What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-06-29 compared with 2025-06-27 · 688 added, 622 removed, 867 unchanged (60% of the section changed)

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These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Redeemable non-controlling interest – valuation of Contrail Aviation Support, LLC — Refer to Notes 1 and 4 to the financial statements

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Inventories, net - valuation of inventories - Refer to Notes 1 and 5 to the financial statements

Critical Audit Matter Description

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

Regional Express Holdings Pty Ltd Acquisition — Valuation of the Commonwealth Facility Agreement assumed - Refer to Notes 1 and 2 to the financial statements

Critical Audit Matter Description

On December 18, 2025, the Company completed the acquisition of Regional Express Holdings Pty Ltd (“Rex”) for approximately $1, with the Company assuming $71.2 million (face value) in liabilities associated with the Commonwealth Facility Agreement ("CFA Debt"), with the Commonwealth of Australia.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

The total consideration for the Rex acquisition includes the nominal equity purchase price and cash consideration transferred to creditors and the assumption of the CFA Debt.

For purposes of determining the fair value of the assumed CFA Debt, the Company utilized a discounted cash flow ("DCF") approach, consistent with market practice and applicable accounting standards to estimate the fair value based on the absence of observable market inputs.

The DCF values the forecasted cash flows related to Rex operations that are required to be used to prepay the note over its term.

The fair value of the debt would have been different if there was a significant change to the cash flows for prepayment and the discount rate applied to the cash flows.

The CFA Debt has an initial term of 30 years and permits extension of the termination date by up to an additional 20 years (in two 10‑year increments) subject to specified conditions and requires mandatory prepayments from Excess Cash Flow in accordance with the Intercreditor Deed.

The CFA Debt does not bear interest, provided that if the Rex fails to maintain compliance with certain ‘Rex Regional Commitments’ (and a resulting event of default occurs), interest shall accrue on the outstanding principal at a rate of 2.00% per annum during the period of such non-compliance.

As of the acquisition date, the fair value of the CFA Debt was $22.2 million.

We identified the valuation of the CFA Debt assumed by the Company as a critical audit matter because of the significant estimates and assumptions management made to determine the fair value of the liability.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists when performing audit procedures to evaluate the reasonableness of management’s forecasts of future cash flow to determine the extent and timing of debt repayments.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future cash flows for the CFA Debt assumed included the following, among others:

• We evaluated the reasonableness of management’s cash flow forecasts by comparing the forecasts to (1) historical operating results of Rex, (2) approved forecasts, (3) internal communications to management and the board of directors, and (4) industry reports containing analyses of the commercial airline industry.

• We evaluated whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit.

• Testing the mathematical accuracy of the model and the application of the contractual repayment terms.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rate by:

◦ Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation.

◦ Developing a range of independent estimates and comparing those to the discount rate selected by management.

/s/ Deloitte & Touche LLP

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Digital solutions 9,081 7,268

Regional airline 55,314 —

Corporate and other 4,895 3,396

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Digital solutions 3,589 2,462

Regional airline (exclusive of depreciation) 44,878 —

Corporate and other 1,935 1,191

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345,321 289,942

Operating Income 1,908 1,264

Gain on sale of aircraft on lease 7,034 —

Operating (Loss) Income ( 11,197 ) 1,908

Non-operating (Expense) Income:

Interest expense ( 12,040 ) ( 8,387 )

Income from equity method investments 1,700 1,689

(Loss) income from equity method investments ( 1,740 ) 1,700

Gain on bargain purchase 111,190 —

Other ( 193 ) ( 209 )

97,217 ( 6,896 )

Loss before income taxes ( 4,988 ) ( 3,955 )

Earnings (Loss) before income taxes 86,020 ( 4,988 )

Income Tax Expense 1,369 423

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

Net Income (Loss) 84,651 ( 5,411 )

Net Income Attributable to Non-controlling Interests ( 6,668 ) ( 729 )

Net Loss Attributable to Air T, Inc.

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

Stockholders $ 77,983 $ ( 6,140 )

Loss per share (Note 20)

Earnings (Loss) per share (Note 21)

Basic $ 28.85 $ ( 2.23 )

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Year Ended March 31,

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

Other Comprehensive (Loss) Income:

Foreign currency translation income (loss) 407 ( 93 )

Unrealized gain on interest rate swaps — 20

Net income (loss) $ 84,651 $ ( 5,411 )

Foreign currency translation gain 4,816 407

Unrealized loss on interest rate swaps ( 14 ) —

Reclassification of interest rate swaps into earnings 49 ( 1,351 )

Redemption of non-controlling interest — 146

Total Other Comprehensive Loss ( 567 ) ( 896 )

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

Allocation of comprehensive income from unconsolidated investments 229 ( 3 )

Allocation of comprehensive income to redeemable non-controlling interests ( 184 ) 234

Total Other Comprehensive Gain (Loss) 4,896 ( 567 )

Total Comprehensive Income (Loss) 89,547 ( 5,978 )

Comprehensive Income Attributable to Non-controlling Interests ( 6,668 ) ( 729 )

Comprehensive Loss Attributable to Air T, Inc.

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

Stockholders $ 82,879 $ ( 6,707 )

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Prepaid expenses 8,851 3,103

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

Other current assets 7,617 4,678

Total Current Assets 159,976 78,507

Notes Receivable - Lendway 3,350 —

Notes Receivable - CAM 2,500 —

Non-current notes receivable - CAM 1,160 2,500

Non-current notes receivable - Bloomia 3,600 3,350

Debt investment (Note 9) 9,286 —

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

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Equity method investments 26,068 19,003

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

Goodwill 11,818 10,542

Other assets 7,568 1,635

Total Assets $ 409,123 $ 173,778

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Accounts payable $ 36,971 $ 17,782

Income tax payable 687 —

Accrued expenses and other (Note 11) 49,717 16,691

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Long-term earnout liability 244 1,109

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

Other non-current liabilities 2,023 866

Total Liabilities 317,902 168,242

Redeemable non-controlling interest 7,054 12,976

Redeemable non-controlling interests 10,346 7,054

Commitments and contingencies (Note 22)

Equity (Deficit):

Stockholders' (Deficit) Equity:

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

Preferred stock, $ 1.00 par value, 4,000,000 and 2,000,000 shares authorized

Common stock, $ 0.25 par value;

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Retained earnings 80,113 2,130

Accumulated other comprehensive loss ( 647 ) ( 80 )

Accumulated other comprehensive income (loss) 4,249 ( 647 )

Total Air T, Inc.

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

Stockholders' Equity (Deficit) 79,810 ( 3,216 )

Non-controlling Interests 1,065 1,698

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

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

Total Equity (Deficit) 80,875 ( 1,518 )

Total Liabilities and Equity $ 409,123 $ 173,778

See notes to consolidated financial statements.

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CASH FLOWS FROM OPERATING ACTIVITIES:

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

Adjustments to reconcile net loss to net cash provided by operating activities:

Net Income (Loss) $ 84,651 $ ( 5,411 )

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

Depreciation and amortization 12,340 4,356

Income from equity method of investments ( 1,700 ) ( 1,689 )

Inventory write-down 1,463 1,195

Loss (Income) from equity method investments 1,740 ( 1,700 )

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

Gain on bargain purchase ( 111,190 ) —

Other 4,813 3,832

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Accrued expenses 5,761 1,087

Employee retention credit receivable — 940

Other current assets ( 2,851 ) 264

Other ( 2,177 ) ( 464 )

Total adjustments 22,419 18,264

Net cash provided by operating activities 23,496 17,178

Net cash (used in) provided by operating activities ( 25,044 ) 23,496

CASH FLOWS FROM INVESTING ACTIVITIES:

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

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

Proceeds from sale of aircraft on lease 19,889 —

Loan advances to Bloomia ( 1,450 ) ( 3,750 )

Loan advances to other unrelated entity ( 9,286 ) —

Proceeds from notes receivable - CAM and Bloomia 2,540 400

Acquisition of businesses, net of cash acquired ( 6,710 ) —

Other ( 495 ) ( 163 )

Net cash used in investing activities ( 21,803 ) ( 20,189 )

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Payments on term loan ( 15,389 ) ( 35,040 )

Proceeds received from issuance of TruPs 910 8,780

Payments on term loan - related party ( 3,655 ) —

Proceeds from issuance of Trust Preferred Securities ("TruPs") 3,101 910

Repurchase of common stock ( 28 ) ( 1,445 )

( 1,445 ) ( 876 )

Distribution to non-controlling interest ( 3,685 ) ( 489 )

Other ( 714 ) 1,247

Net cash used in financing activities ( 4,801 ) ( 13,910 )

Net cash provided by (used in) financing activities 65,399 ( 4,801 )

Effect of foreign currency exchange rates on cash and cash equivalents ( 39 ) 408

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

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 18,513 ( 1,086 )

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 $ 25,270 $ 6,757

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

Assumption of liabilities to acquire assets on lease 720 —

Non-cash contribution from non-controlling interest 475 —

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

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

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

Equipment leased or held for lease transferred to inventory — 73

Equipment in inventory transferred to assets on lease 112 260

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Operating cash payments for operating leases $ 3,664 $ 2,260

Cash paid during the year for interest 8,437 3,891

Cash paid during the year for income taxes $ 850 $ 983

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

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

Cash and cash equivalents $ 5,932

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Restricted cash, long-term (a)

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

Total cash and cash equivalents and restricted cash at beginning of period $ 6,757

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

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Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss) Non-controlling

Interests* Total

Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling

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

Net loss* — — — — — ( 6,819 ) — ( 28 ) ( 6,847 )

— — — — — 77,983 — 2,415 80,398

Distributions to non-controlling interests — — — — — — — ( 3,094 ) ( 3,094 )

Repurchase of common stock — — 1 ( 28 ) — — — ( 28 )

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

Stock compensation expense — — — — 175 — — — 175

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

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

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

Foreign currency translation gain 2

— — — — — — 4,816 — 4,816

Unrealized loss on interest rate swaps — — — — — — ( 14 ) — ( 14 )

Reclassification of interest rate swaps into earnings — — — — — — 49 — 49

Allocation of comprehensive income from unconsolidated investments — — — — — — 229 — 229

Allocation of comprehensive income to redeemable non-controlling interests — — — — — — ( 184 ) — ( 184 )

ATA 25.1 warrants (Note 22) — — — — — — — 46 46

Balance, March 31, 2026 3,030 $ 758 329 $ ( 6,432 ) $ 1,122 $ 80,113 $ 4,249 $ 1,065 $ 80,875

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

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

(2) Cumulative translation adjustments were at a gain of $ 4.5 million and loss of $ 0.4 million as of March 31, 2026 and March 31, 2025, respectively.

See notes to consolidated financial statements.

(In thousands) Common Stock Treasury Stock

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Income (Loss) Non-controlling

Interests* Total

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

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

Declared distributions to non-controlling interests

Net loss (income) 1

— — — — — ( 6,140 ) — 16 ( 6,124 )

Declared distributions to non-controlling interests — — — — — — — ( 98 ) ( 98 )

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

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

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

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

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

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

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

See notes to consolidated financial statements.

