What changed in this filing

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Item 1. Financial Statements

2025-08-13 compared with 2025-02-12 · 416 added, 388 removed, 487 unchanged (62% of the section changed)

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

December 31, Nine Months Ended

2024 2023 2024 2023

Operating Revenues:

Overnight air cargo $ 30,589 $ 30,383

Ground equipment sales 11,846 8,441 33,655 32,474

Commercial jet engines and parts 32,688 24,139 91,865 90,463

Ground support equipment 15,070 7,354

Commercial aircraft, engines and parts 21,960 26,250

Digital solutions 2,096 1,678

Corporate and other 1,155 746

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Overnight air cargo 25,899 25,709

Ground equipment sales 10,252 6,964 29,181 27,854

Commercial jet engines and parts 23,685 19,322 65,177 72,562

Ground support equipment 12,303 6,533

Commercial aircraft, engines and parts 14,656 18,533

Digital solutions 836 556

Corporate and other 415 285

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Interest expense ( 2,314 ) ( 1,946 )

Income from equity method investments 661 1,038 4,930 2,477

(Loss) Income from equity method investments ( 19 ) 1,923

Earnout remeasurement income 402 20

Other 678 683

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(Loss) Income before income taxes ( 807 ) 103

Income Tax Expense 347 153 754 851

Income Tax (Benefit) Expense

Net (Loss) Income ( 671 ) 32

Net Income Attributable to Non-controlling Interests ( 965 ) ( 367 )

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

Net Loss Attributable to Air T, Inc.

Stockholders $ ( 1,636 ) $ ( 335 )

(Loss) Income per share (Note 5)

Loss per share (Note 6)

Basic $ ( 0.61 ) $ ( 0.12 )

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Three Months Ended

December 31, Nine Months Ended

(In Thousands) 2025 2024

Net (Loss) Income $ ( 671 ) $ 32

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

Foreign currency translation gain (loss) 413 ( 50 )

Reclassification of interest rate swaps into earnings 12 ( 203 )

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Other ( 243 ) 1

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

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

Total Other Comprehensive Gain (Loss) 182 ( 106 )

Total Comprehensive Loss ( 489 ) ( 74 )

Comprehensive Income Attributable to Non-controlling Interests ( 965 ) ( 367 )

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

Comprehensive Loss Attributable to Air T, Inc.

Stockholders $ ( 1,454 ) $ ( 441 )

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CONDENSED CONSOLIDATED BALANCE SHEETS

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

(In thousands, except share amounts) June 30, 2025 March 31, 2025

Current Assets:

Cash and cash equivalents $ 14,460 $ 5,932

Marketable securities 485 422

Restricted cash 513 575

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24,633 23,917

Income tax receivable 1,016 681

Inventories, net 39,886 38,516

Prepaid expenses 3,811 3,103

Due from Crestone Asset Management, LLC ("CAM") for expense reimbursements 120 3,093

Other current assets (includes $ 418 and $ 531 measured at fair value)

Other current assets 7,371 4,678

Total Current Assets 92,933 78,507

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Assets on lease or held for lease, net of accumulated depreciation of $ 2,039 and $ 1,451

14,073 14,662

Property and equipment, net of accumulated depreciation of $ 9,635 and $ 9,240

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Intangible assets, net of accumulated amortization of $ 6,841 and $ 6,330

10,438 10,020

Right-of-use ("ROU") assets 12,898 13,274

Equity method investments 19,900 19,003

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

Other assets 1,926 1,635

Goodwill 11,903 10,542

Total Assets 190,037 173,778

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:

Accounts payable 17,932 17,782

Income tax payable 71 139

Accrued expenses and other (Note 4) 20,623 16,691

1 unchanged sentence

Current portion of long-term debt - related party (Note 13) 1,431 1,282

Current portion of earnout liability 430 430

Short-term lease liability 2,555 2,377

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Long-term lease liability 11,293 11,843

Long-term earnout liability 706 1,109

Other non-current liabilities

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Commitments and contingencies (Note 17)

Stockholders' Equity:

Stockholders' Deficit:

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

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Total Air T, Inc.

Stockholders' Equity 5,114 4,770

Stockholders' Deficit ( 4,630 ) ( 3,216 )

Non-controlling Interests 1,712 1,698

Total Equity 6,905 5,820

Total Liabilities and Equity $ 187,623 $ 177,167

Total Deficit ( 2,918 ) ( 1,518 )

Total Liabilities and Deficit $ 190,037 $ 173,778

See notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands) Nine Months Ended

(In Thousands) Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income (Loss) $ 1,751 $ ( 3,744 )

Adjustments to reconcile Net Income (Loss) to net cash provided by operating activities:

Net (Loss) Income $ ( 671 ) $ 32

Adjustments to reconcile Net (Loss) Income to net cash (used in) provided by operating activities:

Depreciation and amortization 1,284 760

Income from equity method investments ( 4,930 ) ( 2,477 )

Loss (Income) from equity method investments 19 ( 1,923 )

Other 440 642

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Accrued expenses 3,817 ( 1,030 )

Employee retention credit receivable — 940

Other current assets

( 2,821 ) 504

Other ( 1,287 ) ( 327 )

Net cash provided by operating activities 19,377 23,145

Net cash (used in) provided by operating activities ( 1,095 ) 113

CASH FLOWS FROM INVESTING ACTIVITIES:

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Capital expenditures related to property & equipment ( 231 ) ( 339 )

