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Item 1. Financial Statements

2025-11-12 compared with 2025-08-13 · 389 added, 228 removed, 675 unchanged (48% of the section changed)

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AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

September 30, Six Months Ended

September 30,

2025 2024 2025 2024

Operating Revenues:

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Depreciation and amortization 827 949 2,111 1,709

Earnout remeasurement ( 264 ) 279 ( 666 ) 259

65,676 77,622 135,700 144,592

Operating Income (Loss) 446 ( 577 )

Gain on sale of aircraft (Note 11) 7,034 — 7,034 —

Operating Income 5,508 3,620 6,354 3,062

Non-operating (Expense) Income:

Interest expense ( 2,252 ) ( 2,162 ) ( 4,565 ) ( 4,108 )

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

Earnout remeasurement income 402 20

Income from equity method investments 4,179 2,346 4,160 4,269

Other ( 201 ) ( 505 ) 478 179

1,726 ( 321 ) 73 340

(Loss) Income before income taxes ( 807 ) 103

Income Tax (Benefit) Expense

Net (Loss) Income ( 671 ) 32

Income before income taxes 7,234 3,299 6,427 3,402

Income Tax Expense 2,201 336 2,065 407

Net Income 5,033 2,963 4,362 2,995

Net Income Attributable to Non-controlling Interests ( 678 ) ( 443 ) ( 1,643 ) ( 810 )

Net Loss Attributable to Air T, Inc.

Net Income Attributable to Air T, Inc.

Stockholders $ 4,355 $ 2,520 $ 2,719 $ 2,185

Loss per share (Note 6)

Income per share (Note 6)

Basic $ 1.61 $ 0.91 $ 1.01 $ 0.79

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AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

September 30, Six Months Ended

September 30,

(In Thousands) 2025 2024 2025 2024

Net (Loss) Income $ ( 671 ) $ 32

Foreign currency translation gain (loss) 413 ( 50 )

Net Income $ 5,033 $ 2,963 $ 4,362 $ 2,995

Foreign currency translation gain 159 719 572 669

Reclassification of interest rate swaps into earnings 12 ( 148 ) 24 ( 351 )

Unrealized loss on interest rate swaps ( 65 ) — ( 65 ) —

Redemption of non-controlling interest — — — 146

Other 197 ( 181 ) ( 46 ) ( 180 )

Total Other Comprehensive Gain (Loss) 182 ( 106 )

Total Comprehensive Loss ( 489 ) ( 74 )

Total Other Comprehensive Gain 303 390 485 284

Total Comprehensive Income 5,336 3,353 4,847 3,279

Comprehensive Income Attributable to Non-controlling Interests ( 678 ) ( 443 ) ( 1,643 ) ( 810 )

Comprehensive Loss Attributable to Air T, Inc.

Comprehensive Income Attributable to Air T, Inc.

Stockholders $ 4,658 $ 2,910 $ 3,204 $ 2,469

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CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

Current Assets:

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("Lendway") 3,250 3,350

Notes Receivable - CAM 2,500 2,500

Notes Receivable - Crestone Asset Management, LLC ("CAM") 1,527 2,500

Assets on lease or held for lease, net of accumulated depreciation of $ 60 and $ 1,451

14,073 14,662

Property and equipment, net of accumulated depreciation of $ 10,055 and $ 9,240

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Total Assets 184,741 173,778

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable 15,771 17,782

Income tax payable 1,163 —

Accrued expenses and other (Note 4) 22,055 16,691

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Commitments and contingencies (Note 18)

Stockholders' Deficit:

Equity (Deficit):

Stockholders' Equity (Deficit):

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

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Total Air T, Inc.

