AIR T INC 10-K

Item 8. Financial Statements and Supplementary Data . INDEX TO FINANCIAL STATEMENTS Page AIR T, INC. CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm 55 Consolidated Statements of Income (Loss) for the Years Ended March 31, 2026 and 2025 58 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended March 31, 2026 and 2025 59 Consolidated Balance Sheets as of March 31, 2026 and 2025 60 Consolidated Statements of Cash Flows for the Years Ended March 31, 2026 and 2025 61 Consolidated Statements of Equity for the Years Ended March 31, 2026 and 2025 62 Notes to Consolidated Financial Statements 64 54 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Air T, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Air T, Inc. and subsidiaries (the “Company”) as of March 31, 2026 and 2025, the related consolidated statements of income (loss), comprehensive income (loss), equity, and cash flows, for each of the two years in the period ended March 31, 2026, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2026, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion 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 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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 Inventories are carried at the lower of cost or net realizable value. Within the commercial aircraft, engines, and parts reportable segment, the Company is required to make assumptions about expected profit margins used in the relief of inventory as parts are sold from established groups of parts from one engine or airframe purchase. Additionally, in its periodic evaluation of the carrying value of the inventories, the Company is required to make estimates regarding the net realizable value. These estimates include assumptions about sales patterns, expected future demand and costs to refurbish. Changes in these assumptions could have a significant impact on the valuation of inventory held by the Company’s commercial aircraft, engines and parts reportable segment. We identified the valuation of certain inventory held by the Company’s commercial aircraft, engines and parts reportable segment as a critical audit matter. Given the magnitude of the inventories at certain business units, coupled with the significant judgments necessary to estimate the expected profit margins and to project sales patterns, expected future demand and costs to refurbish, auditing such estimates required a high degree of auditor judgment and an increased extent of effort when performing audit procedures and evaluating the results of those procedures. How the Critical Audit Matter Was Addressed in the Audit 55 Our audit procedures related to expected profit margins utilized in the relief of inventory, and related to the sales patterns, expected future demand and costs to refurbish used in estimating the net realizable value of inventory, included the following, among others: • We assessed the reasonableness of management’s estimates of expected profit margins for a representative sample of inventories by: ◦ Comparing the life-to-date profit margin on sales from the group of parts to management’s initial profit margin assessment. ◦ Evaluating the reasonableness of management’s judgments about changes to the initial profit margin estimates, if any. • We assessed the reasonableness of management’s projections of sales patterns, expected future demand and costs to refurbish by: ◦ Comparing the information to historical results of those business units. ◦ Evaluating the methodology and assumptions used by, and the qualifications of, the Company’s third-party valuation specialist. ◦ Performing the following procedures for a representative sample of inventories: ▪ Evaluating the key assumptions underlying the valuation by examining recent sales of comparable parts and component condition. ▪ Utilizing historical costs to develop an independent estimate of costs necessary to refurbish the parts. • We compared management’s assumptions to market data and industry forecasts. 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. 56 • 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 Minneapolis, Minnesota June 29, 2026 We have served as the Company's auditor since 2018. 57 AIR T, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) Year Ended March 31, (In thousands, except per share data) 2026 2025 Operating Revenues: Overnight air cargo $ 123,696 $ 124,031 Ground support equipment 47,185 38,940 Commercial aircraft, engines and parts 86,919 118,215 Digital solutions 9,081 7,268 Regional airline 55,314 — Corporate and other 4,895 3,396 327,090 291,850 Operating Expenses: Overnight air cargo 104,100 104,760 Ground support equipment 36,726 33,994 Commercial aircraft, engines and parts 61,579 84,896 Digital solutions 3,589 2,462 Regional airline (exclusive of depreciation) 44,878 — Corporate and other 1,935 1,191 General and administrative 80,840 57,848 Depreciation and amortization 12,340 4,356 Earnout remeasurement ( 666 ) 435 345,321 289,942 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 ) (Loss) income from equity method investments ( 1,740 ) 1,700 Gain on bargain purchase 111,190 — Other ( 193 ) ( 209 ) 97,217 ( 6,896 ) Earnings (Loss) before income taxes 86,020 ( 4,988 ) Income Tax Expense 1,369 423 Net Income (Loss) 84,651 ( 5,411 ) Net Income Attributable to Non-controlling Interests ( 6,668 ) ( 729 ) Net Income (Loss) Attributable to Air T, Inc. Stockholders $ 77,983 $ ( 6,140 ) Earnings (Loss) per share (Note 21) Basic $ 28.85 $ ( 2.23 ) Diluted $ 28.85 $ ( 2.23 ) Weighted Average Shares Outstanding: Basic 2,703 2,750 Diluted 2,703 2,750 See notes to consolidated financial statements. 58 AIR T, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended March 31, 2026 2025 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 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 Income (Loss) Attributable to Air T, Inc. Stockholders $ 82,879 $ ( 6,707 ) See notes to consolidated financial statements. 59 AIR T, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) March 31, 2026 March 31, 2025 ASSETS Current Assets: Cash and cash equivalents $ 20,332 $ 5,932 Marketable securities 1,026 422 Restricted cash 4,938 575 Restricted investments — 683 Accounts receivable, net of allowance for doubtful accounts of $ 1,614 and $ 1,338 39,889 23,917 Income tax receivable 196 681 Inventories, net 77,127 38,516 Prepaid expenses 8,851 3,103 Other current assets 7,617 4,678 Total Current Assets 159,976 78,507 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 — 14,662 Property and equipment, net of accumulated depreciation of $ 18,571 and $ 9,240 162,024 20,285 Intangible assets, net of accumulated amortization of $ 8,046 and $ 6,330 13,029 10,020 Right-of-use ("ROU") assets 14,594 13,274 Equity method investments 26,068 19,003 Goodwill 11,818 10,542 Other assets 7,568 1,635 Total Assets $ 409,123 $ 173,778 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 36,971 $ 17,782 Income tax payable 687 — Accrued expenses and other (Note 11) 49,717 16,691 Current portion of long-term debt 3,633 9,099 Current portion of long-term debt - related party (Note 13) 915 1,282 Current portion of earnout liability 198 430 Short-term lease liability 3,403 2,377 Total Current Liabilities 95,524 47,661 Long-term debt 204,563 101,226 Long-term debt - related party (Note 13) — 3,288 Deferred income tax liabilities, net 3,359 2,249 Long-term lease liability 12,189 11,843 Long-term earnout liability 244 1,109 Other non-current liabilities 2,023 866 Total Liabilities 317,902 168,242 Redeemable non-controlling interests 10,346 7,054 Commitments and contingencies (Note 22) Equity (Deficit): Air T, Inc. Stockholders' (Deficit) Equity: Preferred stock, $ 1.00 par value, 4,000,000 and 2,000,000 shares authorized — — Common stock, $ 0.25 par value; 4,000,000 shares authorized, 3,030,245 and 3,030,245 shares issued, 2,701,375 and 2,702,639 shares outstanding 758 758 Treasury stock, 328,870 shares at $ 19.56 and 327,606 shares at $ 19.55 ( 6,432 ) ( 6,404 ) Additional paid-in capital 1,122 947 Retained earnings 80,113 2,130 Accumulated other comprehensive income (loss) 4,249 ( 647 ) Total Air T, Inc. Stockholders' Equity (Deficit) 79,810 ( 3,216 ) Non-controlling Interests 1,065 1,698 Total Equity (Deficit) 80,875 ( 1,518 ) Total Liabilities and Equity $ 409,123 $ 173,778 See notes to consolidated financial statements. 