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(the “Company,” “Air T,” “we” or “us” or “our”) is a holding company with a portfolio of operating businesses and financial assets.

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

We currently operate in four reportable segments:

Our goal is to identify and empower dynamic individuals and high-performance teams to operate a growing portfolio of aviation and aviation-related businesses, allocating capital to build enterprises that generate long-term cash flow and value for stockholders.

We currently operate in five reportable segments:

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

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

• Regional airline, which provides scheduled regional passenger freight and charter airline services and pilot trainings in Australia, operating a fleet of Saab 340 aircraft serving regional communities and connecting passengers to major metropolitan centers.

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

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

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

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

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

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

Refer to Note 19 for additional details.

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

Accounting Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S.

requires management to make estimates and assumptions that affect the amounts of assets and liabilities and amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

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

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

The Company believes the estimates and assumptions underlying the Company’s consolidated financial statements are reasonable and supportable based on the information available as of March 31, 2026.

Segments - The Company has four reportable operating segments:

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

Segments - The Company has five reportable operating segments:

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

Regional airline is a new segment for the year ended March 31, 2026.

This segment includes the operations acquired in connection with the Company's acquisition of Regional Express Holdings Pty Ltd ("Rex") on December 18, 2025.

The Company assesses the performance of these segments on an individual basis (see Note 20 ).

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.

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

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

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

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

Each reportable segment has separate management teams and infrastructures that offer

different products and services.

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

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Amounts for pre-acquisition periods are excluded.

Acquisition-related costs are costs the Company incurs to affect a business combination.

Acquisition-related costs are costs the Company incurs to effect a business combination.

Those costs may include such items as finder’s fees, advisory, legal, accounting, valuation, and other professional or consulting fees, and general administrative costs.

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Cash and Cash Equivalents – Cash equivalents consist of liquid investments with maturities of three months or less when purchased.

Financial Instruments Designated for Trading – Except for short sales of equity securities, the Company accounts for all other financial instruments (including derivative instruments) designated for trading in accordance with ASC 815.

All changes in the fair value of the financial instruments designated for trading are recognized in earnings as they occur.

Further, all gains and losses on derivative instruments designated for trading are presented net on the consolidated Statements of Income (Loss).

The fair value of derivative instruments designated for trading in a gain position are recorded in Other Current Assets and the fair value of derivative instruments designated for trading in a loss position are recorded in Accrued Expenses and Other on the consolidated Balance Sheets.

The Company accounts for short sales of equity securities in accordance with ASC 942 and ASC 860.

The obligations incurred in short sales are reported in Accrued Expenses and Other on the consolidated Balance Sheets.

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

Interest on the short

positions are accrued periodically and reported as interest expense.

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

This collateral is recorded in Other Current Assets on the consolidated Balance Sheets.

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

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

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

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

Year Ended Year ended March 31,

Below is the reconciliation for allowance for credit losses on accounts receivables for the fiscal years ended March 31, 2026 and 2025 (in thousands):

Year Ended March 31,

Balance at the beginning of the year $ 1,338 $ 1,420

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The classification of cash flows associated with the purchase and sale of finished goods is based on the activity that is likely to be the predominant source or use of cash flows for the items.

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

Consistent with aviation industry practice, the Company includes $ 20.7 million of expendable aircraft parts and supplies in current assets, although a certain portion of these inventories may not be used or sold within one year.

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

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

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

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

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

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

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If, after assessing these events and circumstances, it is determined that there may be an impairment, then a quantitative analysis is performed.

In the first step of the quantitative method, recoverability of goodwill is evaluated by estimating the fair value of the reporting unit’s goodwill using multiple techniques, including a discounted cash flow model income approach and a market approach.

In the first step of the quantitative method, recoverability of goodwill is evaluated by estimating the fair value of the reporting unit’s goodwill using multiple techniques,

including a discounted cash flow model income approach and a market approach.

The estimated fair value is then compared to the carrying value of the reporting unit.

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

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

Year Ended March 31,

Overnight air cargo

Commercial aircraft, engines and parts

Digital solutions

Total reportable segment goodwill, at cost

10,542 10,540

Corporate and other

Less accumulated impairment ( 376 ) ( 376 )

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

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

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

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

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

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

Intangible Assets – Amortizable intangible assets consist of acquired patents, tradenames, customer relationships, and other finite-lived identifiable intangibles.

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If the carrying amount is more than the recoverable amount, an impairment charge must be recognized based on the estimated fair value of the asset.

The estimated amortizable lives of the intangible assets are as follows:

Purchased software 3

Internally developed software 10 - 15

The estimated amortizable lives of the principal intangible asset classifications are as follows:

Principal Intangible Asset Classification Estimated Useful Life

Purchased software 3 years

Internally developed software 10 - 15 years

In-place lease and other intangibles Over lease term

Trade names 5

Certification 5

Non-compete 5

Customer relationships 10 - 15

Trade names 5 years

Certification 5 years

Non-compete 5 years

License 5 years

Patents 9 years

Customer relationships 10 - 15 years

Debt Investments – The Company classifies its debt securities as held-to-maturity, meaning it has the positive intent and ability to hold until maturity.

On measurement, held-to-maturity securities are recorded at amortized cost, adjusted for the amortization of any accretion of premiums or discounts.

Premiums and discounts are amortized or accreted over the life of the security as a yield adjustment using the effective-interest method.

A decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying costs to such securities’ fair value.

The impairment is charged to earnings and a new cost basis for the security is established.

To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary.

Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.

There has been no other than temporary impairment recorded in association with the Company's debt investments.

Property and Equipment and Assets on Lease or Held for Lease – Property and equipment is stated initially at cost, or fair value if purchased as part of a business combination.

Depreciation and amortization are provided on a straight-line basis over the asset’s useful life.

Equipment leased to customers is depreciated using the straight-line method.

Useful lives range from three years for computer equipment, seven years for flight equipment, ten years for deicers and other equipment leased to customers and thirty years for buildings.

The estimated depreciable lives of the principal property and equipment classifications are as follows:

Principal Property and Equipment Classification

Estimated Useful Life

Furniture, fixtures, and equipment 3 - 10 years

Leasehold improvements Lease term or 10 years

Aircraft, engines, and related rotable parts 4 - 5 years

Engine assets on lease or held for lease are stated at cost, less accumulated depreciation.

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held for lease), then they are not being depreciated.

Major overhauls which improve functionality or extend original useful life are capitalized and depreciated over the engine assets' useful life to a residual value.

Major overhauls which improve functionality or extend original useful life

are capitalized and depreciated over the engine assets' useful life to a residual value.

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

The Company adjusts its estimates annually for these older generation assets, including updating estimates of an engine’s or aircraft’s remaining operating life.

The Company adjusts its estimates annually for older generation assets, including updating estimates of an engine’s or aircraft’s remaining operating life.

The Company believes this methodology accurately reflects the typical holding period for the assets and that the residual value assumption, which is dependent on the Company's eventual plan for the engine assets (i.e.

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

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

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

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

Deferred tax assets and liabilities are measured using enacted tax

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

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

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

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An uncertain income tax position is not recognized if it has a less than a 50% likelihood of being sustained.

Lessee Arrangements – The majority of our leases have a lease term of two to five years ;

however, we have certain leases with terms of up to thirty years .

Many of our leases include options to extend the lease for an additional period.

The lease term for all of the Company’s leases includes the non-cancellable period of the lease, plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor that is considered likely to be exercised.

Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments.

Variable payments are typically operating costs associated with the underlying asset and are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs.

Our leases do not contain residual value guarantees.

The Company has elected to combine lease and non-lease components as a single component and not to recognize leases on the balance sheet with an initial term of one year or less.

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 for an amount equal to the lease payments in a similar economic environment.

Accounting for Redeemable Non-Controlling Interest – In 2016, in connection with the Company's acquisition of Contrail, Contrail entered into an Operating Agreement (the “Operating Agreement”) with the Seller providing for the governance of and the terms of membership interests in Contrail.

The Operating Agreement includes put and call options (“Contrail Put/Call Option”) with regard to the 21 % non-controlling interest retained by the Seller.

The Operating Agreement includes put and call options (“Contrail Put/Call Option”) with regard to the 21 % non-controlling interest originally retained by the Seller.

The Seller is the founder of Contrail and its current Chief Executive Officer.

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

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

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

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

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Recently Adopted 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.

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

Improvements to Income Tax Disclosures.

The amendments in this Update require the addition of specific categories to be disclosed in the rate reconciliation if they meet a quantitative threshold, disclosure of disaggregated income taxes paid to federal, state, and foreign jurisdictions, and disclosure of income or loss disaggregated by federal, state, and foreign jurisdictions.

The Company adopted this guidance for the fiscal year ended March 31, 2026.

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Recently Issued Accounting Pronouncements

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

Improvements to Income Tax Disclosures.

The amendments in this Update require the addition of specific categories to be disclosed in the rate reconciliation if they meet a quantitative threshold, disclosure of disaggregated income taxes paid to federal, state, and foreign jurisdictions, and disclosure of income or loss from continuing operations disaggregated by federal, state, and foreign jurisdictions.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2024.

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

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

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

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

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

2025 Royal Aircraft Services, LLC Acquisition

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 ("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 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 consolidated financial statements.

The acquired business is included in overnight air cargo segment.

2025 Rex Acquisition

On December 18, 2025, Air T Rex Acquisition, Inc., a wholly owned subsidiary of the Company (the "Purchaser" or "Air T Rex"), completed the acquisition of substantially all of the outstanding capital stock of Rex, an Australian regional airline operator, pursuant to a share purchase agreement (the "Acquisition").

At the time of the Acquisition, Rex was subject to voluntary administration proceedings in Australia, which commenced on July 30, 2024.

Voluntary administration in Australia is a formal insolvency process comparable to Chapter 11 bankruptcy proceedings in the United States, wherein court-appointed administrators assume control of the debtor entity's operations and assets.

The Acquisition represents the Company's entry into the Australian regional airline market and expands the Company's international aviation services portfolio.

The Acquisition was structured as a share purchase for nominal consideration of approximately $ 1 , with the Company assuming A$ 107.8 million, or approximately US$ 71.2 million of face-value liabilities associated with the Commonwealth Facility Agreement (as defined above, the "CFA Debt") originally dated November 11, 2024, with the Commonwealth of Australia, as represented by the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts (the “Commonwealth”).

The transaction was executed pursuant to a Deed of Company Arrangement ("DOCA"), a formal agreement between an insolvent company and its creditors that is approved by the creditors and supervised by the appointed administrators under Australian insolvency law.

A key feature of the transaction structure was the establishment of a creditors trust designed to ring-fence pre-existing creditor claims and segregate funds allocated for their settlement ("the Creditors Trust").

This structure

enabled Rex to exit voluntary administration and resume operations without the encumbrance of legacy creditor claims against the ongoing business.

In a voluntary administration proceeding, creditors effectively become the economic owners of the business, possessing the right to vote on the DOCA, approve the sale transaction, and receive distributions from the transaction proceeds.

Accordingly, the Company has determined that the settlement of creditor claims pursuant to the DOCA constitutes consideration transferred to the previous economic owners of Rex for accounting purposes.