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

Stockholders' Equity (Deficit) 69 ( 3,216 )

Non-controlling Interests ( 982 ) 1,698

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

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

Total Equity (Deficit) ( 913 ) ( 1,518 )

Total Liabilities and Equity $ 184,741 $ 173,778

See notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands) Three Months Ended

(In Thousands) Six Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (Loss) Income $ ( 671 ) $ 32

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

Net Income $ 4,362 $ 2,995

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

Depreciation and amortization 2,111 1,709

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

Income from equity method investments ( 4,160 ) ( 4,269 )

Gain on sale of aircraft ( 7,034 ) —

Other ( 166 ) 2,258

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Other current assets ( 3,552 ) ( 78 )

( 2,821 ) 504

Other 1,569 624

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Capital expenditures related to property & equipment ( 444 ) ( 581 )

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

Proceeds from sale of aircraft 19,889 —

Loan advances to Lendway ( 1,100 ) ( 2,000 )

Proceeds from notes receivable - CAM and Lendway 2,173 —

Acquisition of businesses, net cash acquired ( 1,162 ) —

Other ( 405 ) ( 16 )

Net cash (used in) provided by investing activities ( 2,724 ) 2,008

Net cash provided by (used in) investing activities 13,936 ( 14,195 )

CASH FLOWS FROM FINANCING ACTIVITIES:

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Payments on term loan ( 11,038 ) ( 6,865 )

Distribution to non-controlling interest ( 3,132 ) ( 323 )

Other ( 296 ) ( 26 )

Net cash provided by (used in) financing activities 12,577 ( 1,291 )

Net cash provided by financing activities 3,746 12,494

Effect of foreign currency exchange rates on cash and cash equivalents ( 147 ) ( 2 )

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AIR T, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(In Thousands) Common Stock Treasury Stock Additional

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Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling

Interests Total

Shares Amount Shares Amount

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

Net income (loss) 1

— — — — — 2,520 — ( 1 ) 2,519

Stock option forfeiture (Note 14) — — — — ( 28 ) — — — ( 28 )

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

Foreign currency translation gain 2

— — — — — — 719 — 719

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

(In Thousands) Common Stock Treasury Stock Additional

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Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling

Interests Total

Shares Amount Shares Amount

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

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

Net (loss) income 1

— — — — — ( 1,636 ) — 52 ( 1,584 )

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

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

— — — — — 4,355 — 302 4,657

Distributions to non-controlling interests — — — — — — — ( 2,996 ) ( 2,996 )

Stock compensation expense — — — — 41 — — — 41

Foreign currency translation gain 2

— — — — — — 159 — 159

Reclassification of interest rate swaps into earnings — — — — — — 12 — 12

Unrealized loss on interest rate swaps — — — — — — ( 65 ) — ( 65 )

Allocation of comprehensive income from unconsolidated investments — — — — — — 204 — 204

Allocation of comprehensive income to redeemable non-controlling interests — — — — — — ( 7 ) — ( 7 )

Balance, September 30, 2025 3,030 $ 758 328 $ ( 6,404 ) $ 1,028 $ 4,849 $ ( 162 ) $ ( 982 ) $ ( 913 )

(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.

(2) Cumulative translation adjustments were at a loss of $ 0.8 million and $ 0.1 million as of March 31, 2024 and September 30, 2024, respectively, and a loss of $ 0.4 million and a gain of $ 0.2 million, as of March 31, 2025 and September 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 June 30, 2025 are not necessarily indicative of the operating results for the full year.

The unaudited results of operations for the period ended September 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.

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

In September 2025, the FASB issued ASU 2025-06- Intangibles- Goodwill and Other- Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

The amendments in this Update modernize the accounting guidance for the costs to develop software for internal use.

The new guidance amends the existing standard that refers to various stages of a software development project to align with current software development methods, such as agile programming.

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

The Company is currently evaluating the impact of this amendment on its 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.

(“MAC”), a wholly-owned subsidiary of Air T, Inc., completed the acquisition of Royal Aircraft Services, LLC ("Royal"), 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 acquired business is included in Overnight Air Cargo segment.

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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 as of June 30, 2025:

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 as of September 30, 2025:

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

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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.

There is no variation in effort expended 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.

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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.

