AIRT 10-Q Quarterly Report Sept. 30, 2025

AIR T INC

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airt-20250930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2025
☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____to _____

Commission File Number 001-35476

Air T, Inc.

(Exact name of registrant as specified in its charter)


Delaware			52-1206400
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

11020 David Taylor Drive, Suite 305 , Charlotte , North Carolina 28262

(Address of principal executive offices, including zip code)

( 980 ) 595 – 2840

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AIRT	NASDAQ Capital Market
Alpha Income Preferred Securities (also referred to as 8% Cumulative Capital Securities) (“TruPs”)*	AIRTP	NASDAQ Global Market
*Issued by Air T Funding

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Common Stock			Common Shares, par value of $.25 per share
Outstanding Shares at October 31, 2025			2,702,639

AIR T, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


		Page
	PART I

Item 1.	Financial Statements

	Condensed Consolidated Statements of Income (Unaudited) For The Three and Six Months Ended September 30, 2025 and 2024	4

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) For The Three and Six Months Ended September 30, 2025 and 2024	6

	Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2025 and March 31, 2025	7

	Condensed Consolidated Statements of Cash Flows (Unaudited) For The Six Months Ended September 30, 2025 and 2024	9

	Condensed Consolidated Statements of Equity (Deficit) (Unaudited) For The Six Months Ended September 30, 2025 and 2024	11

	Notes to Condensed Consolidated Financial Statements (Unaudited)	14

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	49

	PART II

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 5.	Other Information	51

Item 6.	Exhibits	51
	Signatures	53
	Exhibit Index
	Certifications
	Interactive Data Files

Item 1. Financial Statements

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


(In thousands, except per share data)	Three Months Ended September 30,				Six Months Ended September 30,
	2025		2024		2025		2024
Operating Revenues:
Overnight air cargo	$	29,924	$	31,187	$	60,513	$	61,570
Ground support equipment	9,637		14,454		24,707		21,809
Commercial aircraft, engines and parts	20,880		32,926		42,840		59,176
Digital solutions	2,209		1,836		4,305		3,515
Corporate and other	1,500		839		2,655		1,584
	64,150		81,242		135,020		147,654


Operating Expenses:
Overnight air cargo	24,922		26,326		50,821		52,036
Ground support equipment	6,539		12,395		18,842		18,929
Commercial aircraft, engines and parts	14,427		22,582		29,084		41,493
Digital solutions	762		682		1,598		1,238
Corporate and other	364		207		780		491
General and administrative	18,099		14,202		33,130		28,437
Depreciation and amortization	827		949		2,111		1,709
Earnout remeasurement	( 264 )		279		( 666 )		259


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

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

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

Non-operating (Expense) Income:
Interest expense	( 2,252 )		( 2,162 )		( 4,565 )		( 4,108 )
Income from equity method investments	4,179		2,346		4,160		4,269
Other	( 201 )		( 505 )		478		179
	1,726		( 321 )		73		340

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

Income Tax Expense	2,201		336		2,065		407

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

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

Net Income Attributable to Air T, Inc. Stockholders	$	4,355	$	2,520	$	2,719	$	2,185

Income per share (Note 6)
Basic	$	1.61	$	0.91	$	1.01	$	0.79
Diluted	$	1.61	$	0.91	$	1.01	$	0.79



Weighted Average Shares Outstanding:
Basic	2,703	2,760	2,703	2,760
Diluted	2,703	2,760	2,703	2,760

See notes to condensed consolidated financial statements.

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended September 30,				Six Months Ended September 30,
(In Thousands)	2025		2024		2025		2024
Net Income	$	5,033	$	2,963	$	4,362	$	2,995
Foreign currency translation gain	159		719		572		669
Reclassification of interest rate swaps into earnings	12		( 148 )		24		( 351 )
Unrealized loss on interest rate swaps	( 65 )		—		( 65 )		—
Redemption of non-controlling interest	—		—		—		146
Other	197		( 181 )		( 46 )		( 180 )
Total Other Comprehensive Gain	303		390		485		284
Total Comprehensive Income	5,336		3,353		4,847		3,279
Comprehensive Income Attributable to Non-controlling Interests	( 678 )		( 443 )		( 1,643 )		( 810 )
Comprehensive Income Attributable to Air T, Inc. Stockholders	$	4,658	$	2,910	$	3,204	$	2,469

See notes to condensed consolidated financial statements.

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(In thousands, except share amounts)	September 30, 2025		March 31, 2025
ASSETS
Current Assets:
Cash and cash equivalents	$	17,458	$	5,932
Marketable securities	1,102		422
Restricted cash	80		575
Restricted investments	—		683
Accounts receivable, net of allowance for doubtful accounts of $ 1,472 and $ 1,338	18,637		23,917
Income tax receivable	174		681
Inventories, net	46,626		38,516

Prepaid expenses	3,555		3,103

Other current assets	8,175		4,678
Total Current Assets	95,807		78,507

Notes Receivable - Lendway, Inc. ("Lendway")	3,250		3,350
Notes Receivable - Crestone Asset Management, LLC ("CAM")	1,527		2,500
Assets on lease or held for lease, net of accumulated depreciation of $ 60 and $ 1,451	—		14,662
Property and equipment, net of accumulated depreciation of $ 10,055 and $ 9,240	19,897		20,285
Intangible assets, net of accumulated amortization of $ 7,161 and $ 6,330	10,418		10,020
Right-of-use ("ROU") assets	12,269		13,274
Equity method investments	27,866		19,003
Other assets	1,805		1,635

