AIR T INC 10-Q

Item 1. Financial Statements AIR T, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) (In thousands, except per share data) Three Months Ended June 30, 2026 2025 Operating Revenues: Regional airline $ 55,909 $ — Overnight air cargo 29,969 30,589 Commercial aircraft, engines and parts 20,523 21,960 Ground support equipment 3,683 15,070 Digital solutions 2,487 2,096 Aviation leasing and asset management 1,365 — Corporate and other 1,525 1,155 115,461 70,870 Operating Expenses: Regional airline (exclusive of depreciation) 45,258 — Overnight air cargo 24,628 25,899 Commercial aircraft, engines and parts 14,791 14,656 Ground support equipment 2,526 12,303 Digital solutions 887 836 Aviation leasing and asset management 233 — Corporate and other 430 415 General and administrative 29,648 15,031 Depreciation and amortization 9,885 1,284 Earnout remeasurement — ( 402 ) 128,286 70,022 Operating (loss) income ( 12,825 ) 848 Non-operating (expense) income: Interest expense ( 5,673 ) ( 2,314 ) Income (loss) from equity method investments 3,215 ( 19 ) Other 246 678 ( 2,212 ) ( 1,655 ) Loss before income taxes ( 15,037 ) ( 807 ) Income tax expense (benefit) 660 ( 136 ) Net loss ( 15,697 ) ( 671 ) Net income attributable to non-controlling interests ( 112 ) ( 965 ) Net loss attributable to Air T, Inc. stockholders $ ( 15,809 ) $ ( 1,636 ) Loss per share (Note 6) Basic $ ( 5.86 ) $ ( 0.61 ) Diluted $ ( 5.86 ) $ ( 0.61 ) Weighted average shares outstanding: Basic 2,696 2,703 Diluted 2,696 2,703 See notes to condensed consolidated financial statements. 4 AIR T, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended June 30, (In thousands) 2026 2025 Net loss $ ( 15,697 ) $ ( 671 ) Foreign currency translation gain 832 413 Unrealized gain on interest rate swaps 57 — Reclassification of interest rate swaps into earnings 12 12 Allocation of comprehensive income from unconsolidated investments ( 83 ) 5 Allocation of comprehensive income from noncontrolling interests 32 ( 248 ) Total other comprehensive gain 850 182 Total comprehensive loss ( 14,847 ) ( 489 ) Comprehensive income attributable to non-controlling interests ( 112 ) ( 965 ) Comprehensive loss attributable to Air T, Inc. stockholders $ ( 14,959 ) $ ( 1,454 ) See notes to condensed consolidated financial statements. 5 AIR T, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share amounts) June 30, 2026 March 31, 2026 ASSETS Current Assets: Cash and cash equivalents $ 16,667 $ 20,332 Marketable securities 1,247 1,026 Restricted cash 4,987 4,938 Accounts receivable, net of allowance for doubtful accounts of $ 1,706 and $ 1,614 33,304 39,889 Income tax receivable 676 196 Inventories, net 90,056 77,127 Prepaid expenses 6,710 8,851 Other current assets 4,475 7,617 Total Current Assets 158,122 159,976 Notes receivable - Crestone Asset Management, LLC ("CAM") — 1,160 Notes receivable - Bloomia Holdings, Inc. ("Bloomia") — 3,600 Debt investments (Note 8) 8,292 9,286 Property and equipment, net of accumulated depreciation of $ 27,446 and $ 18,571 175,185 162,024 Intangible assets, net of accumulated amortization of $ 8,667 and $ 8,046 57,083 13,029 Right-of-use ("ROU") assets 17,380 14,594 Equity method investments 27,858 26,068 Deferred income tax assets, net 266 102 Goodwill 19,592 11,818 Other assets 5,285 7,466 Total Assets 469,063 409,123 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable 41,017 36,971 Income taxes payable 977 687 Accrued expenses and other (Note 4) 55,766 49,717 Current portion of long-term debt 9,046 3,633 Current portion of long-term debt - related party (Note 12) — 915 Current portion of earnout liabilities — 198 Short-term lease liabilities 3,888 3,403 Total Current Liabilities 110,694 95,524 Long-term debt 237,290 204,563 Deferred income tax liabilities, net 9,329 3,359 Long-term lease liabilities 14,553 12,189 Long-term earnout liabilities 12,388 244 Other non-current liabilities 1,651 2,023 Total Liabilities 385,905 317,902 Redeemable non-controlling interests 16,291 10,346 Commitments and contingencies (Note 14) Equity: Air T, Inc. Stockholders' Equity: Preferred stock, $ 1.00 par value, 4,000,000 shares authorized — — Common stock, $ 0.25 par value; 4,000,000 shares authorized, 3,030,245 shares issued, 2,691,664 and 2,701,375 shares outstanding 758 758 Treasury stock, 338,581 shares at $ 19.63 and 328,870 shares at $ 19.56 ( 6,648 ) ( 6,432 ) Additional paid-in capital 1,687 1,122 Retained earnings 64,304 80,113 Accumulated other comprehensive income 5,099 4,249 Total Air T, Inc. Stockholders' Equity 65,200 79,810 Non-controlling Interests 1,667 1,065 Total Equity 66,867 80,875 Total Liabilities and Equity $ 469,063 $ 409,123 See notes to condensed consolidated financial statements. 6 AIR T, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands) Three Months Ended June 30, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 15,697 ) $ ( 671 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 9,885 1,284 (Income) loss from equity method investments ( 3,215 ) 19 Other 893 440 Changes in operating assets and liabilities: Accounts receivable 6,789 ( 653 ) Inventories ( 12,817 ) ( 1,356 ) Accounts payable 3,003 133 Accrued expenses 1,559 3,817 Income taxes payable 44 ( 335 ) Other current assets 3,596 ( 2,821 ) Other 3,130 ( 952 ) Net cash used in operating activities ( 2,830 ) ( 1,095 ) CASH FLOWS FROM INVESTING ACTIVITIES: Investments in unconsolidated entities ( 8,822 ) ( 2,037 ) Distributions from unconsolidated entities 3,164 848 Advances on debt investments ( 3,965 ) — Proceeds from debt investments 4,998 — Proceeds from notes receivable - CAM 1,160 — Capital expenditures related to property and equipment ( 21,323 ) ( 231 ) Acquisitions of businesses, net of cash acquired ( 19,177 ) ( 1,180 ) Other ( 58 ) ( 124 ) Net cash used in investing activities ( 44,023 ) ( 2,724 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from lines of credit 55,390 35,966 Payments on lines of credit ( 37,613 ) ( 32,201 ) Proceeds from term loan 15,000 10,850 Payments on term loan ( 1,060 ) ( 1,752 ) Proceeds from issuance of Trust Preferred Securities ("TruPs") 755 — Contribution from redeemable non-controlling interests 10,000 — Other ( 173 ) ( 286 ) Net cash provided by financing activities 42,299 12,577 Effect of foreign currency exchange rates on cash and cash equivalents 938 ( 292 ) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 3,616 ) 8,466 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 25,270 6,757 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 21,654 $ 15,223 See notes to condensed consolidated financial statements. 