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 June 30,

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

2025 2024 2025 2024

Product Sales

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Total $ 64,150 $ 81,242 $ 135,020 $ 147,654

See Note 1 5 for the Company's disaggregated revenues by geographic region and Note 1 6 for the Company’s disaggregated revenues by segment.

See Note 16 for the Company's disaggregated revenues by geographic region and Not e 17 for the Company’s disaggregated revenues by segment.

These notes disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

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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, 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):

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

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

Recognized as Revenue

As of June 30, 2025 $ 7,781

As of September 30, 2025 $ 7,009

As of April 1, 2025 $ 4,199

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

For the six months ended September 30, 2025 $ ( 2,878 )

Accrued Expenses and Other

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

(In thousands) September 30,

2025 March 31,

Salaries, wages and related items $ 6,196 $ 6,235

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Accrued insurance payable 2,730 1,336

Accrued interest expense 1,920 955

Other 2,239 986

Total $ 22,055 $ 16,691

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 June 30, 2025 were the valuation allowance related to the Company’s U.S.

During the three-month period ended September 30, 2025, the Company recorded $ 2.2 million in income tax expense at an effective tax rate (“ETR”) of 30.4 %.

The Company has computed the provision for income taxes based on the estimated annual effective tax rate and the application of discrete items, if any, for interim reporting.

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

consolidated group, Delphax Technologies, Inc.

(“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.

(“DSI”), the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, non-deductible acquisition-related costs, and the benefit from the Foreign-Derived Intangible Income (“FDII”) deduction.

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

The Company has reflected the impact of the OBBBA in the second quarter of 2026 financial statements as required by generally accepted accounting principles.

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 %.

During the six-month period ended September 30, 2025, the Company recorded $ 2.1 million in income tax expense at an ETR of 32.1 %.

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

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

consolidated group, DTI and DSI, the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, non-deductible transaction costs, and the benefit from the FDII deduction.

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

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

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.

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

The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the six-month period ended September 30, 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.

Net Earnings (Loss) Per Share

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

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

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

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

As of September 30, 2025, of the 244,750 options outstanding under the Air T's 2020 Omnibus Stock and Incentive Plan, none were exercisable.

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

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

2025 2024 2025 2024

Net income $ 5,033 $ 2,963 $ 4,362 $ 2,995

Net income attributable to non-controlling interests ( 678 ) ( 443 ) ( 1,643 ) ( 810 )

Net loss attributable to Air T, Inc.

Net income attributable to Air T, Inc.

Stockholders $ 4,355 $ 2,520 $ 2,719 $ 2,185

Loss per share:

Income per share:

Basic $ 1.61 $ 0.91 $ 1.01 $ 0.79

Diluted $ 1.61 $ 0.91 $ 1.01 $ 0.79

Antidilutive shares excluded from computation of loss per share — —

Weighted Average Shares Outstanding:

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Diluted 2,703 2,760 2,703 2,760

Potential common shares outstanding are not included in the computation of diluted income per share if their effect is anti-dilutive.

During the three and six months ended September 30, 2025, the Company had 244,750 potential shares from share-based awards that were anti-dilutive.

There were no potential shares from share-based awards that were anti-dilutive during the three and six months ended September 30, 2024.

Intangible Assets and Goodwill

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

June 30, 2025

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

September 30, 2025

Gross Carrying Amount Accumulated Amortization Net Book Value

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

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:

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

Based on the intangible assets recorded at September 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

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

2026 (excluding the 6 months ended September 30, 2025) $ 627

Thereafter 3,944

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

The carrying amount of goodwill as of September 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 $ 0.4 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.

There was no impairment on goodwill during the six months ended September 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

September 30, 2025 March 31, 2025

Overnight air cargo $ 1,113 $ 76

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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.

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 %.

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 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 (loss).

The Company 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 (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 months ended June 30, 2025 and 2024 were immaterial.

The Company's gross unrealized gains and losses on equity securities for the three and six months ended September 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.