Goodwill	11,902		10,542
Total Assets	184,741		173,778

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	15,771		17,782
Income tax payable	1,163		—
Accrued expenses and other (Note 4)	22,055		16,691
Current portion of long-term debt	3,447		9,099
Current portion of long-term debt - related party (Note 13)	1,460		1,282
Current portion of earnout liability	—		430
Short-term lease liability	2,551		2,377
Total Current Liabilities	46,447		47,661

Long-term debt	114,979		101,226
Long-term debt - related party (Note 13)	2,421		3,288
Deferred income tax liabilities, net	2,249		2,249
Long-term lease liability	10,665		11,843
Long-term earnout liability	442		1,109
Other non-current liabilities	231		866
Total Liabilities	177,434		168,242


Redeemable non-controlling interests	8,220		7,054

Commitments and contingencies (Note 18)

Equity (Deficit):
Air T, Inc. Stockholders' Equity (Deficit):
Preferred stock, $ 1.00 par value, 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, 2,702,639 and 2,702,639 shares outstanding	758		758
Treasury stock, 327,606 shares at $ 19.55 and 327,606 shares at $ 19.55	( 6,404 )		( 6,404 )
Additional paid-in capital	1,028		947
Retained earnings	4,849		2,130
Accumulated other comprehensive loss	( 162 )		( 647 )
Total Air T, Inc. Stockholders' Equity (Deficit)	69		( 3,216 )
Non-controlling Interests	( 982 )		1,698
Total Equity (Deficit)	( 913 )		( 1,518 )
Total Liabilities and Equity	$	184,741	$	173,778

See notes to condensed consolidated financial statements.

AIR T, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


(In Thousands)	Six Months Ended September 30,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	4,362	$	2,995
Adjustments to reconcile Net Income to net cash (used in) provided by operating activities:
Depreciation and amortization	2,111		1,709
Income from equity method investments	( 4,160 )		( 4,269 )


Gain on sale of aircraft	( 7,034 )		—
Other	( 166 )		2,258
Change in operating assets and liabilities:
Accounts receivable	5,210		( 8,182 )
Inventories	( 8,047 )		8,832
Accounts payable	( 2,025 )		461
Accrued expenses	5,228		( 1,306 )
Other current assets	( 3,552 )		( 78 )
Other	1,569		624
Net cash (used in) provided by operating activities	( 6,504 )		3,044
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in unconsolidated entities	( 6,765 )		—
Distribution from unconsolidated entities	1,750		3,000
Capital expenditures related to property & equipment	( 444 )		( 581 )
Capital expenditures related to assets on lease or held for lease	—		( 14,598 )
Proceeds from sale of aircraft	19,889		—
Loan advances to Lendway	( 1,100 )		( 2,000 )
Proceeds from notes receivable - CAM and Lendway	2,173		—
Acquisition of businesses, net cash acquired	( 1,162 )		—
Other	( 405 )		( 16 )
Net cash provided by (used in) investing activities	13,936		( 14,195 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit	80,235		69,159
Payments on lines of credit	( 72,873 )		( 59,451 )
Proceeds from term loan	10,850		10,000
Payments on term loan	( 11,038 )		( 6,865 )

Distribution to non-controlling interest	( 3,132 )		( 323 )
Other	( 296 )		( 26 )
Net cash provided by financing activities	3,746		12,494
Effect of foreign currency exchange rates on cash and cash equivalents	( 147 )		( 2 )
NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	11,031		1,341
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	17,788		9,184









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

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD:
Cash and cash equivalents			17,458
Restricted cash, current			80
Restricted cash, long-term(a)			250
Total cash and cash equivalents and restricted cash at end of period			17,788

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

See notes to condensed consolidated financial statements.

AIR T, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(UNAUDITED)


(In Thousands)	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests 1		Total Equity
	Shares	Amount		Shares	Amount
Balance, March 31, 2024	3,030	$	758	257	$	( 4,959 )	$	859	$	8,192	$	( 80 )	$	1,050	$	5,820

Net loss 1	—	—		—	—		—		( 335 )		—		( 5 )		( 340 )

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

Stock option forfeiture (Note 14)	—	—		—	—		( 25 )		—		—		—		( 25 )

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

Foreign currency translation loss 2	—	—		—	—		—		—		( 50 )		—		( 50 )



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

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

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

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


Net income (loss) 1	—	—		—	—		—		2,520		—		( 1 )		2,519



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

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

Foreign currency translation gain 2	—	—		—	—		—		—		719		—		719

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

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

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

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

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


(In Thousands)	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests 1		Total Equity
	Shares	Amount		Shares	Amount
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 income to redeemable non-controlling interests	—	—		—	—		—		—		( 248 )		—		( 248 )

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

Net income 1	—	—		—	—		—		4,355		—		302		4,657

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



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

Foreign currency translation gain 2	—	—		—	—		—		—		159		—		159

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

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

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

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

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

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

See notes to condensed consolidated financial statements.