60 AIR T, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended March 31, (In thousands) 2026 2025 CASH FLOWS FROM 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 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 Change in operating assets and liabilities: Accounts receivable ( 3,347 ) ( 1,808 ) Inventories ( 24,091 ) 20,630 Accounts payable 16,341 2,710 Accrued expenses 5,761 1,087 Other current assets ( 2,851 ) 264 Other ( 2,177 ) ( 464 ) Net cash (used in) provided by operating activities ( 25,044 ) 23,496 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in unconsolidated entities ( 15,249 ) ( 7,027 ) Distribution from unconsolidated entities 5,441 6,030 Capital expenditures related to property & equipment ( 16,483 ) ( 1,081 ) Capital expenditures related to assets on lease or held for lease — ( 14,598 ) 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 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from lines of credit 144,976 136,515 Payments on lines of credit ( 135,527 ) ( 131,376 ) Proceeds from term loan 76,320 24,877 Payments on term loan ( 15,389 ) ( 35,040 ) 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 ) Distribution to non-controlling interest ( 3,685 ) ( 489 ) Other ( 714 ) 1,247 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 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 CASH FLOW INFORMATION: Operating cash payments for operating leases $ 3,664 $ 2,260 Cash paid during the year for income taxes $ 850 $ 983 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD: Cash and cash equivalents $ 5,932 Restricted cash, current 575 Restricted cash, long-term (a) 250 Total cash and cash equivalents and restricted cash at beginning of period $ 6,757 (a) Included in other assets on the consolidated balance sheets. See notes to consolidated financial statements. 61 AIR T, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (In thousands) Common Stock Treasury Stock Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interests 1 Total Equity Balance, March 31, 2025 3,030 $ 758 328 $ ( 6,404 ) $ 947 $ 2,130 $ ( 647 ) $ 1,698 $ ( 1,518 ) Net income 1 — — — — — 77,983 — 2,415 80,398 Distributions to non-controlling interests — — — — — — — ( 3,094 ) ( 3,094 ) Repurchase of common stock — — 1 ( 28 ) — — — ( 28 ) Stock compensation expense — — — — 175 — — — 175 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 (1) Excludes amount attributable to redeemable non-controlling interests in Contrail Aviation Support, LLC ("Contrail") and Shanwick B.V. ("Shanwick") (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. 62 (In thousands) Common Stock Treasury Stock Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interests 1 Total Equity Balance, March 31, 2024 3,030 $ 758 257 $ ( 4,959 ) $ 859 $ 8,192 $ ( 80 ) $ 1,050 $ 5,820 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 ) Stock option forfeiture (Note 15) — — — — ( 54 ) — — — ( 54 ) Stock compensation expense — — — — 142 — — — 142 Foreign currency translation gain — — — — — — 407 — 407 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 ) Initial consolidation of CASP, LLC — — — — — — — 730 730 Allocation of comprehensive income from unconsolidated investments — — — — — — ( 3 ) — ( 3 ) Allocation of comprehensive income to redeemable non-controlling interests — — — — — — 234 — 234 Balance, March 31, 2025 3,030 $ 758 328 $ ( 6,404 ) $ 947 $ 2,130 $ ( 647 ) $ 1,698 $ ( 1,518 ) (1) Excludes amount attributable to redeemable non-controlling interests in Contrail Aviation Support, LLC ("Contrail") and Shanwick B.V. ("Shanwick") See notes to consolidated financial statements. 63 AIR T, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2026 AND 2025 Air T, Inc. (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 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; • Ground support equipment, which manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers; • Commercial aircraft, engines and parts, which manages and leases aviation assets; supplies surplus and aftermarket commercial jet engine components; provides commercial aircraft disassembly/part-out services; commercial aircraft parts sales; procurement services and overhaul and repair services to airlines and; • Digital solutions, which develops and provides digital aviation and other business services to customers within the aviation industry to generate recurring subscription revenues; and • 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 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. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as well as its non-wholly owned subsidiaries, Contrail, Shanwick and Delphax. All material intercompany transactions and balances have been eliminated in consolidation. Certain reclassifications have been made to the prior period amounts to conform to the current presentation. 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. 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 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 ("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 64 different products and services. We evaluate the performance of our reportable segments based on operating income (loss) and Adjusted EBITDA. Variable Interest Entities – In accordance with the applicable accounting guidance for the consolidation of variable interest entities, the Company analyzes its variable interests to determine if an entity in which we have a variable interest is a variable interest entity. Our analysis includes both quantitative and qualitative reviews to determine if we must consolidate a variable interest entity as its primary beneficiary. Business Combinations – The Company accounts for business combinations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations . Consistent with ASC 805, the Company accounts for each business combination by applying the acquisition method. Under the acquisition method, the Company records the identifiable assets acquired and liabilities assumed at their respective fair values on the acquisition date. Goodwill is recognized for the excess of the purchase consideration over the fair value of identifiable net assets acquired. Included in purchase consideration is the estimated acquisition date fair value of any earn-out obligation incurred. For business combinations where non-controlling interests remain after the acquisition, assets (including goodwill) and liabilities of the acquired business are recorded at the full fair value and the portion of the acquisition date fair value attributable to non-controlling interests is recorded as a separate line item within the equity section or, as applicable to redeemable non-controlling interests, between the liabilities and equity sections of the Company’s consolidated balance sheets . The acquisition method permits the Company a period of time after the acquisition date during which the Company may adjust the provisional amounts recognized in a business combination. This period of time is referred to as the “measurement period”. The measurement period provides an acquirer with a reasonable time to obtain the information necessary to identify and measure the assets acquired and liabilities assumed. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports in its consolidated financial statements provisional amounts for the items for which the accounting is incomplete. Accordingly, the Company is required to recognize adjustments to the provisional amounts, with a corresponding adjustment to goodwill, in the reporting period in which the adjustments to the provisional amounts are determined. Thus, the Company would adjust its consolidated financial statements as needed, including recognizing in its current-period earnings the full effect of changes in depreciation, amortization, or other income effects, by line item, if any, as a result of the change to the provisional amounts calculated as if the accounting had been completed at the acquisition date. Income statement activity of an acquired business is reflected within the Company’s consolidated statements of income (loss) commencing with the date of acquisition. Amounts for pre-acquisition periods are excluded. 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. The Company accounts for such acquisition-related costs as expenses in the period in which the costs are incurred and the services are received. Changes in estimates of the fair value of earn-out obligations subsequent to the acquisition date are not accounted for as part of the acquisition, rather, they are recognized directly in earnings. Cash and Cash Equivalents – Cash equivalents consist of liquid investments with maturities of three months or less when purchased. Accounts Receivable – Accounts receivable include trade receivables from customers with stated collection terms of less than one year from the date of origination. Accounts receivable are stated net of estimated allowance for uncollectible balances. We measure expected credit losses primarily utilizing credit loss history. In addition, our credit loss estimates consider current conditions. We charge off receivables against the allowances after reasonable collection efforts are exhausted. Below is the reconciliation for allowance for credit losses on accounts receivables for the fiscal years ended March 31, 2026 and 2025 (in thousands): 65 Year Ended March 31, 2026 2025 Balance at the beginning of the year $ 1,338 $ 1,420 Provision for credit losses 289 802 Charge-offs, net of recoveries ( 13 ) ( 884 ) Balance at March 31 $ 1,614 $ 1,338 Inventories – Inventories are carried at the lower of cost or net realizable value. When finished goods units are leased to customers under operating leases, the units are transferred to Assets on Lease or Held For Lease. 