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

Equity Method Investments

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The Company’s investment in Lendway (NASDAQ:

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

LDWY), formerly Insignia Systems, Inc., has been accounted for under the equity method of accounting since Air T obtained significant influence in January 2018.

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

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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 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.

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.

As of September 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 % (the "Delayed Draw Term Loan").

On September 27, 2024 and January 15, 2025 the borrowing limit was increased to $ 3.5 million and $ 3.8 million, respectively.

The Delayed Draw Term Loan limit increases were provided to assist with inventory purchases during the growing season and operating expenses as needed.

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

As of September 30, 2025 the Delayed Draw Term Loan has $ 2.2 million and $ 0.3 million of principal and accrued interest outstanding, respectively.

On September 15, 2025, Lendway expanded its financing by entering into three promissory notes totaling $ 4.0 million among three of the largest shareholders, where Air T provided $ 1.1 million of additional funding (the "Promissory Note").

The notes were issued to Lendway to assist with inventory purchase for the growing season and operating expenses as needed.

The promissory note bears interest at a rate of 13.5 % with all outstanding principal and accrued interest due on the maturity date, which is June 1, 2027.

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

As of September 30, 2025, $ 1.1 million of the principal balance remains outstanding and minimal interest has been accrued.

Due to the continued subordinated financial support, Lendway is a variable interest entity to which the Company holds several variable interests.

The Company has determined that it is not the primary beneficiary, as it does not control Lendway's Board of Directors, which is the party with the power to direct the activities that most significantly impact the economic performance of Lendway.

Additionally, the Company's exposure to variability of Lendway is limited to its 27.5 % ownership in Lendway's common stock and a total of $ 3.6 million of notes receivable and accrued interest from Lendway.

Accordingly, the Company does not consolidate Lendway and will continue to account for its investment using the equity method of accounting.

Cadillac Casting, Inc.

1 unchanged sentence

("CCI") is accounted for under the equity method of accounting.

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

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

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

The Company recorded a basis difference adjustment of $ 12.0 thousand and $ 25.0 thousand in each of the three and six months ended September 30, 2025.

CCI and Lendway's combined summarized unaudited financial information for the three and six months ended June 30, 2025 and 2024 is as follows (in thousands):

Three Months Ended Six Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Revenue $ 54,452 $ 52,662 $ 96,121 $ 98,419

3 unchanged sentences

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.

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

3 unchanged sentences

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

In August 2025, CAM entered into an Amended and Restated Limited Liability Company Agreement as the Managing Member Blue Crest Aviation Partners 2025-01 LLC ("BCAP").

BCAP was formed as a series LLC and consists of several individual series that target investments in mid-life commercial jet aircraft on lease to airlines globally.

CAM's involvement with BCAP represents an expansion of its Asset Management Function in which CAM will collect fees for the services it provides as the Managing Member of BCAP.

CAM has two classes of equity interests:

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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 $ 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

As of September 30, 2025, $ 1.5 million of the principal balance remains outstanding with minimal accrued interest.

CAM's HLBV net assets, including common interests and investor interests, was $ 33.2 million and $ 29.9 million as of September 30, 2025 and 2024, respectively.

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

Three Months Ended Six Months Ended

September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Contributions $ 3,520 $ — $ 7,288 $ —

Distributions 3,887 676 6,402 2,277

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

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

Investment September 30, 2025 March 31, 2025

Lendway $ 1,350 $ 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 months ended June 30, 2025 and 2024 is as follows (in thousands):

Three Months Ended

Investment June 30, 2025 June 30, 2024

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

Three Months Ended Six Months Ended

Investment September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Lendway $ 288 $ ( 206 ) $ 411 $ ( 496 )

4 unchanged sentences

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

For the three 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

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

Three Months Ended Six Months Ended

Investment September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Lendway $ — $ — $ — $ —

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Inventories consisted of the following (in thousands):

September 30,

2025 March 31,

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

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

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

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

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

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

On July 15, 2025, CASP completed the sale of these two aircraft, including their associated engines, for a total contracted sales price exceeding $ 25.0 million.