(2) Cumulative translation adjustments were at a loss of $ 0.8 million and $ 0.1 million as of March 31, 2024 and September 30, 2024, respectively, and a loss of $ 0.4 million and a gain of $ 0.2 million, as of March 31, 2025 and September 30, 2025, respectively.

AIR T, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09- Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this Update require the addition of specific categories to be disclosed in the rate reconciliation if they meet a quantitative threshold, disclosure of disaggregated income taxes paid to federal, state, and foreign jurisdictions, and disclosure of income or loss from continuing operations disaggregated by federal, state, and foreign jurisdictions. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of this amendment on its consolidated financial statements and disclosures.

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

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 Condensed Consolidated Financial Statements. The acquired business is included in Overnight Air Cargo segment.

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 September 30, 2025:


Type of Revenue			Nature, Timing of Satisfaction of Performance Obligations, and Significant Payment Terms
Product Sales			The Company generates revenue from sales of various distinct products such as parts, aircraft equipment, 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 which provides access to the software and customer support services. A performance obligation is created when the Company agrees to provide a particular service to a customer. For software access, revenue is recognized ratably over time for the daily performance obligation related to the customer's access to the cloud hosted software. For support services, revenue is recognized over time for the hourly performance obligation provided to the customer. Generally, subscription terms range from three years to five years . Software access is usually billed monthly and support services are billed upon completion.
Leasing Revenue			Leasing revenue is recognized in accordance with ASC Topic 842. Refer to Note 11 for further details regarding the Company's leasing revenue.

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


	Three Months Ended September 30,				Six Months Ended September 30,
	2025		2024		2025		2024
Product Sales
Overnight air cargo	$	11,194	$	10,070	$	23,671	$	19,769
Ground support equipment	9,180		14,022		23,518		21,150
Commercial aircraft, engines and parts	17,378		30,165		35,139		53,784
Corporate and other	323		54		490		173
Support Services
Overnight air cargo	18,712		21,037		36,704		41,695
Ground support equipment	289		287		708		453
Commercial aircraft, engines and parts	3,093		2,106		5,335		4,306
Corporate and other	9		3		25		18
Leasing Revenue
Ground support equipment	—		15		—		30
Commercial aircraft, engines and parts	204		475		1,958		514
Corporate and other	414		405		869		869
Software Services
Digital solutions	2,209		1,836		4,305		3,515
Other
Overnight air cargo	18		80		138		106
Ground support equipment	168		130		481		176
Commercial aircraft, engines and parts	205		180		408		572
Corporate and other	754		377		1,271		524

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

See Note 16 for the Company's disaggregated revenues by geographic region and Not e 17 for the Company’s disaggregated revenues by segment. These notes disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Contract Balances and Costs

Contract liabilities relate to deferred revenue, our unconditional right to receive consideration in advance of performance with respect to subscription revenue and advanced customer deposits with respect to product sales. The following table presents outstanding contract liabilities as of April 1, 2025 and September 30, 2025 and the amount of contract liabilities that were recognized as revenue during the six-month period ended September 30, 2025 (in thousands):


	Outstanding contract liabilities		Outstanding contract liabilities as of April 1, 2025 Recognized as Revenue
As of September 30, 2025	$	7,009
As of April 1, 2025	$	4,199
For the six months ended September 30, 2025			$	( 2,878 )

4. Accrued Expenses and Other


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

Salaries, wages and related items	$	6,196	$	6,235
Profit sharing and bonus	1,961		2,980
Other deposits	2,260		513
Deferred income	4,749		3,686
Accrued insurance payable	2,730		1,336
Accrued interest expense	1,920		955
Other	2,239		986
Total	$	22,055	$	16,691

5. Income Taxes

During the three-month period ended September 30, 2025, the Company recorded $ 2.2 million in income tax expense at an effective tax rate (“ETR”) of 30.4 %. The Company has computed the provision for income taxes based on the estimated annual effective tax rate and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended September 30, 2025 were the valuation allowance related to the Company’s U.S. consolidated group, Delphax Technologies, Inc. (“DTI”), and Delphax Solutions, Inc. (“DSI”), the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, non-deductible acquisition-related costs, and the benefit from the Foreign-Derived Intangible Income (“FDII”) deduction.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the U.S., which includes a broad range of tax reform provisions affecting businesses. The Company has reflected the impact of the OBBBA in the second quarter of 2026 financial statements as required by generally accepted accounting principles. The Company is evaluating the full effects of the legislation on its estimated annual effective tax rate and cash tax position, but does not expect the legislation to have a material impact on its financial statements.

During the six-month period ended September 30, 2025, the Company recorded $ 2.1 million in income tax expense at an ETR of 32.1 %. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the six-month period ended September 30, 2025 were the valuation allowance related to the Company’s U.S. consolidated group, DTI and DSI, the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, non-deductible transaction costs, and the benefit from the FDII deduction.