7 AIR T, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) (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, 2026 3,030 $ 758 329 $ ( 6,432 ) $ 1,122 $ 80,113 $ 4,249 $ 1,065 $ 80,875 Net (loss) income 1 — — — — — ( 15,809 ) — 1 ( 15,808 ) Contributions from non-controlling interests — — — — — — — 564 564 Repurchase of common stock — — 10 ( 216 ) — — — — ( 216 ) Stock compensation expense — — — — 47 — — — 47 Foreign currency translation gain 2 — — — — — — 832 — 832 Unrealized gain on interest rate swaps — — — — — — 57 — 57 Reclassification of interest rate swaps into earnings — — — — — — 12 — 12 Allocation of comprehensive loss from unconsolidated investments — — — — — — ( 83 ) — ( 83 ) Allocation of comprehensive income to redeemable non-controlling interests — — — — — — 32 — 32 ATA 25.1 warrants — — — — — — — 37 37 Redemptions of redeemable non-controlling interests — — — — 518 — — — 518 8 Balance, June 30, 2026 3,030 $ 758 339 $ ( 6,648 ) $ 1,687 $ 64,304 $ 5,099 $ 1,667 $ 66,867 (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 (loss) income 1 — — — — — ( 1,636 ) — 52 ( 1,584 ) Distributions to non-controlling interests — — — — — — — ( 38 ) ( 38 ) Stock compensation expense — — — — 40 — — — 40 Foreign currency translation gain 2 — — — — — — 413 — 413 Reclassification of interest rate swaps into earnings — — — — — — 12 — 12 Allocation of comprehensive income from unconsolidated investments — — — — — — 5 — 5 Allocation of comprehensive loss to redeemable non-controlling interests — — — — — — ( 248 ) — ( 248 ) Balance, June 30, 2025 3,030 $ 758 328 $ ( 6,404 ) $ 987 $ 494 $ ( 465 ) $ 1,712 $ ( 2,918 ) (1) Excludes amount attributable to redeemable non-controlling interests in Contrail Aviation Support, LLC ("Contrail") and Shanwick B.V. ("Shanwick") (2) Cumulative translation adjustments were at a loss of $ 0.4 million and a gain of $ 0.1 million as of March 31, 2025 and June 30, 2025, respectively, and a gain of $ 4.5 million and $ 5.3 million as of March 31, 2026 and June 30, 2026, respectively. See notes to condensed consolidated financial statements. 9 AIR T, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) INDEX TO NOTES Notes to Condensed Consolidated Financial Statements (Unaudited) 1 Financial Statement Presentation 11 2 Acquisitions 11 3 Revenue Recognition 14 4 Accrued Expenses and Other 16 5 Income Taxes 16 6 Net Loss Per Share 16 7 Intangible Assets and Goodwill 16 8 Debt Investments 18 9 Equity Method Investments 18 10 Inventories 21 11 Lessee Arrangements 21 12 Financing Arrangements 22 13 Segment Information 26 14 Commitments and Contingencies 30 15 Subsequent Events 31 10 1. Financial Statement Presentation The condensed consolidated financial statements of Air T, Inc. (“Air T”, the “Company”, “we”, “us” or “our”) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results for the periods presented have been made. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 2026. The unaudited results of operations for the period ended June 30, 2026 are not necessarily indicative of the operating results for the full year. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Recently Issued Accounting Pronouncements In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. This update does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this amendment on its condensed consolidated financial statements and disclosures. 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 2026 Arena Aviation Partners B.V. On June 10, 2026, Crestone Air Partners, LLC ("CAP"), a subsidiary of Air T, Inc., completed the acquisition of 100 % of the outstanding equity interests of Arena Aviation Partners B.V. ("Arena"), an aviation asset management and aircraft leasing company for a purchase price of $ 33.9 million (the "Acquisition"). The Company acquired Arena to expand its aviation leasing and asset-management platform. The acquired business is included in the aviation leasing and asset management segment. The Acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). Consideration for the acquisition included cash of $ 21.7 million and contingent consideration with a fair value of $ 12.2 million. The contingent consideration consists of future cash payments to certain former owners of Arena equal to 57.5 % of specified performance-based fees collected under certain servicing agreements acquired as part of the transaction. Payments are not contingent upon continued employment. The ultimate amount payable depends on future collections associated with the underlying agreements and is not subject to a contractual cap. The contingent consideration was recorded as a liability at its acquisition-date fair value and will be remeasured to fair value at each reporting date until settled, with changes recognized in earnings. For purposes of determining the fair value of the contingent consideration, 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 forecasted expected future payments based on the performance-based fees expected to be collected over the term of the earnout. The fair value of the contingent consideration would have been materially different if there was a significant change to the projected performance-based fees and the credit spread of 5.0 % used to discount projected future payments of the earnout. The purchase price was allocated to identifiable asse ts and liabilities based on information available on the date of the acquisition. The current purchase price allocation resulted in goodwill of $ 8.2 million . 11 The allocation of the purchase price is preliminary and will potentially change in future periods as fair value estimates of the assets acquired and liabilities assumed are finalized, including those related to int angible assets, deferred taxes, and other acquisition-date estimates. The final determination of the fair values will be completed within the one-year measurement period. The purchase price was paid at closing, and transaction costs associated with the acquisition of $ 3.0 million were expensed as incurred and recognized within general and administrative expenses. The following table summarizes the current acquisition-date fair values of the assets acquired and liabilities assumed as of June 10, 2026 (in thousands): Fair Value of Assets Acquired and Liabilities Assumed Amount Assets: Cash and cash equivalents $ 2,589 Accounts receivable, net of allowance for doubtful accounts 470 Tax receivable 466 Prepaid expenses 6 Other current assets 210 Property and equipment 154 ROU assets 168 Intangible assets 29,684 Equity method investments 731 Goodwill 8,228 Total Assets 42,706 Liabilities Accounts payable ( 696 ) Accrued expenses and other ( 13 ) Tax liabilities ( 232 ) Other liabilities ( 27 ) Current lease liability ( 71 ) Non-current lease liability ( 98 ) Deferred tax liability ( 7,659 ) Total Liabilities ( 8,796 ) Net Assets Acquired $ 33,910 As of the effective date of the acquisition, identifiable intangible assets are required to be measured at fair value. For purposes of these consolidated financial statements, the fair value and weighted-average useful lives of these intangible assets have been estimated using the excess earnings method under the income approach. Significant inputs used to value these intangible assets include probability of renewal, contributory asset charge, long-term growth rates, discount rates, and applicable income tax rates. For purposes of determining the fair value of the identifiable intangible assets, 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 forecasted associated cash flows related to the customer relationships at Arena that drive the income for the acquired business. The fair value of the customer relationships would have been materially different if there was a significant change to the cash flows associated with the customer relationships and/or the discount rate applied to the cash flows for the existing contracts and institutional investor relationships of 21.0 % and 25.0 %, respectively. The following table sets forth the identifiable intangible assets and their useful lives as of June 10, 2026 (in thousands): Identifiable Intangible Assets Useful Life in Years Fair Value Customer relationships - existing contracts 4 $ 14,193 Customer relationships - institutional investor relationships 11 15,491 12 Revenues of $ 0.6 million and a net loss of $ 0.4 million attributable to Arena are included in the Company’s unaudited condensed consolidated statements of income (loss) for the period beginning on June 10, 2026 and ending on June 30, 2026. Pro Forma Consolidated Financial Information The unaudited pro forma consolidated results for the three months ended June 30, 2026 and 2025 were prepared using the acquisition method of accounting and are based on the historical financial information of Arena 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 financial information presents the Company's results as if the acquisition had occurred on April 1, 2025, and is not indicative of what the Company’s consolidated results of operations actually would have been had it completed the acquisition on April 1, 2025. The pro forma adjustments do not include any of the cost savings and other synergies anticipated from the acquisition (in thousands). Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Revenue $ 116,991 $ 73,452 Net Loss ( 18,248 ) ( 4,108 ) 2025 Regional Express Holdings Pty Ltd On December 18, 2025, Air T Rex Acquisition, Inc., a wholly owned subsidiary of the Company, acquired substantially all of the outstanding capital stock of Regional Express Holdings Pty Ltd ("Rex"), an Australian regional airline operator that had been in voluntary administration, pursuant to a Deed of Company Arrangement and a related Creditors Trust. Consideration transferred was $ 10.2 million, and the Company recognized a gain on bargain purchase of $ 111.2 million during the year ended March 31, 2026 within non-operating (expense) income. The acquisition established the Company’s regional airline segment. A complete description of the transaction, including the acquisition-date fair values of the assets acquired and liabilities assumed and the calculation of the gain on bargain purchase, is included in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2026. The initial accounting for the Rex acquisition remains incomplete. The amounts recorded for aircraft and related equipment, right-of-use assets and lease liabilities, certain accrued liabilities and contingencies arising from the administration process, and income tax balances are provisional pending completion of the Company’s valuation analyses. No measurement period adjustments were recognized during the three months ended June 30, 2026, and the amounts recognized as of the acquisition date are unchanged from those reported in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2026. The measurement period will end no later than December 18, 2026. Changes to these provisional amounts during the remainder of the measurement period may result in material adjustments to the fair values of the assets acquired and liabilities assumed and to the gain on bargain purchase. The results of operations of Rex are included in the Company’s condensed consolidated financial statements for the three months ended June 30, 2026. Because Rex was acquired subsequent to June 30, 2025, no amounts related to Rex are included in the comparative prior year period. 13 3. 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 June 30, 2026: Type of Revenue Nature, Timing of Satisfaction of Performance Obligations, and Significant Payment Terms 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. 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. 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 that provide 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. 14 Aviation Leasing and Asset Management Revenue The Company provides aircraft asset management and investment services on behalf of joint venture investors, generating revenue through origination fees, sourcing and due diligence fees, administrative fees, and management incentive fees. These fees are recognized as revenue when earned at the close of a given transaction, with each lease rent payment, upon sale of an asset or completion of a lease contract, or when performance-based uncertainty is resolved. Leasing Revenue Leasing revenue is recognized in accordance with ASC Topic 842. The following table summarizes disaggregated revenues by type (in thousands): Three Months Ended June 30, 2026 2025 Regional Airline Revenue Regional airline $ 52,212 $ — Product Sales Overnight air cargo 10,842 12,476 Commercial aircraft, engines and parts 17,412 17,760 Ground support equipment 3,543 14,337 Corporate and other 260 167 Support Services Overnight air cargo 18,987 17,992 Commercial aircraft, engines and parts 2,834 2,242 Ground support equipment 71 419 Corporate and other 6 16 Other Regional airline 3,697 — Overnight air cargo 140 121 Commercial aircraft, engines and parts 261 203 Ground support equipment 69 314 Corporate and other 851 517 Software Services Digital solutions 2,487 2,096 Aviation Leasing and Asset Management Aviation leasing and asset management 1,365 — Leasing Revenue Commercial aircraft, engines and parts 16 1,755 Corporate and other 408 455 Total $ 115,461 $ 70,870 See Note 13 for the Company’s disaggregated revenues by segment. These notes disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. 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 June 30, 2026 and March 31, 2026 were $ 24.2 million and $ 22.8 million, respectively. The amount of contract liabilities outstanding as of March 31, 2026 that were recognized during the first quarter of fiscal 2027 was $ 19.5 million. 15 4. Accrued Expenses and Other (In thousands) June 30, 2026 March 31, 2026 Salaries, wages and related items $ 17,172 $ 15,774 Profit sharing and bonus 4,698 4,416 Other deposits 1,788 849 Deferred income 22,588 22,153 Accrued interest expense 2,322 3,542 Other 4,310 2,983 Total $ 55,766 $ 49,717 5. Income Taxes During the three-month period ended June 30, 2026, the Company recorded $ 0.7 million in income tax expense at an effective tax rate ("ETR") of ( 4.4 )%. The Company has computed the provision for income taxes using the discrete method. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended June 30, 2026 is the effect of the pre-tax loss and the U.S. consolidated group being in an estimated taxable income position, principally due to limitations of interest expense, notwithstanding the full valuation allowance on the Company’s U.S. consolidated group, as well as the valuation allowance related to Delphax Technologies, Inc. (“DTI”), Delphax Solutions, Inc. ("DSI"), and Rex and its subsidiaries, and the foreign rate differentials for Air T’s operations located in Australia, the Netherlands, Ireland and Puerto Rico. During the three-month period ended June 30, 2025, the Company recorded an income tax benefit of $ 0.1 million at an ETR of 16.9 %. The Company has computed the provision for income taxes based on the estimated annual ETR excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's ETR for the three-month period ended June 30, 2025 were the valuation allowance related to the Company's U.S. consolidated group, DTI, Landing Gear Support Services PTE LTD ("LGSS"), DSI, and BCCM Advisors (Kenya) Limited (“BCCM Kenya”), and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico. 6. Net Loss Per Share Basic loss per share has been calculated by dividing net loss attributable to Air T, Inc. stockholders by the weighted average number of common shares outstanding during each period. For purposes of calculating diluted loss per share, shares issuable under stock options were considered potential common shares and were included in the weighted average common shares unless they were anti-dilutive. As of June 30, 2026, of the 212,000 options outstanding under 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 three months ended June 30, 2026, the Company had 212,000 potential shares from share-based awards that were anti-dilutive. 