sentences

Leasehold improvements 8,393 7,656

Building 13,850 13,850

Land and buildings 13,850 13,850

29,525 28,566

1 unchanged sentence

Property and equipment, net $ 20,285 $ 20,861

During the fiscal years ended March 31, 2025 and 2024, depreciation on fixed assets amounted to $ 1.7 million and $ 1.5 million, respectively.

Intangibles consisted of the following (in thousands):

8 unchanged sentences

Accumulated amortization ( 6,330 ) ( 5,119 )

10,837 12,063

In-process software 70 141

3 unchanged sentences

Thereafter 4,635

Amortization expense totaled $ 1.2 million for each fiscal years ended March 31, 2025 and 2024.

INVESTMENTS IN SECURITIES AND DERIVATIVE INSTRUMENTS

As part of the Company’s interest rate risk management strategy, the Company, from time to time, uses derivative instruments to minimize significant unanticipated earnings fluctuations that may arise from rising variable interest rate costs associated with existing borrowings (Air T - Term Note A and Air T - Term Note D).

To meet these objectives, the Company entered into interest rate swaps with notional amounts consistent with the outstanding debt to provide a fixed rate of 4.56 % and 5.09 %, respectively, on Term Notes A and D.

The swaps mature in January 2028.

On August 31, 2021, Air T and MBT refinanced Term Note A and fixed its interest rate at 3.42 %.

To meet these objectives, the Company entered into interest rate swaps with notional amounts consistent with the outstanding debt on Term Note A - MBT and Term Note D - MBT, which were designated as cash flow hedging instruments and qualified as effective hedges in accordance with ASC 815.

On August 31, 2021, Air T refinanced Term Note A and fixed its interest rate at 3.42 %.

As a result of this refinancing, the Company determined that the interest rate swap on Term Note A 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 Term Note A at the time of de-designation into earnings over the remainder of its term.

In addition, any changes in the fair value of Term Note A's swap after August 31, 2021 are recognized directly into earnings.

The remaining swap contract associated with Term Note D is designated as an effective cash flow hedging instrument in accordance with ASC 815.

At the time of de-designation, the Company amortized the fair value of the interest-rate swap contract included in accumulated other comprehensive income (loss) associated with Term Note A into earnings, classified with interest expense on the consolidated statement of income (loss), over the remainder of its term.

On July 10, 2024, the interest rate swap on Term Note A - MBT was terminated and the Company received proceeds in the amount of $ 0.1 million with the net realized loss on swap termination included in other income (loss) on the condensed consolidated statement of income (loss).

The swap termination has no impact on the Company's accounting for the fair value adjustments of the interest-rate swap contract included in accumulated other comprehensive income (loss) associated with Term Note A - MBT.

On July 10, 2024, the interest rate swap on Term Note D - MBT was also terminated and the Company received proceeds in the amount $ 41.0 thousand with the net realized loss on swap termination included in other income (loss) on the condensed consolidated statement of income (loss).

As a result of this swap termination, the Company determined that the interest rate swap on Term Note D - MBT 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 Term Note D - MBT at the time of de-designation into earnings, classified with interest expense on the consolidated statement of income (loss), over the remaining term of the originally hedged loan.

On January 7, 2022, Contrail completed an interest rate swap transaction with Old National Bank ("ONB") with respect to the $ 43.6 million loan made to Contrail in November 2020 pursuant to the Main Street Priority Loan Facility as established by the U.S.

1 unchanged sentence

The purpose of the floating-to-fixed interest rate swap transaction was to effectively fix the loan interest rate at 4.68 %.

As of February 24, 2022, this swap contract has been designated as a cash flow hedging instrument and qualified as an effective hedge in accordance with ASC 815.

During the period between January 7, 2022 and February 24, 2022, the Company recorded a loss of approximately $ 0.1 million in the consolidated statement of income (loss) due to the changes in the fair value of the instrument prior to the designation and qualification of this instrument as an effective hedge.

After it was deemed an effective hedge, the Company recorded changes in the fair value of the instrument in the consolidated statement of comprehensive income (loss).

As of February 24, 2022, this swap contract was designated as a cash flow hedging instrument and qualified as an effective hedge in accordance with ASC 815.

On March 30, 2023, Contrail made a prepayment of $ 6.7 million on Contrail - Term Note G.

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.

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

For the swaps related to Air T Term Note D and Contrail - Term Note G (prior to March 30, 2023), the effective portion of changes in the fair value on these instruments is recorded in other comprehensive income (loss) and is reclassified into the consolidated statement of income (loss) as interest expense in the same period in which the underlying hedged transactions affect earnings.

The Company amortized 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.

During the year ended March 31, 2025, the interest rate swap on Contrail - Term Note G was terminated and the Company received proceeds in the amount of $ 0.6 million.

As a result of the termination, the Company reclassified a gain of $ 0.7 million from accumulated other comprehensive income (loss) into earnings.

On February 28, 2025, MAC completed an interest rate swap transaction with Bank of America, N.A ("BofA") with respect to the $ 2.3 million loan made to MAC in February 2025.

The purpose of the floating-to-fixed interest rate swap transaction was to effectively fix the loan interest rate at 5.99 %.

The Company elected not to apply hedge accounting on the interest rate swap with BofA, therefore, any changes in the fair value of the swap are recognized directly into earnings.

These fair value changes are included in interest expense on the condensed consolidated statement of income (loss).

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 fiscal years ended March 31, 2025 and 2024, 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 March 31, 2024 and March 31, 2023, the fair value of the interest-rate swap contracts was an asset of $ 1.9 million and $ 2.4 million, respectively, which is included within other assets in the consolidated balance sheets.

During the years ended March 31, 2024 and 2023, the Company recorded a gain of approximately $ 20.0 thousand and $ 1.0 million, net of tax, respectively, in the consolidated statement of comprehensive income (loss) for changes in the fair value of the instruments.

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

The fair value of these interest-rate swap contracts was not material as of March 31, 2025.

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

Estimated net unrealized losses related to the interest rate swaps included in accumulated other comprehensive income (loss) that will be reclassified into earnings within the next twelve months are not material.

The Company may, from time to time, employ trading strategies designed to profit from market anomalies and opportunities it identifies.

1 unchanged sentence

These derivative instruments are priced using publicly quoted market prices and are considered Level 1 fair value measurements.

During the fiscal year ended March 31, 2024, the Company recorded $ 0.2 million gain and $ 0.4 million loss related to these derivative instruments.

During the fiscal year ended March 31, 2023, the Company recorded no gain and $ 0.3 million loss related to these derivative instruments.

During the fiscal year ended March 31, 2025, gains and losses related to these derivative instruments were not material.

During the fiscal year ended March 31, 2024, the Company recorded a $ 0.2 million gain and $ 0.4 million loss related to these derivative instruments.

These gains and losses are included within Corporate and other's operating expenses in the consolidated statement of income (loss).

1 unchanged sentence

Marketable equity securities are carried at fair value, with changes in fair market value included in the determination of net income (loss).

The fair market value of marketable equity securities is determined based on quoted market prices in active markets.

During the fiscal year ended March 31, 2024, the Company had a gross unrealized gain aggregating to $ 1.6 million and a gross unrealized loss aggregating to $ 2.1 million.

During the fiscal year ended March 31, 2023, the Company had a gross unrealized gain aggregating to $ 0.5 million and a gross unrealized loss aggregating to $ 0.9 million.

These unrealized gains and losses are included within Other income (loss) in the consolidated statement of income (loss).

The calculation of net unrealized gains and losses recognized during the period related to equity securities still held at the end of the period is as follows (in thousands):

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 twelve months ended March 31, 2025 and 2024 are as follows (in thousands):

Year Ended March 31,

Net unrealized losses recognized during the period on equity securities $ ( 453 ) $ ( 389 )

Net gains recognized during the period on equity securities sold during the period 20 —

Net unrealized losses recognized during the reporting period on equity securities still held at the reporting date $ ( 473 ) $ ( 389 )

Unrealized Gains $ 615 $ 1,602

Unrealized Losses $ 1,049 $ 2,055

These unrealized gains and losses are included within Other income (loss) in the consolidated statement of income (loss).

As of March 31, 2025 and 2024, the fair value of these marketable equity securities was an asset of $ 1.1 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

The Company’s investment in Lendway, formerly Insignia, is accounted for under the equity method of accounting.

Lendway, Inc.

The Company’s investment in Lendway (NASDAQ:

LDWY), formerly Insignia Systems, Inc., is accounted for under the equity method of accounting.

The Company has elected a three-month lag upon adoption of the equity method.

1 unchanged sentence

Subsequent to reincorporation, Lendway sold its legacy business on August 4, 2023 to pivot the business towards specialty agricultural finance.

On February 26, 2024, Lendway acquired Bloomia B.V.

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

As of March 31, 2025, the number of Lendway's shares owned by the Company was 0.5 million, representing approximately 28 % of the outstanding shares.

During the fiscal year ended March 31, 2024, the Company's share of Lendway's net income for the twelve months ended December 31, 2023 was $ 0.7 million.

As of March 31, 2025, the Company's net investment basis in Lendway is $ 0.7 million.

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.

On January 15, 2025 the borrowing limit was further increased to $ 3.8 million and as of March 31, 2025, $ 3.8 million has been drawn.

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

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

As of March 31, 2025, $ 3.4 million of the principal balance remains outstanding and $ 0.1 million of interest has been accrued.

Cadillac Casting, Inc.

The Company's 20.1 % investment in CCI is accounted for under the equity method of accounting.

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

For the fiscal year ended March 31, 2024, the Company recorded income of $ 1.1 million as its share of CCI's net income for the twelve months ended December 31, 2023, along with a basis difference adjustment of $ 50.0 thousand.

The Company's net investment basis in CCI is $ 3.9 million as of March 31, 2025.

Summarized audited financial information for the Company's equity method investees for the twelve months ended December 31, 2023 and December 31, 2022 are as follows (in thousands):

Twelve Months Ended

December 31, 2023 Twelve Months Ended

December 31, 2022

Crestone Asset Management, LLC investment

On May 5, 2021, the Company formed an aircraft asset management business called Crestone Asset Management, LLC ("CAM"), formerly known as Contrail Asset Management LLC, and an aircraft capital joint venture called Contrail JV II LLC ("CJVII").