The total consideration for the Acquisition includes the nominal equity purchase price and cash consideration transferred to creditors and the assumption of the CFA Debt.

The DCF values the forecasted cash flows related to Rex operations that are required to be used to prepay the note over its term.

The fair value of the debt would have been different if there was a significant change to the cash flows for prepayment and the discount rate applied to the cash flows.

The CFA Debt has an initial term of 30 years, permits extension of the termination date by up to an additional 20 years (in two 10‑year increments) subject to specified conditions, and requires mandatory prepayments from Excess Cash Flow in accordance with the Intercreditor Deed.

The CFA Debt does not bear interest, provided that if Rex fails to maintain compliance with certain ‘Rex Regional Commitments’ (and a resulting event of default occurs), interest shall accrue on the outstanding principal at a rate of 2.00 % per annum during the period of such non-compliance.

As of the acquisition date, the fair value of the CFA Debt was $ 22.2 million.

The Acquisition was funded through a combination of cash on hand and net proceeds received on December 15, 2025 through a Note Purchase Agreement with two Institutional Investors, as further discussed in Note 13 .

Total cash consideration paid is summarized in the table below (in thousands):

Nominal equity value $ —

Air T's payment to the Creditors Trust 10,174

Consideration paid $ 10,174

The Acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”).

The current acquisition-date fair values of the tangible assets and identifiable intangible assets acquired and liabilities assumed were determined with the assistance of independent third-party valuation specialists, and were reviewed and approved by management with respect to the valuation methodologies and significant assumptions used.

Assets acquired and liabilities assumed were recognized and measured in accordance with applicable accounting guidance.

The following table summarizes the current acquisition-date fair values of the assets acquired and liabilities assumed as of December 18, 2025 (in thousands):

Fair value of assets acquired and liabilities assumed:

Cash and cash equivalents $ 75

Restricted cash 4,668

Accounts receivable, net 16,368

Aircraft Parts and supplies 14,562

Property and equipment, net

Aircraft 70,385

Spare aircraft engines 21,762

Rotable aircraft parts 22,942

Land and buildings 12,659

Other property, plant and equipment 3,862

Intangible assets, net 3,215

ROU assets 3,539

Other non-current assets 2,950

Total Assets 176,987

Accounts payable 2,795

Deferred revenue 16,018

Accrued expenses and other 9,888

Short-term lease liability 800

CFA Debt 22,203

Long-term lease liability 2,739

Other non-current liabilities 1,180

Total Liabilities 55,623

Net Assets $ 121,364

The Company is continuing to evaluate the fair values of aircraft and related equipment, ROU assets and lease liabilities, certain accrued liabilities and contingencies arising from the administration process, and income tax balances.

Changes to these estimates during the measurement period may result in material adjustments to the fair value of assets acquired and liabilities assumed.

Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their acquisition-date fair values as of December 18, 2025.

The current purchase price allocation resulted in a $ 111.2 million bargain purchase gain due to Rex's distressed financial condition and the administrators' determination, following a formal bidding process, that the Company's offer represented the optimal outcome for Rex's creditors.

During the twelve months ended March 31, 2026, the Company incurred transaction costs of $ 3.3 million, which were expensed and included as a component of general and administrative expense in the consolidated statements of income (loss).

Total purchase consideration $ 10,174

Net assets acquired ( 121,364 )

Bargain purchase gain $ ( 111,190 )

Based on internal assessments as well as discussions with the Rex business’s management, the Company has identified the following significant tangible assets recorded within property and equipment:

aircraft, spare aircraft engines, rotable aircraft parts, land and buildings and other property, plant and equipment.

The estimated useful lives over which the tangible assets will be amortized are as follows:

aircraft ( 4.4 years), spare aircraft engines ( 4.2 years), rotable aircraft parts ( 4.1 years), buildings ( 24.2 years) and other property, plant and equipment, which primarily consists of furniture and fixtures, computer equipment and motor vehicles ( 2.2 years).

As of the effective date of the Acquisition, identifiable intangible assets are required to be measured at fair value, and these assets could include assets that are not intended to be used or sold or that are intended to be used in a manner other than their highest and best use.

For purposes of these consolidated financial statements, the fair value and weighted-average useful lives of these intangible assets have been estimated using variations of the income approach.

Significant inputs used to value these intangible assets include projections of future cash flows, long-term growth rates, customer attrition rates, discount rates, royalty rates, and applicable income tax rates.

The following table sets forth the operating results of Rex that are included in the Company’s consolidated statements of income, inclusive of intercompany transactions, for the period beginning on December 18, 2025 and ending on March 31, 2026:

March 31, 2026 (in thousands):

Income Statement Post-Acquisition

Revenue $ 55,314

Net loss ( 16,653 )

Pro forma consolidated financial information

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the twelve months ending March 31, 2026 and 2025 as if the Acquisition had occurred on April 1, 2024:

Twelve Months Ended March 31,

Net revenues $ 492,116 $ 482,538

Operating loss ( 14,995 ) ( 10,359 )

Net Income (Loss) ( 28,949 ) 91,568

Net Income (Loss) per share:

Basic $ ( 10.71 ) $ 33.30

Diluted $ ( 10.71 ) $ 33.30

The unaudited pro forma consolidated results for the twelve months ending March 31, 2026 and 2025 were prepared using the acquisition method of accounting and are based on the historical financial information of Rex and the Company.

The historical financial information has been adjusted to give effect to pro forma adjustments that are:

(i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results.

The unaudited pro forma consolidated results are not necessarily indicative of what the Company’s consolidated results of operations actually would have been had it completed the acquisition on April 1, 2024.

The bargain purchase gain recognized in the current period, has been reflected in the unaudited pro forma consolidated financial information as if the acquisition had occurred on April 1, 2024.

MAJOR CUSTOMER

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

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

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

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

35 % and 39 % of the Company’s consolidated revenues were derived from services performed for FedEx by the Company's overnight air cargo segment during the fiscal years ended March 31, 2026 and 2025, respectively.

14 % and 35 % of the Company’s consolidated accounts receivable at March 31, 2026 and 2025, respectively, were due from FedEx Corporation.

4 % and 13 % of the Company’s consolidated revenues were derived from services performed for American Airlines Corporation by the Company's commercial aircraft, engines and parts and ground support equipment segments in fiscal 2026 and 2025, respectively.

9 % and 19 % of the Company’s consolidated accounts receivable at March 31, 2026 and 2025, respectively, were due from American Airlines Corporation.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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Marketable securities (including restricted investments) (Level 1) $ 1,026 $ 1,105

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

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

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

The fair values of our interest rate swaps are based on the market standard methodology of netting the discounted expected future variable cash receipts and the discounted future fixed cash payments.

The variable cash receipts are based on an expectation of future interest rates derived from observed market interest rate forward curves.

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

Contrail earnout (Level 3) 442 1,539

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

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Finished goods 4,406 5,358

Aircraft parts 28,794 49,522

Aircraft parts for sale 49,553 28,794

Expendable parts 20,745 —

Total inventories 82,313 43,422

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Total inventories, net of reserves $ 77,127 $ 38,516

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

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

A write-down of $ 0.9 million and $ 1.5 million was recorded on the inventory of the commercial aircraft, engines and parts segment during the fiscal years ended March 31, 2026 and March 31, 2025, respectively.

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

LESSOR ARRANGEMENTS

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

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

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

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

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

Leases for aircraft and engines to aviation customers typically have terms ranging from one and four 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.

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

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

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

Depreciation expense relating to equipment leases for the fiscal year ended March 31, 2024 was not material.

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

During the fiscal year ended March 31, 2025, earned contingent rent on equipment leases totaled approximately $ 1.1 million.

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

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

Year ended March 31,

Total $ 9,606

Depreciation expense relating to equipment leases during the fiscal years ended March 31, 2026 and 2025 was $ 0.7 million and $ 1.5 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 and $ 1.1 million during the fiscal years ended March 31, 2026 and 2025, respectively.

Future minimum lease payments under the leased equipment are $ 0.2 million.

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

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 and recognized a gain of $ 7.0 million which is presented as gain on sale of aircraft on lease on the consolidated statements of income (loss).

Office leases

The Company, through its wholly-owned subsidiary, Wolfe Lake, leases offices to third parties with lease terms between 5 and 29 years under operating lease agreements.

The Company leases offices to third parties with lease terms of up to twenty-nine years under operating lease agreements.

For the offices currently on lease, there are no options for the lessees to purchase the spaces at the end of the leases.

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We utilize the reasonably certain threshold criteria in determining which options our customers will exercise.

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

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

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

The Company recognized rental and other revenues related to operating lease payments of $ 1.7 million, of which variable lease payments were $ 0.7 million, during both fiscal years ended March 31, 2026 and 2025.

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.

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Land and buildings 27,348 13,850

Aircraft, engines, and related rotable parts 133,253 —

180,595 29,525

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Property and equipment, net $ 162,024 $ 20,285

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

Intangibles consisted of the following (in thousands):

Year Ended March 31,

During the fiscal years ended March 31, 2026 and 2025, depreciation on property and equipment amounted to $ 10.2 million and $ 1.7 million, respectively.

INTANGIBLE ASSETS AND GOODWILL

Intangible assets consisted of the following (in thousands):

March 31, 2026

Gross Carrying Amount Accumulated Amortization Net Book Value

Purchased software $ 889 $ ( 681 ) $ 208

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Patents 1,139 ( 1,118 ) 21

Government contracts 716 ( 195 ) 521

Tradenames 1,233 ( 46 ) 1,187

Other 1,551 ( 1,168 ) 383

20,264 ( 8,046 ) 12,218

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

In-process software 811 — 811

Intangible assets, total $ 21,075 $ ( 8,046 ) $ 13,029

Based on the intangible assets recorded at March 31, 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) Amortization

March 31, 2025

Gross Carrying Amount Accumulated Amortization Net Book Value

Purchased software $ 865 $ ( 549 ) $ 316

Internally developed software 3,658 ( 1,111 ) 2,547

In-place lease and other intangibles 1,094 ( 460 ) 634

Customer relationships 8,012 ( 2,007 ) 6,005

Patents 1,139 ( 1,114 ) 25

Government contracts — — —

Tradenames — — —

Other 1,512 ( 1,089 ) 423

16,280 ( 6,330 ) 9,950

In-process software 70 — 70

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

The increase in customer relationships from March 31, 2025 to March 31, 2026 relates to changes in foreign currency translation adjustments.

Intangible assets obtained through the acquisition of Rex and recognized at acquisition date fair value included government contracts, tradenames, and internally developed software totaling $ 0.7 million, $ 1.2 million, and $ 1.4 million, respectively.

The estimated useful lives over which the intangible assets will be amortized are as follows:

government contracts ( 1.0 years), tradenames ( 7.5 years), and internally developed software ( 5.0 years).

The weighted average amortization period is 5.1 years.

Refer to Note 2 for additional information on the acquisition of Rex.