7. Intangible Assets and Goodwill Intangible assets as of June 30, 2026 and March 31, 2026 consisted of the following (in thousands): 16 June 30, 2026 Gross Carrying Amount Accumulated Amortization Net Book Value Purchased software $ 889 $ ( 714 ) $ 175 Internally developed software 5,180 ( 1,719 ) 3,461 In-place lease and other intangibles 1,094 ( 580 ) 514 Customer relationships 53,230 ( 3,129 ) 50,102 Patents 1,139 ( 1,118 ) 21 Government contracts 718 ( 369 ) 349 Tradenames 1,238 ( 88 ) 1,150 Other 1,318 ( 950 ) 368 64,806 ( 8,667 ) 56,140 In-process software 943 — 943 Intangible assets, total $ 65,749 $ ( 8,667 ) $ 57,083 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 Intangible assets obtained through the acquisition of Arena consisted of customer relationships for existing contracts and institutional investors and are included as part of customer relationships. Refer to Note 2 for additional information on the acquisition of Arena and related intangible assets. As discussed in Note 9 , the Company received a distribution of the rights to servicing agreements from CAM during the three months ended June 30, 2026. The fair value on distribution of the servicing agreements was $ 15.5 million and is included within customer relationships. The asset was deemed to have a useful life of five years . For purposes of determining the fair value of the identifiable intangible asset, the Company utilized a DCF approach, consistent with market practice and applicable accounting standards to estimate the fair value based on the absence of observable market inputs. The DCF values forecasted associated cash flows related to the servicing agreements that made up the asset management function at CAM. The fair value of the servicing agreements would have been materially different if there was a significant change to the cash flows associated with the servicing agreements and/or the discount rate applied to the cash flows for the servicing agreements of 14.5 %. The increase in customer relationships from March 31, 2026 to June 30, 2026 was primarily driven by the Arena acquisition and distribution from CAM. In addition, changes in foreign currency translation rates can result in changes to intangible asset balances displayed above. Based on the intangible assets recorded at June 30, 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): 17 Year ending March 31, Amortization Expense 2027 (excluding the three months ended June 30, 2026) $ 6,892 2028 8,657 2029 8,567 2030 8,559 2031 5,646 2032 4,705 Thereafter 13,114 $ 56,140 Amortization expense totaled $ 0.9 million and $ 1.2 million for the three months ended June 30, 2026 and 2025, respectively. Goodwill for relevant segments and corporate and other, at original cost, consists of the following (in thousands): June 30, 2026 March 31, 2026 Overnight air cargo $ 1,113 $ 1,113 Commercial aircraft, engines and parts 4,227 4,227 Digital solutions 6,446 6,478 Aviation leasing and asset management 7,806 — Total reportable segment goodwill, at cost 19,592 11,818 Corporate and other 376 376 Less accumulated impairment ( 376 ) ( 376 ) Goodwill, net of impairment $ 19,592 $ 11,818 The increase in the carrying amount of goodwill from March 31, 2026 to June 30, 2026 is primarily attributable to the Arena acquisition (as described in Note 2 ), as well as adjustments due to changes in foreign exchange rates. Subsequent to the acquisition of Arena, there was a purchase accounting adjustment for $ 0.3 million that reduced goodwill, There was no impairment of goodwill during the three months ended June 30, 2026. 8. Debt Investments The Company participates in profit participation notes receivable ("PPN") as part of the Company's investment strategy in association with its aircraft investments. The Company has subscribed to one PPN with Blue Crest Prospector Pico Duarte DAC ("Pico Duarte") and a second PPN with Blue Crest Aerie 1 DAC ("Aerie"). The issuer of the PPN utilizes the funds received to purchase aircraft investments that are on lease with a third party to generate income to repay the PPNs with interest. The Pico Duarte PPN does not have a stated interest rate, but accrues interest at 100 % of the associated profits, as dictated by the respective agreements. The Aerie PPN accrues interest at the greater of 4.0 % per annum or 100 % of the accumulated net accounting profits, as dictated by the respective agreement. The following table summarizes the terms of the related notes in addition to the principal outstanding (in thousands): Principal Outstanding PPN 6/30/2026 3/31/2026 Maximum Participation Maturity Date Pico Duarte $ 4,808 $ 9,286 $ 20,000 2/22/2046 Aerie 3,484 — 4,000 3/30/2046 9. Equity Method Investments Bloomia Holdings, Inc. investment The Company’s investment in Bloomia (NASDAQ: TULP), formerly Lendway, Inc., formerly Insignia Systems, Inc., is accounted for under the equity method of accounting. As of June 30, 2026, the number of Bloomia's shares owned by the Company was 1,605,000 , representing approximately 33.7 % of the outstanding shares. In April 2026, as part of a rights offering by Bloomia, the Company exchanged the full balance of 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 18 shares for $ 0.5 million. Due to the subordinated financial support, Bloomia is a variable interest entity to which the Company holds variable interests in the common stock. The Company has determined 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 33.7 % ownership in Bloomia's common stock. Accordingly, the Company does not consolidate Bloomia and will continue to account for this investment using the equity method of accounting. Cadillac Casting, Inc. investment The Company's 20.1 % investment in Cadillac Casting, Inc. ("CCI") is accounted for under the equity method of accounting. Due to the differing fiscal year-ends, the Company has elected a three-month lag to record the CCI investment at cost, with a basis difference of $ 0.3 million. 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, which has been fully satisfied. 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, formerly known as Contrail Asset Management LLC, and an aircraft capital joint venture called Crestone JV II LLC ("CJVII"), formerly known as Contrail JV II LLC. The venture focuses on acquiring commercial aircraft and jet engines for leasing, trading and disassembly. The joint venture, CJVII, was formed as a series LLC ("CJVII Series"). It consists of several individual series that target investments in current generation narrow-body aircraft and engines, building on Contrail’s origination and asset management expertise. CAM was formed to serve two separate and distinct functions: 1) to direct the sourcing, acquisition and management of aircraft assets owned by CJVII Series as governed by the Management Agreement between CJVII and CAM (“Asset Management Function”), and 2) to directly invest into CJVII Series alongside other institutional investment partners (“Investment Function”). In October 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. On June 10, 2026, as part of the transactions described below, the entire balance and all outstanding unpaid interest was repaid. On June 10, 2026, the Company, through its