In connection with the sale, CASP executed assignment, assumption, and amendment agreements under the existing leases, thereby transferring all lessor rights and obligations to the purchaser.

After applying purchase price adjustments for deposits and rent payments as described in the sale and purchase agreements, CASP received net closing proceeds of $ 19.9 million.

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 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 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,

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.

During the three and six months ended September 30, 2025, the Company recognized depreciation expense relating to equipment leases of $ 0.1 million and $ 0.7 million, respectively.

Depreciation expense relating to equipment leases for the three and six months ended September 30, 2024 was $ 0.2 million and $ 0.3 million, respectively.

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

Earned contingent rent on equipment leases totaled approximately $ 0.5 million during the six months ended September 30, 2025, and was immaterial during the three months ended September 30, 2025.

Contingent rent earned on equipment leases during the three and six months ended September 30, 2024 was immaterial .

As of September 30, 2025, future minimum undiscounted rental payments to be received under non-cancelable leases are immaterial .

Office leases

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

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.

During the three and six months ended September 30, 2025 and 2024, depreciation expense relating to office leases was immaterial .

For each of the three months ended September 30, 2025 and 2024, the Company recognized rental and other revenues related to operating lease payments of $ 0.4 million, of which variable lease payments were $ 0.2 million.

For each of the six months ended September 30, 2025 and 2024, the Company recognized rental and other revenues related to operating lease payments of $ 0.9 million, of which variable lease payments were $ 0.4 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 June 30, 2025:

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

Year ended March 31,

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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 months ended June 30, 2025 and 2024 are as follows (in thousands):

Three Months Ended June 30,

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

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

2025 2024 2025 2024

Operating lease cost $ 874 $ 749 $ 1,715 $ 1,418

2 unchanged sentences

Total lease cost $ 1,358 $ 1,274 $ 2,785 $ 2,463

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

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

September 30, 2025 March 31, 2025

Operating leases

5 unchanged sentences

Operating leases 5.68 % 5.67 %

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.

During the six months ended September 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):

As of September 30, 2025, the remaining lease term on the operating lease was four years, two months and the useful life of leasehold improvements that exceeded the lease term ranged from four years, four months to four years, eight months .

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

Operating Leases

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

2026 (excluding the six months ended September 30, 2025) $ 1,632

Thereafter 7,670

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Financing Arrangements

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.

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

In connection with the acquisition of Royal on May 15, 2025, 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.

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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.

The Issuer may prepay all or a portion of the outstanding principal and accrued but unpaid interest at any time, provided that (i) if the Issuer prepays all or any portion of the Multiple Advance Note within one year from the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to 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,

On September 3, 2025, the Alerus Loan Parties under the Revolving Credit Agreement with Alerus entered into Amendment No.

5 to Credit Agreement, the Amended and Restated Revolving Credit Note, and the Amended and Restated Term Note A.

Pursuant to Amendment No.

5 to Credit Agreement, the Overline Note provisions and note were eliminated.

Pursuant to the Amended and Restated Revolving Credit Note, the revolving credit commitment to make revolving credit loans and to issue letters of credit was increased to an aggregate principal amount not to exceed $ 20.0 million.

The interest rate on the Revolving Credit Note was decreased to the greater of 5.00 % or 1-month SOFR plus 1.90 %.

The maturity date was extended to August 28, 2027.

The financial covenants are to be measured semi-annually at December and March of each year and the Alerus Loan Parties are to deliver quarterly financial statements to Alerus.

Pursuant to the Amended and Restated Term Note A, Term Note A was amended and restated by the Alerus Loan Parties in the principal amount of $ 9.2 million.

The maturity date remains August 15, 2029.

The Term Note A interest rate was revised to 1-month SOFR plus 2.00 %.