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 $ 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. The estimates and judgments made in relief of inventory are based on assumptions that are consistent with a market participant’s future expectations for the commercial aircraft, jet engines and parts industry and the economy in general and our expected intent for the inventory. These assumptions and estimates are complex and subjective in nature. Changes in economic and operating conditions could impact the assumptions and result in future losses to our inventory. The Company periodically evaluates the carrying value of inventory. In these evaluations, the Company is required to make estimates regarding the net realizable value, which includes the consideration of sales patterns and expected future demand. Any slow moving, obsolete or damaged inventory and inventory with costs exceeding net realizable value are evaluated for write-downs. These estimates could vary significantly from actual amounts based upon future economic conditions, customer inventory levels, or competitive factors that were not foreseen or did not exist when the estimated write-downs were made. In accordance with industry practice, all inventories are classified as a current asset including portions with long production cycles, some of which may not be realized within one year. Investments under the Equity Method – The Company utilizes the equity method to account for investments when the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The Company applies the equity method to investments in common stock and to other investments when such other investments possess substantially identical subordinated interests to common stock. For investments that have a different fiscal year-end, if the difference is not more than three months, the Company elects a 3-month lag to record the change in the investment. The Company assesses the carrying value of its investments whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the investment to the estimated future undiscounted cash flows of the investment, which take into account current, and expectations for future, market conditions and the Company’s intent with respect to holding or disposing of the investment. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and the Company’s ultimate use of the investment could impact the assumptions and result in future impairment losses to the investments. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through quoted prices in active markets or various valuation techniques, including internally developed discounted cash flow models or comparable market transactions. Goodwill - The Company evaluates goodwill on an annual basis or anytime events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company is permitted to first assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying value, including goodwill. In qualitatively evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company assesses relevant events and circumstances such as macroeconomic conditions, industry and market developments, cost factors, and the overall financial performance of the reporting unit. 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, 66 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. Intangible Assets – Amortizable intangible assets consist of acquired patents, tradenames, customer relationships, and other finite-lived identifiable intangibles. Such intangibles are initially recorded at fair value and subsequently subject to amortization. Amortization is recorded using the straight-line method over the estimated useful lives of the assets. In accordance with the applicable accounting guidance, the Company evaluates the recoverability of amortizable intangible assets whenever events occur that indicate potential impairment. In doing so, the Company assesses whether the carrying amount of the asset is unrecoverable by estimating the sum of the future cash flows expected to result from the asset, undiscounted and without interest charges. 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 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 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. 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 Buildings 30 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. Certain costs incurred in connection with the acquisition of engine assets are capitalized as part of the cost of such assets. If assets are not actively being leased (i.e. held for lease), then they are not being depreciated. Major overhauls which improve functionality or extend original useful life 67 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 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. whole asset sale, part-out, etc.), reasonably approximates the selling price of the assets. When engine assets are committed for sales, the assets are transferred to inventory. The classification of cash flows associated with the purchase and sale of engine assets is based on the activity that is likely to be the predominant source or use of cash flows for the items. The Company assesses long-lived assets for impairment when events and circumstances indicate the assets may be impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amount. When evaluating the future cash flows that an asset will generate, we make assumptions regarding the lease market for specific engine models, including estimates of market lease rates and future demand. These assumptions are based upon lease rates that we are obtaining in the current market as well as our expectation of future demand for the specific engine/aircraft model. We determine fair value of the assets by reference to independent appraisals, quoted market prices (e.g., an offer to purchase) and other factors such as current data from manufacturers as well as specific market sales. 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 over a 12-month period of time. The Company has no obligation to sell any TruPs, and may at any time suspend offers under the ATM Agreement or terminate the ATM Agreement. These TruPs are mandatorily redeemable preferred security obligations of the Company. In accordance with ASC 480, the Company presented mandatorily redeemable preferred securities that do not contain a conversion option as a liability on the balance sheet. Further, as the redemption date and the redemption amount are both fixed, in accordance with ASC 825, we measured these TruPs at the present value of the amount to be paid at settlement, discounted by using the implicit rate at inception. Income Taxes – Income taxes have been provided using the asset and liability method. 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. 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. A valuation allowance against net deferred tax assets is recorded when it is more likely than not that such assets will not be fully realized. Tax credits are accounted for as a reduction of income taxes in the year in which the credit originates. All deferred income taxes are classified as non-current in the consolidated balance sheets. The Company recognizes the benefit of a tax position taken on a tax return, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. 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. 