Based on the intangible assets recorded at March 31, 2026 and assuming no subsequent additions to, or impairment of the underlying assets, and no changes in foreign currency exchange rates.

the remaining estimated annual amortization expense is as follows (in thousands):

Thereafter 4,242

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

INVESTMENTS IN SECURITIES AND DERIVATIVE INSTRUMENTS

As part of the Company’s interest rate risk management strategy, the Company, from time to time, uses derivative instruments to minimize significant unanticipated earnings fluctuations that may arise from rising variable interest rate costs associated with existing borrowings (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 cash flow hedging instruments and qualified as effective hedges in accordance with ASC 815.

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

As a result of this refinancing, the Company determined that the interest rate swap on Term Note A was no longer an effective hedge.

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

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

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

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

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

The Company will amortize the fair value of the interest-rate swap contract included in accumulated other comprehensive income (loss) associated with Term Note D - MBT at the time of de-designation into earnings, classified with interest expense on the consolidated statement of income (loss), over the remaining term of the originally hedged loan.

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

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

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

As of February 24, 2022, this swap contract 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 amortized the fair value of the interest-rate swap contract included in accumulated other comprehensive income (loss) associated with Contrail - Term Note G at the time of de-designation into earnings over the remainder of its term.

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

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

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

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

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

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

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

The changes in the fair value of the instruments during the fiscal years ended March 31, 2025 and 2024, inclusive of Term Note D - MBT due to its effective hedge designation at the time, were not material.

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

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

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

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

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

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

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

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

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

The Company's gross unrealized gains and losses on equity securities for the twelve months ended March 31, 2025 and 2024 are as follows (in thousands):

Year Ended March 31,

Unrealized Gains $ 615 $ 1,602

Unrealized Losses $ 1,049 $ 2,055

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

As of March 31, 2025 and 2024, the fair value of these marketable equity securities was an asset of $ 1.1 million and $ 1.9 million, respectively, which is included within restricted investments and other current assets in the condensed consolidated balance sheets.

Amortization expense totaled $ 1.6 million and $ 1.2 million for the fiscal years ended March 31, 2026 and 2025.

The carrying amount of goodwill as of March 31, 2026 and March 31, 2025 was $ 11.8 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 to goodwill during the twelve months ended March 31, 2026.

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

March 31, 2026 March 31, 2025

Overnight air cargo $ 1,113 $ 76

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

Digital solutions 6,478 6,239

Total reportable segment goodwill, at cost 11,818 10,542

Corporate and other 376 376

Less accumulated impairment ( 376 ) ( 376 )

Goodwill, net of impairment $ 11,818 $ 10,542

DEBT INVESTMENT

On February 12, 2026, the Company's wholly owned subsidiary AAM 24-1 entered into a profit participation note receivable (the "PPN") through executing a Note Subscription Agreement with Blue Crest Prospector Pico Duarte Designated Activity Company.

The maximum principal amount of the PPN is up to $ 100.0 million, of which AAM 24-1 is required to participate for 20 % of the amount, or $ 20.0 million.

As a PPN, there is no stated interest rate and interest is accrued as 100% of the accounting profits as calculated for Irish tax purposes.

The PPN and all accrued and unpaid interest mature 20 years from the date of issuance.

The Payments under the note shall be subordinated to any senior debt.

As of March 31, 2026 the principal and accrued but unpaid interest outstanding was $ 9.3 million.

EQUITY METHOD INVESTMENTS

Lendway, Inc.

The Company’s investment in Lendway (NASDAQ:

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

Bloomia Holdings, Inc.

The Company’s investment in Bloomia (NASDAQ:

TULP), formerly Lendway, Inc.

("Lendway"), formerly Insignia Systems, Inc.

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

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

On August 2, 2023, Insignia reincorporated in the state of Delaware as Lendway, Inc.

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

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

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

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

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

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

On September 27, 2024 the borrowing limit was increased to $ 3.5 million.

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

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

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

As of March 31, 2026, the number of Bloomia's shares owned by the Company was 487,000 , representing approximately 28 % of the outstanding shares.

As of March 31, 2026, the Company's net investment basis in Bloomia is zero .

On August 15, 2024, the Company entered into a delayed draw term loan with Bloomia 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 will become due and payable to the Company on the maturity date, which is earlier of August 15, 2029 or by written demand of the Company after February 15, 2026.

As of March 31, 2026, $ 2.5 million of the principal balance remains outstanding and $ 0.3 million of interest has been accrued.

On September 15, 2025, Bloomia 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 Bloomia 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, Bloomia may prepay any accrued interest or principal outstanding without penalty.

As of March 31, 2026, $ 1.1 million of the principal balance remains outstanding and minimal interest has been accrued.

Refer to Note 2 5 for further discussion of conversion of the notes with Bloomia into additional shares of Bloomia's common stock.

Due to the continued subordinated financial support, Bloomia 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 Bloomia's Board of Directors, which is the party with the power to direct the activities that most significantly impact the economic performance of Bloomia.

Additionally, the Company's exposure to variability of Bloomia is limited to its 28 % ownership in Bloomia's common stock and a total of $ 4.0 million of notes receivable and accrued interest from Bloomia.

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

Cadillac Casting, Inc.

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

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

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

Due to 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.

Blue Crest Aviation Partners 2025-01 LLC investment

In August 2025, the Company entered into an Amended and Restated Limited Liability Company Agreement as one of three investor members in Blue Crest Aviation Partners 2025-01 LLC ("BCAP").

BCAP was formed as a series LLC to function as an aircraft capital joint venture targeting investments in mid-life commercial jet aircraft on lease to airlines globally.

The Company's initial investor interest in BCAP was represented by a capital commitment of $ 5.1 million, which represents 10.0 % of all capital commitments for BCAP.

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

Crestone Asset Management, LLC investment

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

In May 2021, the Company formed an aircraft asset management business called Crestone Asset Management, LLC, and an aircraft capital joint venture called Crestone JV II LLC.

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

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

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

It consists of several individual series that target investments in current generation narrow-body aircraft and engines.

CAM was formed to serve two separate and distinct functions:

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

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

The HLBV method uses a balance sheet approach to capture changes in the Company's claim on CAM's net assets from a period-

end hypothetical liquidation at book value.

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

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

All outstanding principal and accrued

interest will become due and payable for the Company on the maturity date (which is October 15, 2027).

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

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

As of March 31, 2026, $ 1.2 million of the principal balance and an immaterial amount of accrued and unpaid interest remains outstanding.

CAM's HLBV net assets, including common interests and investor interests, was $ 36.1 million and $ 37.8 million as of March 31, 2026 and 2025, respectively.

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Investment March 31, 2026 March 31, 2025

Lendway $ 729 $ 2,339

Bloomia $ — $ 729

CCI 3,557 3,889

CAM 10,322 12,428

BCAP 10,909 —

Other equity method investments 1,280 1,957

Total $ 26,068 $ 19,003

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

Twelve Months Ended December 31,

Revenue $ 174,810 $ 143,208

Gross Profit 20,942 19,137

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

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

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

stockholders $ ( 1,286 ) $ 1,862

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

Current assets $ 48,327 $ 49,101

Noncurrent assets 119,881 40,971

Total assets 168,208 90,072

Current liabilities 34,594 28,656

Noncurrent liabilities 101,151 19,262

Total liabilities 135,745 47,918

Noncontrolling interests 2,841 689

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

Year Ended March 31,

Revenue $ 31,516 $ 27,306

Gross Profit 11,949 8,356

Operating (loss) income ( 228 ) 1,311

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

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

stockholders $ 3,054 $ ( 80 )

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

Current assets $ 41,947 $ 37,275

Noncurrent assets 26,856 28,460

Total assets 68,803 65,735

Current liabilities 6,194 5,959

Noncurrent liabilities 1,090 1,399

Total liabilities 7,284 7,358

Noncontrolling interests — —

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

stockholders for the Company's equity method investees, included in non-operating (expense) income on the condensed consolidated statements of income (loss), including basis difference adjustments and other comprehensive income adjustments, during the fiscal years ended March 31, 2025 and 2024 is as follows (in thousands):

stockholders for the Company's equity method investees, included in non-operating (expense) income on the consolidated statements of income (loss), including basis difference adjustments and other comprehensive income adjustments, were as follows (in thousands):

Year Ended March 31,

Investment 2026 2025

Lendway $ ( 1,609 ) $ 659

Bloomia $ ( 771 ) $ ( 1,609 )

CCI ( 332 ) 165

CAM ( 360 ) 2,919

BCAP ( 436 ) —

Other equity method investments 388 225

4 unchanged sentences

Investment 2026 2025

Lendway $ — $ —

Bloomia $ — $ —

CAM 4,366 4,907

2 unchanged sentences

ACCRUED EXPENSES

Year ended March 31,

(In thousands) 2025 2024

Accrued expenses consisted of the following (in thousands):

2026 March 31,

Salaries, wages and related items $ 15,774 $ 6,235

2 unchanged sentences

Deferred income 22,153 3,686

Accrued interest expense 3,542 955

Other 2,983 2,322

2 unchanged sentences

The Company has operating leases for the use of real estate, machinery, and office equipment.

The majority of our leases have a lease term of 2 to 5 years;

however, we have certain leases with longer terms of up to 30 years.

Many of our leases include options to extend the lease for an additional period.

Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments.

Our leases do not contain residual value guarantees.

The Company has elected to combine lease and non-lease components as a single component and not to recognize leases on the balance sheet with an initial term of one year or less.

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 fiscal years ended March 31, 2025 and 2024 are as follows (in thousands):

Twelve Months Ended March 31,

The components of lease cost for the fiscal years ended March 31, 2026 and 2025 were as follows (in thousands):

Year Ended March 31,

Operating lease cost $ 3,860 $ 3,121

2 unchanged sentences

Total lease cost $ 6,496 $ 5,281

Amounts reported in the consolidated balance sheets for leases where we are the lessee as of March 31, 2025 and 2024 were as follows (in thousands):

Amounts reported in the consolidated balance sheets for leases where we are the lessee were as follows (in thousands):

March 31, 2026 March 31, 2025

3 unchanged sentences

Weighted-average remaining lease term

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

Operating leases 9 years, 10 months 10 years, 3 months

Weighted-average discount rate

Operating leases 7.33 % 5.67 %

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

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

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

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

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

Operating Leases

During the fiscal years ended March 31, 2026 and 2025, the Company had ROU assets that were obtained in exchange for new operating lease liabilities in the amount of $ 4.0 million and $ 4.1 million, respectively, of which $ 3.8 million was obtained through the acquisitions of Royal and Rex during the fiscal year ended March 31, 2026.

Maturities of lease liabilities under non-cancellable leases where we are the lessee as of March 31, 2026 are as follows (in thousands):

Fiscal Operating Leases

Thereafter 9,257

3 unchanged sentences

FINANCING ARRANGEMENTS

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

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

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

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

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

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

The rate adjusts on each anniversary date of the note.

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

Initially, the payment obligation would revert back to interest o

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

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

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

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

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

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

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

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

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

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

1 to Credit Agreement ("Amendment No.

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

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

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

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

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

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

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

The prepayment premium is:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Second NPA amended and restated the terms of the Company’s previously disclosed the Note Purchase Agreement (the

“Original NPA”), which was filed in a Current Report on Form 8-K on February 26, 2024.

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

The Second NPA amended and restated the amount issued and sold to $ 30.0 million of 8.5 % senior secured notes to the Institutional Investors, which includes the $ 15.0 million from the Original NPA bringing the total indebtedness to $ 30.0 million.