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

Disbursements for note receivable - Lendway ( 3,500 ) —

Acquisition of businesses, net cash acquired ( 1,180 ) —

Other ( 124 ) 23

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Payments on term loan ( 1,752 ) ( 2,519 )

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

Other ( 286 ) ( 300 )

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Effect of foreign currency exchange rates on cash and cash equivalents ( 292 ) 32

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 10,924 ( 1,903 )

NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 8,466 862

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 6,757 7,843

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD 15,223 8,705

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

Equipment in inventory transferred to assets on lease 112 —

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 —

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD:

Cash and cash equivalents 5,932

Restricted cash, current 575

Restricted cash, long-term(a) 250

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

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD:

Cash and cash equivalents 14,460

Restricted cash, current 513

Restricted cash, long-term(a) 250

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 condensed consolidated financial statements.

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

Net loss* — — — — — ( 531 ) — ( 9 ) ( 540 )

— — — — — ( 335 ) — ( 5 ) ( 340 )

Repurchase of common stock — — 13 ( 301 ) — — — — ( 301 )

Stock option forfeiture (Note 17) — — — — ( 25 ) — — — ( 25 )

Stock compensation expense — — — — 42 — — — 42

Foreign currency translation loss 2

Adjustment to fair value of redeemable non-controlling interest — — — — — 134 — — 134

— — — — — — ( 50 ) — ( 50 )

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

Unrealized gain on interest rate swaps, net of tax — — — — — — 1 — 1

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Balance, June 30, 2024 3,030 $ 758 270 $ ( 5,260 ) $ 876 $ 7,935 $ ( 186 ) $ 1,045 $ 5,168

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

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

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

Foreign currency translation loss — — — — — — ( 170 ) — ( 170 )

Adjustment to fair value of redeemable non-controlling interest — — — — — 412 — — 412

Unrealized gain on interest rate swaps, net of tax — — — — — — 16 — 16

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

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

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

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

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

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

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

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

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

(In Thousands) Common Stock Treasury Stock Additional

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

Net loss* — — — — — ( 335 ) — ( 5 ) ( 340 )

Repurchase of common stock — — 13 ( 301 ) — — — — ( 301 )

Stock option forfeiture (Note 16) — — — — ( 25 ) — — — ( 25 )

Stock compensation expense — — — — 42 — — — 42

Foreign currency translation loss — — — — — — ( 50 ) — ( 50 )

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

Unrealized gain on interest rate swaps — — — — — — 1 — 1

Reclassification of interest rate swaps into earnings — — — — — — ( 203 ) — ( 203 )

Balance, June 30, 2024 3,030 758 270 ( 5,260 ) 876 7,935 ( 186 ) 1,045 5,168

Net income (loss) — — — — — ( 1,636 ) — 52 ( 1,584 )

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

Distributions to non-controlling interests — — — — — — — ( 38 ) ( 38 )

Stock compensation expense — — — — 40 — — — 40

Foreign currency translation gain 2

Reclassification of interest rate swaps into earnings — — — — — — ( 148 ) — ( 148 )

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

Allocation of comprehensive income from unconsolidated investments — — — — — — 2 — 2

Allocation of comprehensive income to redeemable non-controlling interests — — — — — — ( 183 ) — ( 183 )

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

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

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

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

Foreign currency translation loss

— — — — — — 413 — 413

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Allocation of comprehensive income to redeemable non-controlling interests — — — — — — ( 248 ) — ( 248 )

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

Balance, June 30, 2025 3,030 $ 758 328 $ ( 6,404 ) $ 987 $ 494 $ ( 465 ) $ 1,712 $ ( 2,918 )

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

See notes to condensed consolidated financial statements.

(2) Cumulative translation adjustments were at a loss of $ 0.8 million as of March 31, 2024 and June 30, 2024, respectively, and a loss of $ 0.4 million and a gain of $ 54.0 thousand as of March 31, 2025 and June 30, 2025, respectively.

AND SUBSIDIARIES

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These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 2025.

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

The unaudited results of operations for the period ended June 30, 2025 are not necessarily indicative of the operating results for the full year.

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

Recently Issued Accounting Pronouncements

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

Improvements to Reportable Segment Disclosures.

The amendments in this Update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses utilized by the chief operating decision maker for a company along with details about who the chief operating decision maker is and their title.

The Update additionally requires that all annual disclosures under Topic 280 be included in interim periods financial statements, clarifies when an entity can disclose multiple segment measures of profit or loss, and provides new segment disclosure requirements for entities with a single reportable segment.

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 condensed consolidated financial statements and disclosures.

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

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

On May 15, 2025, Mountain Air Cargo, Inc.

(“MAC”), a wholly-owned subsidiary of Air T, Inc., completed the acquisition of Royal Aircraft Services, LLC, a privately-held aircraft maintenance and repair company based in Hagerstown, Maryland for a purchase price of $ 1.2 million, net of cash acquired.

The assets and liabilities of Royal were recorded at their estimated fair values at the date of acquisition and were not material, individually or in the aggregate, to the unaudited Condensed Consolidated Financial Statement.

The acquired business is included in Overnight Air Cargo segment.

Revenue Recognition

Performance Obligations

Substantially all of the Company’s non-lease 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.

The following is a description of the Company’s performance obligations:

The following is a description of the Company’s performance obligations as of June 30, 2025:

Type of Revenue Nature, Timing of Satisfaction of Performance Obligations, and Significant Payment Terms

Product Sales The Company generates revenue from sales of various distinct products such as parts, aircraft equipment, jet engines, airframes, and scrap metal to its customers.