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

(In Thousands) September 30,

2025 March 31,

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

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

Debt - Air T Funding Trust Preferred Securities 1 $ 35,500 $ 35,342 6/7/2049 8.00 % Recourse

Total 35,500 35,342

3 unchanged sentences

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 A - Alerus 9,061 9,827 8/15/2029 1-month SOFR + 2.00 %

Term Note C - Alerus 1,000 — 5/15/2030 Greater of 5.00 % or 1-month SOFR + 2.25 %

16 unchanged sentences

Total 161 398

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.

AAM 24-1 Debt

1 unchanged sentence

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.

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Total Debt, net $ 118,426 $ 110,325

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

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

Due by Amount

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

September 30, 2026 $ 3,447

September 30, 2027 23,257

September 30, 2028 2,102

September 30, 2029 5,049

September 30, 2030 2,488

Thereafter 82,884

Unamortized Premiums and Debt Issuance Costs ( 801 )

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:

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

Three Months Ended

September 30, Six Months Ended

September 30,

2025 2024 2025 2024

Air T $ 743 $ 979 $ 1,454 $ 1,952

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Air T Acquisition 22.1 25 83 115 150

WASI 4 11 9 23

AAM 24-1 736 310 1,435 633

MAC 38 — 96 —

Other 95 20 80 26

Total $ 2,252 $ 2,162 $ 4,565 $ 4,108

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

Cash paid for interest totaled $ 3.8 million during the six months ended September 30, 2025.

EMPLOYEE AND NON-EMPLOYEE STOCK OPTIONS

maintains the 2020 Omnibus Stock and Incentive Plan for the benefit of certain eligible employees and directors.

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

The Company uses either the Black-Scholes option pricing model or Monte Carlo simulations to value stock options the Company grants.

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

Many of these assumptions are judgmental and highly sensitive in the determination of compensation expense.

On December 29, 2020, the Company’s Board of Directors unanimously approved the Omnibus Stock and Incentive Plan (the "Plan"), which was subsequently approved by the Company's stockholders at the August 18, 2021 Annual Meeting of Stockholders.

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

Through September 30, 2025, options to purchase up to 399,300 shares have been granted under the Plan.

Of the shares granted on the Plan, 349,800 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 four vesting dates, June 30, 2025, 2024, 2023 and 2022, a total of 129,050 shares satisfied the service condition;

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

For the three and six months ended September 30, 2025, no unvested shares were forfeited due to employee departures.

As of September 30, 2025, there were 195,250 granted options that may become exercisable on future vesting dates under the Plan.

No options were exercisable as of September 30, 2025.

On August 5, 2025, Air T granted 49,500 options under the Plan with a different vesting schedule.

Beginning August 6, 2026 and each anniversary date thereafter through August 6, 2035, 10 % of the granted options will vest.

For all the options granted, half will have a strike price of $ 30 and the other half will have a strike price of $ 50 .

Should an employee quit or services cease being provided, any options that have not vested will be forfeited.

Options that vest each August 6 will be exercisable for a period of ten years after they become vested, meaning vested options that were not exercised will expire from August 6, 2036 through August 6, 2045.

Management valued the granted options using the Monte Carlo Simulation method, noting the fair value on August 5, 2025 was $ 0.8 million.

Expenses are recognized based on a straight-line basis.

For the three and six months ended September 30, 2025, total compensation cost recognized under the Plan was $ 41.0 thousand and $ 81.0 thousand.

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.

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

No shares were repurchased by the Company during the six months ended September 30, 2025.

As of September 30, 2025, 752,228 shares may be repurchased pursuant to this program.

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 June 30, 2025 and March 31, 2025 (in thousands):

June 30, 2025 March 31, 2025

September 30, 2025 March 31, 2025

United States $ 19,807 $ 20,422

1 unchanged sentence

Total tangible long-lived assets, net $ 19,897 $ 34,947

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 $ —

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

September 30, 2025 March 31, 2025

Bulgaria $ — $ 14,435

Total tangible long-lived assets, net $ 90 $ 14,525

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,

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

Three Months Ended

September 30, Six Months Ended

September 30,

2025 2024 2025 2024

Operating Revenues:

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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.