wholly owned subsidiary Air T Acquisition 26.1, LLC (“ATA 26.1”), and Aviation Growth Initiatives, LLC (“AGI”), a management-affiliated entity formed by executives of the Company’s wholly owned subsidiary Crestone Air Partners, Inc., entered into a Membership Interest Purchase Agreement with the MRC Common Members, pursuant to which ATA 26.1 and AGI each acquired 5 % of the Common Interests of CAM previously held by the MRC Common Members for cash consideration of $ 3.1 million each ($ 6.2 million in the aggregate), increasing the Company’s aggregate Common Interest ownership (together with ATA 26.1) from 90 % to 95 %, with AGI holding the remaining 5 %. Immediately following this purchase, the Company, ATA 26.1, and AGI entered into a Redemption Agreement with CAM, pursuant to which CAM redeemed approximately 99 % of the Common Interests held by each of them on a pro rata basis (leaving a residual 1 % Common Interest) in exchange for CAM’s assignment of its entire right, title, and interest in a portfolio of servicing agreements (the “Servicing Agreements”) that had historically constituted CAM’s Asset Management Function with a fair value of $ 15.5 million, allocated ratably based on Common Interests held immediately prior to the redemption. In connection with these transactions, the parties also amended CAM’s Second Amended and Restated Limited Liability Company Agreement (the “LLC Amendment”) to replace the CAM board seat previously designated for MRC with a Company/AGI-affiliated designee, and to replace MRC’s prior board-level veto rights with a direct contractual consent right held by the MRC Investor Members over specified significant actions of CAM, including approval of new investment opportunities, amendments to CAM’s governing documents, changes in distribution or fee allocations, and extraordinary transactions such as a merger, liquidation, or dissolution of CAM. Following these transactions, CAM continues to be a variable interest entity, and management has concluded that the Company continues not to be CAM’s primary beneficiary. Although the Company and AGI now control CAM’s Board of Directors, the MRC Investor Members retain a substantive consent right over the activities that most significantly affect CAM’s economic performance, such that power over those activities continues to be shared between the Company/AGI-controlled Board and the unrelated MRC Investor Members. Accordingly, the Company continues to account for its investment in CAM under the equity method. The Company accounts for its investment in CAM using the hypothetical liquidation at book value ("HLBV") method without a reporting lag. The HLBV method uses a balance sheet approach to capture changes in the Company's claim on CAM's net assets from a period-end hypothetical liquidation at book value. This approach provides a more accurate reflection of the Company's investment in CAM, compared to recording its proportionate share of income or loss. 19 The Company recognized a gain of $ 1.8 million in connection with the redemption of its Common Interests in CAM. This gain is included in income (loss) from equity method investments, and represents the difference between the fair value of the servicing agreements received and the carrying amount of the Company’s common interests surrendered. CAM's HLBV net assets, including common interests and investor interests, were $ 34.7 million and $ 37.3 million as of June 30, 2026 and 2025, respectively. Additionally, contributions from and distributions to both Air T and MRC for the three months ended June 30, 2026 and 2025 were as follows (in thousands): Three Months Ended June 30, 2026 June 30, 2025 Contributions $ 49 $ 3,767 Distributions $ 2,306 $ 2,515 Investment balances for the Company's equity method investees as of June 30, 2026 and March 31, 2026 are as follows (in thousands): Investment June 30, 2026 March 31, 2026 CAM $ 4,502 $ 10,322 BCAP 14,628 10,909 Bloomia 4,111 — CCI 3,489 3,557 Other equity method investments 1,128 1,280 Total $ 27,858 $ 26,068 Net income (loss) attributable to Air T, Inc. stockholders for the Company's equity method investees, included in non-operating (expense) income on the condensed consolidated statements of income (loss), including basis difference adjustments and other comprehensive income adjustments, during the three months ended June 30, 2026 and 2025 is as follows (in thousands): Three Months Ended Investment June 30, 2026 June 30, 2025 CAM $ 3,671 $ ( 251 ) BCAP ( 330 ) — Bloomia ( 293 ) 123 CCI ( 68 ) ( 29 ) Other equity method investments 152 138 Total $ 3,132 $ ( 19 ) The Company's equity method investees may, from time to time, make distributions and dividends to the Company in accordance with accumulated earnings at the investee. For the three months ended June 30, 2026 and 2025, the Company received distributions and dividends from equity method investees as follows (in thousands): Three Months Ended Investment June 30, 2026 June 30, 2025 CAM $ 1,934 $ 829 BCAP 1,190 — Other equity method investments 346 298 Total $ 3,470 $ 1,127 20 10. Inventories (In thousands) June 30, 2026 March 31, 2026 Inventories: Raw Materials $ 5,975 $ 5,252 Work in process 2,341 2,357 Finished goods 12,158 4,406 Aircraft parts 55,865 49,553 Expendable parts 18,745 20,745 Total inventories 95,084 82,313 Reserves ( 5,028 ) ( 5,186 ) Total inventories, net of reserves $ 90,056 $ 77,127 11. Lessee Arrangements The Company has operating leases for the use of real estate, machinery, and office equipment. The majority of our leases have a lease term of 2 to 5 years; however, we have certain leases with longer terms of up to 30 years. Many of our leases include options to extend the lease for an additional period. The lease term for all of the Company’s leases includes the non-cancellable period of the lease, plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor that is considered likely to be exercised. Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments. Variable payments are typically operating costs associated with the underlying asset and are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Our leases do not contain residual value guarantees. The Company has elected to combine lease and non-lease components as a single component and not to recognize leases on the balance sheet with an initial term of one year or less. The interest rate implicit in lease contracts is typically not readily determinable, and as such the Company utilizes the incremental borrowing rate to calculate lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The components of lease cost for the three months ended June 30, 2026 and 2025 are as follows (in thousands): Three Months Ended June 30, 2026 2025 Operating lease cost $ 1,254 $ 841 Short-term lease cost 642 279 Variable lease cost 316 246 Total lease cost $ 2,212 $ 1,366 21 Amounts reported in the condensed consolidated balance sheets for leases where we are the lessee as of June 30, 2026 and March 31, 2026 were as follows (in thousands): June 30, 2026 March 31, 2026 Operating leases Operating lease ROU assets $ 17,380 $ 14,594 Operating lease liabilities $ 18,441 $ 15,592 Weighted-average remaining lease term Operating leases 9 years, 1 month 9 years, 10 months Weighted-average discount rate Operating leases 8.05 % 7.33 % During the three months ended June 30, 2026, the Company had ROU assets that were obtained in exchange for new operating lease liabilities in the amount of $ 3.8 million. The Company has an operating lease between entities under common control where the useful life of certain leasehold improvements exceeds the related lease term. As of June 30, 2026, the remaining lease term on the operating lease was three years, five months and the useful life of leasehold improvements that exceeded the lease term ranged from three years, seven months to three years, eleven months . As of June 30, 2026, the unamortized balance of such leasehold improvements was $ 0.2 million. Maturities of lease liabilities under non-cancellable leases where we are the lessee as of June 30, 2026 are as follows (in thousands): Year ending March 31, Operating Leases 2027 (excluding the three months ended June 30, 2026) $ 3,936 2028 4,660 2029 3,281 2030 1,930 2031 1,399 Thereafter 10,406 Total undiscounted lease payments 25,612 Interest ( 7,171 ) Total lease liabilities $ 18,441 12. Financing Arrangements 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”). 