Product Sales The Company generates revenue from sales of various distinct products such as parts, aircraft equipment, printing equipment, jet engines, airframes, and scrap metal to its customers.

A performance obligation is created when the Company accepts an order from a customer to provide a specified product.

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The terms and conditions of the customer purchase orders or contracts are dictated by either the Company’s standard terms and conditions or by a master service agreement or by the contract.

Support Services The Company provides a variety of support services such as aircraft maintenance and short-term repair services to its customers.

Support Services The Company provides a variety of support services such as aircraft maintenance, printer maintenance, and short-term repair services to its customers.

Additionally, the Company operates certain aircraft routes on behalf of FedEx.

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

In addition to the above type of revenues, the Company also has Leasing Revenue, which is in scope under Topic 842 (Leases) and out of scope under Topic 606 and Other Revenues (Freight, Management Fees, etc.) which are immaterial for disclosure under Topic 606.

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 years to five years .

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

Leasing Revenue

Leasing revenue is recognized in accordance with ASC Topic 842.

Refer to Note 11 for further details regarding the Company's leasing revenue.

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

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

2024 2023 2024 2023

Three Months Ended June 30,

Product Sales

Overnight air cargo $ 12,476 $ 9,699

Ground equipment sales 10,108 8,080 31,258 31,556

Commercial jet engines and parts 29,488 21,381 83,271 81,535

Ground support equipment 14,337 7,128

Commercial aircraft, engines and parts 17,760 23,619

Corporate and other 167 119

1 unchanged sentence

Overnight air cargo 17,992 20,658

Ground equipment sales 1,486 223 1,939 474

Commercial jet engines and parts 1,846 2,533 6,151 8,393

Ground support equipment 419 166

Commercial aircraft, engines and parts 2,242 2,199

Corporate and other 16 14

Leasing Revenue

Ground equipment sales — 24 30 58

Commercial jet engines and parts 1,172 12 1,687 35

Ground support equipment — 15

Commercial aircraft, engines and parts 1,755 39

Corporate and other 455 464

Software Services

Digital Solutions 2,096 1,678

Overnight air cargo 121 26

Ground equipment sales 252 114 428 386

Commercial jet engines and parts 182 213 756 500

Ground support equipment 314 45

Commercial aircraft, engines and parts 203 393

Corporate and other 517 149

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

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

The following table presents outstanding contract liabilities as of April 1, 2025 and June 30, 2025 and the amount of contract liabilities that were recognized as revenue during the three-month period ended June 30, 2025 (in thousands):

Outstanding contract liabilities Outstanding contract liabilities as of April 1, 2025

Recognized as Revenue

As of December 31, 2024 $ 3,956

As of June 30, 2025 $ 7,781

As of April 1, 2025 $ 4,199

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

For the three months ended June 30, 2025 $ ( 1,577 )

Accrued Expenses and Other

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

(In thousands) June 30, 2025 March 31, 2025

Salaries, wages and related items $ 6,477 $ 6,235

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Deferred Income 4,816 3,686

Accrued insurance payable 2,949 1,336

Other 2,589 1,941

Total $ 20,623 $ 16,691

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

During the three-month period ended June 30, 2025, the Company recorded $ 0.1 million in income tax benefit at an effective rate ("ETR") of 16.9 %.

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

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

The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended June 30, 2025 were the valuation allowance related to the Company’s U.S.

consolidated group, Delphax Technologies, Inc.

(“DTI”), Landing Gear Support Services PTE LTD (“LGSS”), Delphax Solutions, Inc.

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

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

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

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

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

(“DTI”), and Delphax Solutions, Inc.

("DSI"), the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, and the benefit from the Foreign-Derived Intangible Income ("FDII") deduction.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S., which includes a broad range of tax reform provisions affecting businesses.

The Company is evaluating the full effects of the legislation on its estimated annual effective tax rate and cash tax position, but does not expect the legislation to have a material impact on its financial statements.

Because the law was enacted after the end of the first fiscal quarter, its effects are not reflected in the operating results for the three months ended June 30, 2025.

During the three-month period ended June 30, 2024, the Company recorded income tax expense of $ 71.0 thousand at an ETR of 68.9 %.

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

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

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

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

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

Net Earnings (Loss) Per Share

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

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

consolidated group, DTI, Landing Gear Support Services PTE LTD ("LGSS"), DSI, and BCCM Advisors (Kenya) Limited (“BCCM Kenya”), and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

Net Loss Per Share

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

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

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

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

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

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

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

2024 2023 2024 2023

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

As of June 30, 2025, of the 199,000 options outstanding under the Air T's 2020 Omnibus Stock and Incentive Plan, none were exercisable.

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

Three Months Ended June 30,

Net (loss) income $ ( 671 ) $ 32

Net income attributable to non-controlling interests ( 965 ) ( 367 )

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

Net loss attributable to Air T, Inc.

Stockholders $ ( 1,636 ) $ ( 335 )

(Loss) income per share:

Loss per share:

Basic $ ( 0.61 ) $ ( 0.12 )

Diluted $ ( 0.61 ) $ ( 0.12 )

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

Antidilutive shares excluded from computation of loss per share — —

Weighted Average Shares Outstanding:

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Intangible Assets and Goodwill

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

December 31, 2024

Intangible assets as of June 30, 2025 and March 31, 2025 consisted of the following (in thousands):

June 30, 2025

Gross Carrying Amount Accumulated Amortization Net Book Value

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Intangible assets, total $ 16,350 $ ( 6,330 ) $ 10,020

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

The increase in customer relationships from March 31, 2025 to June 30, 2025 relates to the quarterly changes in foreign currency translation adjustments at Shanwick.