The venture focuses on acquiring commercial aircraft and jet engines for leasing, trading and disassembly.

The joint venture, CJVII, was formed as a series LLC ("CJVII Series").

It consists of several individual series that target investments in current generation narrow-body aircraft and engines, building on Contrail’s origination and asset management expertise.

CAM was formed to serve two separate and distinct functions:

1) to direct the sourcing, acquisition and management of aircraft assets owned by CJVII Series as governed by the Management Agreement between CJVII and CAM (“Asset Management Function”), and 2) to directly invest into CJVII Series alongside other institutional investment partners (“Investment Function”).

CAM has two classes of equity interests:

1) common interests and 2) investor interests.

Neither interest votes as the entity is operated by a Board of Directors.

The common interests of CAM relate to its Asset Management Function.

The investor interests of CAM relate to the Company’s and Mill Road Capital’s (“MRC”) investments through CAM into CJVII (the Investment Function) and ultimately into the individual CJVII Series.

With regard to CAM’s common interests, the Company currently owns 90 % of the economic common interests in CAM, and MRC owns the remaining 10 %.

MRC invested $ 1.0 million directly into CAM in exchange for 10 % of the common interests.

For the Asset Management Function, CAM receives origination fees, management fees, consignment fees (where applicable) and a carried interest from the direct investors into each CJVII Series.

Such fee income and carried interest will be distributed to the Company and MRC in proportion to their respective common interests.

The Company determined that CAM is a variable interest entity and that the Company is not the primary beneficiary.

This is primarily the result of the Company's conclusion that it does not control CAM’s Board of Directors, which has the power to direct the activities that most significantly impact the economic performance of CAM.

Accordingly, the Company does not consolidate CAM and has determined to account for this investment using equity method accounting.

The Company accounts for its investment in CAM using the hypothetical liquidation at book value ("HLBV") method without a reporting lag.

The HLBV method uses a balance sheet approach to capture changes in the Company's claim on CAM's net assets from a period-end hypothetical liquidation at book value.

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

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 for 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 $ 37.8 million and $ 29.6 million as of March 31, 2025 and 2024, respectively.

Additionally, contributions from and distributions to both Air T and MRC for the fiscal year ended March 31, 2025 and 2024 are as follows (in thousands):

Year Ended March 31,

Contributions $ 7,029 $ 4,095

Distributions $ 11,847 $ 4,852

Investment balances for the Company's equity method investees as of March 31, 2025 and 2024 is as follows (in thousands):

Investment March 31, 2025 March 31, 2024

Lendway $ 729 $ 2,339

CCI 3,889 3,723

CAM 12,428 7,397

Other equity method investments 1,957 3,194

Total $ 19,003 $ 16,653

Summarized income statement financial information for the Company's equity method investees accounted for on a three month lag for the twelve months ended December 31, 2024 and December 31, 2023 are as follows (in thousands):

Twelve Months Ended December 31,

Revenue $ 174,810 $ 143,208

Gross Profit 20,942 19,137

Operating income 6,643 16,631

Net income 7,849 14,256

Net income attributable to Air T, Inc.

Operating (loss) income ( 1,150 ) 4,843

Net (loss) income ( 3,347 ) 8,765

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

stockholders $ ( 1,286 ) $ 1,862

Summarized balance sheet financial information for the Company's equity method investees accounted for on a three month lag as of December 31, 2024 and December 31, 2023 are as follows (in thousands):

Current assets $ 48,327 $ 49,101

Noncurrent assets 119,881 40,971

Total assets 168,208 90,072

Current liabilities 34,594 28,656

Noncurrent liabilities 101,151 19,262

Total liabilities 135,745 47,918

Noncontrolling interests 2,841 689

The summarized income statement financial information for the Company's equity method investees accounted for without a reporting lag for the fiscal years ended March 31, 2025 and 2024 are as follows (in thousands):

Year Ended March 31,

Revenue $ 31,516 $ 27,306

Gross Profit 11,949 8,356

Operating (loss) income ( 228 ) 1,311

Net income (loss) 6,374 ( 1,552 )

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

stockholders $ 3,054 $ ( 80 )

Summarized balance sheet financial information for the Company's equity method investees accounted for on a three month lag as of March 31, 2025 and 2024 are as follows (in thousands):

Current assets $ 41,947 $ 37,275

Noncurrent assets 26,856 28,460

Total assets 68,803 65,735

Current liabilities 6,194 5,959

Noncurrent liabilities 1,090 1,399

Total liabilities 7,284 7,358

Noncontrolling interests — —

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 and other comprehensive income adjustments, during the fiscal years ended March 31, 2025 and 2024 is as follows (in thousands):

Year Ended March 31,

Investment 2025 2024

Lendway $ ( 1,609 ) $ 659

CCI 165 1,041

CAM 2,919 ( 184 )

Other equity method investments 225 173

Total $ 1,700 $ 1,689

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 fiscal years ended March 31, 2025 and 2024, the Company received distributions and dividends from equity method investees as follows (in thousands):

Year Ended March 31,

Investment 2025 2024

Lendway $ — $ —

CAM 4,907 2,275

Other equity method investments 1,458 465

Total $ 6,365 $ 3,192

ACCRUED EXPENSES

19 unchanged sentences

The components of lease cost for the fiscal years ended March 31, 2025 and 2024 are as follows (in thousands):

Twelve Months Ended March 31, 2024 Twelve Months Ended March 31, 2023

Twelve Months Ended March 31,

Operating lease cost $ 3,121 $ 2,587

8 unchanged sentences

Weighted-average remaining lease term

Operating leases 12 years, 1 month 12 years, 10 months

Operating leases 10 years, 3 months 12 years, 1 month

Weighted-average discount rate

Operating leases 5.67 % 5.09 %

During the twelve months ended March 31, 2025, the Company had ROU assets that were obtained in exchange for new operating lease liabilities in the amount of $ 4.1 million.

The Company has an operating lease between entities under common control where the useful life of certain leasehold improvements exceeds the related lease term.

As of March 31, 2025, the remaining lease term on the operating lease was 4 years, 8 months and the useful life of leasehold improvements that exceeded the lease term ranged from 4 years, 10 months to 5 years, 2 months .

As of March 31, 2025, the unamortized balance of such leasehold improvements was $ 0.2 million.

Maturities of lease liabilities under non-cancellable leases where we are the lessee as of the fiscal year ended March 31, 2025 are as follows (in thousands):

3 unchanged sentences

Interest ( 4,609 )

Discount ( 857 )

Total lease liabilities $ 14,220

1 unchanged sentence

Borrowings of the Company and its subsidiaries are summarized below at March 31, 2025 and March 31, 2024, respectively.

Effective May 26, 2023, Contrail entered into the Fourth Amendment to Master Loan Agreement and the Amended and Restated Promissory Note Term Note G with ONB.

The purpose of the amended documents was to replace the one-month LIBOR based interest rate with a one-month SOFR-based rate.

All other material terms of the obligations remain the same.

The principal amount of the loan was $ 38.2 million on the effective date of the amended documents and the applicable interest rate is now the one-month SOFR based rate, as defined in the loan agreement, plus 3.11 %.

Effective May 26, 2023, Contrail entered into the First Amendment to Supplement #8 to Master Loan Agreement, the Fifth Amendment to Supplement #2 to the Master Loan Agreement and the Fourth Amended and Restated Promissory Note Revolving Note with ONB.

The purpose of the amended documents was to replace the LIBOR based interest rate with a one-month SOFR based rate.

All other material terms of the obligation remain the same.

The maximum principal amount of the revolving note remains at $ 25.0 million and the applicable interest rate is now the one-month SOFR-based rate, as defined in the loan agreement, plus 3.56 %.

On May 26, 2023, AirCo 1 executed an Amendment to Main Street Priority Loan Facility Term Loan Agreement with PSB.

The Amendment replaces the three-month LIBOR benchmark applicable to the loan with a three-month SOFR based rate, which is defined as the three-month SOFR rate plus 3.26 %.

The principal amount of the loan was $ 6.4 million on the effective date of the amended agreement.

The interest rate is to be determined on the 11th day of each month on the amounts that remain outstanding, commencing June 11, 2023.

On June 23, 2023, the Company and MBT entered into amendments to the Credit Agreement with MBT and related promissory note.

The amendments extended the maturity date of the credit facility to August 31, 2024 and include the following changes:

A $ 2.0 million seasonal increase in the maximum amount available under the facility.

The maximum amount of the facility will now increase to $ 19.0 million between May 1 and November 30 of each year and will decrease to $ 17.0 million between December 1 and April 30 of each year;

The reference rate for the interest rate payable on the revolving facility will change from Prime to SOFR, plus a spread.

The exact spread over SOFR will change every September 30 and March 31 based on the Company calculated funded debt leverage ratio (defined as total debt divided by EBITDA).

Depending on the result of the calculation, the interest rate spread applicable to the facility will range between 2.25 % and 3.25 %;

The unused commitment fee on the revolving credit facility will increase from 0.11 % to 0.15 %;

The covenant restricting the Company’s use of funds for “Other Investments” was revised to limit the Company to $ 5.0 million of “Other Investments” per year.

On February 22, 2024 the Company, along with AAM 24-1, LLC, entered into a Note Purchase Agreement with Honeywell pursuant to which AAM 24-1 agreed to issue and sell 8.5 % senior secured notes in the aggregate principal amount of $ 15.0 million for an aggregate purchase price of $ 14.9 million.

The notes bear an annual interest rate of 8.5 % which is computed on the basis of a 30/360-day year and actual days elapsed and is payable semi-annually in arrears.

The maturity date of the notes is February 22, 2031.

A continuing first priority lien and security interest in and to all of the Company’s right, title and interest in all of the capital stock of AAM 24-1 was created in favor of Honeywell, as collateral for the repayment of the notes.

In addition, 160,000 newly-issued shares of TruPs held by AAM 24-1 are also separately pledged to Honeywell.

On March 28, 2024, Contrail entered into Supplement #10 to the Master Loan Agreement with Old National Bank dated June 24, 2019 and Term Loan I.