During the three-month period ended September 30, 2024, the Company recorded $ 0.3 million in income tax expense at an ETR of 10.2 %. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended September 30, 2024 were the valuation allowance related to the Company’s U.S. consolidated group, DTI, Landing Gear Support Services PTE LTD (“LGSS”), DSI and BCCM Advisors (Kenya) Limited (“BCCM Kenya”), and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

During the six-month period ended September 30, 2024, the Company recorded $ 0.4 million in income tax expense at an ETR of 12.0 %. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the six-month period ended September 30, 2024 were the valuation allowance related to the Company’s U.S. consolidated group, DTI, LGSS, DSI and BCCM Kenya, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

6. Net Earnings (Loss) Per Share

Basic earnings per share has been calculated by dividing net income attributable to Air T, Inc. stockholders by the weighted average number of common shares outstanding during each period. For purposes of calculating diluted earnings per share, shares issuable under stock options were considered potential common shares and were included in the weighted average common shares unless they were anti-dilutive.

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

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


	Three Months Ended September 30,				Six Months Ended September 30,
	2025		2024		2025		2024
Net income	$	5,033	$	2,963	$	4,362	$	2,995
Net income attributable to non-controlling interests	( 678 )		( 443 )		( 1,643 )		( 810 )
Net income attributable to Air T, Inc. Stockholders	$	4,355	$	2,520	$	2,719	$	2,185
Income per share:
Basic	$	1.61	$	0.91	$	1.01	$	0.79
Diluted	$	1.61	$	0.91	$	1.01	$	0.79

Weighted Average Shares Outstanding:
Basic	2,703		2,760		2,703		2,760
Diluted	2,703		2,760		2,703		2,760

Potential common shares outstanding are not included in the computation of diluted income per share if their effect is anti-dilutive. During the three and six months ended September 30, 2025, the Company had 244,750 potential shares from share-based awards that were anti-dilutive. There were no potential shares from share-based awards that were anti-dilutive during the three and six months ended September 30, 2024.

7. Intangible Assets and Goodwill

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


	September 30, 2025
	Gross Carrying Amount		Accumulated Amortization		Net Book Value
Purchased software	$	886	$	( 615 )	$	271
Internally developed software	3,867		( 1,348 )		2,519
In-place lease and other intangibles	1,094		( 511 )		583
Customer relationships	8,601		( 2,441 )		6,160
Patents	1,139		( 1,116 )		23
Other	1,547		( 1,130 )		417
	17,134		( 7,161 )		9,973
In-process software	445		—		445
Intangible assets, total	$	17,579	$	( 7,161 )	$	10,418


	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
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 September 30, 2025 relates to the quarterly changes in foreign currency translation adjustments at Shanwick.

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


(In thousands)
Year ending March 31,	Amortization
2026 (excluding the 6 months ended September 30, 2025)	$	627
2027	1,203
2028	1,120
2029	1,030
2030	1,025
2031	1,024
Thereafter	3,944
	$	9,973

The carrying amount of goodwill as of September 30, 2025 and March 31, 2025 was $ 11.9 million and $ 10.5 million, respectively. The increase from the prior fiscal year end balance is attributable to the Royal acquisition within the overnight air cargo segment (as described in Note 2 ) of $ 1.0 million and the $ 0.4 million change in foreign currency translation adjustments related to the goodwill balance at Shanwick within the digital solutions segment. There was no impairment on goodwill during the six months ended September 30, 2025.

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


	September 30, 2025		March 31, 2025
Overnight air cargo	$	1,113	$	76
Commercial aircraft, engines and parts	4,227		4,227
Digital solutions	6,562		6,239
Total reportable segment goodwill, at cost	11,902		10,542
Corporate and other	376		376
Less accumulated impairment	( 376 )		( 376 )
Goodwill, net of impairment	$	11,902	$	10,542

8. Investments in Securities and Derivative Instruments

The Company invests in exchange-traded marketable securities and accounts for that activity in accordance with ASC 321, Investments- Equity Securities. Marketable equity securities are carried at fair value, with changes in fair market value included in the

determination of net income (loss). The fair market value of marketable equity securities is determined based on quoted market prices in active markets and are therefore, considered Level 1 fair value measurements.

The Company's gross unrealized gains and losses on equity securities for the three and six months ended September 30, 2025 and 2024 were immaterial. These unrealized gains and losses are included within other income (loss) on the condensed consolidated statement of income (loss). As of both September 30, 2025 and March 31, 2025, the fair value of these marketable equity securities was an asset of $ 1.1 million, which is included within marketable securities and restricted investments in the condensed consolidated balance sheets.

9. Equity Method Investments

Lendway, Inc. investment

The Company’s investment in Lendway (NASDAQ: LDWY), formerly Insignia Systems, Inc., has been accounted for under the equity method of accounting since Air T obtained significant influence in January 2018. The Company elected a three-month lag upon adoption of the equity method. On August 2, 2023, Insignia reincorporated in the state of Delaware as Lendway, Inc. Subsequent to reincorporation, Lendway sold its legacy business on August 4, 2023 and pivoted the business towards specialty agricultural finance. On February 26, 2024, Lendway acquired Bloomia B.V. ("Bloomia"), marking its first investment in specialty agriculture and underscoring its strategy of targeting high-quality agricultural assets and enterprises. As of September 30, 2025, the Company owned 487,000 Lendway shares, representing approximately 27.5 % of Lendway's outstanding shares.