Based on the intangible assets recorded at June 30, 2025 and assuming no subsequent additions to, or impairment of the underlying assets, the remaining estimated annual amortization expense is expected to be as follows:

(In thousands)

Year ending March 31, Amortization

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

2026 (excluding the three months ended June 30, 2025) $ 941

Thereafter 3,939

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

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

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

The carrying amount of goodwill as of June 30, 2025 and March 31, 2025 was $ 11.9 million and $ 10.5 million, respectively.

The increase from the prior fiscal year end balance is attributable to the Royal acquisition within the overnight air cargo segment (as described in Note 2 ) of $ 1.0 million and the $ 0.3 million change in foreign currency translation adjustments related to the goodwill balance at Shanwick within the digital solutions segment.

There was no impairment of goodwill during the three months ended June 30, 2025.

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

June 30, 2025 March 31, 2025

Overnight air cargo $ 1,121 $ 76

Commercial aircraft, engines and parts 4,227 4,227

Digital solutions 6,555 6,239

Total reportable segment goodwill, at cost 11,903 10,542

Corporate and other 376 376

Less accumulated impairment ( 376 ) ( 376 )

Goodwill, net of impairment $ 11,903 $ 10,542

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 (Term Note A - MBT and Term Note D - MBT).

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 effective hedges.

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 amortized 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.

On July 10, 2024, the interest rate swap on Term Note A - MBT was terminated and the Company received proceeds in the amount $ 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 over the remaining term of the interest rate swap prior to termination.

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.

Federal Reserve ("Contrail - Term Note G").

To meet these objectives, the Company has entered into interest rate swaps designated as cash flow hedging instruments.

As of June 30, 2025, all interest rate swaps previously designated as cash flow hedging instruments have been determined to no longer be effective hedges.

For de-designated interest-rate swap contracts included in accumulated other comprehensive loss as of June 30, 2025, the Company is amortizing the fair value of the de-designated interest-rate swaps at the time of de-designation into earnings within interest expense on the condensed consolidated statement of income (loss) over the remaining term of originally hedged loans.

Estimated net unrealized losses related to the interest rate swaps included in accumulated other comprehensive loss that will be reclassified into earnings within the next twelve months are immaterial.

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 %.

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

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

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

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

The 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).

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

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

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

As of June 30, 2025 and March 31, 2025, the fair value of the interest-rate swap contracts was immaterial.

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

Management uses derivative financial instruments to execute those strategies, which may include options, and futures contracts.

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

During the three months ended June 30, 2025 and 2024, gains and losses related to these derivative instruments were immaterial.

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

The Company also invests in exchange-traded marketable securities and accounts for that activity in accordance with ASC 321, Investments- Equity Securities.

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

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 and are therefore, considered Level 1 fair value measurements.

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

Three Months Ended

December 31, Nine Months Ended

2024 2023 2024 2023

Unrealized Gains $ 142 $ 487 $ 582 $ 1,411

Unrealized Losses $ 240 $ — $ 912 $ 1,832

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

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

The Company's gross unrealized gains and losses on equity securities for the three months ended June 30, 2025 and 2024 were immaterial.

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

As of June 30, 2025 and March 31, 2025, the fair value of these marketable equity securities was an asset of $ 1.2 million and $ 1.1 million, respectively, which is included within marketable securities and restricted investments in the condensed consolidated balance sheets.

Equity Method Investments

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

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

As of June 30, 2025, the Company owned 487,000 Lendway shares, representing approximately 27.5 % of Lendway's outstanding shares.

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

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

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 the earlier of August 15, 2029 or by written demand of the Company after February 15, 2026.

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

As of June 30, 2025, $ 3.4 million of the principal balance remains outstanding and $ 0.2 million of interest has been accrued.

Cadillac Casting, Inc.

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("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, with a basis difference decrease of $ 0.3 million.

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

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

Three Months Ended Nine Months Ended

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

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.

The Company's net investment basis in CCI is $ 3.9 million as of June 30, 2025.

CCI and Lendway's combined summarized unaudited financial information for the three months ended March 31, 2025 and 2024 is as follows (in thousands):

Three Months Ended

March 31, 2025 March 31, 2024

Revenue $ 41,670 $ 45,757

Gross Profit 5,363 6,006

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

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

Operating income 1,685 1,206

Net income $ 368 $ 1,102

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 Crestone JV II LLC ("CJVII"), formerly known as Contrail JV II LLC.

formerly known as Contrail JV II LLC.

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

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

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

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

Three Months Ended Nine Months Ended

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

CAM's HLBV net assets, including common interests and investor interests, was $ 37.3 million and $ 27.1 million as of June 30, 2025 and 2024, respectively.