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 agreed 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, of which the Issuer has received all contractually required advances through June 30, 2026 (in thousands): September 30, 2025 $ 10,000 January 30, 2026 10,000 May 30, 2026 1 10,000 September 30, 2026 10,000 January 30, 2027 10,000 May 30, 2027 10,000 22 1 The Investors advanced $ 15.0 million for the scheduled $ 10.0 million issuance on May 30, 2026. For the remaining scheduled issuances, the Company has the flexibility to choose which advance amount will be reduced by $ 5.0 million. As of the date the condensed consolidated financial statements are issued, the Company has not made that determination. As of June 30, 2026, the Issuer has collectively received a total of $ 75.0 million of advances from the Investors. The Multiple Advance Note bears annual interest at a rate of 8.5 % which is computed on the basis of a 30/360-day year and actual days elapsed and is payable semi-annually in arrears, pursuant to the terms of the Multiple Advance Note. The maturity date of the Multiple Advance Note is May 31, 2035. The Multiple Advance Note contains standard and customary events of default including, but not limited to, failure to make payments when due under the Multiple Advance Note, failure to comply with certain covenants contained in the Multiple Advance Note, or bankruptcy or insolvency of, or certain monetary judgments against the Issuer or the Company. The prior notes were cancelled and replaced by the Multiple Advance Note. Funds advanced under the Multiple Advance Note may be reinvested for a period of six years from the date of closing. The Issuer may prepay all or a portion of the outstanding principal and accrued but unpaid interest at any time, provided that (i) if the Issuer prepays all or any portion of the Multiple Advance Note within one year from the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal 2.0 % of the amount being prepaid, and (ii) if the Issuer prepays all or any portion of the Multiple Advance Note after the first anniversary of the Issue Date but on or prior to the second anniversary of the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to 1.0 % of the amount being prepaid. If the Issuer elects to prepay a portion of the outstanding principal and accrued but unpaid interest, then in no event can such prepayment be for an amount less than $ 1.0 million. The various equity interests that were assigned by the Company to the Issuer on or about the closing date of the original financings continue to serve as collateral for the repayment of the Multiple Advance Note as do all of the issued and outstanding capital stock of the Issuer owned by the Company, and the 320,000 Trust Preferred Securities, held by the Issuer. On June 2, 2026, Contrail entered into a subordinated promissory note with OCAS, Inc. ("OCAS"), the former minority owner of Contrail, in the amount of $ 3.5 million ("Term Loan - OCAS II") with an economic effective date of April 1, 2026. The note was made pursuant to Contrail's purchase and redemption of OCAS' 5 % membership interest in Contrail. The note matures on April 1, 2029 and bears interest at an annual rate equal to the ten year Treasury bond yield plus 2.50 % which is compounded monthly on the basis of a 365-day year for the actual number of days elapsed. The rate adjusts on each anniversary date of the note. On June 15, 2026, Air’Zona Aircraft Services, Inc., CSA Air, Inc., Global Ground Support, LLC, Jet Yard, LLC, Jet Yard Solutions, LLC, Mountain Air Cargo, Inc., Worldwide Aircraft Services, Inc., Royal Aircraft Services, LLC and Worthington Aviation, LLC, each a subsidiary or affiliate of the Company (collectively, the “Alerus Loan Parties”), entered into Amendment No. 6 to Credit Agreement with Alerus Financial, National Association (“Alerus”), as lender. In connection with Amendment No. 6, the Alerus Loan Parties executed an Overline Note with Alerus in the original principal amount of $ 2.8 million (the “Overline Note”). The Overline Note bears interest at a fluctuating annual rate equal to the greater of 5.00 % or 1-month term SOFR plus 2.50 % and matures on the earlier of October 15, 2026 or the termination of the overline commitment in accordance with the Alerus Credit Agreement. The following table provides certain information about the current financing arrangements of the Company and its subsidiaries (other than related party obligations) as of June 30, 2026 and March 31, 2026: (In Thousands) June 30, 2026 March 31, 2026 Maturity Date Interest Rate Unused commitments as of June 30, 2026 Type of Debt Air T Debt Debt - Air T Funding Trust Preferred Securities 2 $ 39,535 $ 38,719 6/7/2049 8.00 % Recourse Total 39,535 38,719 Alerus Loan Parties Debt Revolver - Alerus 10,654 10,545 8/28/2027 Greater of 5.00 % or 1-month SOFR + 1.90 % $ 9,346 Recourse 2 Does not include $ 13.0 million held by wholly-owned subsidiaries of the Company. 23 Overline Note - Alerus 2,800 — 10/15/2026 Greater of 5.00 % or 1-month SOFR + 2.50 % — Recourse Term Note A - Alerus 7,912 8,295 8/15/2029 Greater of or 1-month SOFR + 2.00 % Recourse Term Note C - Alerus 888 925 5/15/2030 Greater of 5.00 % or 1-month SOFR + 2.25 % Recourse Total 22,254 19,765 Contrail Debt Revolver - Alerus 11,601 8,181 11/24/2027 1-month SOFR + 3.11 % 3,399 Limited recourse 3 Term Loan - OCAS II 3,535 — 4/1/2029 10-YR Treasury Yield + 2.50 % Non-recourse Term Loan - OCAS I 547 — 11/28/2026 10-YR Treasury Yield + 2.50 % Non-recourse Total 15,683 8,181 Wolfe Lake Debt Term Loan - Bridgewater 8,706 8,778 12/2/2031 3.65 % Non-recourse Total 8,706 8,778 ATA 22.1 Debt Term Loan - Alerus 6,000 6,000 11/24/2032 Greater of 5.00 % or CME 1-month SOFR + 1.90 % Non-recourse Term Loan A - ING 513 690 2/1/2027 3.50 % Non-recourse Term Loan B - ING 1,141 1,150 5/1/2027 4.00 % Non-recourse Total 7,654 7,840 AAM 24-1 Debt Promissory Notes - Institutional Investors 75,000 60,000 5/31/2035 8.50 % Non-recourse Total 75,000 60,000 MAC Debt Term Loan - Bank of America, N.A. 2,128 2,157 2/21/2030 1-month SOFR + 0.11 % + 1.75 % Non-recourse Total 2,128 2,157 Rex Debt Term Loan - Commonwealth 24,899 23,842 11/11/2054 — % Non-recourse Line of Credit - Commonwealth 11,600 — 12/17/2032 12.00 % 29,614 Non-recourse Total 36,499 23,842 3 Includes Air T's guarantee of approximately $ 2.0 million. 