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

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

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

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

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

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

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

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

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

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

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

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

Amendment No.

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

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

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

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

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

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

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

In connection with Amendment No.

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

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

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

Borrowings of the Company and its subsidiaries are summarized below.

In connection with the acquisition of Royal on May 15, 2025, Air'Zona, CSA, GGS, MAC, WASI, Worthington, Jet Yard, Jet Yard Solutions, and Royal ("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 %.

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, as of May 30, 2025, had 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.

The prior notes were cancelled and replaced by the Multiple Advance Note.

Funds advanced under the Multiple Advance Note may be reinvested for a period of six years from the date of closing.

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

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 %.

Pursuant to Amendment No.

5 to Credit Agreement, the Alerus Loan Parties must maintain a debt service coverage ratio of at least 1.25 to 1.00 measured on December 31 and March 31 of each year and a leverage ratio not to exceed 3.00 to 1.00 measured annually on March 31.

On November 24, 2025, Air T Acquisition 22.1, LLC ("ATA 22.1") entered into a $ 6.0 million term loan with Alerus.

The loan proceeds were used to repay amounts due on the $ 3.5 million term loan from Bridgewater Bank.

The new term loan is due on or before November 24, 2032 and has an interest rate of the greater of 5.00 % or 1-month SOFR plus 1.90 %.

The loan may be prepaid at any time without penalty.

The loan contains normal and customary default provisions and is secured by all the assets and membership interests of ATA 22.1 and 200,000 shares of TruPs owned by ATA 22.1, as well as an investment account of Air T.

The loan requires ATA 22.1 to maintain marketable securities pledged as collateral in an amount that is at all times not less than the outstanding principal amount of the term loan, measured as of the end of each calendar month.

On November 24, 2025, Contrail entered into a Master Loan Agreement and Supplement No.

1 to Master Loan Agreement (collectively the “Master Loan Agreement”) with Alerus.

The agreement provides for a $ 15.0 million revolving loan facility that is evidenced by a Promissory Note Revolving Note dated November 24, 2025 in the principal amount of $ 15.0 million.

The funds are to be used for the purchases of engines and working capital needs.

The revolving loan carries interest at the rate of 1-month SOFR plus 3.11 % and the loan requires payments of interest only until maturity at November 24, 2027.

There is no penalty on prepayment and the loan includes a 30 day resting period requirement if Contrail’s debt service coverage ratio exceeds 1.25 to 1.00 , at any time during each annual period ending on the anniversary of the date of the revolving loan.

The loan contains normal and customary default provisions and is secured by a security interest in all of Contrail’s assets.

In addition, the loan is secured by a payment guaranty of Air T, in an aggregate amount not to exceed $ 2.0 million plus collection and collateral recovery costs.

The Master Loan Agreement contains customary affirmative and negative covenants such as maintaining, as of the last day of each fiscal quarter, a quarterly rolling cash flow coverage ratio of not less than 1.25 to 1.00 and maintaining a tangible net worth of at least $ 15.0 million at all times.

On December 15, 2025, the Company and its wholly-owned subsidiary Air T Acquisition 25.1, LLC ("ATA 25.1"), entered into a Note Purchase Agreement (the “Agreement”) with two Institutional Investors (the "Investors"), which Investors had previously entered into the Third Note Purchase Agreement with the Company.

Pursuant to the Agreement, ATA 25.1 issued to the Investors a 11.5 % Senior Secured Note due December 15, 2031 in the aggregate principal amount of $ 40.0 million (the “Investor Note”).

The loan proceeds were made immediately available to ATA 25.1’s wholly-owned subsidiary Air T Lending 25.1, LLC (“ATL 25.1”) and used to provide financing to Rex pursuant to the Syndicated Loan Note Subscription Agreement – Project Mustang dated December 17, 2025 between and among ATL 25.1, Rex and additional parties (the “New Cap Note Facility”).

The New Cap Note Facility provides a A$ 50.0 million line of credit, matures on December 15, 2030, and bears interest at 12.0 % per annum.

Interest on the New Cap Note Facility must be paid equally between cash and capitalization (i.e., paid-in-kind through the issuance of additional debt), during the initial period, as defined in the Intercreditor Deed (i.e., the period commencing on December 17, 2025 and ending on the earlier of the date the applicable availability period in the New Facility Agreement (as defined below) has ended and the facilities under such loan agreement are fully drawn).

Interest under the New Cap Note Facility is first payable on December 31, 2025, and such interest is payable quarterly thereafter.

The New Cap Note Facility further permits the Rex Companies to incur other unsecured financial indebtedness up to an aggregate limit of A$ 10.0 million.

Interest on the Investor Note accrues at the rate of 11.5 % per annum on the basis of a 30/360-day year (and actual days elapsed) and is payable quarterly in arrears.

The Investor Note matures on December 15, 2031 and may not be prepaid, in whole or in part, prior to June 15, 2027 unless the prepayment premium specified therein has been paid.

The Investor Note is secured by a pledge of all equity interests of ATA 25.1 and is guaranteed by the Company, which guarantee generally covers 25 % of principal and interest due under the Investor Note and related documents.

The Agreement includes customary covenants and events of default.

In connection with the Investor Note, the Company, ATA 25.1, Air T Rex, as defined in Note 2 , and the Investors entered into a Contingent Payment Agreement that provides the Investors with the right to receive up to A$ 8.0 million (the "Maximum Contingent Payment Amount") of contingent payments after the Investor Note has been repaid in full, based on the gross revenues of Air T Rex and its direct and indirect subsidiaries on a consolidated basis.

Upon full repayment of the Investor Note, ATA 25.1 shall pay the Investors contingent payments equal to 0.5 % of the aggregate gross revenue of Air T Rex and its direct and indirect subsidiaries for each fiscal year beginning with the year the Investor Note has been repaid in full and continuing until the Investors have received an aggregate of the Maximum Contingent Payment Amount.

Each annual payment is capped at A$ 2.0 million, with any excess above the cap treated as a rollover amount that carries forward to subsequent years until the Maximum Contingent Payment amount is reached.

The Company determined the fair value of the Contingent Payment Agreement using a Monte Carlo simulation to estimate the potential contingent payments, and is considered a Level 3 fair value measurement.

The simulation risk-adjusted the metric forecast by the metric discount factor, determined using a short-term revenue discount rate.

The fair value of the Contingent Payment Agreement would have been different if there was a significant change in estimated gross revenues and the short-term revenue discount rate.

As of March 31, 2026, the carrying value of the Contingent Payment Agreement was $ 1.3 million.

In December 2025, as part of the Company's acquisition of Rex, further discussed in Note 2 , the Company assumed approximately $ 71.2 million in liabilities associated with the Commonwealth Facility Agreement originally dated November 11, 2024, with the Commonwealth.

The Company determined the fair value of the CFA Debt using a discounted cash flow approach, consistent with market practice and applicable accounting standards for valuing long-dated, non-tradeable debt instruments.

As of March 31, 2026, the carrying value of the CFA Debt was $ 23.8 million.

In December 2025, Rex and the Commonwealth entered into (i) an amendment and restatement of the Commonwealth Facility Agreement originally dated November 11, 2024 (the “Commonwealth Term Loan”), and (ii) a new facility agreement (the “New Facility Agreement” and, together with the Commonwealth Term Loan, the “Commonwealth Facilities”).

The Commonwealth Term Loan is for an initial term of 30 years and permits extension of the termination date by up to an additional 20 years (in two 10 ‑year increments) subject to specified conditions and requires mandatory prepayments from Excess Cash Flow in accordance with the Intercreditor Deed.

The Commonwealth Term Loan does not bear interest, provided that if Rex fails to maintain compliance with certain ‘Rex Regional Commitments’ (and a resulting event of default occurs), interest shall accrue on the outstanding principal at a rate of 2.00 % per annum during the period of such non-compliance.

The fair value of the Commonwealth Term Loan on the date of the Rex acquisition was approximately $ 22.2 million, estimated using a DCF approach, consistent with market practice and applicable accounting standards to estimate the fair value based on the absence of observable market inputs, and is considered a Level 3 fair value measurement.

The DCF values the forecasted cash flows related to Rex operations that are required to be used to prepay the note over its term.

The fair value of the debt would have been different if there was a significant change to the cash flows for prepayment and the 15 % discount rate applied to the cash flows.

The face value exceeded the estimated fair value primarily due to the Commonwealth Term Loan bearing no contractual interest.

The New Facility Agreement bears interest at 12.0 % per annum (which rate shall increase by 2.00 % per annum if the Rex Companies fail to maintain compliance with certain “Rex Regional Commitments” regarding flight service levels and route profitability).

The interest rate applicable to the New Facility Agreement is subject to adjustment from time to time in accordance with the Intercreditor Deed to match the interest rate applicable to the New Cap Note Facility.

The New Facility Agreement matures on December 17, 2032 and provides for differing availability periods:

(i) a three-year availability period for the A$ 40.0 million facility for engine care and maintenance;

and (ii) a two-year availability period for the A$ 20.0 million business operations facility.

The Commonwealth Facilities are secured by general security deeds and certain real property and aircraft‑related security and, among other things:

(i) include a financial covenant requiring the Rex Companies to maintain a minimum cash balance of A$ 5.0 million at all times until the New Cap Note Facility is fully drawn, (ii) require application of Excess Cash Flow as mandatory prepayments pursuant to the Intercreditor Deed, (iii) under the New Facility Agreement, provide for mandatory prepayments from asset sale proceeds, insurance proceeds not applied to repair or replacement, and Excess Cash Flow, (iv) restrict the sale or disposal of assets outside the ordinary course of business, subject to a basket for disposals where the market value or consideration does not exceed A$1.0 million in any financial year;

and (v) under the Commonwealth Term Loan, requires mandatory prepayments from Excess Cash Flow in accordance with the Intercreditor Deed.

Excess Cash Flow is calculated as available cash flow for that relevant period less required debt payments for that relevant period (excluding capitalized interest).

The following table provides certain information about the current financing arrangements of the Company and its subsidiaries (other than related party obligations) as of March 31, 2026 and 2025:

(In Thousands) March 31, 2026 March 31, 2025 Maturity Date Interest Rate Unused commitments as of March 31, 2026 Type of Debt

Revolver - MBT $ — $ — 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 %

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

Total 35,342 45,679

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

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

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

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

Total — 5,434

Jet Yard Debt

Term Loan - MBT 1

— 1,749 8/31/2031 4.14 % Recourse

Debt - Air T Funding Trust Preferred Securities 1 $ 38,719 $ 35,342 6/7/2049 8.00 % Recourse

Total 38,719 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 9,827 — 8/15/2029 Greater of 5.00 % or 1-month SOFR + 2.00 %

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

Term Note A - Alerus 8,295 9,827 8/15/2029 1-month SOFR + 2.00 %

Term Note C - Alerus 925 — 5/15/2030 Greater of 5.00 % or 1-month SOFR + 2.25 %

Total 19,765 15,877

Contrail Debt

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

21,873 Limited recourse 4

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

Revolver - Alerus 8,181 — 11/24/2027 1-month SOFR + 3.11 %

6,819 Limited recourse 2

Term Note I - ONB 5

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

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

— Limited recourse 3

5 unchanged sentences

Total 8,778 9,059

Air T Acquisition 22.1

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

2 Includes Air T's guarantee of approximately $ 2.0 million.

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

ATA 22.1 Debt

Term Loan - Alerus 6,000 — 11/24/2032 Greater of 5.00 % or 1-month SOFR + 1.90 %

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

2 unchanged sentences

Total 7,840 5,880

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

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

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

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

Total 398 849

AAM 24-1 Debt

1 unchanged sentence

Total 60,000 30,000

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

Term Loan - Bank of America, N.A.