On August 15, 2024, the Company entered into a delayed draw term loan with Lendway for up to $ 2.5 million with an interest rate of 8.0 % (the "Delayed Draw Term Loan"). On September 27, 2024 and January 15, 2025 the borrowing limit was increased to $ 3.5 million and $ 3.8 million, respectively. The Delayed Draw Term Loan limit increases were provided to assist with inventory purchases during the growing season and operating expenses as needed. All outstanding principal and accrued interest is due on the maturity date, which is the earlier of August 15, 2029 or by written demand of the Company after February 15, 2026. As of September 30, 2025 the Delayed Draw Term Loan has $ 2.2 million and $ 0.3 million of principal and accrued interest outstanding, respectively.

On September 15, 2025, Lendway expanded its financing by entering into three promissory notes totaling $ 4.0 million among three of the largest shareholders, where Air T provided $ 1.1 million of additional funding (the "Promissory Note"). The notes were issued to Lendway to assist with inventory purchase for the growing season and operating expenses as needed. The promissory note bears interest at a rate of 13.5 % with all outstanding principal and accrued interest due on the maturity date, which is June 1, 2027. Prior to the maturity date, Lendway may prepay any accrued interest or principal outstanding without penalty. As of September 30, 2025, $ 1.1 million of the principal balance remains outstanding and minimal interest has been accrued.

Due to the continued subordinated financial support, Lendway is a variable interest entity to which the Company holds several variable interests. The Company has determined that it is not the primary beneficiary, as it does not control Lendway's Board of Directors, which is the party with the power to direct the activities that most significantly impact the economic performance of Lendway. Additionally, the Company's exposure to variability of Lendway is limited to its 27.5 % ownership in Lendway's common stock and a total of $ 3.6 million of notes receivable and accrued interest from Lendway. Accordingly, the Company does not consolidate Lendway and will continue to account for its investment using the equity method of accounting.

Cadillac Casting, Inc. 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, with a basis difference decrease of $ 0.3 million. The Company recorded a basis difference adjustment of $ 12.0 thousand and $ 25.0 thousand in each of the three and six months ended September 30, 2025.

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


	Three Months Ended				Six Months Ended
	June 30, 2025		June 30, 2024		June 30, 2025		June 30, 2024
Revenue	$	54,452	$	52,662	$	96,121	$	98,419
Gross Profit	7,108		7,434		12,471		13,440
Operating income	2,995		1,823		4,680		3,029
Net income	1,117		755		1,485		2,081

Crestone Asset Management, LLC investment

On May 5, 2021, the Company formed an aircraft asset management business called Crestone Asset Management, LLC ("CAM"), formerly known as Contrail Asset Management LLC, and an aircraft capital joint venture called Crestone JV II LLC ("CJVII"), formerly known as Contrail JV II LLC. The venture focuses on acquiring commercial aircraft and jet engines for leasing, trading and disassembly. 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 August 2025, CAM entered into an Amended and Restated Limited Liability Company Agreement as the Managing Member Blue Crest Aviation Partners 2025-01 LLC ("BCAP"). BCAP was formed as a series LLC and consists of several individual series that target investments in mid-life commercial jet aircraft on lease to airlines globally. CAM's involvement with BCAP represents an expansion of its Asset Management Function in which CAM will collect fees for the services it provides as the Managing Member of BCAP.

CAM has two classes of equity interests: 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-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 to 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 September 30, 2025, $ 1.5 million of the principal balance remains outstanding with minimal accrued interest.

CAM's HLBV net assets, including common interests and investor interests, was $ 33.2 million and $ 29.9 million as of September 30, 2025 and 2024, respectively. Additionally, contributions from and distributions to both Air T and MRC for the three and six months ended September 30, 2025 and 2024 is as follows (in thousands):


	Three Months Ended				Six Months Ended
	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Contributions	$	3,520	$	—	$	7,288	$	—
Distributions	3,887		676		6,402		2,277

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


Investment	September 30, 2025		March 31, 2025
Lendway	$	1,350	$	729
CCI	3,861		3,889
CAM	16,225		12,428
Other equity method investments	6,430		1,957
Total	$	27,866	$	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 condensed consolidated statements of income (loss), including basis difference adjustments, during the three and six months ended September 30, 2025 and 2024 is as follows (in thousands):


	Three Months Ended				Six Months Ended
Investment	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Lendway	$	288	$	( 206 )	$	411	$	( 496 )
CCI	2		77		( 27 )		751
CAM	3,767		2,345		3,516		3,839
Other equity method investments	122		130		260		175
Total	$	4,179	$	2,346	$	4,160	$	4,269

The Company's equity method investees may, from time to time, make distributions and dividends to the Company in accordance with accumulated earnings at the investee. For the three and six months ended September 30, 2025 and 2024, the Company received distributions and dividends from equity method investees as follows (in thousands):


	Three Months Ended				Six Months Ended
Investment	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Lendway	$	—	$	—	$	—	$	—
CCI	—		—		—		—
CAM	903		676		1,731		2,277
Other equity method investments	241		118		538		1,051
Total	$	1,144	$	794	$	2,269	$	3,328

10. Inventories

Inventories consisted of the following (in thousands):


	September 30, 2025		March 31, 2025
Inventories:
Raw Materials	$	7,608	$	6,928
Work in process	2,521		2,342
Finished Goods	5,666		5,358
Aircraft parts	35,994		28,794
Total inventories	51,789		43,422
Reserves	( 5,163 )		( 4,906 )
Total inventories, net of reserves	$	46,626	$	38,516

11. 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 1 and 4 years under operating lease agreements. The Company depreciates aircraft and engines on a straight-line basis over the assets' useful life from the acquisition date to an estimated residual value.