68 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 originally retained by the Seller. The Seller is the founder of Contrail and its current Chief Executive Officer. The Contrail Put/Call Option permits the Seller to require Contrail to purchase all of the Seller’s equity membership interests in Contrail commencing on the fifth anniversary of the acquisition, which was on July 18, 2021. On May 30, 2024, Contrail entered into a Membership Interest Redemption and Earnout Agreement (the "Redemption Agreement") with the Seller. Pursuant to the Redemption Agreement, Contrail agreed to purchase and redeem from the Seller, 16 % of its 21 % interest in Contrail, with the earnout period being retroactive to April 1, 2024. In connection with the Redemption Agreement, the parties agreed to certain technical amendments to the First Amended and Restated Operating Agreement of Contrail and entered into a new Put and Call Agreement with respect to the remaining 5 % interest in Contrail held by the Seller. Per the Operating Agreement, Contrail's non-controlling interest is redeemable at an amount other than fair value, which is equal to 5 % of the Contrail Equity Value, which is defined as an amount equal to nine times the average Adjusted EBITDA of Contrail's most recent three completed fiscal years at the time an option notice is delivered. The purchase price for the 5 % interest is to be paid in equal quarterly installments over a three-year period, together with interest at the then current ten-year Treasury bond yield plus 2.5 % adjusted annually. In February 2022, in connection with the Company's acquisition of GdW, a consolidated subsidiary of Shanwick, the Company entered into a shareholder agreement with the 30.0 % non-controlling interest owners of Shanwick, providing for the governance of and the terms of membership interests in Shanwick. The shareholder agreement includes the Shanwick Put/Call Option with regard to the 30.0 % non-controlling interest. The non-controlling interest holders are the executive management of the underlying business. The Shanwick Put/Call Option grants the Company an option to purchase the 30.0 % interest at the call option price that equals the average 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. The Call Option and the Put Option may be exercised at any time from the fifth anniversary of the shareholder agreement and then only at the end of each fiscal year of Air T ("Shanwick RNCI"). Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer. As a result of this feature, the Company recorded the non-controlling interests as redeemable and classified them in temporary equity within its Consolidated Balance Sheets. Initial measurement of the redeemable non-controlling interests is at their acquisition-date fair value. Because the redeemable non-controlling interests are redeemable at an amount other than fair value, subsequent measurement is to be measured at the greater of the carrying value in accordance with ASC 810-10 measurement guidance or the redemption value in accordance with ASC 480-10. Refer to Note 22 for further information. Revenue Recognition – Substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less. As a result, the Company has applied the practical expedient to exclude consideration of significant financing components from the determination of transaction price, to expense costs incurred to obtain a contract, and to not disclose the value of unsatisfied performance obligations. We evaluate gross versus net presentation on revenues from products or services purchased and resold in accordance with the revenue recognition criteria outlined in ASC 606-10, Principal Agent Considerations. The Company, under the terms of its overnight air cargo dry-lease service contracts, passes through to its air cargo customer certain cost components of its operations without markup. The cost of fuel, landing fees, outside maintenance, parts and certain other direct operating costs are included in operating expenses and billed to the customer, at cost, and included in overnight air cargo revenue on the accompanying statements of income (loss). These pass-through costs totaled $ 45.9 million and $ 39.9 million for the years ended March 31, 2026 and 2025, respectively. 69 Recently Adopted 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 disaggregated by federal, state, and foreign jurisdictions. The Company adopted this guidance for the fiscal year ended March 31, 2026. Refer to Note 18 for more information. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03- Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this Update require disaggregated disclosure of income statement expenses for public business entities. The Update does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this amendment on its 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. 2. ACQUISITIONS 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 70 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. 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, 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: Assets: 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 71 Liabilities: 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 Less: 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 ) 72 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, 2026 2025 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. 3. MAJOR CUSTOMER 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. 4. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures and reports financial assets and liabilities at fair value. Fair value measurement is classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Assets Measured and Recorded at Fair Value on a Recurring Basis The following consolidated balance sheet items are measured at fair value on a recurring basis (in thousands): 73 Fair Value Measurements at March 31, 2026 2025 Marketable securities (including restricted investments) (Level 1) $ 1,026 $ 1,105 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. See Note 22 . The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, notes receivable and accounts payable approximate their fair values at March 31, 2026 and 2025. 5. INVENTORIES Inventories consisted of the following (in thousands): Year Ended March 31, 2026 2025 Inventories: Raw materials $ 5,252 $ 6,928 Work in process 2,357 2,342 Finished goods 4,406 5,358 Aircraft parts for sale 49,553 28,794 Expendable parts 20,745 — Total inventories 82,313 43,422 Reserves ( 5,186 ) ( 4,906 ) Total inventories, net of reserves $ 77,127 $ 38,516 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. 6. LESSOR ARRANGEMENTS Equipment Leases The Company leases equipment to third parties, primarily through Contrail. Leases for aircraft and engines to aviation customers typically have terms ranging from 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. 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. 74 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 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. Our contractual obligations for offices currently on lease can include termination and renewal options. We utilize the reasonably certain threshold criteria in determining which options our customers will exercise. 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. The following table sets forth the undiscounted cash flows for future minimum base rents to be received from customers for office leases in effect as of March 31, 2026: Year Ended March 31, 2027 $ 990 2028 849 2029 774 2030 743 2031 673 Thereafter 1,151 Total $ 5,180 7. PROPERTY AND EQUIPMENT Property and equipment consisted of the following (in thousands): Year Ended March 31, 2026 2025 Furniture, fixtures and equipment $ 10,983 $ 7,282 Leasehold improvements 9,011 8,393 Land and buildings 27,348 13,850 Aircraft, engines, and related rotable parts 133,253 — 180,595 29,525 Accumulated depreciation ( 18,571 ) ( 9,240 ) Property and equipment, net $ 162,024 $ 20,285 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. 8. INTANGIBLE ASSETS AND GOODWILL Intangible assets consisted of the following (in thousands): 75 March 31, 2026 Gross Carrying Amount Accumulated Amortization Net Book Value Purchased software $ 889 $ ( 681 ) $ 208 Internally developed software 5,196 ( 1,574 ) 3,622 In-place lease and other intangibles 1,094 ( 557 ) 537 Customer relationships 8,446 ( 2,707 ) 5,739 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 In-process software 811 — 811 Intangible assets, total $ 21,075 $ ( 8,046 ) $ 13,029 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): 76 Amortization 2027 $ 2,150 2028 1,548 2029 1,458 2030 1,450 2031 1,370 Thereafter 4,242 $ 12,218 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 9. 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. 10. EQUITY METHOD INVESTMENTS Bloomia Holdings, Inc. investment 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. 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 77 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. investment The Company's 20.1 % investment in CCI is accounted for under the equity method of accounting. 