Additionally, contributions from and distributions to both Air T and MRC for the three months ended June 30, 2025 and 2024 is as follows (in thousands):

Three Months Ended

June 30, 2025 June 30, 2024

Contributions $ 3,767 $ —

Distributions $ 2,515 $ 1,613

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

Investment December 31, 2024 March 31, 2024

Investment balances for the Company's equity method investees as of June 30, 2025 and March 31, 2025 is as follows (in thousands):

Investment June 30, 2025 March 31, 2025

Lendway $ 858 $ 729

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

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

Three Months Ended Nine Months Ended

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

stockholders for the Company's equity method investees, included in non-operating (expense) income on the condensed consolidated statements of income (loss), including basis difference adjustments, during the three months ended June 30, 2025 and 2024 is as follows (in thousands):

Three Months Ended

Investment June 30, 2025 June 30, 2024

Lendway $ 123 $ ( 290 )

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

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

Three Months Ended Nine Months Ended

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

For the three months ended June 30, 2025 and 2024, the Company received distributions and dividends from equity method investees as follows (in thousands):

Three Months Ended

Investment June 30, 2025 June 30, 2024

Lendway $ — $ —

CCI — — — 452

CAM 829 1,626

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2025 March 31,

Overnight air cargo:

Finished goods $ 1,102 $ 893

Ground equipment manufacturing:

Raw Materials $ 7,275 $ 6,928

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Finished Goods 4,084 5,358

Corporate and other:

Raw materials 1,165 1,003

Finished goods 721 724

Commercial jet engines and parts:

Parts 30,792 49,522

Aircraft parts 30,440 28,794

Total inventories 44,877 43,422

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

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

During the three months ended June 30, 2025 and 2024, the Company recognized depreciation expense relating to equipment leases of $ 0.6 million and $ 0.1 million, respectively.

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

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

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

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

During the three months ended June 30, 2025, earned contingent rent on equipment leases totaled approximately $ 0.5 million.

The Company had no contingent rent earned on equipment leases during the three months ended June 30, 2024.

As of June 30, 2025, future minimum rental payments to be received under non-cancelable leases are as follows (in thousands):

Year ended March 31,

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

2026 (excluding the 3 months ended 06/30/2025) $ 2,192

Total $ 8,396

Subsequent to the financial statement period end date, as mentioned in Note 19 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on July 15, 2025, CASP completed the sale of the two Airbus Model A321-111 aircrafts, including associated engines, for over $ 18.0 million.

Concurrently, CASP entered into assignment, assumption, and amendment agreements under the existing leases, effectively transferring the lessor’s rights and obligations to the purchaser.

The amounts related to the transferred leases included in the future minimum rental payments to be received under non-cancelable leases schedule above are as follows:

$ 2.1 million, $ 3.3 million, and $ 2.8 million for the years ended March 31, 2026 (excluding the 3 months ended June 30, 2025), 2027, and 2028, respectively.

Office leases

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

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

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

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

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

Depreciation expense relating to office leases was $ 0.1 million for the three months ended June 30, 2025 and 2024, respectively.

During the three months ended June 30, 2025, the Company recognized rental and other revenues related to operating lease payments of $ 0.5 million, of which variable lease payments were $ 0.2 million.

During the three months ended June 30, 2024, the Company recognized rental and other revenues related to operating lease payments of $ 0.5 million, of which variable lease payments were $ 0.2 million.

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

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

The following table sets forth the undiscounted cash flows for future minimum base rents to be received from customers for office leases in effect as of June 30, 2025:

Year ended March 31,

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

2026 (excluding the 3 months ended 06/30/2025) $ 765

Thereafter 1,824

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

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

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

2024 2023 2024 2023

The components of lease cost for the three months ended June 30, 2025 and 2024 are as follows (in thousands):

Three Months Ended June 30,

Operating lease cost $ 841 $ 668

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Total lease cost $ 1,366 $ 1,188

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

December 31, 2024 March 31, 2024

Amounts reported in the consolidated balance sheets for leases where we are the lessee as of June 30, 2025 and March 31, 2025 were as follows (in thousands):

June 30, 2025 March 31, 2025

Operating leases

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Weighted-average remaining lease term

Operating leases 10 years, 5 months 12 years, 1 month

Operating leases 10 years, 2 months 10 years, 3 months

Weighted-average discount rate

Operating leases 5.68 % 5.67 %

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

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

During the three months ended June 30, 2025, the Company had ROU assets that were obtained in exchange for new operating lease liabilities in the amount of $ 0.2 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 June 30, 2025, the remaining lease term on the operating lease was 4 years, 5 months and the useful life of leasehold improvements that exceeded the lease term ranged from 4 years, 7 months to 4 years, 11 months .

As of June 30, 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 June 30, 2025 are as follows (in thousands):

Operating Leases

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

2026 (excluding the three months ended June 30, 2025) $ 2,450

Thereafter 7,669

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Financing Arrangements

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

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

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 only, 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 created.

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 twelve of the Company’s subsidiaries ("Alerus Loan Parties") entered into a credit agreement (the “New Credit Agreement”) with Alerus Financial, National Association (the “Lender”).

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 bears interest at a rate per annum equal to the greater of 5.00 % or one-month SOFR plus 2.00 %.

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 the Lender or prepaid with funds from the Alerus Loan Parties’ internally generated cash flows.

The Alerus Loan Parties are co-borrowers under the New Credit Agreement and each of the notes and include the following subsidiaries:

AirCo, LLC, Airco 2, LLC, Air’Zona Aircraft Services, Inc., AirCo Services, LLC, CSA Air, Inc., Global Ground Support, LLC, Jet Yard, LLC, Jet Yard Solutions, LLC, Mountain Air Cargo, Inc., Stratus Aero Partners, LLC, Worldwide Aircraft Services, Inc., and Worthington Aviation, LLC.