Term Loan I is a multiple advance term loan in the principal amount of $ 10.0 million and is secured by a first lien on three engines and other identified collateral recently purchased by Contrail.

The loan requires Contrail to disassemble the collateral and place it in Contrail's inventory.

The loan bears a monthly variable interest rate at the 30 Day Term SOFR + 3.11 %.

The loan requires 18 monthly payments of interest until the loan maturity date of September 20, 2025.

Principal reduction payments are due monthly in an amount equal to 100% of the amount of the gross sales proceeds collected that are derived from any of the engines or other specific collateral listed in the security agreement sold during the prior month.

In addition to the first lien noted above, the loan is also secured by the current $ 2.0 million limited guarantees of the Company and Joe Kuhn.

The loan may be prepaid without penalty and includes a quarterly rolling cash flow coverage ratio covenant, a tangible net worth covenant and monthly sales reporting.

The loan was fully drawn at closing and the funds were used to prepay the principal balance on Contrail’s existing Main Street Loan (Term Loan G) by $ 10.0 million.

The Revolver - MBT has no outstanding balance as of March 31, 2024 and matures on August 31, 2024.

We are currently seeking to refinance the Revolver - MBT prior to its maturity date;

however, there is no assurance that we will be able to execute this refinancing or, if we are able to refinance this obligation, that the terms of such refinancing would be as favorable as the terms of our existing credit facility.

The following table provides certain information about the current financing arrangements of the Company's and its subsidiaries as of March 31, 2024 and 2023:

(In Thousands) March 31, 2024 March 31, 2023 Maturity Date Interest Rate Unused commitments as of March 31, 2024

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.

(the "Seller"), the minority owner of Contrail.

Pursuant to the Redemption Agreement, Contrail agreed to purchase and redeem from the Seller, 16 % of its 21 % interest in Contrail, effective as of April 1, 2024.

The purchase price for the redeemed interest is $ 4.6 million, plus an earnout amount.

The cash purchase price is payable pursuant to a secured, subordinated promissory note ("OCAS Loan"), payable beginning on May 1, 2024 and monthly thereafter for a 12-month period of interest payments only with the outstanding balance amortized and paid over the following three years .

Interest accrues on the principal amount at an annual rate equal to the 10-year Treasury bond yield plus 375 basis points, compounded monthly.

The rate adjusts on each anniversary date of the note.

The payment obligation under the note may be deferred if Contrail’s forecast indicates that any payment following the first 12-month period would cause a loan default or a loan default exists.

Initially, the payment obligation would revert back to interest o

nly, unless a default exists, in which case no payment would be required.

If Contrail is unable to make a payment for 12 months, then interest shall cease to accrue.

The note is expressly subordinated to the payment in full of all indebtedness of Contrail on or prior to the date of the note or thereafter.

The OCAS Loan is classified as related party debt on the Company's condensed consolidated balance sheet.

As a result, it is excluded from the tables of current financing arrangements and contractual financing obligations below.

On August 29, 2024, the Company and AirCo, LLC, AirCo 2, LLC, AirCo Services, LLC, Air'Zona, CSA, GGS, MAC, Stratus Aero Partners LLC, WASI, Worthington, Jet Yard and Jet Yard Solutions (the "Original Alerus Loan Parties") entered into a credit agreement (the "New Credit Agreement") with Alerus Financial ("Alerus").

The New Credit Agreement provides for a secured revolving credit facility ("Revolver - Alerus") in an initial maximum principal amount of up to $ 14.0 million.

Availability under the Revolver - Alerus is subject to a borrowing base and provides for a sub-facility for the issuance of letters of credit in an aggregate amount not to exceed $ 3.0 million, with the outstanding amount of any such letters of credit reducing availability for borrowings under the revolving credit facility.

Revolver - Alerus matures on February 28, 2026 and the balance outstanding on Revolver - Alerus bears interest at a rate per annum equal to the greater of 5.00 % or one-month SOFR plus 2.00 %.

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

1 to Credit Agreement ("Amendment No.

1") and Other Loan Documents with Alerus which extends the maturity date of the revolving credit agreement from February 28, 2026 to August 28, 2026.

In addition to the Revolver - Alerus, the New Credit Agreement provides for two secured term loans – Term Note A ("Term Note A - Alerus") and Term Note B ("Term Note B - Alerus").

Term Note A - Alerus is a loan in the principal amount of $ 10.7 million that matures on August 15, 2029 that bears interest at a rate per annum equal to the greater of 5.00 % or one-month SOFR plus 2.00 %.

Term Note A - Alerus requires monthly payments of principal commencing September 15, 2024 with such payments set at a seven year level principal amortization and a payment of $ 3.2 million due at maturity.

Term Note B - Alerus is a loan in the principal amount of $ 2.3 million that matures on August 15, 2029 and bears interest at a rate per annum equal to the greater of 5.00 % or one-month SOFR plus 2.00 %.

Term Note B - Alerus requires monthly payments of principal commencing September 15, 2024 with such payments set at a 25 year level principal amortization and a payment of $ 1.8 million due at maturity.

Term Note A and Term Note B may be prepaid in whole or in part at any time, subject to accrued interest and a prepayment premium.

The prepayment premium is:

3.00 % of the prepaid amount in the first loan year, 2.00 % in the second and third loan years, 1.00 % in the fourth and fifth loan years, and no premium after the fifth loan year.

No prepayment premium applies if it is refinanced by Alerus or prepaid with funds from the Original Alerus Loan Parties’ internally generated cash flows.

The Original Alerus Loan Parties are co-borrowers under the New Credit Agreement and each of the notes.

The obligations of the Original Alerus Loan Parties under the New Credit Agreement and the notes are secured by a first priority security interest in substantially all of the Original Alerus Loan Parties' current assets, including accounts receivable and inventory.

The Company is not a borrower under the New Credit Agreement but has guaranteed all indebtedness under the New Credit Agreement and the notes.

In addition, the Company has pledged a brokerage account of marketable securities held at a securities intermediary to secure the obligations.

Furthermore, the obligations are further secured by a deed of trust on approximately 4.626 acres of real estate that includes a 13,000 square foot office building in Denver, North Carolina.

In connection with the closing of the New Credit Agreement, the Company and its subsidiaries used proceeds from the new financing to satisfy and discharge all obligations, and terminated all commitments, under the Company’s previous secured credit facility with MBT.

All debt issuance costs were expensed as debt extinguishment cost within other income (loss) on the condensed consolidated statement of income (loss).

The Company incurred no termination penalties in connection with such termination.

On September 12, 2024, Contrail entered into the Fifth Amendment to the Master Loan Agreement dated June 24, 2019 and Supplement #11 to the Master Loan Agreement, and Term Note J with ONB.

Term Note J is a term loan in the principal amount of $ 10.0 million.

The loan bears a variable monthly interest rate at the 1-month SOFR Rate plus 3.86 % and requires equal monthly payments of principal and interest until the loan maturity date of September 12, 2028.

The loan requires compliance with covenants that require minimum Tangible Net Worth of $ 15.0 million and a Quarterly Cash Flow Coverage of not less than 1.25 to 1.0.

In order to induce ONB to enter into these agreements, Contrail and OCAS, Inc.

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.

On October 16, 2024, the Company and AAM 24-1, LLC ("AAM 24-1"), a wholly-owned subsidiary of the Company entered into a the Second Note Purchase Agreement (the “Second NPA”) with two institutional investors (the "Institutional Investors").

The Second NPA amended and restated the terms of the Company’s previously disclosed the 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 to the Institutional Investors, 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 the Institutional Investors, in connection with the closing of the Second NPA.

On February 21, 2025, MAC entered into a $ 2.3 million term loan with BofA.

The term loan requires monthly interest payments commencing March 21, 2025 until payment in full on the February 21, 2030 maturity date.

The loan also requires principal payments in equal monthly installments of $ 9,500 and MAC may prepay the loan at any time in full or in part without penalty.

The loan bears a variable monthly interest rate at the 1-month SOFR Rate plus 1.75 % plus 0.11 %.

As part of the term loan, BofA put a lien on real property owned by MAC in Denver, North Carolina to further secure the loan.

The new loan with Bank of America, N.A.

contains a number of covenants, including but not limited to:

providing financial information and statements, maintaining a fixed coverage ratio of at least 1.25 to 1.00, a limit on other debts and other liens, maintenance of assets, a limit on loans and investments, a prohibition on a change of ownership and additional negative covenants.

In connection with the financing, the Original Alerus Loan Parties entered into Amendment No.

2 to Credit Agreement and Consent on February 21, 2025.

Amendment No.

2 updated the Credit Agreement dated as of August 29, 2024, as amended by Amendment No.

1 dated as of January 21, 2025 to remove references to Term Note B - Alerus and remove the lien and assignment of rents on the Denver, North Carolina real property.

MAC used the proceeds of the new financing to repay Term Note B - Alerus with the Alerus.

On March 31, 2025, the Original Alerus Loan Parties under the Credit Agreement with Alerus entered into Amendment No.

3 to Credit Agreement with Alerus as well as a $ 3.0 million secured Overline Note and an Amended and Restated Revolving Credit Note in the amount of $ 14.0 million.

The maturity date of the Overline Note is October 31, 2025 or such earlier date on which the Overline Note becomes due and payable.

The Overline Note bears interest at the greater of 5.00 % or one-month SOFR plus 2.00 %.

In connection with Amendment No.

3, AirCo, LLC, AirCo 2, LLC, AirCo Services, LLC, and Stratus Aero Partners, LLC were released as co-borrowers from the New Credit Agreement (including the Overline Note).