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

Additionally, the Company 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.

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

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.

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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.

Until the fourth quarter of the fiscal year 2025, Digital Solutions had 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.

4 unchanged sentences

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

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

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

11 unchanged sentences

General and administrative 3,250 6,742 1,445 1,512 12,949

Gain from sale of aircraft — ( 7,034 ) — — ( 7,034 )

Other segment items 4 137 34 34 213 418

5 unchanged sentences

Interest expense ( 2,252 )

Loss from equity method investments

Income from equity method investments 4,179

Other non-operating expense ( 201 )

Other corporate expenses 5 ( 4,271 )

Elimination of intersegment profits 142

Income before income taxes $ 7,234

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 September 30, 2025.

After eliminations, Other revenue from third parties is $ 1.5 million for the three months ended September 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 September 30, 2024

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

Revenue from external customers $ 31,187 $ 32,926 $ 14,454 $ 1,836 $ 80,403

Intersegment revenue 14 484 — — 498

31,201 33,410 14,454 1,836 80,901

Reconciliation of revenue

Other revenue 1 882

Elimination of intersegment revenue 2 ( 541 )

Total consolidated revenue $ 81,242

Cost of sales:

Cost of sales from external sources 26,326 22,582 12,395 682

Intersegment operating expense 20 540 — —

26,346 23,122 12,395 682

General and administrative 2,942 6,446 1,546 1,163 12,097

Other segment items 4 112 648 95 202 1,057

Segment profit (loss) 1,801 3,194 418 ( 211 ) 5,202

Reconciliation of profit (loss)

Other revenue 1

Other cost of sales 1

Other expenses 1

Interest expense ( 2,162 )

Income from equity method investments 2,346

Other non-operating expense ( 505 )

Other corporate expenses 5 ( 1,391 )

Elimination of intersegment profits 244

Income before income taxes $ 3,299

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

After eliminations, Other revenue from third parties is $ 0.8 million for the three months ended September 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.

Six Months Ended September 30, 2025

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

Revenue from external customers $ 60,513 $ 42,840 $ 24,707 $ 4,305 $ 132,365

Intersegment revenue 2,014 1,051 — — 3,065

62,527 43,891 24,707 4,305 135,430

Reconciliation of revenue

Other revenue 1 2,743

Elimination of intersegment revenue 2 ( 3,153 )

Total consolidated revenue $ 135,020

Cost of sales:

Cost of sales from external sources 50,821 29,084 18,842 1,598

Intersegment operating expense 2,014 953 — —

52,835 30,037 18,842 1,598

General and administrative 6,336 12,865 2,838 2,814 24,853

Gain on sale of aircraft — ( 7,034 ) — — ( 7,034 )

Other segment items 4 275 389 70 420 1,154

Segment profit (loss) 3,081 7,634 2,957 ( 527 ) 13,145

Reconciliation of profit (loss)

Other revenue 1

Other cost of sales 1

Other expenses 1

Interest expense ( 4,565 )

Income from equity method investments 4,160

Other non-operating income 478

Earnout remeasurement 402

Other corporate expenses 5 ( 6,646 )

Elimination of intersegment profits 286

Loss before income taxes $ ( 807 )

Income before income taxes $ 6,427

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.

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 88.0 thousand for the six months ended September 30, 2025.

After eliminations, Other revenue from third parties is $ 2.7 million for the six months ended September 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.

4 unchanged sentences

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

Six Months Ended September 30, 2024

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

20 unchanged sentences

Other non-operating income 179

Earnout remeasurement 20

Other corporate expenses 5 ( 3,507 )

Elimination of intersegment profits 336

Loss before income taxes $ 103

Income before income taxes $ 3,402

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.

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 87.0 thousand for the six months ended September 30, 2024.

After eliminations, Other revenue from third parties is $ 1.6 million for the six months ended September 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.