On August 26, 2024, Contrail executed the operating agreement for CASP Leasing 1, LLC ("CASP"), a newly-created and 95 % owned subsidiary of Contrail. Shortly thereafter, on August 29, 2024, CASP entered into two purchase agreements to acquire, and subsequently lease, two Airbus Model A321-111 aircraft. On July 15, 2025, CASP completed the sale of these two aircraft, including their associated engines, for a total contracted sales price exceeding $ 25.0 million. In connection with the sale, CASP executed assignment, assumption, and amendment agreements under the existing leases, thereby transferring all lessor rights and obligations to the purchaser. After applying purchase price adjustments for deposits and rent payments as described in the sale and purchase agreements, CASP received net closing proceeds of $ 19.9 million.

For the assets currently on lease, there are no options for the lessees to purchase the assets at the end of the lease term. During the three and six months ended September 30, 2025, the Company recognized depreciation expense relating to equipment leases of $ 0.1 million and $ 0.7 million, respectively. Depreciation expense relating to equipment leases for the three and six months ended September 30, 2024 was $ 0.2 million and $ 0.3 million, respectively.

Future minimum undiscounted rental payments to be received do not include contingent rentals that may be received under certain leases because amounts are based on usage. Earned contingent rent on equipment leases totaled approximately $ 0.5 million during the six months ended September 30, 2025, and was immaterial during the three months ended September 30, 2025. Contingent rent earned on equipment leases during the three and six months ended September 30, 2024 was immaterial . As of September 30, 2025, future minimum undiscounted rental payments to be received under non-cancelable leases are immaterial .

Office leases

The Company, through its wholly-owned subsidiary, Wolfe Lake, leases offices to third parties with lease terms between 5 and 29 years under operating lease agreements. 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 depreciates the assets on a straight-line basis over the assets' useful life. During the three and six months ended September 30, 2025 and 2024, depreciation expense relating to office leases was immaterial .

For each of the three months ended September 30, 2025 and 2024, the Company recognized rental and other revenues related to operating lease payments of $ 0.4 million, of which variable lease payments were $ 0.2 million. For each of the six months ended September 30, 2025 and 2024, the Company recognized rental and other revenues related to operating lease payments of $ 0.9 million, of which variable lease payments were $ 0.4 million. Future minimum rental payments to be received do not include variable lease payments that may be received under certain leases because amounts are based on usage. The following table sets forth the undiscounted cash flows for future minimum base rents to be received from customers for office leases in effect as of September 30, 2025:


Year ended March 31,
2026 (excluding the 6 months ended 09/30/2025)	$	503
2027	990
2028	849
2029	774
2030	743
Thereafter	1,824
Total	$	5,683

12. 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 and six months ended September 30, 2025 and 2024 are as follows (in thousands):


	Three Months Ended September 30,				Six Months Ended September 30,
	2025		2024		2025		2024
Operating lease cost	$	874	$	749	$	1,715	$	1,418
Short-term lease cost	232		289		571		583
Variable lease cost	252		236		499		462
Total lease cost	$	1,358	$	1,274	$	2,785	$	2,463

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


	September 30, 2025			March 31, 2025
Operating leases
Operating lease ROU assets	$	12,269		$	13,274
Operating lease liabilities	$	13,216		$	14,220

Weighted-average remaining lease term
Operating leases	10 years, 3 months			10 years, 3 months

Weighted-average discount rate
Operating leases	5.68		%	5.67		%

During the six months ended September 30, 2025, the Company had ROU assets that were obtained in exchange for new operating lease liabilities in the amount of $ 0.2 million.

The Company has an operating lease between entities under common control where the useful life of certain leasehold improvements exceeds the related lease term. As of September 30, 2025, the remaining lease term on the operating lease was four years, two months and the useful life of leasehold improvements that exceeded the lease term ranged from four years, four months to four years, eight months . As of September 30, 2025, the unamortized balance of such leasehold improvements was $ 0.2 million.

Maturities of lease liabilities under non-cancellable leases where we are the lessee as of September 30, 2025 are as follows (in thousands):


	Operating Leases
2026 (excluding the six months ended September 30, 2025)	$	1,632
2027	3,062
2028	2,354
2029	1,748
2030	977
Thereafter	7,670
Total undiscounted lease payments	17,443
Interest	( 4,227 )
Total lease liabilities	$	13,216

13. Financing Arrangements

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

In connection with the acquisition of Royal on May 15, 2025, the Alerus Loan Parties under the Revolving Credit Agreement with Alerus entered into Amendment No. 4 to Credit Agreement and Consent and Term Loan C with Alerus in the amount of $ 1.1 million. The purpose of the Amendment and Term Note was to provide a term loan to finance the full purchase price of the acquisition, to add Royal as an Alerus Loan Party to the Alerus credit agreement, as amended and to memorialize Alerus’ consent to the Royal acquisition. The new term loan matures May 15, 2030 and bears interest at the greater of 5.00 % or the CME one-month term SOFR rate plus 2.25 %. Monthly payments on Term Note C commenced June 15, 2025 and are equal to $ 12.5 thousand plus accrued interest. The term loan is secured by the terms of the Security Agreement dated as of August 29, 2024.