As a result, only Air'Zona, CSA, GGS, MAC, WASI, Worthington, Jet Yard and Jet Yard Solutions remain as entities related to the Alerus note (the "Alerus Loan Parties")

The following table summarizes certain information about the current financing arrangements of the Company's and its subsidiaries as of March 31, 2025 and 2024:

(In Thousands) March 31, 2025 March 31, 2024 Maturity Date Interest Rate Unused commitments as of March 31, 2025 Type of Debt

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

Term Note A - MBT 6,955 7,762 8/31/2031 3.42 %

Term Note A - MBT 1 — 6,955 8/31/2031 3.42 % Recourse

Term Note B - MBT 1

Term Note D - MBT 1,271 1,338 1/1/2028 1-month LIBOR + 2.00 %

Term Note E - MBT — 800 6/25/2025 Greater of LIBOR + 1.50 % or 2.50 %

Term Note F - MBT 783 983 1/31/2028 Greater of 6.00 % or Prime + 1.00 %

Debt - Trust Preferred Securities 34,214 25,598 6/7/2049 8.00 %

— 2,456 8/31/2031 3.42 % Recourse

Term Note D - MBT 1

— 1,271 1/1/2028 1-month LIBOR + 2.00 %

Term Note F - MBT 1

— 783 1/31/2028 Greater of 6.00 % or Prime + 1.00 %

Debt - Trust Preferred Securities 2 35,342 34,214 6/7/2049 8.00 % Recourse

Total 35,342 45,679

Term Loan - Park State Bank ("PSB") 5,434 6,393 12/11/2025 3-month SOFR + 3.26 %

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

The Company terminated all commitments under the credit facility with MBT as of August 29, 2024.

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

Term Loan - PSB 3 — 5,434 12/11/2025 3-month SOFR + 3.26 %

Total — 5,434

1 unchanged sentence

Term Loan - MBT 1

— 1,749 8/31/2031 4.14 % Recourse

Total — 1,749

Alerus Loan Parties Debt

Revolver - Alerus 6,050 — 8/28/2026 Greater of 5.00 % or 1-month SOFR + 2.00 %

7,950 Recourse

Overline Note - Alerus — — 10/31/2025 Greater of 5.00 % or 1-month SOFR + 2.00 %

3,000 Recourse

Term Note A - Alerus 9,827 — 8/15/2029 Greater of 5.00 % or 1-month SOFR + 2.00 %

Term Note B - Alerus — — 8/15/2029 Greater of 5.00 % or 1-month SOFR + 2.00 %

Total 15,877 —

Contrail Debt

Revolver - ONB 3,127 3,476 11/24/2025 1-month SOFR + 3.56 %

21,873 Limited recourse 4

Term Loan G - ONB 5 — 14,918 11/24/2025 1-month SOFR + 3.11 %

Term Note I - ONB 10,000 — 9/28/2025 1-month SOFR + 3.11 %

Limited recourse 3

Term Note I - ONB 5

— 10,000 9/28/2025 1-month SOFR + 3.11 %

Limited recourse 3

Term Note J - ONB 8,750 — 9/12/2028 1-month SOFR + 3.86 %

Limited recourse 3

Total 11,877 28,394

Delphax Solutions Debt

Canadian Emergency Business Account Loan — 30 12/31/2025 5.00 %

Wolfe Lake Debt

Term Loan - Bridgewater 9,327 9,586 12/2/2031 3.65 %

Term Loan - Bridgewater 9,059 9,327 12/2/2031 3.65 % Non-recourse

Total 9,059 9,327

Air T Acquisition 22.1

Term Loan - Bridgewater 4,000 4,500 2/8/2027 4.00 %

Term Loan A - ING 1,946 2,610 2/1/2027 3.50 %

Term Loan B - ING 1,081 1,088 5/1/2027 4.00 %

Term Loan - Bridgewater 3,500 4,000 2/8/2027 4.00 % Non-recourse

Term Loan A - ING 1,298 1,946 2/1/2027 3.50 % Non-recourse

Term Loan B - ING 1,082 1,081 5/1/2027 4.00 % Non-recourse

Total 5,880 7,027

Promissory Note - Seller's Note 849 1,279 1/1/2026 6.00 %

3 Term Loan - PSB was fully paid off prior to the maturity date.

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

5 Term Loan G - ONB and Term Note I - ONB were fully paid off prior to their respective maturity dates.

Promissory Note - Seller's Note 398 849 1/1/2026 6.00 % Non-recourse

Total 398 849

AAM 24-1 Debt

Promissory Notes - Honeywell 15,000 — 2/22/2031 8.50 %

Promissory Notes - Institutional Investors 30,000 15,000 3/1/2031 8.50 % Non-recourse

Total 30,000 15,000

Term Loan - BofA 2,271 — 2/21/2030 1-month SOFR + 0.11 % + 1.75 %

Total 2,271 —

Total Debt 110,704 113,459

1 unchanged sentence

Total Debt, net $ 110,325 $ 112,926

Fiscal 2024's weighted average interest rate on short term borrowings outstanding was 8.88 % .

Fiscal year 2025's weighted average interest rate on short term borrowings outstanding was 7.68 %.

The weighted average interest rate on short term borrowings outstanding as of March 31, 2024 was 8.88 %.

The Company's Credit Agreement with MBT and the Contrail revolving credit facility contain affirmative and negative covenants, including covenants that restrict the ability of the Company and its subsidiaries to, among other things, incur or guarantee indebtedness, incur liens, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, make changes in the nature of its business, and engage in transactions with affiliates.

On June 24, 2024, we obtained a waiver letter from MBT that waives two outstanding events of default.

This Letter provides a one-time waiver for defaults resulting from our inability to meet the debt service coverage ratio as of March 31, 2024 and our failure to submit unaudited financial statements within 45 days following the quarter ending on that date.

Based on the Letter, we are no longer in default of the Company's Credit Agreement with MBT.

The Promissory Notes - Honeywell also contain affirmative and negative covenants, including covenants on the utilization of loan proceeds, TruPs dividends, distributions from AAM 24-1's investments and other reporting requirements.

The New Credit Agreement between Alerus Loan Parties and Alerus includes several covenants that are measured twice a year at September 30 and March 31, including but not limited to, a negative covenant requiring a debt service coverage ratio of 1.25 and a leverage ratio greater than 3.00 .

The Contrail Credit Agreement with ONB contains affirmative and negative covenants, including covenants that restrict the ability of Contrail and its subsidiaries to, among other things, incur or guarantee indebtedness, incur liens, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, make changes in the nature of its business, and engage in transactions with affiliates.

The Contrail Credit Agreement also contains quarterly financial covenants applicable to Contrail and its subsidiaries, including a minimum debt service coverage ratio of 1.25 to 1.00, a minimum cash flow coverage ratio of 1.25 to 1.00, and a minimum tangible net worth of $ 15.0 million.

Air T Acquisition 22.1's term loans with ING include several covenants that are measured once a year at December 31, including but not limited to, a negative covenant requiring a debt service coverage ratio of 1.10 and a senior net leverage ratio of 1.50 .

The Promissory Notes - Institutional Investors also contain affirmative and negative covenants, including covenants on the utilization of loan proceeds, TruPs dividends, distributions from AAM 24-1's investments and other reporting requirements.

The obligations of Contrail under the Contrail Credit Agreement with ONB are secured by a first-priority security interest in substantially all of the assets of Contrail.

The obligations of Contrail under the Contrail Credit Agreement are also guaranteed by the Company, up to a maximum of $ 1.6 million, plus costs of collection.

The Company is not liable for any other assets or liabilities of Contrail and there are no cross-default provisions with respect to Contrail’s debt in any of the Company’s debt agreements with MBT.

At March 31, 2025, our contractual financing obligations, including payments due by period, are as follows (in thousands)

Fiscal year ended Amount

2025 $ 14,358

Thereafter 72,895

2 unchanged sentences

Financial obligations are considered to represent known future cash payments that the Company is required to make under existing contractual arrangements such as debt and lease agreements.

Fair Value of Debts - As of March 31, 2024 and 2023, the carrying amounts reported in the consolidated balance sheets for the Company’s debt instruments approximate the fair values.

Estimated fair values are determined by comparing current borrowing rates and risk spreads offered in the market (Level 2 fair value measures) or quoted market prices (Level 1 fair value measures), when available, to the stated interest rates and spreads on the Company’s debts.

Interest Expense, net - The components of net interest expense during the years ended March 31, 2024 and March 31, 2023 are as follows (in thousands):

Fair Value of Debts - The following table presents the carrying amounts and estimated fair values of the Company’s debt instruments, which are not measured at fair value on a recurring basis, as of March 31, 2025 and 2024:

(in thousands)

March 31, 2025 March 31, 2024

Carrying Value

$ 75,362 $ 79,245

Estimated Fair Value

$ 92,984 $ 90,248

The fair value of the Company’s debt was estimated using discounted cash flow models based on current market interest rates for debt instruments with similar terms, maturities, and credit risk.

These estimates utilize Level 2 inputs within the fair value hierarchy.

As of March 31, 2025 and March 31, 2024, the estimated fair value exceeded the carrying value primarily due to certain outstanding borrowings bearing contractual interest rates that are above current market rates, which results in higher present values of future cash flows.

The smaller differential in the prior year reflects changes in interest rate environments and debt structure.

The Company has not elected the fair value option under ASC 825-10 and continues to report its debt obligations at amortized cost.

The fair value amounts are presented for disclosure purposes only.

Interest Expense, net

The components of net interest expense during the years ended March 31, 2025 and March 31, 2024 are as follows (in thousands):

March 31, 2025 March 31, 2024

Contractual interest $ 8,606 $ 6,688

Amortization of deferred financing costs 323 324

Gain on interest rate swaps

( 167 ) ( 4 )

Interest income ( 375 ) ( 92 )

Total $ 8,387 $ 6,916

Net interest expense by entity during the years ended March 31, 2025 and March 31, 2024 are as follows (in thousands):

Year Ended March 31,

Air T $ 3,380 $ 3,818

Jet Yard 31 78

Alerus Loan Parties 997 —

Contrail 1,316 1,570

AirCo 1 378 561

Wolfe Lake 345 356

Air T Acquisition 22.1 277 318

AAM 24-1 1,793 132

Gain on interest rate swaps

( 167 ) ( 4 )

Other ( 16 ) 20

Total $ 8,387 $ 6,916

RELATED PARTY MATTERS

3 unchanged sentences

The facility consists of approximately 21,000 square feet of warehouse and office space.

The Company paid aggregate rental payments of approximately $ 0.2 million to Cohen Kuhn Properties, LLC pursuant to such lease during the period from April 1, 2023 through March 31, 2024.