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 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. CAM was formed to serve two separate and distinct functions: 1) to direct the sourcing, acquisition and management of aircraft assets owned by CJVII Series as governed by the Management Agreement between CJVII and CAM (“Asset Management Function”), and 2) to directly invest into CJVII Series alongside other institutional investment partners (“Investment Function”). CAM has two classes of equity interests: 1) common interests and 2) investor interests. Neither interest votes as the entity is operated by a Board of Directors. The common interests of CAM relate to its Asset Management Function. The investor interests of CAM relate to the Company’s and Mill Road Capital’s (“MRC”) investments through CAM into CJVII (the Investment Function) and ultimately into the individual CJVII Series. With regard to CAM’s common interests, the Company currently owns 90 % of the economic common interests in CAM, and MRC owns the remaining 10 %. MRC invested $ 1.0 million directly into CAM in exchange for 10 % of the common interests. For the Asset Management Function, CAM receives origination fees, management fees, consignment fees (where applicable) and a carried interest from the direct investors into each CJVII Series. Such fee income and carried interest will be distributed to the Company and MRC in proportion to their respective common interests. The Company determined that CAM is a variable interest entity and that the Company is not the primary beneficiary. This is primarily the result of the Company's conclusion that it does not control CAM’s Board of Directors, which has the power to direct the activities that most significantly impact the economic performance of CAM. Accordingly, the Company does not consolidate CAM and has determined to account for this investment using equity method accounting. The Company accounts for its investment in CAM using the hypothetical liquidation at book value ("HLBV") method without a reporting lag. The HLBV method uses a balance sheet approach to capture changes in the Company's claim on CAM's net assets from a period- 78 end hypothetical liquidation at book value. This approach provides a more accurate reflection of the Company's investment in CAM, compared to recording its proportionate share of income or loss. On October 18, 2024, the Company entered into an unsecured promissory note with CAM for $ 2.5 million with an interest rate of 10.0 %, through conversion of a portion of the Company's accounts receivable from CAM. All outstanding principal and accrued interest will become due and payable for the Company on the maturity date (which is October 15, 2027). Prior to the maturity, CAM may prepay any accrued interest or principal outstanding without penalty. 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. Additionally, contributions from and distributions to both Air T and MRC for the fiscal year ended March 31, 2026 and 2025 are as follows (in thousands): Year Ended March 31, 2026 2025 Contributions $ 3,555 $ 7,029 Distributions $ 8,455 $ 11,847 Investment balances for the Company's equity method investees as of March 31, 2026 and 2025 is as follows (in thousands): Investment March 31, 2026 March 31, 2025 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 Net income (loss) attributable to Air T, Inc. 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 Bloomia $ ( 771 ) $ ( 1,609 ) CCI ( 332 ) 165 CAM ( 360 ) 2,919 BCAP ( 436 ) — Other equity method investments 388 225 Total $ ( 1,511 ) $ 1,700 The Company's equity method investees may, from time to time, make distributions and dividends to the Company in accordance with accumulated earnings at the investee. For the fiscal years ended March 31, 2026 and 2025, the Company received distributions and dividends from equity method investees as follows (in thousands): 79 Year Ended March 31, Investment 2026 2025 Bloomia $ — $ — CCI — — CAM 4,366 4,907 BCAP 1,129 — Other equity method investments 1,023 1,458 Total $ 6,518 $ 6,365 80 11. ACCRUED EXPENSES Accrued expenses consisted of the following (in thousands): March 31, 2026 March 31, 2025 Salaries, wages and related items $ 15,774 $ 6,235 Profit sharing and bonus 4,416 2,980 Other deposits 849 513 Deferred income 22,153 3,686 Accrued interest expense 3,542 955 Other 2,983 2,322 Total $ 49,717 $ 16,691 12. LESSEE ARRANGEMENTS The Company has operating leases for the use of real estate, machinery, and office equipment. The components of lease cost for the fiscal years ended March 31, 2026 and 2025 were as follows (in thousands): Year Ended March 31, 2026 2025 Operating lease cost $ 3,860 $ 3,121 Short-term lease cost 1,429 1,111 Variable lease cost 1,207 1,049 Total lease cost $ 6,496 $ 5,281 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 Operating leases Operating lease ROU assets $ 14,594 $ 13,274 Operating lease liabilities $ 15,592 $ 14,220 Weighted-average remaining lease term Operating leases 9 years, 10 months 10 years, 3 months Weighted-average discount rate Operating leases 7.33 % 5.67 % 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): 81 Fiscal Operating Leases 2027 $ 4,374 2028 3,713 2029 2,342 2030 1,228 2031 760 Thereafter 9,257 Total undiscounted lease payments 21,674 Interest ( 6,082 ) Total lease liabilities $ 15,592 13. FINANCING ARRANGEMENTS 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. If 82 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. 83 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. 84 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 Air T Debt Debt - Air T Funding Trust Preferred Securities 1 $ 38,719 $ 35,342 6/7/2049 8.00 % Recourse Total 38,719 35,342 Alerus Loan Parties Debt Revolver - Alerus 10,545 6,050 8/28/2027 Greater of 5.00 % or 1-month SOFR + 1.90 % $ 9,455 Recourse Overline Note - Alerus — — 10/31/2025 Greater of 5.00 % or 1-month SOFR + 2.00 % — Recourse Term Note A - Alerus 8,295 9,827 8/15/2029 1-month SOFR + 2.00 % Recourse Term Note C - Alerus 925 — 5/15/2030 Greater of 5.00 % or 1-month SOFR + 2.25 % Recourse Total 19,765 15,877 Contrail Debt Revolver - Alerus 8,181 — 11/24/2027 1-month SOFR + 3.11 % 6,819 Limited recourse 2 Revolver - ONB — 3,127 11/24/2025 1-month SOFR + 3.56 % — Limited recourse 3 Term Note J - ONB — 8,750 9/12/2028 1-month SOFR + 3.86 % Limited recourse 3 Total 8,181 11,877 Wolfe Lake Debt Term Loan - Bridgewater 8,778 9,059 12/2/2031 3.65 % Non-recourse Total 8,778 9,059 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. 85 ATA 22.1 Debt Term Loan - Alerus 6,000 — 11/24/2032 Greater of 5.00 % or 1-month SOFR + 1.90 % Non-recourse Term Loan - Bridgewater — 3,500 2/8/2027 4.00 % Non-recourse Term Loan A - ING 690 1,298 2/1/2027 3.50 % Non-recourse Term Loan B - ING 1,150 1,082 5/1/2027 4.00 % Non-recourse Total 7,840 5,880 WASI Debt Promissory Note - Seller's Note — 398 1/1/2026 6.00 % Non-recourse Total — 398 AAM 24-1 Debt Promissory Notes - Institutional Investors 60,000 30,000 5/31/2035 8.50 % Non-recourse Total 60,000 30,000 MAC Debt Term Loan - Bank of America, N.A. 2,157 2,271 2/21/2030 1-month SOFR + 0.11 % + 1.75 % Non-recourse Total 2,157 2,271 Rex Debt 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 — ATA 25.1 Term Note - Institutional Investors 41,271 — 12/15/2031 11.50 % Recourse Total 41,271 — Total Debt 210,553 110,704 Unamortized Premiums and Debt Issuance Costs ( 2,357 ) ( 379 ) Total Debt, net $ 208,196 $ 110,325 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. 86 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): 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 172,760 210,553 Unamortized Premiums and Debt Issuance Costs ( 2,357 ) $ 208,196 The Company assumes various financial obligations and commitments in the normal course of its operations and financing activities. 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 (in thousands): March 31, 2026 March 31, 2025 Carrying Value $ 210,553 $ 75,362 Estimated Fair Value $ 200,081 $ 92,984 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. The Company has not elected the fair value option under ASC 825-10 and continues to report its debt obligations at amortized cost. The fair value amounts are presented for disclosure purposes only. Interest Expense, net The components of net interest expense during the fiscal years ended March 31, 2026 and March 31, 2025 were as follows (in thousands): 87 Year Ended March 31, 2026 2025 Contractual interest $ 10,969 $ 8,606 Amortization of deferred financing costs 268 323 Gain on interest rate swaps ( 2 ) ( 167 ) Interest income ( 748 ) ( 375 ) Accretion of fair value discount 1,328 — Other 225 — Total $ 12,040 $ 8,387 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, 2026 2025 Air T $ 2,872 $ 3,504 Jet Yard — 31 Alerus Loan Parties 1,486 997 Contrail 715 981 AirCo 1 — 378 Wolfe Lake 335 345 ATA 22.1 333 277 WASI 11 39 AAM 24-1 3,310 1,793 MAC 233 58 Rex 917 — 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. 88 14. RELATED PARTY MATTERS Nick Swenson, CEO of the Company, along with his affiliates (other than the Company), successors and assignees, are the majority shareholders of CCI. As of March 31, 2026, Mr. Swenson and his affiliates, successors and assignees own 70.4 % of ownership interests in CCI. Under the VIE model, Mr. Swenson and his affiliates (other than the Company), successors and assignees are the primary beneficiaries of CCI due to Mr. Swenson's controlling interest in CCI. Mr. 