24 ATA 25.1 Debt Term Note - Institutional Investors 41,301 41,271 12/15/2031 11.50 % Recourse Total Debt 248,760 210,553 Unamortized Premiums and Debt Issuance Costs ( 2,424 ) ( 2,357 ) Total Debt, net $ 246,336 $ 208,196 At June 30, 2026, our contractual financing obligations, including payments due by period, are as follows (in thousands): Due by Amount June 30, 2027 $ 9,046 June 30, 2028 26,388 June 30, 2029 4,227 June 30, 2030 6,726 June 30, 2031 1,197 Thereafter 201,176 248,760 Unamortized Premiums and Debt Issuance Costs ( 2,424 ) $ 246,336 Net interest expense (income) for the Company and its subsidiaries was as follows for the three months ended June 30, 2026 and 2025: Three Months Ended June 30, 2026 2025 Change Rex $ 1,428 $ — $ 1,428 ATA 25.1 (Rex's parent entity) 1,192 — 1,192 Air T Funding Trust Preferred Securities 1,372 711 661 AAM 24-1 1,021 699 322 Other 59 14 45 Alerus Loan Parties 371 371 — Wolfe Lake 82 83 ( 1 ) MAC 13 38 ( 25 ) Contrail 231 309 ( 78 ) ATA 22.1 ( 96 ) 89 ( 185 ) Total $ 5,673 $ 2,314 $ 3,359 Cash paid for interest totaled $ 5.5 million and $ 2.3 million during the three months ended June 30, 2026 and 2025, respectively. 25 13. Segment Information Air T's portfolio of businesses is managed on a highly decentralized basis. These businesses are aggregated into operating segments in a manner that reflects how Air T views the business activities. The Company's chief operating decision maker ("CODM") is the Chief Executive Officer. The Chief Executive Officer is ultimately responsible for significant capital allocation decisions and evaluating operating performance. In assessing performance for the Company's businesses, the CODM reviews operating income and Adjusted EBITDA. Certain operating segments are aggregated into reportable segments. On June 10, 2026, the Company acquired Arena and received a distribution of servicing agreement rights for CAM as discussed in Note 2 and Note 9 , respectively. The acquisition and resulting distribution of the servicing agreement rights will be reported in the new aviation leasing and asset management segment based on new business operations not previously part of the consolidated Company. The Company's six business segments are as follows: Reportable Segment Principal Business Activities 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. Overnight Air Cargo The overnight air cargo segment primarily operates under its relationship with FedEx, which spans over 40 years. Its two operating companies represent two of the eight companies in the U.S. that have North American feeder airlines under contract with FedEx. MAC and CSA operate and maintain Cessna Caravan, Sky Courier, ATR-42 and ATR-72 aircraft that fly daily small-package cargo routes throughout the eastern United States and upper Midwest, and in the Caribbean. Commercial Aircraft, Engines and Parts 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 The ground support equipment segment manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers. Digital Solutions The digital solutions segment develops and provides digital aviation and other business services to customers within the aviation industry to generate recurring subscription revenues. Aviation Leasing and Asset Management The aviation leasing and asset management segment originates and structures asset acquisitions and related financings and provides lease administration, technical and risk management, and remarketing services for aircraft and engines on lease to airline customers globally. Aviation leasing and asset management further monetizes assets at the end of their economic lives through engine separation and continued component leasing, aircraft disassembly, and sale of airframe and engine materials in coordination with other specialized aviation businesses. The information that follows shows data of Air T's reportable segments reconciled to amounts reflected in our Condensed Consolidated Financial Statements. Intersegment eliminations are included to reconcile segment totals to consolidated amounts. The cost and expense information presented below is based on the information regularly provided to the CODM. Further, asset information is not included in the information regularly provided to the CODM as it is not a key determining factor in the performance of the Company's reportable segments. The Company also has a "Corporate and Other" category which includes unallocated Air T holding company costs that are not directly attributable to the ongoing operating activities of our reportable segments in addition to revenues and expenses for non-reportable operating segments. Segment data is summarized in the following tables (in thousands): 26 Three Months Ended June 30, 2026 Regional Airline Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Aviation Leasing and Asset Management Total Revenue from external customers $ 55,909 $ 29,969 $ 20,523 $ 3,683 $ 2,487 $ 1,365 $ 113,936 Intersegment revenue — 1,230 325 — 140 — 1,695 55,909 31,199 20,848 3,683 2,627 1,365 115,631 Reconciliation of revenue Other revenue 1 1,570 Elimination of intersegment revenue 2 ( 1,740 ) Total consolidated revenue $ 115,461 Cost of sales: Cost of sales from external sources 45,258 24,628 14,791 2,526 887 233 Intersegment operating expense 44 1,230 226 — 7 — 45,302 25,858 15,017 2,526 894 233 Less: 3 General and administrative 9,264 3,263 6,404 1,367 1,314 4,332 25,944 Other segment items 4 9,070 155 173 37 268 297 10,000 Segment profit (loss) $ ( 7,727 ) $ 1,923 $ ( 746 ) $ ( 247 ) $ 151 $ ( 3,497 ) $ ( 10,143 ) Reconciliation of profit (loss) Other revenue 1 1,570 Other cost of sales 1 ( 430 ) Other expenses 1 ( 1,264 ) Interest expense ( 5,673 ) Income from equity method investments 3,215 Other non-operating income 246 Other corporate expenses 5 ( 2,669 ) Elimination of intersegment profits 111 Loss before income taxes $ ( 15,037 ) 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 $ 45.0 thousand for the three months ended June 30, 2026. After eliminations, Other revenue from third parties is $ 1.5 million for the three months ended June 30, 2026. 3 The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. 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. 27 Three Months Ended June 30, 2025 Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Total Revenue from external customers $ 30,589 $ 21,960 $ 15,070 $ 2,096 $ 69,715 Intersegment revenue 862 468 — — 1,330 31,451 22,428 15,070 2,096 71,045 Reconciliation of revenue Other revenue 1 1,199 Elimination of intersegment revenue 2 ( 1,374 ) Total consolidated revenue $ 70,870 Cost of sales: Cost of sales from external sources 25,899 14,656 12,303 836 Intersegment operating expense 862 436 — — 26,761 15,092 12,303 836 Less: 3 General and administrative 3,086 6,123 1,393 1,302 11,904 Other segment items 4 138 355 36 208 737 Segment profit (loss) $ 1,466 $ 858 $ 1,338 $ ( 250 ) 3,412 Reconciliation of profit (loss) Other revenue 1 1,199 Other cost of sales 1 ( 415 ) Other expenses 1 ( 1,118 ) Interest expense ( 2,314 ) Loss from equity method investments ( 19 ) Other non-operating income 678 Other corporate expenses 5 ( 2,375 ) Elimination of intersegment profits 145 Loss before income taxes $ ( 807 ) 1 Revenue, cost of sales, and expenses from segments below the quantitative thresholds or that do not constitute a business segment are attributable to an investment advisory business, a laser printer manufacturer, and a commercial property owned by the Company. 2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 44.0 thousand for the three months ended June 30, 2025. After eliminations, Other revenue from third parties is $ 1.2 million for the three months ended June 30, 2025. 