4 unchanged sentences

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

Three Months Ended September 30, 2025

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

1 unchanged sentence

Capital Expenditures 81 47 15 — 143 33 176

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

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

1 unchanged sentence

Capital Expenditures 70 14,612 158 — 14,840 — 14,840

Six Months Ended September 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 275 1,055 70 420 1,820 291 2,111

Capital Expenditures 146 213 15 — 374 33 407

Six Months Ended September 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 210 558 190 400 1,358 351 1,709

Capital Expenditures 261 14,674 212 — 15,147 32 15,179

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

Three Months Ended June 30, 2025

Three Months Ended September 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 $ 1,615 $ 6,838 $ 1,619 $ ( 278 ) $ 9,794 $ ( 4,286 ) $ — $ 5,508

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

Intersegment operating (loss) income — ( 61 ) — — ( 61 ) ( 81 ) 142 —

— ( 95 ) — — ( 95 ) ( 50 ) 145 —

Operating income (loss) 1,615 6,777 1,619 ( 278 ) 9,733 ( 4,367 ) 142 5,508

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

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

1 unchanged sentence

Intersegment operating (loss) income ( 7 ) ( 178 ) — — ( 185 ) ( 59 ) 244 —

( 8 ) ( 13 ) — — ( 21 ) ( 74 ) 95 —

Operating income (loss) 1,801 3,194 418 ( 211 ) 5,202 ( 1,826 ) 244 3,620

Six Months Ended September 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 $ 3,081 $ 7,790 $ 2,957 $ ( 527 ) $ 13,301 $ ( 6,947 ) $ — $ 6,354

Intersegment operating (loss) income — ( 156 ) — — ( 156 ) ( 130 ) 286 —

Operating income (loss) 3,081 7,634 2,957 ( 527 ) 13,145 ( 7,077 ) 286 6,354

Six Months Ended September 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 $ 3,644 $ 4,696 $ ( 357 ) $ ( 674 ) $ 7,309 $ ( 4,247 ) $ — $ 3,062

Intersegment operating (loss) income ( 14 ) ( 226 ) — — ( 240 ) ( 96 ) 336 —

Operating income (loss) 3,630 4,470 ( 357 ) ( 674 ) 7,069 ( 4,343 ) 336 3,062

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.

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 $ 1.1 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).

The earnout pursuant to the Redemption Agreement is a Level 3 fair value measurement that is valued at $ 0.4 million as of September 30, 2025.

For the three and six months ended September 30, 2025, a gain has been recorded due to an increase in fair value of $ 0.3 million and $ 0.7 million, respectively.

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 10-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 ten-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 June 30, 2025, the balances were comprised of the following (in thousands):

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

Shanwick RNCI Contrail RNCI Total

4 unchanged sentences

Redemption value adjustments ( 70 ) 709 639

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

Ending Balance as of September 30, 2025 $ 5,618 $ 2,602 $ 8,220

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 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.

As of September 30, 2025, for its Investment Function, the Company has contributed $ 19.6 million to CAM’s Offshore Series and $ 1.0 million to CAM’s Onshore Series.

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

3 unchanged sentences

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

2020 Omnibus Stock and Incentive Plan

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

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.

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 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 $ 4.4 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.

The maximum potential payments for nonfinancial guarantees were $ 4.6 million and $ 4.4 million at September 30, 2025 and March 31, 2025, respectively.

There were no liabilities recorded related to the nonfinancial guarantees at both September 30, 2025 and March 31, 2025.

Subsequent Events

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.

On October 21, 2025, the Company and a wholly-owned, indirect subsidiary of the Company delivered a Sale and Implementation Deed with the Court-Appointed Administrators of Regional Express Holdings Limited (Rex).

If creditor, court and other approvals are received, the Company then expects to close the proposed transaction by calendar year end.

The proposed transaction provides for the Company's indirect subsidiary to acquire all of the outstanding capital stock of Rex, which operates the leading regional airline in Australia.

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