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, 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. 15. EMPLOYEE AND NON-EMPLOYEE STOCK OPTIONS Air T, Inc. maintains the 2020 Omnibus Stock and Incentive Plan for the benefit of certain eligible employees and directors. Compensation expense is recognized over the requisite service period for stock options which are expected to vest based on their grant-date fair values. The Company uses either the Black-Scholes option pricing model or Monte Carlo simulations to value stock options the Company grants. The key assumptions for the valuation methodologies include the expected term of the option, stock price volatility, risk-free interest rate and dividend yield. Many of these assumptions are judgmental and highly sensitive in the determination of compensation expense. Air T's 2020 Omnibus Stock and Incentive Plan On December 29, 2020, the Company’s Board of Directors unanimously approved the Omnibus Stock and Incentive Plan (the "Plan"), which was subsequently approved by the Company's stockholders at the August 18, 2021 Annual Meeting of Stockholders. The total number of shares authorized under the Plan is 420,000 . Through March 31, 2026, options to purchase up to 399,300 shares have been granted under the Plan. 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. 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 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 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. Management 89 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 % Expected dividend yield — Expected term 10 Years Expected volatility 53.62 % 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. 16. REVENUE RECOGNITION Performance Obligations Substantially all of the Company’s non-lease revenue is derived from contracts with an initial expected duration of one year or less. As a result, the Company has applied the practical expedient to exclude consideration of significant financing components from the determination of transaction price, to expense costs incurred to obtain a contract, and to not disclose the value of unsatisfied performance obligations. The following is a description of the Company’s performance obligations as of March 31, 2026: Type of Revenue Nature, Timing of Satisfaction of Performance Obligations, and Significant Payment Terms Product Sales The Company generates revenue from sales of various distinct products such as parts, aircraft equipment, printing equipment, jet engines, airframes, and scrap metal to its customers. A performance obligation is created when the Company accepts an order from a customer to provide a specified product. Each product ordered by a customer represents a performance obligation. The Company recognizes revenue when obligations under the terms of the contract are satisfied; generally, this occurs at a point in time upon shipment or when control is transferred to the customer. Transaction prices are based on contracted terms, which are at fixed amounts based on standalone selling prices. While the majority of the Company's contracts do not have variable consideration, for the limited number of contracts that do, the Company records revenue based on the standalone selling price less an estimate of variable consideration (such as rebates, discounts or prompt payment discounts). The Company estimates these amounts based on the expected incentive amount to be provided to customers and reduces revenue accordingly. Performance obligations are short-term in nature and customers are typically billed upon transfer of control. The Company records all shipping and handling fees billed to customers as revenue. The terms and conditions of the customer purchase orders or contracts are dictated by either the Company’s standard terms and conditions or by a master service agreement or by the contract. 90 Support Services The Company provides a variety of support services such as aircraft maintenance, printer maintenance, and short-term repair services to its customers. Additionally, the Company operates certain aircraft routes on behalf of FedEx. A performance obligation is created when the Company agrees to provide a particular service to a customer. For each service, the Company recognizes revenues over time as the customer simultaneously receives the benefits provided by the Company's performance. This revenue recognition can vary from when the Company has a right to invoice to the output or input method depending on the structure of the contract and management’s analysis. For repair-type services, the Company records revenue over time based on an input method of costs incurred to total estimated costs. The Company believes this is appropriate as the Company is performing labor hours and installing parts to enhance an asset that the customer controls. The vast majority of repair services are short term in nature and are typically billed upon completion of the service. Some of the Company’s contracts contain a promise to stand ready as the Company is obligated to perform certain maintenance or administrative services. For most of these contracts, the Company applies the 'as invoiced' practical expedient as the Company has a right to consideration from the customer in an amount that corresponds directly with the value of the entity's performance completed to date. A small number of contracts are accounted for as a series and recognized equal to the amount of consideration the Company is entitled to less an estimate of variable consideration (typically rebates). These services are typically ongoing and are generally billed on a monthly basis. Software Services The Company provides market data related to air cargo based on primary sources and owns cloud hosted software that supports the needs of aviation businesses and helps aftermarket parts sellers automate quoting for their potential clients. For market data services, revenue is derived from contracts that grant customers the right to use the Company's web-based service for a specified term through a subscription fee. A performance obligation is created when the Company agrees to provide a subscription-based service to a customer. There is no variation in effort 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. The cash received is recorded as deferred revenue for the amount stated in the contract and recognized over the subscription term based on straight-line recognition. For cloud hosted software, the Company enters into service contracts which provides access to the software and customer support services. A performance obligation is created when the Company agrees to provide a particular service to a customer. For software access, revenue is recognized ratably over time for the daily performance obligation related to the customer's access to the cloud hosted software. For support services, revenue is recognized over time for the hourly performance obligation provided to the customer. Generally, subscription terms range from three to five years . Software access is usually billed monthly and support services are billed upon completion. 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. 91 The following table summarizes disaggregated revenues by type (in thousands): Year Ended March 31, 2026 2025 Product Sales Overnight air cargo $ 48,789 $ 42,615 Ground support equipment 45,144 35,903 Commercial aircraft, engines and parts 74,790 106,946 Corporate and other 1,675 661 Support Services Overnight air cargo 74,749 81,287 Ground support equipment 1,271 2,426 Commercial aircraft, engines and parts 9,198 7,923 Corporate and other 41 31 Leasing Revenue Ground support equipment — 69 Commercial aircraft, engines and parts 1,997 2,597 Corporate and other 1,708 1,713 Software Services Digital solutions 9,081 7,268 Regional Airline Regional airline 52,095 — Other Overnight air cargo 158 129 Ground support equipment 770 542 Commercial aircraft, engines and parts 934 749 Regional airline 3,219 — Corporate and other 1,471 991 Total $ 327,090 $ 291,850 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. 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. 17. EMPLOYEE BENEFITS The Company has a 401(k) defined contribution plan covering domestic employees and an 1165(e) defined contribution plan covering Puerto Rico based employees (“Plans”). All employees of the Company are immediately eligible to participate in the Plans. 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). 