3 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. Intersegment expenses are included within the amounts shown. 4 Other segment items consist of depreciation and amortization and remeasurement of the earnout liability. 5 Other corporate expenses consist of unallocated expenses that are related to the activities of Corporate and other in support of the overall business. Unallocated expenses include, but are not limited to: shared services that are not allocated, costs associated with the corporate headquarters and, expenses related to identifying and pursuing new corporate business initiatives. 28 Three Months Ended June 30, 2026 Regional Airline Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Aviation Leasing and Asset Management Total Reportable segments Corporate and Other Total Depreciation and amortization $ 8,819 $ 155 $ 173 $ 37 $ 268 $ 297 $ 9,749 $ 136 $ 9,885 Capital expenditures 20,849 187 50 — — — 21,323 — 21,323 Three Months Ended June 30, 2025 Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Total Reportable segments Corporate and Other Total Depreciation and amortization $ 138 $ 757 $ 36 $ 207 $ 1,139 $ 146 $ 1,284 Capital expenditures 65 166 — — 231 — 231 Reconciliation of operating income (loss) and elimination of intersegment loss was as follows: Three Months Ended June 30, 2026 Regional Airline Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Aviation Leasing and Asset Management Total Reportable Segments Corporate and Other Eliminations Total Operating income (loss) from external sources $ ( 7,683 ) $ 1,923 $ ( 722 ) $ ( 247 ) $ 150 $ ( 3,497 ) $ ( 10,076 ) $ ( 2,749 ) $ — $ ( 12,825 ) Intersegment operating (loss) income ( 44 ) — ( 24 ) — 1 — ( 67 ) ( 44 ) 111 — Operating income (loss) $ ( 7,727 ) $ 1,923 $ ( 746 ) $ ( 247 ) $ 151 $ ( 3,497 ) $ ( 10,143 ) $ ( 2,793 ) $ 111 $ ( 12,825 ) Three Months Ended June 30, 2025 Regional Airline Overnight Air Cargo Commercial Aircraft, Engines and Parts Ground Support Equipment Digital Solutions Total Reportable Segments Corporate and Other Eliminations Total Operating income (loss) from external sources $ — $ 1,466 $ 953 $ 1,338 $ ( 250 ) $ 3,507 $ ( 2,659 ) $ — $ 848 Intersegment operating (loss) income — — ( 95 ) — — ( 95 ) ( 50 ) 145 — Operating income (loss) $ — $ 1,466 $ 858 $ 1,338 $ ( 250 ) $ 3,412 $ ( 2,709 ) $ 145 $ 848 29 14. Commitments and Contingencies Redeemable Non-Controlling Interests Put/Call Options 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. In June 2026, the Company purchased and redeemed from the Seller their remaining 5 % ownership of Contrail in exchange for a $ 3.5 million Secured Subordinated Promissory Note (the "Put Note"), $ 0.5 million below the redemption value where the excess was recorded as an increase to additional paid-in capital. The Put Note accrues interest on the principal amount at an initial rate of 6.8 % and adjusts annually to the equivalent of the ten-year Treasury bond yield, adjusted on each anniversary date of the note, plus 2.5 %. The interest under the note compounds annually. In February 2022, in connection with the Company's acquisition of GdW, a consolidated subsidiary of Shanwick, the Company entered into a shareholder agreement with the 30.0 % non-controlling interest owners of Shanwick, providing for the governance of and the terms of membership interests in Shanwick. The shareholder agreement includes the Shanwick Put/Call Option with regard to the 30.0 % non-controlling interest. The non-controlling interest holders are the executive management of the underlying business. The Shanwick Put/Call Option grants the Company an option to purchase the 30.0 % interest at the call option price that equals the average EBIT over the three Financial Years prior to the exercise of the Call Option multiplied by eight . In addition, the Shanwick Put/Call Option also grants the non-controlling interest owners an option to require the Company to purchase from them their respective ownership interests at the Put Option price, that is equal to the average EBIT over the three Financial Years prior to the exercise of the Put Option multiplied by seven and one-half. The Call Option and the Put Option may be exercised at any time from the fifth anniversary of the shareholder agreement and then only at the end of each fiscal year of Air T ("Shanwick RNCI"). In June 2026, in connection with CAP's acquisition of Arena, CAP entered into a shareholder agreement to issue 102,459 Class B preferred units (the "Class B Units") of CAP to an unrelated third party in exchange for $ 10.0 million to help finance the acquisition of Arena. The Class B Units represent 10.25 % of CAP's total equity interests and include a put/call option with regard to the 10.25 % non-controlling interest. The put/call option grants CAP an option to purchase the 10.25 % interest at an amount equal to the greater of an amount equal to the applicable Applicable Liquidation Preference (the "Class B Redemption Value") to the 10.25 % or the fair market value. The Class B Redemption Value is calculated as 1.5 times the original issue price of the Class B Units less any distributions paid or accrued. The put/call option gives the owner of the 10.25 % interest the option to require CAP to purchase their interest at an amount equal to the applicable liquidation preference ("CAP RNCI"). The Company has presented the Shanwick RNCI and CAP RNCI between the liabilities and equity sections of the accompanying condensed consolidated balance sheets. In addition, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the estimated redemption value at the end of each reporting period for the Shanwick RNCI. The CAP RNCI represents preferred equity in a consolidated subsidiary and the redemption features become exercisable after a period of five years . The redemption value adjustment of $ 5.0 million will be accreted over five years . Based on the defined redemption properties, the Shanwick RNCI and CAP RNCI are considered redeemable at other than fair value. Changes in the estimated redemption values are recorded on our condensed consolidated statements of income (loss) within non-controlling interests. The Shanwick RNCI and CAP RNCI are measured at the higher of their carrying value or their redemption value. As of June 30, 2026, the balances were comprised of the following (in thousands): 30 Shanwick RNCI Contrail RNCI CAP RNCI Total Beginning Balance as of April 1, 2026 $ 6,264 $ 4,082 $ — $ 10,346 Contribution from non-controlling members — — 10,000 10,000 Distribution to non-controlling members ( 26 ) ( 30 ) ( 28 ) ( 84 ) Net income attributable to non-controlling interests 179 — — 179 Other comprehensive income attributable to the RNCI ( 32 ) — — ( 32 ) OCI Impact on Redemption value ( 57 ) — — ( 57 ) Redemption value adjustments ( 64 ) — 55 ( 9 ) Redemption of non-controlling interests — ( 4,052 ) — ( 4,052 ) Ending Balance as of June 30, 2026 $ 6,264 $ — $ 10,027 $ 16,291 15. Subsequent Events Management performs an evaluation of events that occur after the balance sheet date but before consolidated financial statements are issued for potential recognition or disclosure of such events in the Company's consolidated financial statements. Management is not aware of any events that occurred after the balance sheet date but before the consolidated financial statements were issued that would materially affect the accuracy of those statements as of the date of issuance. 31