The Company paid aggregate rental payments of approximately $ 0.2 million to Cohen Kuhn Properties, LLC pursuant to such lease during the period for each of the fiscal years ended March 31, 2025 and March 31, 2024.

This lease expires on July 17, 2026.

1 unchanged sentence

The Company believes that the terms of such leases are no less favorable to the Company than would be available from an independent third party.

Kohler, a director of the Company, entered into an employment agreement with Blue Clay Capital Management, a wholly-owned subsidiary of the Company in the Corporate and other segment, to serve as its Chief Investment Officer in return for an annual salary of $ 51.5 thousand plus variable compensation based on the management and incentive fees to be paid to the subsidiary by certain of these investment funds and eligibility to participate in discretionary annual bonuses.

Kohler, a director of the Company, entered into an employment agreement with Blue Clay Capital Management, a wholly-owned subsidiary of the Company included in Corporate and other, to serve as its Chief Investment Officer in return for an annual salary of $ 51.5 thousand plus variable compensation based on the management and incentive fees to be paid to the subsidiary by certain of these investment funds and eligibility to participate in discretionary annual bonuses.

Nick Swenson, CEO of the Company, along with his affiliates (other than the Company), successors and assignees, are the majority shareholders of CCI.

As of March 31, 2025, Mr.

Swenson and his affiliates (other than the Company), successors and assignees owned 70.1 % of ownership interests in CCI.

Swenson and his affiliates, successors and assignees own 70.4 % of ownership interests in CCI.

Under the VIE model, Mr.

Swenson and his affiliates (other than the Company), successors and assignees are the primary beneficiaries of CCI due to the high extent of his ownership relative to other shareholders of CCI, and the lack of shared power between Mr.

Swenson and the Company ("the related party group") to direct the activities of CCI that most significantly impact CCI’s economic performance.

Swenson and his affiliates (other than the Company), successors and assignees are the primary beneficiaries of CCI due to Mr.

Swenson's controlling interest in CCI.

It follows the power held by Mr.

Swenson to direct the activities of CCI that most significantly impact CCI's economic performance is not shared with the Company ("the related party group").

Air T Acquisition 22.1's term loan with Bridgewater is secured by a first lien on all of the assets of the subsidiary, a pledge of $ 5.0 million, 8.0 % TruPs, and a personal guaranty of the Company’s Chairman, President and Chief Executive Officer Nick Swenson.

2 unchanged sentences

During the fiscal year ended March 31, 2025, the Company has paid approximately $ 0.2 million to FLC to compensate for services rendered.

On October 16, 2024 Air T converted a portion of receivables related to expense reimbursements for CAM to a note receivable in the amount of $ 2.5 million.

The note accrues interest at a rate of 10.0 % and is due with any accrued and unpaid interest on October 16, 2027.

As of March 31, 2025, $ 0.1 million has been accrued to interest with an outstanding principal balance of $ 2.5 million.

On August 2024 Air T provided a Delayed Draw Term Loan to Lendway where Lendway can borrow up to $ 2.5 million.

The Delayed Draw Term Loan with Lendway was later amended on September 27, 2024 and January 15, 2025 to increase the total borrowing to $ 3.5 million and $ 3.8 million, respectively.

The note accrues interest at a rate of 8.0 % and is due with any accrued and unpaid interest the earlier of August 14, 2029 or by written notice by the Company delivered on or after February 15, 2026.

As of March 31, 2025 $ 0.1 million has been accrued to interest with an outstanding principal balance of $ 3.4 million.

EMPLOYEE AND NON-EMPLOYEE STOCK OPTIONS

2 unchanged sentences

The second Air T stock option plan is the 2020 Omnibus Stock and Incentive Plan.

In addition, Delphax maintains a number of stock option plans.

Compensation expense is recognized over the requisite service period for stock options which are expected to vest based on their grant-date fair values.

The Company uses the Black-Scholes option pricing model to value stock options granted under the Air T, Inc.

plans and the Delphax plans.

The key assumptions for this valuation method include the expected term of the option, stock price volatility, risk-free interest rate and dividend yield.

1 unchanged sentence

Air T's 2012 Stock Option Plan

No options were granted under Air T, Inc.’s 2012 Stock Option Plan during the fiscal years ended March 31, 2024 and 2023.

No stock-based compensation expense with respect to this plan was recognized for the year ended March 31, 2024 and 2023, respectively.

At March 31, 2024, there was no unrecognized compensation expense related to the Air T's 2012 stock options.

In Fiscal 2024, 3,750 options were exercised under the Air T's 2012 Stock Option Plan at $ 7.04 per share, which was disclosed within our consolidated statement of equity.

No unexpired options remain outstanding under this plan as of March 31, 2024 and the Plan terminated in 2022.

Options activity during the fiscal years ended March 31, 2023 and 2024 is summarized below (in thousands, except for shares):

Air T, Inc.’s 2012 Stock Option Plan terminated in 2022.

The last of the activity under this plan occurred during the year ended March 31, 2024.

As of March 31, 2024 no unrecognized compensation expense related to the Air T's 2012 stock options and no stock-based compensation expense with respect to this plan was recognized for the year ended March 31, 2024.

No unexpired options remained outstanding under this plan as of March 31, 2024.

There was no activity related to this plan during the fiscal year ended March 31, 2025.

The final outstanding options after termination of this plan in 2022 were exercised or forfeited during the fiscal year ended March 31, 2024 as summarized in the table below (in thousands, except for shares):

Shares Weighted

2 unchanged sentences

Life (Years) Aggregate

Outstanding at March 31, 2022 11,250 $ 6.61 1.07 $ 182,000

Outstanding at Outstanding at March 31, 2023 7,500 $ 7.04 0.4 $ 135,075

Exercised ( 3,750 ) 7.04

1 unchanged sentence

Repurchased — —

Outstanding at March 31, 2023 7,500 7.04 0.40 135,000

Exercised ( 3,750 ) 7.04

Forfeited ( 3,750 ) 7.04

Outstanding at March 31, 2024 — — 0.00 —

Exercisable at March 31, 2024 — $ — 0.00 $ —

Outstanding at Outstanding at March 31, 2024 — — 0 —

Air T's 2020 Omnibus Stock and Incentive Plan

1 unchanged sentence

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

Among other instruments, the Plan permits the Company to grant stock option awards.

Through March 31, 2025, options to purchase up to 348,050 shares have been granted under the Plan.

1 unchanged sentence

However, the ability to exercise vested awards, occurring at the conclusion of each annual vesting period, is contingent upon the Company's stock price meeting predetermined milestones outlined in the options agreements (the "market condition").

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, 2023 and June 30, 2022, a total of 65,200 shares satisfied the service condition;

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 and are forfeited.

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.

Therefore, as of March 31, 2024, the remaining number of unvested options is 260,800 shares.

For the fiscal years ended March 31, 2025 and March 31, 2024, 26,000 unvested shares and no unvested shares, respectively, were forfeited due to employee departures resulting in the reversal of previously recognized expense of $ 54.0 thousand for the fiscal year ended March 31, 2025.

As of March 31, 2025 there were 226,000 granted options that may become exercisable on future vesting dates under the Plan.

No options were exercisable as of March 31, 2025.

The Company used the Black-Scholes option pricing model to value stock options granted under the Air T's 2020 Omnibus Stock and Incentive Plan and determined the grant date's fair value was $ 1.3 million.

5 unchanged sentences

We do not anticipate significant forfeitures and elected to account for forfeitures as they occur.

During fiscal years ended March 31, 2024 and 2023, total compensation cost recognized under the Plan was $ 0.1 million and $ 0.3 million, respectively.

During fiscal years ended March 31, 2025 and 2024, total compensation cost recognized under the Plan for each year was $ 0.1 million.

The unrecognized compensation cost related to nonvested awards is $ 0.4 million, which is expected to be recognized over a weighted average period of 6.25 years.

28 unchanged sentences

These services are typically ongoing and are generally billed on a monthly basis.

Software Services The Company provides market data related to air cargo based on primary sources and owns cloud hosted software that supports the needs of aviation businesses and helps aftermarket parts sellers automate quoting for their potential clients.

For market data services, revenue is derived from contracts that grant customers the right to use the Company's web-based service for a specified term through a subscription fee.

A performance obligation is created when the Company agrees to provide a subscription-based service to a customer.

There is no variation in effort expanded by the Company over the subscription term, therefore, revenue is recognized each month on a straight-line basis according to the consideration paid by the customer for the given time period.

Generally, subscription terms are in annual increments and, when a subscription term begins, an annual fee is remitted by the customer to cover the 12-month period.

The cash received is recorded as deferred revenue for the amount stated in the contract and recognized over the subscription term based on straight-line recognition.

For cloud hosted software, the Company enters into service contracts which provides access to the software and customer support services.

A performance obligation is created when the Company agrees to provide a particular service to a customer.

For software access, revenue is recognized ratably over time for the daily performance obligation related to the customer's access to the cloud hosted software.

For support services, revenue is recognized over time for the hourly performance obligation provided to the customer.

Generally, subscription terms range from three to five years .

Software access is usually billed monthly and support services are billed upon completion.