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

The Company is not a borrower under the New Credit Agreement but has guaranteed the obligations of the Borrowers owed to the Lender.

In addition, Air T, Inc.

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.

The New Credit Agreement contains a financial covenant that the Borrowers will not permit the debt service coverage ratio to be less than 1.25 to 1.00 at any quarterly measurement date or permit the leverage ratio to be greater than 3.00 to 1.00 at any semi-annual measurement date.

The New Credit Agreement also includes other customary representations and warranties, affirmative covenants, negative covenants and events of default.

Upon the occurrence of events of default, the obligations to the Lender may be accelerated and the commitments may be terminated.

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 Minnesota Bank & Trust ("MBT").

All debt issuance cost 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 Old National Bank ("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, a wholly-owned subsidiary of the Company ("AAM 24-1") entered into a Second Note Purchase Agreement (the “Second NPA”) with Honeywell Common Investment Fund and Honeywell International Inc.

Master Retirement Trust ("Honeywell").

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

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

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

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

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

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

(In Thousands) December 31,

Borrowings of the Company and its subsidiaries are summarized below at June 30, 2025 and March 31, 2025, respectively.

In connection with the acquisition of Royal on May 15, 2025, Air'Zona, CSA, GGS, MAC, WASI, Worthington, Jet Yard, and Jet Yard Solutions ("the Alerus Loan Parties") under the Revolving Credit Agreement with Alerus 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 an Alerus Loan Party 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 5.00 % or the CME one-month term SOFR rate plus 2.25 %.

Monthly payments on Term Note C commenced June 15, 2025 and are equal to $ 12.5 thousand plus accrued interest.

The term loan is secured by the terms of the Security Agreement dated as of August 29, 2024.

On May 30, 2025, the Company, along with AAM 24-1 (the "Issuer"), entered into new transaction documents with two Institutional Investors that replaced the Second Note Purchase Agreement ("Second NPA") transaction documents.

Pursuant to the Third Note Purchase Agreement ("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 NPA, 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 $ 10.0 million

January 30, 2026 $ 10.0 million

May 30, 2026 $ 10.0 million

September 30, 2026 $ 10.0 million

January 30, 2027 $ 10.0 million

May 30, 2027 $ 10.0 million

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 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 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 as do 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.

The following table provides certain information about the current financing arrangements of the Company and its subsidiaries (other than related party obligations) as of June 30, 2025:

(In Thousands) June 30,

2025 March 31,

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

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

Term Note A - MBT 1

— 6,955 8/31/2031 3.42 % Recourse

Term Note B - MBT 1

— 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 %

2025 Maturity Date Interest Rate Unused commitments as of June 30, 2025 Type of Debt

Debt - Trust Preferred Securities 1 $ 35,450 $ 35,342 6/7/2049 8.00 % Recourse

Total 35,450 35,342

Jet Yard Debt

Term Loan - MBT 1

— 1,749 8/31/2031 4.14 % Recourse

Total — 1,749

Alerus Loan Parties Debt

1 unchanged sentence

$ 1,076 Recourse

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

3,000 Recourse

Term Note A - Alerus 9,444 9,827 8/15/2029 Greater of 5.00 % or 1-month SOFR + 2.00 %

Term Note B - Alerus 2,250 — 8/15/2029 Greater of 5.00 % or 1-month SOFR + 2.00 %

Term Note C - Alerus 1,038 — 5/15/2030 Greater of 5.00 % or 1-month SOFR + 2.25 %

Total 23,406 15,877

2 unchanged sentences

24,982 Limited recourse 2

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

Limited recourse 4

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

Limited recourse 4

Term Note J - ONB 8,125 8,750 9/12/2028 1-month SOFR + 3.86 %

1 unchanged sentence

Total 8,143 11,877

Term Loan - PSB 4,475 5,434 12/11/2025 3-month SOFR + 3.26 %

Total 4,475 5,434

Wolfe Lake Debt

11 unchanged sentences

Total 40,000 30,000

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

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

Term Loan - Bank of America, N.A.

2,242 2,271 2/21/2030 1-month SOFR + 0.11 % + 1.75 %

Total 2,242 2,271

Total Debt 124,413 110,704

1 unchanged sentence

Total Debt, net $ 123,842 $ 110,325

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

At June 30, 2025, our contractual financing obligations, including payments due by period, are as follows (in thousands):

Due by Amount

December 31, 2025 $ 17,519

December 31, 2026 14,688

December 31, 2027 8,616

December 31, 2028 3,807

December 31, 2029 6,290

June 30, 2026 $ 6,080

June 30, 2027 22,212

June 30, 2028 4,599

June 30, 2029 2,736

June 30, 2030 5,869

Thereafter 82,917

Unamortized Premiums and Debt Issuance Costs ( 571 )

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

Interest Expense, net - Net interest expense for the Company and its subsidiaries were as follows for the three months ended June 30, 2025 and 2024:

Three Months Ended

December 31, Nine Months Ended

2024 2023 2024 2023

Air T $ 711 $ 971

5 unchanged sentences

Air T Acquisition 22.1 89 68

WASI 10 ( 80 ) 32 53

AAM 24-1 699 323

Other ( 28 ) 6 ( 13 ) 14

Total $ 2,314 $ 1,946

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.

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

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

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

Cash paid for interest totaled $ 2.3 million during the three months ended June 30, 2025.