On May 30, 2025, the Company, along with AAM 24-1 (the "Issuer"), entered into new transaction documents with two Institutional Investors that replaced the Second Note Purchase Agreement ("Second NPA") transaction documents. Pursuant to the Third Note Purchase Agreement ("Third NPA") with the Institutional Investors, the Issuer agreed to issue and sell a Multiple Advance Senior Secured Note in an aggregate principal amount of up to $ 100.0 million (the “Multiple Advance Note”). For purposes of clarity and the avoidance of doubt, as of the closing date, the Institutional Investors advanced an additional $ 10.0 million to the Issuer and have collectively advanced under the Multiple Advance Note to the Issuer the aggregate amount of $ 40.0 million. Provided no default or event of default of the Issuer exists, and subject to satisfaction of all requirements for any closing as set forth in the Third NPA, the Investors are obligated to advance to the Issuer an additional aggregate $ 60.0 million in $ 10.0 million increments, each on or within fifteen days of the following dates:


September 30, 2025			$ 10.0 million
January 30, 2026			$ 10.0 million
May 30, 2026			$ 10.0 million
September 30, 2026			$ 10.0 million
January 30, 2027			$ 10.0 million
May 30, 2027			$ 10.0 million

The Multiple Advance Note bears annual interest at a rate of 8.5 % which is computed on the basis of a 30/360-day year and actual days elapsed and is payable semi-annually in arrears, pursuant to the terms of the Multiple Advance Note. The maturity date of the Multiple Advance Note is May 31, 2035. The Multiple Advance Note contains standard and customary events of default including, but not limited to, failure to make payments when due under the Multiple Advance Note, failure to comply with certain covenants contained in the Multiple Advance Note, or bankruptcy or insolvency of, or certain monetary judgments against the Issuer or the Company. The prior notes were cancelled and replaced by the Multiple Advance Note. Funds advanced under the Multiple Advance Note may be reinvested for a period of six years from the date of closing.

The Issuer may prepay all or a portion of the outstanding principal and accrued but unpaid interest at any time, provided that (i) if the Issuer prepays all or any portion of the Multiple Advance Note within one year from the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to 2.0 % of the amount being prepaid, and (ii) if the Issuer prepays all or any portion of the Multiple Advance Note after the first anniversary of the Issue Date but on or prior to the second anniversary of the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to 1.0 % of the amount being prepaid. If the Issuer elects to prepay a portion of the outstanding principal and accrued but unpaid interest, then in no event can such prepayment be for an amount less than $ 1.0 million.

The various equity interests that were assigned by the Company to the Issuer on or about the closing date of the original financings continue to serve as collateral for the repayment of the Multiple Advance Note as do all of the issued and outstanding capital stock of the Issuer owned by the Company, and the 320,000 Trust Preferred Securities, held by the Issuer.

On September 3, 2025, the Alerus Loan Parties under the Revolving Credit Agreement with Alerus entered into Amendment No. 5 to Credit Agreement, the Amended and Restated Revolving Credit Note, and the Amended and Restated Term Note A.

Pursuant to Amendment No. 5 to Credit Agreement, the Overline Note provisions and note were eliminated.

Pursuant to the Amended and Restated Revolving Credit Note, the revolving credit commitment to make revolving credit loans and to issue letters of credit was increased to an aggregate principal amount not to exceed $ 20.0 million. The interest rate on the Revolving Credit Note was decreased to the greater of 5.00 % or 1-month SOFR plus 1.90 %. The maturity date was extended to August 28, 2027. The financial covenants are to be measured semi-annually at December and March of each year and the Alerus Loan Parties are to deliver quarterly financial statements to Alerus.

Pursuant to the Amended and Restated Term Note A, Term Note A was amended and restated by the Alerus Loan Parties in the principal amount of $ 9.2 million. The maturity date remains August 15, 2029. The Term Note A interest rate was revised to 1-month SOFR plus 2.00 %.

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


(In Thousands)	September 30, 2025		March 31, 2025		Maturity Date	Interest Rate	Unused commitments as of September 30, 2025		Type of Debt
Air T Debt
Debt - Air T Funding Trust Preferred Securities 1	$	35,500	$	35,342	6/7/2049	8.00 %			Recourse
Total	35,500		35,342

Alerus Loan Parties Debt
Revolver - Alerus	16,639		6,050		8/28/2027	Greater of 5.00 % or 1-month SOFR + 1.90 %	$	3,361	Recourse
Overline Note - Alerus	—		—		10/31/2025	Greater of 5.00 % or 1-month SOFR + 2.00 %	—		Recourse
Term Note A - Alerus	9,061		9,827		8/15/2029	1-month SOFR + 2.00 %			Recourse
Term Note C - Alerus	1,000		—		5/15/2030	Greater of 5.00 % or 1-month SOFR + 2.25 %			Recourse
Total	26,700		15,877

Contrail Debt
Revolver - ONB	—		3,127		11/24/2025	1-month SOFR + 3.56 %	25,000		Limited recourse 2
Term Note J - ONB	—		8,750		9/12/2028	1-month SOFR + 3.86 %			Limited recourse 2
Total	—		11,877