2,157 2,271 2/21/2030 1-month SOFR + 0.11 % + 1.75 %

Total 2,157 2,271

Term Loan - Commonwealth 4 23,842 — 11/11/2054 — % Non-recourse

Line of Credit - Commonwealth — — 12/17/2032 12.00 % 41,070 Non-recourse

Total 23,842 —

Term Note - Institutional Investors 41,271 — 12/15/2031 11.50 % Recourse

Total 41,271 —

Total Debt 210,553 110,704

1 unchanged sentence

Total Debt, net $ 208,196 $ 110,325

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

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

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

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

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

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

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

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

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

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

4 Reported at fair value which was lower than the debt's $ 73.8 million (A$ 107.8 million) face value as of March 31, 2026.

The fair value was estimated using a DCF approach, consistent with market practice and applicable accounting standards to estimate the fair value based on the absence of observable market inputs.

The weighted average interest rate on short term borrowings outstanding as of March 31, 2026 and 2025 was 3.50 % and 7.68 %, respectively.

ATA 22.1's term loans with ING include several covenants that are measured once a year at March 31, including but not limited to, a negative covenant requiring a debt service coverage ratio of at least 1.10 to 1.00 and a senior net leverage ratio not greater than 1.50 to 1.00.

AAM 24-1's promissory notes with the Institutional Investors contain customary affirmative and negative covenants.

The MAC term loan with Bank of America, N.A.

contains a number of covenants, including but not limited to maintaining a fixed coverage ratio of at least 1.25 to 1.00.

At March 31, 2026, our contractual financing obligations, including payments due by period, are as follows (in thousands):

Fiscal year ended Amount

Due by Amount

March 31, 2027 $ 3,633

March 31, 2028 22,829

March 31, 2029 2,965

March 31, 2030 6,847

March 31, 2031 1,519

Thereafter 172,760

2 unchanged sentences

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

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

(in thousands)

March 31, 2026 March 31, 2025

Carrying Value $ 210,553 $ 75,362

$ 75,362 $ 79,245

Estimated Fair Value $ 200,081 $ 92,984

$ 92,984 $ 90,248

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

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

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

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

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

1 unchanged sentence

Interest Expense, net

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

March 31, 2025 March 31, 2024

The components of net interest expense during the fiscal years ended March 31, 2026 and March 31, 2025 were as follows (in thousands):

Year Ended March 31,

Contractual interest $ 10,969 $ 8,606

1 unchanged sentence

Gain on interest rate swaps ( 2 ) ( 167 )

( 167 ) ( 4 )

Interest income ( 748 ) ( 375 )

Accretion of fair value discount 1,328 —

Total $ 12,040 $ 8,387

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

Net interest expense for the Company and its subsidiaries were as follows for the fiscal years ended March 31, 2026 and 2025 (in thousands):

Year Ended March 31,

5 unchanged sentences

Wolfe Lake 335 345

Air T Acquisition 22.1 277 318

ATA 22.1 333 277

AAM 24-1 3,310 1,793

Gain on interest rate swaps

( 167 ) ( 4 )

ATA 25.1 1,584 —

Other 244 ( 16 )

Total $ 12,040 $ 8,387

Cash paid for interest totaled $ 8.5 million and $ 8.4 million during the twelve months ended March 31, 2026 and 2025, respectively.

RELATED PARTY MATTERS

Contrail leases its corporate and operating facilities at Verona, Wisconsin from Cohen Kuhn Properties, LLC, a limited liability company whose membership interests are owned by Mr.

Joseph Kuhn, Contrail's Chief Executive Officer and Mrs.

Miriam Cohen-Kuhn, Contrail's Chief Financial Officer, equally.

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

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

This lease expires on July 17, 2026.

The lease agreement provides that the Company shall be responsible for maintenance of the leased facilities and for utilities, taxes and insurance.

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

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

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

4 unchanged sentences

Swenson's controlling interest in CCI.

It follows the power held by Mr.

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

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

Air T engages Fox Lake Capital, LLC ("FLC") to perform certain consulting and brokerage services for the Company.

Dan Philp, an employee of Air T, is the CEO of FLC.

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

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

On May 30, 2024, Contrail entered into a Membership Interest Redemption and Earnout Agreement with OCAS, Inc., the minority owner of Contrail.

The purchase price for the 16 % redeemed interest was $ 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 twelve-month period of interest payments only with the outstanding balance amortized and paid over the following three years .

The remaining balance is scheduled to be paid off during the fiscal year ended March 31, 2027.

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

The rate adjusts on each anniversary date of the note.

As of March 31, 2026, the outstanding principal balance on the OCAS Loan was $ 0.9 million.

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

The note accrues interest at a rate of 10 % and is due with any accrued and unpaid interest on October 16, 2027.

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

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

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

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

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

As of March 31, 2026, the outstanding principal balance on the note receivable was $ 1.2 million.

Subsequent to March 31, 2026, as noted in Note 25 , on April 1, 2026, as part of a rights offering by Bloomia, the Company exchanged the full balance of its notes receivable with Bloomia for 994,989 shares of Bloomia's common stock.

EMPLOYEE AND NON-EMPLOYEE STOCK OPTIONS

maintains two stock option plans for the benefit of certain eligible employees and directors.

The first Air T stock option plan is the 2012 Stock Option Plan.

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

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

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

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.

Air T's 2012 Stock Option Plan

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

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

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

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

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

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

Shares Weighted

Exercise Price

Per Share Weighted

Life (Years) Aggregate

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

Exercised ( 3,750 ) 7.04

Forfeited ( 3,750 ) 7.04

Repurchased — —

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

Air T's 2020 Omnibus Stock and Incentive Plan

2 unchanged sentences

Through March 31, 2026, options to purchase up to 399,300 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.

Of the shares granted under the Plan, a total of 349,800 vest ratably 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 and are forfeited.

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

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

For the fiscal year ended March 31, 2026, no unvested shares were forfeited due to employee departures.

As of March 31, 2026, there were 244,750 granted options that may become exercisable on future vesting dates under the Plan.

No options were exercisable as of March 31, 2026.

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

The key assumptions used in the Plan's Black-Scholes option pricing model are as follows:

The total compensation cost recognized under the Plan was $ 0.1 million for both fiscal years ended March 31, 2026 and 2025.

The unrecognized cost related to nonvested awards is $ 0.2 million, which is expected to be recognized over a weighted average period of 5.25 years.

On August 5, 2025, Air T granted 49,500 options under the Plan.

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

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

Should a grantee 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.

valued the granted options using the Monte Carlo option pricing model, noting the fair value on August 5, 2025 was $ 0.8 million.

Expenses are recognized on a straight-line basis.

The key assumptions used in the Monte Carlo option pricing model were as follows:

Risk-free interest rate 4.13 %

2 unchanged sentences

Expected volatility 53.62 %

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

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

For the fiscal year ended March 31, 2026, total compensation cost recognized for the options granted in fiscal 2026 was less than $ 0.1 million.

The unrecognized compensation cost related to nonvested awards is $ 0.8 million, which is expected to be recognized over a weighted average period of 9.42 years.

31 unchanged sentences

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.

6 unchanged sentences

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

Regional Airline Revenue The Company provides air transport services, including regular public transport, charter services, and freight services.

For regular transport services, a performance obligation is created when a ticket is purchased to transport a passenger from origin to destination.

Transaction prices are based on published fares representing standalone selling prices.

Generally, the fee for the transportation service is remitted by the customer prior to the transportation service being provided.

The cash received is recorded as deferred revenue for the amount stated in the contract and revenue is recognized at a point-in-time upon completion of the provided transportation service.

Leasing Revenue Leasing revenue is recognized in accordance with ASC Topic 842.

Refer to Note 6 for further details regarding the Company's leasing revenue.

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

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Digital solutions

Regional Airline

Regional airline 52,095 —

Overnight air cargo 158 129

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Commercial aircraft, engines and parts 934 749

Regional airline 3,219 —

Corporate and other 1,471 991

Total $ 327,090 $ 291,850

See Note 1 8 for the Company's disaggregated revenues by geographic region and Note 19 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.

See Note 19 for the Company's disaggregated revenues by geographic region and disaggregated revenues by segment.

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

Contract Balances and Costs

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 March 31, 2025 and the amount of contract liabilities that were recognized as revenue during the year ended March 31, 2025 (in thousands):

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

Recognized as Revenue

As of March 31, 2025 $ 4,199

As of April 1, 2024 $ 4,359

For the year ended March 31, 2025 $ ( 3,705 )

Outstanding contract liabilities as of March 31, 2026 and March 31, 2025 were $ 22.8 million and $ 4.2 million, respectively.

The amount of contract liabilities outstanding as of March 31, 2025 that were recognized during fiscal 2026 were $ 4.0 million.

Contract liabilities obtained from the acquisition of Rex were $ 16.0 million.

Refer to Note 2 for additional information on the acquisition of Rex.

EMPLOYEE BENEFITS

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All employees of the Company are immediately eligible to participate in the Plans.

The Company’s contribution to the Plans for the fiscal years ended March 31, 2025 and 2024 was approximately $ 1.0 million and $ 0.9 million, respectively, and was recorded in the consolidated statements of income (loss).

The Company, in each of the past three years, has paid a discretionary profit sharing bonus in which all employees have participated.

Profit sharing expense in fiscal 2025 and 2024 was approximately $ 3.8 million and $ 2.2 million, respectively, and was recorded in general and administrative expenses in the consolidated statements of income (loss).

Loss from continuing operations before income taxes as shown in the Consolidated Statements of Income (Loss) consists of the following:

The Company’s contributions to the Plans for the fiscal years ended March 31, 2026 and 2025 were approximately $ 1.1 million and $ 1.0 million, respectively, and were recorded in general and administrative expenses in the consolidated statements of income (loss).

Income (loss) before income taxes as shown in the consolidated statements of income (loss) consists of the following:

Year Ended March 31,

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Total $ 86,020 $ ( 4,988 )

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

Income tax expense (benefit) attributable to pretax income (loss) consists of (in thousands):

Year Ended March 31,

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Total $ 1,369 $ 423

Income tax expense attributable to pretax loss from continuing operations differed from the amounts computed by applying the U.S.

Federal income tax rate of 21.0 % to pretax loss from continuing operations as follows (in thousands):

Income tax expense attributable to pretax income (loss) differed from the amounts computed by applying the U.S.