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

Year Ended March 31, 2024 Year Ended March 31, 2023

Year Ended March 31,

Product Sales

Overnight air cargo $ 42,615 $ 39,302

Ground equipment sales 36,127 47,100

Commercial jet engines and parts 114,049 89,700

Ground support equipment 35,903 36,127

Commercial aircraft, engines and parts 106,946 114,049

Corporate and other 661 739

1 unchanged sentence

Overnight air cargo 81,287 76,107

Ground equipment sales 533 587

Commercial jet engines and parts 10,727 9,539

Ground support equipment 2,426 533

Commercial aircraft, engines and parts 7,923 10,727

Corporate and other 31 36

Leasing Revenue

Overnight air cargo — —

Ground equipment sales 49 154

Commercial jet engines and parts 64 2,365

Ground support equipment 69 49

Commercial aircraft, engines and parts 2,597 64

Corporate and other 1,713 1,624

Software Services

Digital Solutions 7,268 5,783

Overnight air cargo 129 137

Ground equipment sales 459 644

Commercial jet engines and parts 695 133

Ground support equipment 542 459

Commercial aircraft, engines and parts 749 695

Corporate and other 991 403

5 unchanged sentences

The following table presents outstanding contract liabilities as of April 1, 2024 and March 31, 2025 and the amount of contract liabilities that were recognized as revenue during the year ended March 31, 2025 (in thousands):

Outstanding Contract Liabilities Outstanding Contract Liabilities

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

Recognized as Revenue

10 unchanged sentences

Year Ended March 31,

$ ( 3,468 ) $ ( 10,566 )

( 487 ) ( 787 )

$ ( 3,955 ) $ ( 11,353 )

Domestic $ ( 4,791 ) $ ( 3,468 )

Foreign ( 197 ) ( 487 )

Total $ ( 4,988 ) $ ( 3,955 )

Income tax expense (benefit) attributable to pretax loss from continuing operations consists of (in thousands):

37 unchanged sentences

Foreign tax credit 520 650

Investment in partnerships — 1,723

Lease liabilities 3,463 2,913

Research and development capitalizations 441 275

Other deferred tax assets 792 517

4 unchanged sentences

Foreign intangible assets ( 1,830 ) ( 2,089 )

Investment in partnerships ( 2,159 ) ( 105 )

Other deferred tax liabilities ( 403 ) ( 393 )

16 unchanged sentences

Several jurisdictions in which the Company operates have enacted laws effective January 1, 2024, consistent with the OECD's framework.

While details around the global minimum tax in each jurisdiction are uncertain, the Company does not anticipate being subject to the global minimum tax in the upcoming fiscal year.

While details around the global minimum tax in each jurisdiction are uncertain, the Company has assessed the applicability of these rules and determined that it is not subject to the global minimum tax for the fiscal year ending March 31, 2025.

Effective on November 24, 2015, Air T, Inc.

1 unchanged sentence

With an equity investment level by the Company of approximately 67 %, Delphax is required to continue filing a separate United States corporate tax return.

Delphax maintains a September 30 fiscal year end, and the returns for the fiscal years ended September 30, 2023 have not been filed.

Delphax maintains a September 30 fiscal year end, and the returns for the fiscal year ended September 30, 2024 have not been filed.

The gross deferred tax balances related to Delphax includes federal and state loss carryforwards of $ 8.6 million and $ 1.7 million, respectively.

1 unchanged sentence

The provisions of ASC 740 require an assessment of both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets will be recovered.

In accounting for Delphax's tax attributes, the Company has established a full valuation allowance of $ 1.8 million at March 31, 2024, and $ 1.9 million at March 31, 2023.

In accounting for Delphax's tax attributes, the Company has established a full valuation allowance of $ 1.8 million as of March 31, 2025 and March 31, 2024.

The cumulative tax losses incurred by Delphax in recent years was the primary basis for the Company’s determination that a full valuation allowance should be established against Delphax’s net deferred tax assets.

9 unchanged sentences

Thailand $ — $ 252

Total tangible long-lived assets, net $ 306 $ 89

Bulgaria 14,435 —

Total foreign tangible long-lived assets, net

$ 14,525 $ 306

Total revenue, located in the United States, and outside the United States is summarized in the following table as of March 31, 2025 and March 31, 2024 (in thousands):

March 31, 2024 March 31, 2023

United States $ 246,626 $ 199,572

Foreign 40,208 47,751

Total revenue $ 286,834 $ 247,323

SEGMENT INFORMATION

The Company has four reportable segments:

overnight air cargo, ground equipment sales, commercial jet engine and parts, and corporate and other.

Segment data is summarized as follows (in thousands):

(In Thousands) Year Ended March 31,

Twelve months ended March 31,

Operating Revenues:

Overnight Air Cargo

Domestic $ 114,809 $ 90,370

International 737 173

United States

$ 120,804 $ 114,809

Foreign 3,227 737

Total Overnight Air Cargo 124,031 115,546

Ground Equipment Sales:

Domestic 32,677 38,652

International 4,491 9,833

Total Ground Equipment Sales 37,168 48,485

Commercial Jet Engines and Parts:

Domestic 95,210 67,599

International 30,325 34,138

Total Commercial Jet Engines and Parts 125,535 101,737

Commercial Aircraft, Engines and Parts

United States

79,138 95,175

Foreign 39,077 30,325

Total Commercial Aircraft, Engines and Parts 118,215 125,500

Ground Support Equipment

United States

36,175 32,677

Foreign 2,765 4,491

Total Ground Support Equipment 38,940 37,168

Digital Solutions

United States

Foreign 5,487 4,452

Total Digital Solutions 7,268 5,783

Corporate and Other

Domestic 3,930 2,952

International 4,655 3,606

United States

Foreign 72 203

Total Corporate and Other 3,396 2,837

Total 286,834 247,323

Operating Income (Loss):

Overnight Air Cargo 6,765 4,047

Ground Equipment Sales ( 1,553 ) 3,141

Commercial Jet Engines and Parts 4,169 ( 957 )

Corporate and Other ( 8,117 ) ( 10,638 )

Total 1,264 ( 4,407 )

Total revenue $ 291,850 $ 286,834

SEGMENT INFORMATION

Air T's robust portfolio of businesses are managed on a highly decentralized basis.

These businesses are aggregated into operating segments in a manner that reflects how Air T views the business activities.

The Company's chief operating decision maker ("CODM") is the Chief Executive Officer.

The Chief Executive Officer is ultimately responsible for significant capital allocation decisions and evaluating operating performance.

In assessing performance for the Company's businesses, the chief operating decision maker reviews operating income and Adjusted EBITDA.

Certain operating segments are aggregated into reportable segments.

Effective as of the fourth quarter of fiscal year 2025, the Company renamed the ground equipment sales segment to ground support equipment and renamed the commercial jet engines and parts segment to commercial aircraft, engines and parts to better align the descriptions of the segments with their activities.

Additionally, the Company has elected to separately disclose the digital solutions segment, as of the fourth quarter of fiscal year 2025, to align presentation in the financial statements with a key long-term growth area for the Company.

Digital solutions was previously classified as part of insignificant business activities.

As a result of this change, prior period segment information has been recast to conform to our current presentation in our financial statements

Air T's four reportable segments are as follows:

Reportable Segment

Principal Business Activities

Overnight Air Cargo Overnight air cargo primarily operates under its relationship with FedEx spanning over 40 years and represent two of eight companies in the U.S.

that have North American feeder airlines under contract with FedEx.

MAC and CSA operate and maintain Cessna Caravan, Sky Courier, ATR-42 and ATR-72 aircraft that fly daily small-package cargo routes throughout the eastern United States and upper Midwest, and in the Caribbean.

Commercial Aircraft, Engines and Parts (formerly known as Commercial Jet Engines and Parts) The Commercial aircraft, engines and parts segment manages and leases aviation assets;

supplies surplus and aftermarket commercial jet engine components;

provides commercial aircraft disassembly/part-out services;

commercial aircraft parts sales;

procurement services and overhaul and repair services to airlines

Ground Support Equipment (formerly known as Ground Support Sales) Ground support equipment manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers.

Digital Solutions Digital solutions develops and provides digital aviation and other business services to customers within the aviation industry to generate recurring subscription revenues.

Digital solutions has historically been reported as part of the central corporate function referred to as Corporate and Other.

The information that follows shows data of Air T's reportable segments reconciled to amounts reflected in our Consolidated Financial Statements.

Intersegment eliminations are included to reconcile segment totals to consolidated amounts.

The cost and expense information presented below is based on the information regularly provided to the CODM.

Further, asset information is not included in the information regularly provided to the CODM as they are not a key determining factor in the performance of the Company's reportable segments.

The Company also has a "Corporate and Other" category which includes unallocated Air T holding company costs that are not directly attributable to the ongoing operating activities of our reportable segments in addition to revenues and expenses for non-reportable operating segments.

Segment data is summarized in the following tables (in thousands):

Year ended March 31, 2025

Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Total

Revenue from external customers $ 124,031 $ 118,215 $ 38,940 $ 7,268 $ 288,454

Intersegment revenue 880 1,197 — — 2,077

124,911 119,412 38,940 7,268 290,531

Reconciliation of revenue

Other revenue 1 3,570

Elimination of intersegment revenue 2

Total consolidated revenue $ 291,850

Cost of sales:

Cost of sales from external sources $ 104,760 $ 84,896 $ 33,994 $ 2,462

Intersegment cost of sales

911 1,323 — —

105,671 86,219 33,994 2,462

General and administrative

$ 12,531 $ 24,113 $ 5,888 $ 5,078

Other segment items 4

489 2,583 268 792

Segment profit (loss) 6,220 6,497 ( 1,210 ) ( 1,064 ) $ 10,443

Reconciliation of profit (loss)

Other revenue 1

Other cost of sales 1

Other expenses 1

Interest expense ( 8,387 )

Income from equity method investments 1,700

Other non-operating expense ( 209 )

Other corporate expenses 5

Elimination of intersegment profits 894

Loss before income taxes $ ( 4,988 )

1 Revenue, cost of sales, and expenses from segments below the quantitative thresholds or that do not constitute a business segment are attributable to an investment advisory business, a laser printer manufacturer, and a commercial property owned by the Company.

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 174 thousand for the fiscal year ended March 31, 2025.

After eliminations, Other revenue from third parties is $ 3,396 thousand for the fiscal year ended March 31, 2025.

3 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.

Intersegment expenses are included within the amounts shown.

4 Other segment items consist of depreciation and amortization and remeasurement of the earnout liability.

5 Other corporate expenses consist of unallocated expenses that are related to the activities of Corporate and other in support of the overall business.

Unallocated expenses include, but are not limited to:

shared services that are not allocated, costs associated with the corporate headquarters and, expenses related to identifying and pursuing new corporate business initiatives.