Shares Repurchased

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

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

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

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

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

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

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

No shares were repurchased by the Company during the three months ended June 30, 2025.

Geographical Information

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

December 31, 2024 March 31, 2024

June 30, 2025 March 31, 2025

United States $ 20,025 $ 20,422

1 unchanged sentence

Total tangible long-lived assets, net $ 34,189 $ 34,947

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

December 31, 2024 March 31, 2024

Bulgaria $ 15,017 $ —

The net book value of tangible long-lived assets located within each individual foreign country at June 30, 2025 and March 31, 2025 is listed below (in thousands):

June 30, 2025 March 31, 2025

Thailand $ 221 $ —

Bulgaria 13,853 14,435

Total tangible long-lived assets, net $ 14,164 $ 14,525

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

Nine Months Ended December 31,

Total revenue, in and outside the United States, is summarized in the following table for the three months ended June 30, 2025 and June 30, 2024 (in thousands):

Three Months Ended June 30,

Operating Revenues:

Overnight Air Cargo

United States $ 29,246 $ 29,543

Foreign 1,343 840

Total revenue $ 225,535 $ 214,154

Segment Information

The Company has four business 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) Three Months Ended

December 31, Nine Months Ended

2024 2023 2024 2023

Operating Revenues by Segment:

Overnight Air Cargo:

Domestic $ 30,394 $ 28,818 $ 91,074 $ 84,054

International 198 200 1,088 890

Total Overnight Air Cargo 30,589 30,383

Ground Equipment Sales:

Domestic 11,567 8,178 31,238 28,709

International 279 263 2,417 3,765

Total Ground Equipment Sales 11,846 8,441 33,655 32,474

Commercial Jet Engines and Parts:

Domestic 20,953 15,967 62,109 66,698

International 11,735 8,172 29,756 23,765

Total Commercial Jet Engines and Parts 32,688 24,139 91,865 90,463

Commercial Aircraft, Engines and Parts

United States 13,502 18,460

Foreign 8,458 7,790

Total Commercial Aircraft, Engines and Parts 21,960 26,250

Ground Support Equipment

United States 14,693 5,798

Foreign 377 1,556

Total Ground Support Equipment 15,070 7,354

Digital Solutions

United States 490 395

Foreign 1,606 1,283

Total Digital Solutions 2,096 1,678

Corporate and Other

Domestic 1,248 935 3,654 2,873

International 1,506 1,223 4,199 3,400

United States 1,136 728

Foreign 19 18

Total Corporate and Other 1,155 746

Total 77,880 63,756 225,535 214,154

Operating Income (Loss):

Overnight Air Cargo 1,864 1,594 5,510 5,568

Ground Equipment Sales 184 ( 522 ) ( 173 ) ( 619 )

Commercial Jet Engines and Parts 2,646 ( 627 ) 7,389 2,002

Corporate and Other ( 2,878 ) ( 2,053 ) ( 7,589 ) ( 7,140 )

Total 1,816 ( 1,608 ) 5,137 ( 189 )

Total revenue $ 70,870 $ 66,411

Segment Information

Air T's 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 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 ("CODM") 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 support equipment 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 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 anticipated 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

The Company's four business 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 it is 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):

Three Months Ended June 30, 2025

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

Revenue from external customers $ 30,589 $ 21,960 $ 15,070 $ 2,096 $ 69,715

Intersegment revenue 862 468 — — 1,330

31,451 22,428 15,070 2,096 71,045

Reconciliation of revenue

Other revenue 1 1,199

Elimination of intersegment revenue 2 ( 1,374 )

Total consolidated revenue $ 70,870

Cost of sales:

Cost of sales from external sources 25,899 14,656 12,303 836

Intersegment operating expense 862 436 — —

26,761 15,092 12,303 836

General and administrative 3,086 6,123 1,393 1,302 11,904

Other segment items 4 138 757 36 208 1,139

Segment profit (loss) 1,466 456 1,338 ( 250 ) 3,010

Reconciliation of profit (loss)

Other revenue 1

Other cost of sales 1

Other expenses 1

Interest expense ( 2,314 )

Loss from equity method investments

Other non-operating income

Earnout remeasurement 402

Other corporate expenses 5 ( 2,375 )

Elimination of intersegment profits 145

Loss before income taxes $ ( 807 )

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 $ 44.0 thousand for the three months ended June 30, 2025.

After eliminations, Other revenue from third parties is $ 1.2 million for the three months ended June 30, 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.

Three Months Ended June 30, 2024

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

Revenue from external customers $ 30,383 $ 26,250 $ 7,354 $ 1,678 $ 65,665

Intersegment revenue — 364 — — 364

30,383 26,614 7,354 1,678 66,029

Reconciliation of revenue

Other revenue 1 789

Elimination of intersegment revenue 2 ( 407 )

Total consolidated revenue $ 66,411

Cost of sales:

Cost of sales from external sources 25,709 18,533 6,533 556

Intersegment operating expense 8 289 — —

25,717 18,822 6,533 556

General and administrative 2,738 6,519 1,501 1,388 12,146

Other segment items 4 97 191 95 198 581

Segment profit (loss) 1,831 1,082 ( 775 ) ( 464 ) 1,674

Reconciliation of profit (loss)

Other revenue 1

Other cost of sales 1

Other expenses 1

Interest expense ( 1,946 )

Income from equity method investments 1,923

Other non-operating income

Earnout remeasurement 20

Other corporate expenses 5 ( 1,943 )

Elimination of intersegment profits 95

Loss before income taxes $ 103

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 43.0 thousand for the three months ended June 30, 2024.