92 18. INCOME TAXES Income (loss) before income taxes as shown in the consolidated statements of income (loss) consists of the following: Year Ended March 31, 2026 2025 Domestic $ 100,752 $ ( 4,791 ) Foreign ( 14,732 ) ( 197 ) Total $ 86,020 $ ( 4,988 ) Income tax expense (benefit) attributable to pretax income (loss) consists of (in thousands): Year Ended March 31, 2026 2025 Current: Federal $ 153 $ — State 247 166 Foreign 1,617 557 Total current 2,017 723 Deferred: Federal ( 399 ) 83 State ( 53 ) ( 17 ) Foreign ( 196 ) ( 366 ) Total deferred ( 648 ) ( 300 ) Total $ 1,369 $ 423 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): 93 Year Ended March 31, 2026 Rate Reconciliation Category Total Amount Rate (%) Earnings Before Income Taxes $ 86,020 U.S. Federal Statutory Tax Rate (21.0%) 18,064 21.0 % RECONCILING ITEMS: 1. State and Local Income Taxes, Net of Federal Effect 1 112 0.1 % 2. Foreign Tax Effects Detail by Jurisdiction: Australia Rate Differential ( 1,472 ) - 1.7 % Valuation allowance 3,742 4.4 % Other 993 1.2 % Other Foreign Jurisdictions 822 0.9 % 3. Effect of Changes in Tax Laws or Rates Enacted in Current Period — 0.0 % 4. Effect of Cross-Border Tax Laws Branch Income 430 0.5 % 5. Tax Credits Research & Development Credit ( 30 ) 0.0 % Foreign Tax Credit ( 810 ) - 1.0 % 6. Changes in Valuation Allowances 3,204 3.7 % 7. Nontaxable or Nondeductible Items Bargain Purchase Gain ( 23,350 ) - 27.1 % Other Permanent Items ( 135 ) - 0.2 % 8. Changes in Unrecognized Tax Benefits — 0.0 % 9. 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, 2025 2024 Expected Federal income tax benefit U.S. statutory rate $ ( 1,048 ) 21.0 % $ ( 831 ) 21.0 % Foreign rate differential ( 101 ) 2.0 % 399 - 10.1 % State income taxes, net of federal benefit ( 165 ) 3.3 % ( 125 ) 3.2 % Micro-captive insurance benefit — 0.0 % ( 306 ) 7.7 % Change in valuation allowance 1,272 - 25.5 % 1,909 - 48.3 % Income attributable to minority interest - Contrail ( 140 ) 2.8 % ( 217 ) 5.5 % Other differences, net 605 - 12.1 % ( 100 ) 2.5 % 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 94 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. 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. These net operating losses will begin to expire in tax year 2031. The Company has foreign tax credits of $ 1.2 million that will begin to expire in tax year 2029. Deferred tax assets and liabilities were comprised of the following (in thousands): Year Ended March 31, 2026 2025 Net operating loss & attribute carryforwards $ 64,728 $ 11,681 Accrued expenses 5,937 442 Unrealized losses on investments 1,839 1,540 Inventory — 1,149 Lease liabilities 3,963 3,463 Investment in partnerships 1,455 — Other deferred tax assets 4,847 1,753 Total deferred tax assets 82,769 20,028 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 ) Foreign intangible assets ( 2,532 ) ( 1,830 ) Investment in partnerships — ( 2,159 ) Other deferred tax liabilities ( 1,726 ) ( 403 ) Total deferred tax liabilities ( 62,219 ) ( 11,072 ) Net deferred tax assets 20,550 8,956 Less valuation allowance ( 22,048 ) ( 11,103 ) Net deferred tax liabilities $ ( 1,498 ) $ ( 2,147 ) 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. The Company continues to assert that it will permanently reinvest all other foreign earnings, including basis differences of all the Company's foreign subsidiaries. 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 a determination is not practicable. 95 Valuation Allowance Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended March 31, 2026. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of March 31, 2026, a valuation allowance of $ 22.0 million (inclusive of the Delphax entities’ valuation allowances that were discussed above) has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. The Organization for Economic Co-operation and Development ("OECD") has introduced a framework to implement a global minimum tax. Several jurisdictions in which the Company operates have enacted laws effective January 1, 2024, consistent with the OECD's framework. While details around the global minimum tax in each jurisdiction are uncertain, the Company has assessed the applicability of these rules and determined that it is not subject to the global minimum tax for the fiscal year ending March 31, 2026. Delphax Effective on November 24, 2015, Air T, Inc. purchased interests in Delphax. 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. The net operating losses expire in varying amounts beginning in the tax year 2027. 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, 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. 19. GEOGRAPHICAL INFORMATION 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 Australia 142,013 8 Bulgaria — 14,435 Other Foreign 82 82 Total tangible long-lived assets, net $ 162,024 $ 34,947 Total revenue is summarized in the following table (in thousands): 96 Year Ended March 31, 2026 2025 Operating Revenues: Overnight Air Cargo United States $ 118,178 $ 120,804 Foreign 5,518 3,227 Total Overnight Air Cargo 123,696 124,031 Ground Support Equipment United States 45,316 36,175 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 United States 1,963 1,781 Foreign 7,118 5,487 Total Digital Solutions 9,081 7,268 Regional Airline United States — — Australia 55,314 — Total Regional Airline 55,314 — Corporate and Other United States 4,143 3,324 Foreign 752 72 Total Corporate and Other 4,895 3,396 Total Revenue $ 327,090 $ 291,850 97 20. SEGMENT INFORMATION Air T's portfolio of businesses are managed on a highly decentralized basis. These businesses are aggregated into operating segments in a manner that reflects how Air T views the business activities. 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 Principal Business Activities Overnight Air Cargo Overnight air cargo primarily operates under its relationship with FedEx spanning over 40 years and represent two of eight companies in the U.S. that have North American feeder airlines under contract with FedEx. MAC and CSA operate and maintain Cessna Caravan, Sky Courier, ATR-42 and ATR-72 aircraft that fly daily small-package cargo routes throughout the eastern 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; provides commercial aircraft disassembly/part-out services; commercial aircraft parts sales; procurement services and overhaul and repair services to airlines 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. 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. Intersegment eliminations are included to reconcile segment totals to consolidated amounts. The cost and expense information presented below is based on the information regularly provided to the CODM. Further, asset information is not included in the information regularly provided to the CODM as they are not a key determining factor in the performance of the Company's reportable segments. The Company also has a "Corporate and Other" category which includes unallocated Air T holding company costs that are not directly attributable to the ongoing operating activities of our reportable segments in addition to revenues and expenses for non-reportable operating segments. Segment data is summarized in the following tables (in thousands): 98 Year ended March 31, 2026 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 Intersegment revenue 4,991 2,990 — 16 — 7,997 128,687 89,909 47,185 9,097 55,314 330,192 Reconciliation of revenue Other revenue 1 5,074 Elimination of intersegment revenue 2 ( 8,176 ) Total consolidated revenue $ 327,090 Cost of sales: Cost of sales from external sources 104,100 61,579 36,726 3,589 44,878 Intersegment cost of sales 4,992 3,329 — 14 138 109,092 64,908 36,726 3,603 45,016 Less: 3 General and administrative 12,842 25,066 6,209 5,922 15,476 Gain from sale of aircraft — ( 7,034 ) — — — Other segment items 4 564 738 140 851 9,058 Segment profit (loss) 6,189 6,231 4,110 ( 1,279 ) ( 14,236 ) 1,015 Reconciliation of profit (loss) Other revenue 1 5,074 Other cost of sales 1 ( 1,935 ) Other expenses 1 ( 4,501 ) Interest expense ( 12,040 ) Income from equity method investments ( 1,740 ) Gain on bargain purchase 111,190 Other non-operating expense 5 ( 193 ) Other corporate expenses ( 12,077 ) Elimination of intersegment profits 1,227 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 $ 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. Intersegment expenses are included within the amounts shown. 4 Other segment items consist of depreciation and amortization and remeasurement of the earnout liability. 5 Other corporate expenses consist of unallocated expenses that are related to the activities of Corporate and other in support of the overall business. Unallocated expenses include, but are not limited to: shared services that are not allocated, costs associated with the corporate headquarters, and expenses related to identifying and pursuing new corporate business initiatives. 