Year ended March 31, 2024

Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Total

Revenue from external customers $ 115,546 $ 125,535 $ 37,168 $ 5,783 $ 284,032

Intersegment revenue 126 2,150 — — 2,276

115,672 127,685 37,168 5,783 286,308

Reconciliation of revenue

Other revenue 1

Elimination of intersegment revenue 2

Total consolidated revenue $ 286,834

Cost of sales:

Cost of sales from external sources $ 97,690 $ 99,222 $ 31,834 $ 1,710

Intersegment cost of sales

137 2,025 — 1

97,827 101,247 31,834 1,711

General and administrative

$ 10,734 $ 21,792 $ 6,743 $ 3,929

Other segment items 4

366 756 144 804

Segment profit (loss) 6,745 3,890 ( 1,553 ) ( 661 ) $ 8,421

Reconciliation of profit (loss)

Other revenue 1

Other cost of sales 1

Other expenses 1

Interest expense ( 6,916 )

Income from equity method investments 1,689

Other non-operating expense 8

Other corporate expenses 5

Elimination of intersegment profits 464

Loss before income taxes $ ( 3,955 )

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 1,155 thousand for the fiscal year ended March 31, 2024.

After eliminations, Other revenue from third parties is $ 2,802 thousand for the fiscal year ended March 31, 2024.

3 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.

Intersegment expenses are included within the amounts shown.

4 Other segment items consist of depreciation and amortization and remeasurement of the earnout liability.

5 Other corporate expenses consist of unallocated expenses that are related to the activities of Corporate and other in support of the overall business.

Unallocated expenses include, but are not limited to:

shared services that are not allocated, costs associated with the corporate headquarters and, expenses related to identifying and pursuing new corporate business initiatives.

Year ended March 31, 2025

Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Total Reportable Segments

Corporate and other Total Consolidated

Depreciation and amortization $ 489 $ 2,148 $ 268 $ 792 $ 3,697 $ 659 $ 4,356

Capital Expenditures 418 14,911 217 36 15,582 97 15,679

Overnight Air Cargo 535 307

Ground Equipment Sales 131 35

Commercial Jet Engines and Parts 238 572

Corporate and Other 172 293

Total 1,076 1,207

Year ended March 31, 2024

Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Total Reportable Segments

Corporate and other Total Consolidated

Depreciation and amortization $ 366 $ 756 $ 144 $ 804 $ 2,070 $ 728 $ 2,798

Overnight Air Cargo 366 115

Ground Equipment Sales 144 164

Commercial Jet Engines and Parts 756 2,382

Corporate and Other 1,532 1,501

Total $ 2,798 $ 4,162

The table below provides a reconciliation of operating income (loss) to Adjusted EBITDA for the fiscal years ended March 31, 2024 and 2023 (in thousands):

Fiscal year 2024 Fiscal year 2023

Operating income (loss) from continuing operations

1,264 ( 4,407 )

Depreciation and amortization (excluding leased engines depreciation) 2,798 2,525

Asset impairment, restructuring or impairment charges 1,195 7,840

Loss on sale of property and equipment 18 8

TruPs issuance expenses 347 63

Adjusted EBITDA $ 5,622 $ 6,029

Capital Expenditures 535 131 238 — 904 172 1,076

EARNINGS PER COMMON SHARE

16 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Contrail Put/Call Option

Contrail entered into an 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 of Contrail.

The Company has presented this redeemable non-controlling interest in Contrail between the liabilities and equity sections of the accompanying consolidated balance sheets.

In addition, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period.

The Contrail RNCI is a Level 3 fair value measurement that is valued at $ 7.4 million as of March 31, 2024.

The change in the redemption value compared to March 31, 2023 is a decrease of $ 0.5 million.

The decrease was driven by $ 1.3 million of the net change in fair value and $ 0.2 million of distributions, offset by $ 1.0 million of net income attributable to the non-controlling interest.

After March 31, 2024 and before the financial statements were issued, Contrail redeemed 16 % of the 21 % of the Seller's interest for consideration consisting of a promissory note and an earnout.

Immediately following the redemption transaction, the Put/Call Option in the Operating Agreement was amended so that the remaining 5 % interest in Contrail will be redeemable based on an amount other than fair value.

Refer to Note 2 5 , Subsequent Events, for additional details on the transaction.

Contrail Asset Management, LLC and CJVII, LLC

On May 5, 2021, the Company formed an aircraft asset management business called Contrail Asset Management, LLC (“CAM”), and an aircraft capital joint venture called CJVII, LLC (“CJVII”).

The venture focuses on acquiring commercial aircraft and jet engines for leasing, trading and disassembly.

The joint venture, CJVII, was formed as a series LLC ("CJVII Series").

It consists of several individual series that target investments in current generation narrow-body aircraft and engines, building on Contrail’s origination and asset management expertise.

CAM was formed to serve two separate and distinct functions:

CAM has two classes of equity interests:

1) common interests and 2) investor interests.

Neither interest votes as the entity is operated by a Board of Directors.

The common interests of CAM relate to its Asset Management Function.

The investor interests of CAM relate to the Company’s and MRC's investments through CAM into CJVII (the Investment Function) and

ultimately into the individual CJVII Series.

With regard to CAM’s common interests, the Company currently owns 90 % of the economic common interests in CAM, and MRC owns the remaining 10 %.

MRC invested $ 1.0 million directly into CAM in exchange for 10 % of the common interests.

For the Asset Management Function, CAM receives origination fees, management fees, consignment fees (where applicable) and a carried interest from the direct investors into each CJVII Series.

Such fee income and carried interest will be distributed to the Company and MRC in proportion to their respective common interests.

For its Investment Function, CAM’s initial commitment to CJVII was approximately $ 51.0 million.

The Company and MRC have commitments to CAM in the respective amounts of $ 7.0 million and $ 44.0 million.

These represent the investor interests of CAM, separate and distinct from the common interests.

Any investment returns on CAM’s investor interests are shared pro-rata between the Company and MRC for each individual investment at the CJVII Series.

As of March 31, 2023, Air T fulfilled its Investment Function initial commitment to CAM.

Per its Operating Agreement, CAM is comprised of only two Series:

the Onshore and the Offshore Series.

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 March 31, 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.

The Company determined that CAM is a variable interest entity and that the Company is not the primary beneficiary.

Accordingly, the Company does not consolidate CAM and has determined to account for this investment using equity method accounting.

As of March 31, 2024, the Company's net investment basis in CAM is $ 7.4 million.

In connection with the formation of CAM, MRC has a fixed price put option of $ 1.0 million to sell its common equity in CAM to Air T at each of the first three ( 3 ) anniversary dates.

At the later of (a) five ( 5 ) years after execution of the agreement and (b) distributions to MRC per the waterfall equal to their capital contributions, Air T has a call option and MRC has a put option on the MRC common interests in CAM.

If either party exercises the option, the exercise price will be fair market value if Air T pays in cash at closing or 112.5 % of fair market value if Air T opts to pay in three ( 3 ) equal annual installments after exercise.

The Company previously recognized $ 1.0 million within “ Other non-current liabilities ” with an offset to equity as of March 31, 2022.

We subsequently reviewed this accounting treatment and determined that there was no loss contingency that existed under ASC 450 as we did not expect the $ 1.0 million put option to be exercised in the money to MRC.

As such, as of March 31, 2023, the Company reversed the $ 1.0 million previously recorded.

This matter was not material to our consolidated financial statements for any quarterly or annual periods.

With respect to the secondary put and call option, as it is priced at fair value, the Company also determined that there is no potential loss or gain upon exercise that would need to be recognized.

Shanwick Put/Call Option

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, 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.

Pursuant to the Redemption Agreement, Contrail agreed to purchase and redeem from the Seller, 16 % of its 21 % interest in Contrail, with the earnout period being retroactive to April 1, 2024.

The purchase price for the redeemed interest is $ 4.6 million in the form of a secured, subordinated promissory note, plus an earnout amount valued at $ 1.1 million.

Under the Redempti

on Agreement, the Seller is entitled to an annual earnout payment equal to 9.14 % of Contrail's adjusted EBITDA over $ 7.0 million in each fiscal year beginning on March 31, 2025 and continuing through March 31, 2029.

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.

As of March 31, 2025 the earnout pursuant to the Redemption Agreement is a Level 3 fair value measurement that is valued at $ 1.5 million.

As of March 31, 2025 $ 0.4 million and $ 1.1 million are classified as short-term and long-term liabilities, respectively.

For the fiscal year ended March 31, 2025, a loss has been recorded due to an increase in fair value of $ 0.4 million as presented in operating expenses on the condensed consolidated statements of income (loss).

Pursuant to the new Put and Call Agreement, commencing April 1, 2026 and at any time thereafter, either Contrail or the Seller has the option to elect by written notice to purchase or sell all of the remaining 5 % interest in Contrail held by the Seller.

The purchase price for the 5 % interest is equal to 5 % of the Contrail Equity Value, which is defined as an amount equal to nine times the average Adjusted EBITDA of Contrail's most recent three completed fiscal years at the time an option notice is delivered.

The Company has presented this redeemable non-controlling interest in Contrail ("Contrail RNCI") between the liabilities and equity sections of the accompanying condensed consolidated balance sheets where the changes in its estimated redemption value are recorded on our consolidated statements of operations within non-controlling interests.

1 unchanged sentence

The non-controlling interest holders are the executive management of the underlying business.

The Shanwick Put/Call Option grants the Company an option to purchase the 30 % interest at the call option price that equals to the average EBIT over the 3 Financial Years prior to the exercise of the Call Option multiplied by 8.

In addition, the Shanwick Put/Call Option also grants the non-controlling interest owners an option to require Air T to purchase from them their respective ownership interests at the Put Option price, that is equal to the average EBIT over the 3 Financial Years prior to the exercise of the Put Option multiplied by 7.5.

The Call Option and the Put Option may be exercised at any time from the fifth anniversary of the shareholder agreement and then only at the end of each fiscal year of Air T.

The Company has presented this redeemable non-controlling interest in Shanwick between the liabilities and equity sections of the accompanying consolidated balance sheets.

The Call Option and the Put Option may be exercised at any time from the fifth anniversary of the shareholder agreement and then only at the end of each fiscal year of Air T ("Shanwick RNCI").

The Company has presented the Shanwick RNCI between the liabilities and equity sections of the accompanying condensed consolidated balance sheets.

In addition, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the estimated redemption value at the end of each reporting period.

1 unchanged sentence

Changes in its estimated redemption value are recorded on our consolidated statements of operations within non-controlling interests.