Federal income tax rate of 21.0 % to pretax income (loss) as follows (in thousands):

Year Ended March 31, 2026

Rate Reconciliation Category Total Amount Rate (%)

Earnings Before Income Taxes $ 86,020

Federal Statutory Tax Rate (21.0%) 18,064 21.0 %

RECONCILING ITEMS:

State and Local Income Taxes, Net of Federal Effect 1

Foreign Tax Effects

Detail by Jurisdiction:

Rate Differential ( 1,472 ) - 1.7 %

Valuation allowance 3,742 4.4 %

Other 993 1.2 %

Other Foreign Jurisdictions 822 0.9 %

Effect of Changes in Tax Laws or Rates Enacted in Current Period — 0.0 %

Effect of Cross-Border Tax Laws

Branch Income 430 0.5 %

Research & Development Credit ( 30 ) 0.0 %

Foreign Tax Credit ( 810 ) - 1.0 %

Changes in Valuation Allowances 3,204 3.7 %

Nontaxable or Nondeductible Items

Bargain Purchase Gain ( 23,350 ) - 27.1 %

Other Permanent Items ( 135 ) - 0.2 %

Changes in Unrecognized Tax Benefits — 0.0 %

Other Adjustments

Other ( 201 ) - 0.2 %

Total Income Tax Expense $ 1,369 1.6 %

1 State taxes in Florida and Pennsylvania represent the majority (greater than 50%) of the tax effect in this category.

The Company adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, prospectively beginning with the fiscal year ended March 31, 2026.

The rate reconciliations for the fiscal years ended March 31, 2025 and March 31, 2024 are presented below in the format applicable before adoption:

Year Ended March 31,

Expected Federal income tax benefit U.S.

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Income tax expense $ 423 - 8.5 % $ 729 - 18.5 %

During the fiscal year ended March 31, 2026, the Company paid approximately $ 0.9 million in income taxes, net of refunds received, consisting of $ 0.2 million to U.S.

federal jurisdictions, $ 0.2 million to U.S.

state jurisdictions, and $ 0.5 million to

foreign jurisdictions.

Income taxes paid to individual jurisdictions equal to or exceeding 5% of total income taxes paid consisted of $ 0.5 million paid to the Netherlands and $ 0.1 million paid to the Commonwealth of Pennsylvania.

The Company did not record any liabilities for uncertain tax positions for the fiscal years ended March 31, 2026 and March 31, 2025.

The Tax Cuts and Jobs Act (the "Tax Act") provides for a territorial tax system, that includes the global intangible low-taxed income (“GILTI”) provision beginning in 2018.

The GILTI provisions require us to include in our U.S.

income tax return certain current year foreign subsidiary earnings net of foreign tax credits, subject to limitation.

We elected to account for the GILTI tax in the period in which it is incurred.

There was no GILTI inclusion for the fiscal years ended March 31, 2025 and March 31, 2024.

On July 4, 2025, the U.S.

signed into law the One Big Beautiful Bill Act, which included various provisions specific to businesses.

The legislation has multiple effective dates, with certain provisions effective in Fiscal 2026 and others implemented in subsequent years.

The Company has reflected the impact of the enacted provisions in its financial statements for the year ended March 31, 2026.

The Company (exclusive of Delphax which has a full valuation allowance) has federal gross operating losses of $ 1.2 million and state gross operating losses of $ 15.5 million, and foreign gross operating losses of $ 170.3 million at March 31, 2026.

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Net operating loss & attribute carryforwards $ 64,728 $ 11,681

Accrued expenses 5,937 442

Unrealized losses on investments 1,839 1,540

Inventory reserve 1,149 1,041

Accrued vacation 442 449

Foreign tax credit 520 650

Inventory — 1,149

Lease liabilities 3,963 3,463

Research and development capitalizations 441 275

Investment in partnerships 1,455 —

Other deferred tax assets 4,847 1,753

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Property and equipment ( 14,697 ) ( 1,651 )

Long-term debt ( 14,922 ) —

Inventory ( 4,475 ) —

Right-of-use assets ( 3,749 ) ( 3,236 )

Outside basis on Rex Airlines Pty Ltd ( 18,345 ) —

Capital gain deferment ( 1,773 ) ( 1,793 )

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Net deferred tax liabilities $ ( 1,498 ) $ ( 2,147 )

The Company is not asserting indefinite reinvestment with regards to foreign earnings in the Netherlands.

The Company is not asserting indefinite reinvestment concerning foreign earnings in the Netherlands.

The Company has not recorded deferred taxes associated with these undistributed earnings, as the impact of any future distribution will not have a material tax impact.

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As a result of its permanent reinvestment assertion, the Company has not recorded deferred taxes related to its foreign subsidiaries under the indefinite exception.

The Company has not determined the deferred tax liability associated with these undistributed earnings and basis differences, as such determination is not practicable.

The Company has not determined the deferred tax liability associated with these undistributed earnings and basis differences, as such a determination is not practicable.

Valuation Allowance

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purchased interests in Delphax.

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

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

With an equity investment level by the Company of approximately 67 %, Delphax is required to continue filing a separate U.S.

corporate tax return.

Delphax maintains a September 30 fiscal year end, and the returns for the fiscal year ended September 30, 2025 has not been filed.

The gross deferred tax balances related to Delphax includes federal and state loss carryforwards of $ 8.7 million and $ 1.8 million, respectively.

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

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

In accounting for Delphax's tax attributes, the Company has established a full valuation allowance of $ 1.8 million as of March 31, 2026 and March 31, 2025, respectively.

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

GEOGRAPHICAL INFORMATION

Total tangible long-lived assets, net of accumulated depreciation, located in the United States, the Company's country of domicile, and similar tangible long-lived assets, net of accumulated depreciation, held outside the United States are summarized in the following table as of March 31, 2025 and March 31, 2024 (in thousands):

The net book value of tangible long-lived assets, which include property and equipment as well as assets on lease, net of accumulated depreciation, located in the U.S, the Company's country of domicile, and held outside the U.S., are summarized in the following table (in thousands):

March 31, 2026 March 31, 2025

United States $ 19,929 $ 20,422

Foreign 14,525 306

Total tangible long-lived assets, net $ 34,947 $ 21,113

The Company’s tangible long-lived assets, net of accumulated depreciation, held outside of the United States represent primarily assets on lease at March 31, 2025.

The net book value located within each individual country at March 31, 2025 is listed below (in thousands):

Country March 31, 2025 March 31, 2024

Thailand $ — $ 252

Australia 142,013 8

Bulgaria — 14,435

Total foreign tangible long-lived assets, net

$ 14,525 $ 306

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

Twelve months ended March 31,

Other Foreign 82 82

Total tangible long-lived assets, net $ 162,024 $ 34,947

Total revenue is summarized in the following table (in thousands):

Year Ended March 31,

Operating Revenues:

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United States $ 118,178 $ 120,804

$ 120,804 $ 114,809

Foreign 5,518 3,227

Total Overnight Air Cargo 123,696 124,031

Commercial Aircraft, Engines and Parts

United States

79,138 95,175

Foreign 39,077 30,325

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

Ground Support Equipment

United States 45,316 36,175

36,175 32,677

Foreign 1,869 2,765

Total Ground Support Equipment 47,185 38,940

Commercial Aircraft, Engines and Parts

United States 54,323 79,138

Foreign 32,596 39,077

Total Commercial Aircraft, Engines and Parts 86,919 118,215

Digital Solutions

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Total Digital Solutions 9,081 7,268

Regional Airline

United States — —

Australia 55,314 —

Total Regional Airline 55,314 —

Corporate and Other

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SEGMENT INFORMATION

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

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 ("CODM") is the Chief Executive Officer.

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

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

Certain operating segments are aggregated into reportable segments.

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

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

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

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

Air T's four reportable segments are as follows:

In fiscal year 2026, the Company introduced a new reportable segment named regional airline.

This new segment includes all reportable activity as it relates to the operating business of Rex after its acquisition on December 18, 2025 as discussed in Note 2 .

Air T's five reportable segments are as follows:

Reportable Segment

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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;

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 U.S.

and upper Midwest, and in the Caribbean.

Commercial Aircraft, Engines and Parts The commercial aircraft, engines and parts segment manages and leases aviation assets;

supplies surplus and aftermarket commercial jet engine components;

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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.

Ground Support Equipment 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.

Prior to March 31, 2025, digital solutions operations were reported as part of the central corporate function referred to as Corporate and Other.

Regional Airline The regional airline segment's primary operations focus on sustaining and growing essential regional passenger and cargo air connectivity.

The segment consists of Regional Express Holdings Pty Ltd, which operates a fleet of Saab 340 aircraft that provide vital connections between Australia's regional centers and capital cities for its customers.

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

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Year ended March 31, 2026

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

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

Revenue from external customers $ 123,696 $ 86,919 $ 47,185 $ 9,081 $ 55,314 $ 322,195

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109,092 64,908 36,726 3,603 45,016

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

General and administrative 12,842 25,066 6,209 5,922 15,476

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

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

Other segment items 4 564 738 140 851 9,058

489 2,583 268 792

Segment profit (loss) 6,189 6,231 4,110 ( 1,279 ) ( 14,236 ) 1,015

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Income from equity method investments ( 1,740 )

Gain on bargain purchase 111,190

Other non-operating expense 5 ( 193 )

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Elimination of intersegment profits 1,227

Loss before income taxes $ ( 4,988 )

Earnings before income taxes $ 86,020

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

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

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

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 0.2 million for the year ended March 31, 2026.

After eliminations, Other revenue from third parties is $ 4.9 million for the year ended March 31, 2026.

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

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Year ended March 31, 2025

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

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

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

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105,671 86,219 33,994 2,462 —

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

General and administrative 12,531 24,113 5,888 5,078 —

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

Other segment items 4 489 2,583 268 792 —

366 756 144 804

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

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

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

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 0.2 million for the year ended ended March 31, 2025.

After eliminations, Other revenue from third parties is $ 3.4 million for the year ended March 31, 2025.

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

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Year ended March 31, 2026

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

Corporate and other Total Consolidated

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

Depreciation and amortization $ 564 $ 1,404 $ 140 $ 851 $ 8,808 $ 11,767 $ 573 $ 12,340

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Year ended March 31, 2025

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

Corporate and other Total Consolidated

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

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

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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.

The computation of earnings per common share is as follows (in thousands, except per share data):

Year Ended March 31,

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

Net income attributable to non-controlling interests ( 729 ) ( 2,135 )

Net loss attributable to Air T, Inc.

Stockholders $ ( 6,140 ) ( 6,819 )

Loss per share:

Basic $ ( 2.23 ) $ ( 2.42 )

Diluted $ ( 2.23 ) $ ( 2.42 )

Antidilutive shares excluded from computation of loss per share — —

Weighted Average Shares Outstanding:

Basic 2,750 2,816

Diluted 2,750 2,816

As of March 31, 2026, of the 244,750 options outstanding under the Air T's 2020 Omnibus Stock and Incentive Plan, none were exercisable.

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

During the fiscal year ended March 31, 2026, the Company had 244,750 potential shares from share-based awards that were anti-dilutive.

COMMITMENTS AND CONTINGENCIES

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

Under the Redempti

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

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.

As of March 31, 2026, the earnout pursuant to the Redemption Agreement is a Level 3 fair value measurement that is valued at $ 0.4 million.