After eliminations, Other revenue from third parties is $ 0.7 million for the three months ended June 30, 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.

Three Months Ended June 30, 2025

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

Depreciation and amortization $ 138 $ 757 $ 36 $ 207 $ 1,138 $ 146 $ 1,284

Capital Expenditures 65 166 — — 231 — 231

Overnight Air Cargo 126 60 387 263

Ground Equipment Sales — 24 212 82

Commercial Jet Engines and Parts 123 24 14,810 166

Corporate and Other 89 12 121 167

Total 338 120 15,530 678

Three Months Ended June 30, 2024

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

Depreciation and amortization $ 97 $ 190 $ 95 $ 198 $ 580 $ 180 $ 760

Overnight Air Cargo 117 95 326 269

Ground Equipment Sales 39 37 230 107

Commercial Jet Engines and Parts 804 185 1,364 565

Corporate and Other 368 382 1,118 1,147

Total $ 1,328 $ 699 $ 3,038 $ 2,088

Capital Expenditures 191 62 54 — 307 32 339

Reconciliation of operating income (loss) and elimination of intersegment loss was as follows:

Three Months Ended June 30, 2025

(in thousands) Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Reportable Segment Total Corporate and Other Eliminations Total

Operating income (loss) from external sources

$ 1,466 $ 551 $ 1,338 $ ( 250 ) $ 3,105 $ ( 2,659 ) $ — $ 446

Intersegment operating (loss) income

— ( 95 ) — — ( 95 ) ( 50 ) 145 —

Operating income (loss) 1,466 456 1,338 ( 250 ) 3,010 ( 2,709 ) 145 446

Three Months Ended June 30, 2024

Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Reportable Segment Total Corporate and Other Eliminations Total

Operating income (loss) from external sources $ 1,839 $ 1,095 $ ( 775 ) $ ( 464 ) $ 1,695 $ ( 2,272 ) $ — $ ( 577 )

Intersegment operating (loss) income

( 8 ) ( 13 ) — — ( 21 ) ( 74 ) 95 —

Operating income (loss) 1,831 1,082 ( 775 ) ( 464 ) 1,674 ( 2,346 ) 95 ( 577 )

Commitments and Contingencies

4 unchanged sentences

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 Redemption 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.

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.

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

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

The earnout pursuant to the Redemption Agreement is a Level 3 fair value measurement that is valued at $ 1.1 million as of June 30, 2025.

For the three months ended June 30, 2025, a loss has been recorded due to an decrease in fair value of $ 0.4 million and included as part of other non-operating income in the condensed consolidated statements of income (loss).

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

1 unchanged sentence

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 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.

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 10-year Treasury bond yield plus 2.5 % adjusted annually.

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.

11 unchanged sentences

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

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

As of June 30, 2025, the balances were comprised of the following (in thousands):

Shanwick RNCI Contrail RNCI Total

Beginning Balance as of April 1, 2025 $ 5,176 $ 1,878 $ 7,054

Contribution from non-controlling members — — —

Distribution to non-controlling members — ( 4 ) ( 4 )

2 unchanged sentences

Redemption value adjustments 67 671 738

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

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

Ending Balance as of June 30, 2025 $ 5,608 $ 2,602 $ 8,210

Crestone Asset Management, LLC and CJVII, LLC

6 unchanged sentences

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

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

As of June 30,

2025, for its Investment Function, the Company has contributed $ 19.1 million to CAM’s Offshore Series and $ 1.0 million to CAM’s Onshore Series.

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

6 unchanged sentences

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

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

Through June 30, 2025, options to purchase up to 348,000 shares have been granted under the Plan.

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

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 three vesting dates, June 30, 2024, 2023 and 2022, a total of 97,000 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 four vesting dates, June 30, 2025, 2024, 2023 and 2022, a total of 128,000 shares satisfied the service condition;

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

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

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

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

No options were exercisable as of December 31, 2024.

For the three months ended June 30, 2025 and June 30, 2024, 21,000 unvested shares and 8,000 unvested shares, respectively, were forfeited due to employee departures.

No expense reversal from forfeiture of options due to employee departures was recorded during the three months ended June 30, 2025.

For the three months ended June 30, 2025, total compensation cost recognized under the Plan was $ 40.0 thousand.

As of June 30, 2025 there were 199,000 granted options that may become exercisable on future vesting dates under the Plan.

No options were exercisable as of June 30, 2025.

Nonfinancial Guarantees

3 unchanged sentences

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

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

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

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

The maximum potential payments for nonfinancial guarantees were $ 4.4 million at June 30, 2025 and March 31, 2025.

The carrying value of recorded liabilities related to nonfinancial guarantees was $ 0 at both June 30, 2025 and March 31, 2025.

Subsequent Events

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

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

1”) with Alerus.

Amendment No.

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

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

On July 15, 2025, CASP, a 95 %-owned subsidiary of Contrail, completed the sale of two Airbus aircraft, including associated engines, for over $ 18.0 million.

The purchaser was FTAI Aircraft Leasing Ireland (2025) DAC.

Concurrently, CASP entered into assignment, assumption, and amendment agreements under the existing leases, effectively transferring the lessor’s rights and obligations to FTAI Aircraft Leasing Ireland (2025) DAC.

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

What changed 10-Q

Item 1. Financial Statements