99 Year ended March 31, 2025 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 Intersegment revenue 880 1,197 — — — 2,077 124,911 119,412 38,940 7,268 — 290,531 Reconciliation of revenue Other revenue 1 3,570 Elimination of intersegment revenue 2 ( 2,251 ) Total consolidated revenue $ 291,850 Cost of sales: Cost of sales from external sources 104,760 84,896 33,994 2,462 — Intersegment cost of sales 911 1,323 — — — 105,671 86,219 33,994 2,462 — Less: 3 General and administrative 12,531 24,113 5,888 5,078 — Other segment items 4 489 2,583 268 792 — Segment profit (loss) 6,220 6,497 ( 1,210 ) ( 1,064 ) — 10,443 Reconciliation of profit (loss) Other revenue 1 3,570 Other cost of sales 1 ( 1,191 ) Other expenses 1 ( 3,930 ) Interest expense ( 8,387 ) Income from equity method investments 1,700 Other non-operating expense ( 209 ) Other corporate expenses 5 ( 7,878 ) Elimination of intersegment profits 894 Loss before income taxes $ ( 4,988 ) 1 Revenue, cost of sales, and expenses from segments below the quantitative thresholds or that do not constitute a business segment are attributable to an investment advisory business, a laser printer manufacturer, and a commercial property owned by the Company. 2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 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. Intersegment expenses are included within the amounts shown. 4 Other segment items consist of depreciation and amortization and remeasurement of the earnout liability. 5 Other corporate expenses consist of unallocated expenses that are related to the activities of Corporate and other in support of the overall business. Unallocated expenses include, but are not limited to: shared services that are not allocated, costs associated with the corporate headquarters, and expenses related to identifying and pursuing new corporate business initiatives. 100 Year ended March 31, 2026 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 Capital Expenditures 460 580 91 — 14,972 16,103 380 16,483 Year ended March 31, 2025 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 Capital Expenditures 418 14,911 217 36 — 15,582 97 15,679 101 21. EARNINGS PER COMMON SHARE Basic earnings per share has been calculated by dividing net income (loss) attributable to Air T, Inc. stockholders by the weighted average number of common shares outstanding during each period. For purposes of calculating diluted earnings per share, shares issuable under stock options were considered potential common shares and were included in the weighted average common shares unless they were anti-dilutive. As of 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. 22. COMMITMENTS AND CONTINGENCIES Put/Call Options and Earnout Contrail entered into an Operating Agreement (the “Contrail Operating Agreement”) in connection with the acquisition of Contrail providing for the governance of and the terms of membership interests in Contrail and including put and call options with the Seller to require Contrail to purchase all of the Seller’s equity membership interests in Contrail, such options commencing on the fifth anniversary of the acquisition, which occurred on July 18, 2021. On May 30, 2024, Contrail entered into a Membership Interest Redemption and Earnout Agreement (the "Redemption Agreement") with the Seller. Pursuant to the Redemption Agreement, Contrail agreed to purchase and redeem from the Seller, 16 % of its 21 % interest in Contrail, with the earnout period being retroactive to April 1, 2024. The purchase price for the redeemed interest is $ 4.6 million in the form of a secured, subordinated promissory note, plus an earnout amount valued at $ 1.1 million. Under the 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, 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. Pursuant to the new Put and Call Agreement, commencing April 1, 2026 and at any time thereafter, either Contrail or the Seller has the option to elect by written notice to purchase or sell all of the remaining 5 % interest in Contrail held by the Seller. The purchase price for the 5 % interest is equal to 5 % of the Contrail Equity Value, which is defined as an amount equal to nine times the average Adjusted EBITDA of Contrail's most recent three completed fiscal years at the time an option notice is delivered. The 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 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. The non-controlling interest holders are the executive management of the underlying business. The Shanwick Put/Call Option grants the Company an option to purchase the 30.0 % interest at the call option price that equals the average EBIT over the three Financial Years prior to the exercise of the Call Option multiplied by eight . In addition, the Shanwick Put/Call Option also grants the non-controlling interest owners an option to require the Company to purchase from them their respective ownership interests at the Put Option price, that is equal to the average EBIT over the three Financial Years prior to the exercise of the Put Option multiplied by seven and one-half. The Call Option and the Put Option may be exercised at any time from the fifth anniversary of the shareholder agreement and then only at the end of each fiscal year of Air T ("Shanwick RNCI"). 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 102 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. The Shanwick RNCI and Contrail RNCI are measured at the higher of their carrying value or redemption value. As of March 31, 2026, the balances were comprised of the following (in thousands): Shanwick RNCI Contrail RNCI Total Beginning Balance as of April 1, 2025 $ 5,176 $ 1,878 $ 7,054 Contribution from non-controlling members — — — Distribution to non-controlling members ( 493 ) ( 651 ) ( 1,144 ) Net income attributable to non-controlling interests 439 449 888 Other comprehensive income attributable to the RNCI 184 — 184 Redemption value adjustments 958 2,406 3,364 Redemption of non-controlling interests — — — Ending Balance as of March 31, 2026 $ 6,264 $ 4,082 $ 10,346 CAM and CJVII For CAM's Investment Function, as described in Note 10 , CAM's initial commitment to CJVII was approximately $ 51.0 million. The Company and MRC have commitments to CAM in the respective amounts of $ 7.0 million and $ 44.0 million. These represent the investor interests of CAM, separate and distinct from the common interests. Any investment returns on CAM’s investor interests are shared pro-rata between the Company and MRC for each individual investment at the CJVII Series. Per its Operating Agreement, CAM is comprised of only two Series: the Onshore and the Offshore Series. Participation in each is determined solely based on whether a potential investment at the CJVII Series is a domestic (Onshore) or international (Offshore) investment. As of March 31, 2026, for its Investment Function, the Company has contributed $ 19.7 million to CAM’s Offshore Series and $ 1.0 million to CAM’s Onshore Series. The Company fulfilled its Investment Function initial commitment to CAM in fiscal year 2023. In connection with the formation of CAM, MRC had a fixed price put option of $ 1.0 million to sell its common equity in CAM to the Company at each of the first three ( 3 ) anniversary date. The fixed price put option expired on May 5, 2024. At the later of (a) five ( 5 ) years after execution of the agreement and (b) distributions to MRC per the waterfall equal to their capital contributions, Air T has a call option and MRC has a put option on the MRC common interests in CAM ("secondary put and call option"). If either party exercises the option, the exercise price will be fair market value if Air T pays in cash at closing or 112.5 % of fair market value if Air T opts to pay in three ( 3 ) equal annual installments after exercise. 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. 23. GUARANTEES Nonfinancial Guarantees 103 From time to time, we may issue guarantees or indemnifications to third parties assuring performance of lease agreements pertaining to aircraft assets owned by certain CJVII Series ("nonfinancial guarantees"). Air T's performance under these guarantees would be triggered by failure of the series to perform in accordance with the terms stated in the lease agreements. Nonfinancial guarantees and indemnifications are recorded at fair value at their inception. We regularly review our performance risk under these arrangements, and in the event it becomes probable that we will be required to perform under a guarantee or indemnity, the amount of probable payment will be recorded. The maximum potential payments for nonfinancial guarantees may vary over time given changing circumstances related to the underlying asset. 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. 24. 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. 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. 25. SUBSEQUENT EVENTS 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 104 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. 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. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None