The Shanwick RNCI's estimated redemption value is $ 5.5 million as of March 31, 2024, which was comprised of the following (in thousands):

Shanwick's Redeemable

Non-Controlling

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

As of March 31, 2025, the balances were comprised of the following (in thousands):

Shanwick RNCI Contrail RNCI Total

Beginning Balance as of April 1, 2024 $ 5,540 $ 7,436 $ 12,976

2 unchanged sentences

Net income attributable to non-controlling interests 229 521 750

Other comprehensive income attributable to the RNCI ( 234 ) — ( 234 )

Redemption value adjustments ( 36 ) — ( 36 )

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

Ending Balance as of March 31, 2025 $ 5,176 $ 1,878 $ 7,054

Financial Guarantees

Our financial guarantees consist of debt obligations of certain CJVII Series.

Expiration dates vary through 2028, and guarantees will terminate on payment and/or cancellation of the underlying obligation.

A payment by us would be triggered by failure of the series to fulfill its obligation covered by the guarantee.

We are entitled to recover from amounts paid by us under the guarantees by other unrelated institutional investment partners ("CJVII Series investors"), up to their pro rata ownership of the CJVII Series.

The maximum potential payments for financial guarantees was $ 13.6 million as of March 31, 2023.

In February 2024, the Company was released of its obligations from these financial guarantees.

As a result, the maximum potential payments for financial guarantees was $ 0 as of March 31, 2024.

Financial guarantees and indemnifications are recorded at fair value at their inception.

Subsequent to initial recognition, the guarantee liability is adjusted at each reporting period to reflect the current estimate of expected payments resulting from possible default events over the remaining life of the guarantee.

Crestone Asset Management, LLC and CJVII, LLC

For CAM's Investment Function, as described in Note 9 , CAM's initial commitment to CJVII was approximately $ 51.0 million.

The Company and MRC have commitments to CAM in the respective amounts of $ 7.0 million and $ 44.0 million.

These represent the investor interests of CAM, separate and distinct from the common interests.

Any investment returns on CAM’s investor interests are shared pro-rata between the Company and MRC for each individual investment at the CJVII Series.

Per its Operating Agreement, CAM is comprised of only two Series:

the Onshore and the Offshore Series.

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 March 31, 2025, for its Investment Function, the Company has contributed $ 17.6 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.

In connection with the formation of CAM, MRC had a fixed price put option of $ 1.0 million to sell its common equity in CAM to the Company at each of the first three ( 3 ) anniversary date.

The fixed price put option expired on May 5, 2024.

With respect to the secondary put and call option, as it is priced at fair value, the Company determined that there is no potential loss or gain upon exercise that would need to be recognized.

Nonfinancial Guarantees

5 unchanged sentences

The maximum potential payments for nonfinancial guarantees were $ 4.4 million and $ 10.1 million at March 31, 2025 and March 31, 2024, respectively.

The carrying value of recorded liabilities related to nonfinancial guarantees was $ 0 at both March 31, 2024 and March 31, 2023.

There were no recorded liabilities related to nonfinancial guarantees at March 31, 2025 and March 31, 2024.

SHARES REPURCHASE

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.

During the year ended March 31, 2024, the Company repurchased 48,729 shares at an aggregate cost of $ 0.9 million, in which all were recorded as treasury shares.

The Company has a total of 256,850 treasury shares as of March 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 (subject to certain thresholds being met) that was applicable to the Company beginning Fiscal 2024, 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.

The Company does not currently expect that the tax-related provisions of the IRA will have a material impact on its consolidated financial statements.

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 Fiscal 2024 was no t material.

During the years ended March 31, 2025 and 2024, the Company repurchased 70,756 shares at an aggregate cost of $ 1.4 million, and 48,729 shares at an aggregate cost of $ 0.9 million, respectively, in which all were recorded as treasury shares.

The Company has a total of 327,606 and 256,850 treasury shares as of March 31, 2025 and 2024, respectively.

SUBSEQUENT EVENTS

Contrail RNCI Redemption

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

Pursuant to the Redemption Agreement, Contrail agreed to purchase and redeem from the Seller, 16 % of its 21 % interest in Contrail, with the earnout period being retroactive to April 1, 2024.

The purchase price for the redeemed interest is $ 4.6 million in the form of a secured, subordinated promissory note, plus an earnout amount.

Interest accrues on the principal amount at an annual rate equal to the 10 year Treasury bond yield, adjusted on each anniversary date of the note, plus 3.75 %, compounded monthly.

The promissory note consists of a 12 month interest only period commencing on May 1, 2024, followed by a three year amortization period for the remaining balance of the note.

Under the Redemption Agreement, the Seller is also entitled to an annual earnout payment equal to 9.14 % of Contrail’s adjusted EBITDA over $ 7.0 million in each fiscal year beginning March 31, 2025 and through March 31, 2029.

Pursuant to the Redemption Agreement, Contrail is required to calculate earnout payments annually within 30 days following 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.

Similar to payments under the note, earnout payments are subordinated and subject to the payment in full of all then outstanding senior debt and no earnout payment may be made if such payment causes or would cause a loan default or if a loan default exists.

In such case, any earnout payments would be deferred until Contrail is no longer reasonably at risk of a loan default or has been authorized by the lender to resume payments.

Any deferred earnout payment will accrue interest at a rate equal to the note rate.

The purchase price for the 5 % interest is equal to 5 % of the Contrail Equity Value, which is defined as an amount equal to nine times the average Adjusted EBITDA of Contrail’s most recent three completed fiscal years at the time an option notice is delivered.

Royal Acquisition and Amendment No.

4 to Credit Agreement and Term Loan C with Alerus

On May 15, 2025, MAC purchased and acquired all the outstanding membership interests of Royal Aircraft Services, LLC ("Royal") for total estimated consideration of approximately $ 1.1 million, subject to customary adjustments.

Royal provides aircraft painting, maintenance, repair, and overhaul services, together with parts sources and sales.

The Royal operations will be included within the MAC division operations following the acquisition.

As of the date of this filing, the initial accounting for the business combination is incomplete due to the timing of the transaction and the ongoing evaluation of the fair values of the assets acquired and liabilities assumed.

In connection with the acquisition, the Alerus Loan Parties under the Revolving Credit Agreement with Alerus and Royal and Air T entered into Amendment No.

4 to Credit Agreement and Consent and Term Loan C with Alerus in the amount of $ 1.1 million.

The purpose of the Amendment and Term Note was to provide a term loan to finance the full purchase price of the acquisition, to add Royal as a part of the Alerus Loan Parties to the Alerus credit agreement, as amended and to memorialize Alerus’ consent to the Royal acquisition.

The new term loan matures May 15, 2030 and bears interest at the greater of five ( 5 %) percent or the CME one-month term SOFR rate plus 2.25 %.

Monthly payments on Term Note C commence June 15, 2025 and are equal to $ 12,500 plus accrued interest.

The term loan is secured by the terms of Security Agreement dated as of August 29, 2024.

AAM 24-1 Third NPA with the Institutional Investors

On May 30, 2025, the Company, along with AAM 24-1 (the "Issuer"), entered into new transaction documents with the Institutional Investors that replaced the Second NPA transaction documents.

Pursuant to the Third NPA with the Institutional Investors, the Issuer agreed to issue and sell a Multiple Advance Senior Secured Note in an aggregate principal amount of up to $ 100.0 million (the “Multiple Advance Note”).

For purposes of clarity and the avoidance of doubt, as of the closing date, the Institutional Investors advanced an additional $ 10.0 million to the Issuer and have collectively advanced under the Multiple Advance Note to the Issuer the aggregate amount of $ 40.0 million.

Provided no default or event of default of the Issuer exists, and subject to satisfaction of all requirements for any closing as set forth in the Third Note Purchase Agreement, the Investors are obligated to advance to the Issuer an additional aggregate $ 60.0 million in $ 10.0 million increments, each on or within fifteen days of the following dates:

September 30, 2025 $ 10,000,000

January 30, 2026 $ 10,000,000

May 30, 2026 $ 10,000,000

September 30, 2026 $ 10,000,000

January 30, 2027 $ 10,000,000

May 30, 2027 $ 10,000,000

The Multiple Advance Note bears annual interest at a rate of 8.5 % which is computed on the basis of a 30/360-day year and actual days elapsed and is payable semi-annually in arrears, pursuant to the terms of the Multiple Advance Note.

The maturity date of the Multiple Advance Note is May 31, 2035.

The Multiple Advance Note contains standard and customary events of default including, but not limited to, failure to make payments when due under the Multiple Advance Note, failure to comply with certain covenants contained in the Multiple Advance Note, or bankruptcy or insolvency of, or certain monetary judgments against the Issuer or the Company.

The prior notes were cancelled and replaced by the Multiple Advance Note.

Funds advanced under the Multiple Advance Note may be reinvested for a period of six years from the date of closing.

The Issuer may prepay all or a portion of the outstanding principal and accrued but unpaid interest at any time, provided that (i) if the Issuer prepays all or any portion of the Multiple Advance Note within one year from the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to two percent ( 2.0 %) of the amount being prepaid, and (ii) if the Issuer prepays all or any portion of the Multiple Advance Note after the first anniversary of the Issue Date but on or prior to the second anniversary of the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to one percent ( 1.0 %) of the amount being prepaid.

If the Issuer elects to prepay a portion of the outstanding principal and accrued but unpaid interest, then in no event can such prepayment be for an amount less than $ 1.0 million.

The various equity interests that were assigned by the Company to the Issuer on or about the closing date of the Original Financings continue to serve as collateral for the repayment of the Multiple Advance Note:

all of the issued and outstanding capital stock of the Issuer owned by the Company, and the 320,000 Trust Preferred Securities, held by the Issuer.

CASP Sale of Airbus Models

On June 19, 2025, CASP, entered into two separate sale and purchase agreements, each agreement to sell an Airbus Model aircraft.

The aggregate transaction value, assuming both transactions are completed, would exceed $ 25,000,000 .

Although closing of the transactions is currently anticipated to occur during the week of July 7, 2025, the agreements are subject to numerous closing conditions and other terms and conditions customary for such transactions and there is no assurance that such transactions will close on the dates anticipated or at all.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data