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

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

As of March 31, 2026, $ 0.4 million is classified as a long-term liability, respectively.

For the fiscal year ended March 31, 2026, a gain has been recorded due to a decrease in fair value of $ 0.7 million as presented in operating expenses on the 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.

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

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

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

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

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

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

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

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

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

As the Shanwick RNCI will be redeemed at established multiples of EBIT, it is considered redeemable at other than fair value.

the Shanwick RNCI will be redeemed at established multiples of EBIT, it is considered redeemable at other than fair value.

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

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Ending Balance as of March 31, 2026 $ 6,264 $ 4,082 $ 10,346

Crestone Asset Management, LLC and CJVII, LLC

CAM and CJVII

For CAM's Investment Function, as described in Note 10 , CAM's initial commitment to CJVII was approximately $ 51.0 million.

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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.

Acquisition 25.1 Warrant Issuances

On December 17, 2025, ATA 25.1 sold for nominal consideration ten-year warrants to purchase an aggregate of 19 % of the equity interests of ATA 25.1 to three Air T employees (the "Holder(s)") that worked closely on the acquisition of Rex.

The warrants vest at the earliest of certain conditions or five years from their issuance for a cumulative exercise price of $ 1.4 million with an option for each Holder to net settle in shares of ATA 25.1 if the fair value were to exceed the exercise price.

If a Holder departs the Company or any of its subsidiaries voluntarily, the Company has the option to repurchase the warrant from the Holder for the greater of $ 2.0 million or the fair market value of the warrant.

Additionally, each Holder agrees to guarantee a pro rata portion of the Investor Note, as defined in Note 13 , and share in any excess cash flow on an as exercised basis if there is no claim on cash flows for any current or future debt holder.

The warrants are considered equity securities, and at the time of their issuance, the warrants were fair valued at $ 0.8 million, which will be recognized over the five-year vesting period as an expense.

Nonfinancial Guarantees

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The maximum potential payments for nonfinancial guarantees may vary over time given changing circumstances related to the underlying asset.

The maximum potential payments for nonfinancial guarantees were $ 4.4 million and $ 10.1 million at March 31, 2025 and March 31, 2024, respectively.

There were no recorded liabilities related to nonfinancial guarantees at March 31, 2025 and March 31, 2024.

SHARES REPURCHASE

The maximum potential payments for nonfinancial guarantees were $ 4.3 million and $ 4.4 million at March 31, 2026 and 2025, respectively.

There were no liabilities recorded related to the nonfinancial guarantees at both March 31, 2026 and 2025.

SHARE REPURCHASES

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 years ended March 31, 2025 and 2024, the Company repurchased 70,756 shares at an aggregate cost of $ 1.4 million, and 48,729 shares at an aggregate cost of $ 0.9 million, respectively, in which all were recorded as treasury shares.

1,264 shares were repurchased by the Company at an aggregate cost of $ 28,000 during the fiscal year ended March 31, 2026.

During the fiscal year ended March 31, 2025, the Company repurchased 70,756 shares at an aggregate cost of $ 1.4 million, of which all were recorded as treasury shares.

The Company has a total of 328,870 and 327,606 treasury shares as of March 31, 2026 and 2025, respectively.

As of March 31, 2026, 750,964 shares may be repurchased pursuant to this program.

SUBSEQUENT EVENTS

Royal Acquisition and Amendment No.

4 to Credit Agreement and Term Loan C with Alerus

On May 15, 2025, MAC purchased and acquired all the outstanding membership interests of Royal Aircraft Services, LLC ("Royal") for total estimated consideration of approximately $ 1.1 million, subject to customary adjustments.

Royal provides aircraft painting, maintenance, repair, and overhaul services, together with parts sources and sales.

The Royal operations will be included within the MAC division operations following the acquisition.

Cancellation of Bloomia Indebtedness for Exercise of Rights Offering

On April 1, 2026, as part of a rights offering by Bloomia, the Company exchanged the full balance of the its notes receivable with Bloomia, totaling $ 4.0 million of principal and unpaid interest, for 994,989 shares of Bloomia's common stock in addition to purchasing 123,456 shares.

Following completion of the rights offering, the Company's equity interest in Bloomia constituted 1,605,264 shares or approximately 33.7 % of the outstanding shares of Bloomia common stock after the rights offering closed.

Acquisition of Arena

On June 10, 2026, the Company, through its subsidiaries and affiliates, entered into and consummated a series of related agreements and transactions involving the reorganization and capitalization of its aviation asset management platform and the acquisition of Arena Aviation Partners B.V., a Netherlands private limited company (“Arena”).

The transactions were completed through Crestone Air Partners, LLC, a Delaware limited liability company (“CAP”), which serves as the platform vehicle for the combined Crestone and Arena aviation asset management business.

At closing, the Company paid cash consideration of $ 21.8 million for 100 % of the outstanding shares of Arena pursuant to that certain Share Purchase Agreement.

The consideration is subject to closing adjustments for debt, transaction expenses and leakage.

A portion of the consideration payable in respect of certain Class P Shares was deposited into an indemnity escrow with Bank of Utah, as escrow agent, to secure seller indemnification obligations under the Share Purchase Agreement.

Immediately prior to the closing, the Company owned 90 % of the common interests in CAM.

At this same time, entities controlled by the Mill Road Investors (the “MRC Parties”) collectively owned the remaining 10 % of the common interests in CAM.

In connection with the transactions, the Company and Aviation Growth Initiatives, LLC (“AGI”), a management-affiliated entity formed by executives of CAP, entered into a Membership Interest Purchase Agreement with the MRC Parties, pursuant to which the Company and AGI acquired the MRC Parties’ 10 % common interest position in CAM for aggregate cash consideration of $ 6.2 million, with each of the Company and AGI contributing $ 3.1 million of the aggregate cash consideration.

Following that acquisition, the Company and AGI entered into a Redemption Agreement with CAM, pursuant to which the Company and AGI redeemed approximately 99 % of their CAM common interests in exchange for CAM’s assignment to the Company and AGI of a portfolio of servicing agreement rights.

The Company and AGI retained the remaining approximately 1 % of CAM common interests and continue as common members of CAM.

To the extent any servicing agreement requires third-party consent to assignment, the agreement will be treated as a non-assignable agreement held by CAM for the economic benefit of the Company and AGI pending receipt of the required consent.

In connection with the reorganization, the parties also

amended CAM’s limited liability company agreement to reflect the exit of the MRC parties from the common interest holder group and to preserve certain limited investor-protective consent rights held by specified MRC investor-side entities.

The acquisition will be accounted for as a business combination.

Because the transaction occurred after March 31, 2026, no amounts related to Arena are included in the accompanying consolidated financial statements as of and for the year ended March 31, 2026.

As of the date of this filing, the initial accounting for the business combination is incomplete due to the timing of the transaction and the ongoing evaluation of the fair values of the assets acquired and liabilities assumed.

In connection with the acquisition, the Alerus Loan Parties under the Revolving Credit Agreement with Alerus and Royal and Air T entered into Amendment No.

4 to Credit Agreement and Consent and Term Loan C with Alerus in the amount of $ 1.1 million.

The purpose of the Amendment and Term Note was to provide a term loan to finance the full purchase price of the acquisition, to add Royal as a part of the Alerus Loan Parties to the Alerus credit agreement, as amended and to memorialize Alerus’ consent to the Royal acquisition.

The new term loan matures May 15, 2030 and bears interest at the greater of five ( 5 %) percent or the CME one-month term SOFR rate plus 2.25 %.

Monthly payments on Term Note C commence June 15, 2025 and are equal to $ 12,500 plus accrued interest.

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

AAM 24-1 Third NPA with the Institutional Investors

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

Pursuant to the Third NPA with the Institutional Investors, the Issuer agreed to issue and sell a Multiple Advance Senior Secured Note in an aggregate principal amount of up to $ 100.0 million (the “Multiple Advance Note”).

For purposes of clarity and the avoidance of doubt, as of the closing date, the Institutional Investors advanced an additional $ 10.0 million to the Issuer and have collectively advanced under the Multiple Advance Note to the Issuer the aggregate amount of $ 40.0 million.

Provided no default or event of default of the Issuer exists, and subject to satisfaction of all requirements for any closing as set forth in the Third Note Purchase Agreement, the Investors are obligated to advance to the Issuer an additional aggregate $ 60.0 million in $ 10.0 million increments, each on or within fifteen days of the following dates:

September 30, 2025 $ 10,000,000

January 30, 2026 $ 10,000,000

May 30, 2026 $ 10,000,000

September 30, 2026 $ 10,000,000

January 30, 2027 $ 10,000,000

May 30, 2027 $ 10,000,000

The maturity date of the Multiple Advance Note is May 31, 2035.

The Multiple Advance Note contains standard and customary events of default including, but not limited to, failure to make payments when due under the Multiple Advance Note, failure to comply with certain covenants contained in the Multiple Advance Note, or bankruptcy or insolvency of, or certain monetary judgments against the Issuer or the Company.

The prior notes were cancelled and replaced by the Multiple Advance Note.

Funds advanced under the Multiple Advance Note may be reinvested for a period of six years from the date of closing.

The Issuer may prepay all or a portion of the outstanding principal and accrued but unpaid interest at any time, provided that (i) if the Issuer prepays all or any portion of the Multiple Advance Note within one year from the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to two percent ( 2.0 %) of the amount being prepaid, and (ii) if the Issuer prepays all or any portion of the Multiple Advance Note after the first anniversary of the Issue Date but on or prior to the second anniversary of the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to one percent ( 1.0 %) of the amount being prepaid.

If the Issuer elects to prepay a portion of the outstanding principal and accrued but unpaid interest, then in no event can such prepayment be for an amount less than $ 1.0 million.

The various equity interests that were assigned by the Company to the Issuer on or about the closing date of the Original Financings continue to serve as collateral for the repayment of the Multiple Advance Note:

all of the issued and outstanding capital stock of the Issuer owned by the Company, and the 320,000 Trust Preferred Securities, held by the Issuer.

CASP Sale of Airbus Models

On June 19, 2025, CASP, entered into two separate sale and purchase agreements, each agreement to sell an Airbus Model aircraft.

The aggregate transaction value, assuming both transactions are completed, would exceed $ 25,000,000 .

Although closing of the transactions is currently anticipated to occur during the week of July 7, 2025, the agreements are subject to numerous closing conditions and other terms and conditions customary for such transactions and there is no assurance that such transactions will close on the dates anticipated or at all.

Redemption of Contrail RNCI

On June 2, 2026 Contrail entered into a Subordinated Security Agreement (the "Put Agreement") with OCAS, Inc.

(the "Seller").

As part of the Put Agreement, the Seller exercised its right to sell, and Contrail has agreed to buy, the remaining 5 % interest the Seller has in Contrail, effective as of April 1, 2026, in exchange for a $ 3.5 million Secured Subordinated Promissory Note (the "Put Note").

The Put Note accrues interest on the principal amount at an initial rate be 6.8 % and adjusts annually to the equivalent of the ten-year Treasury bond yield, adjusted on each anniversary date of the note, plus 2.50 %.

The interest under the note compounds monthly.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data