Wolfe Lake Debt
Term Loan - Bridgewater	8,921		9,059		12/2/2031	3.65 %			Non-recourse
Total	8,921		9,059

Air T Acquisition 22.1
Term Loan - Bridgewater	3,500		3,500		2/8/2027	4.00 %			Non-recourse
Term Loan A - ING	1,057		1,298		2/1/2027	3.50 %			Non-recourse
Term Loan B - ING	1,174		1,082		5/1/2027	4.00 %			Non-recourse
Total	5,731		5,880

WASI Debt
Promissory Note - Seller's Note	161		398		1/1/2026	6.00 %			Non-recourse
Total	161		398

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

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



AAM 24-1 Debt
Promissory Notes - Honeywell	40,000		30,000		5/31/2035	8.50 %	Non-recourse
Total	40,000		30,000

MAC Debt
Term Loan - Bank of America, N.A.	2,214		2,271		2/21/2030	1-month SOFR + 0.11 % + 1.75 %	Non-recourse
Total	2,214		2,271

Total Debt	119,227		110,704

Unamortized Premiums and Debt Issuance Costs	( 801 )		( 379 )
Total Debt, net	$	118,426	$	110,325

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


Due by	Amount
September 30, 2026	$	3,447
September 30, 2027	23,257
September 30, 2028	2,102
September 30, 2029	5,049
September 30, 2030	2,488
Thereafter	82,884
	119,227
Unamortized Premiums and Debt Issuance Costs	( 801 )
	$	118,426

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


	Three Months Ended September 30,				Six Months Ended September 30,
	2025		2024		2025		2024
Air T	$	743	$	979	$	1,454	$	1,952
Jet Yard	—		12		—		31
Alerus Loan Parties	370		177		741		177
Contrail	156		332		465		690
AirCo 1	—		125		—		251
Wolfe Lake	85		113		170		175
Air T Acquisition 22.1	25		83		115		150
WASI	4		11		9		23
AAM 24-1	736		310		1,435		633
MAC	38		—		96		—
Other	95		20		80		26
Total	$	2,252	$	2,162	$	4,565	$	4,108

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

14. 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.

On December 29, 2020, the Company’s Board of Directors unanimously approved the Omnibus Stock and Incentive Plan (the "Plan"), which was subsequently approved by the Company's stockholders at the August 18, 2021 Annual Meeting of Stockholders. The total number of shares authorized under the Plan is 420,000 . Through September 30, 2025, options to purchase up to 399,300 shares have been granted under the Plan. Of the shares granted on the Plan, 349,800 vest annually over a period of ten years based on a specified service condition ("vested awards") and expire ten years after vesting. However, the ability to exercise vested awards, occurring at the conclusion of each annual vesting period, is contingent upon the Company's stock price meeting predetermined milestones outlined in the options agreements (the "market condition"). If the market condition is not fulfilled at the annual vesting period on June 30 of every year, the vested awards may not be exercisable at any subsequent point. On the preceding four vesting dates, June 30, 2025, 2024, 2023 and 2022, a total of 129,050 shares satisfied the service condition; however, they did not meet the market condition to become exercisable. For the three and six months ended September 30, 2025, no unvested shares were forfeited due to employee departures. As of September 30, 2025, there were 195,250 granted options that may become exercisable on future vesting dates under the Plan. No options were exercisable as of September 30, 2025.

On August 5, 2025, Air T granted 49,500 options under the Plan with a different vesting schedule. Beginning August 6, 2026 and each anniversary date thereafter through August 6, 2035, 10 % of the granted options will vest. For all the options granted, half will have a strike price of $ 30 and the other half will have a strike price of $ 50 . Should an employee quit or services cease being provided, any options that have not vested will be forfeited. Options that vest each August 6 will be exercisable for a period of ten years after they become vested, meaning vested options that were not exercised will expire from August 6, 2036 through August 6, 2045. Management valued the granted options using the Monte Carlo Simulation method, noting the fair value on August 5, 2025 was $ 0.8 million. Expenses are recognized based on a straight-line basis.

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

15. Shares Repurchased

On May 14, 2014, the Company announced that its Board of Directors had authorized a program to repurchase up to 750,000 (retrospectively adjusted to 1,125,000 after the stock split on June 10, 2019) shares of the Company’s common stock from time to time on the open market or in privately negotiated transactions, in compliance with SEC Rule 10b-18, over an indefinite period. No shares were repurchased by the Company during the six months ended September 30, 2025. As of September 30, 2025, 752,228 shares may be repurchased pursuant to this program.

16. Geographical Information

Total tangible long-lived assets, which include property and equipment as well as assets on lease, net of accumulated depreciation, located in the United States, the Company's country of domicile, and held outside the United States, are summarized in the following table as of September 30, 2025 and March 31, 2025 (in thousands):


	September 30, 2025		March 31, 2025
United States	$	19,807	$	20,422
Foreign	90		14,525
Total tangible long-lived assets, net	$	19,897	$	34,947

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


	September 30, 2025		March 31, 2025
Bulgaria	$	—	$	14,435
Other	90		90
Total tangible long-lived assets, net	$	90	$	14,525

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


	Three Months Ended September 30,				Six Months Ended September 30,
	2025		2024		2025		2024
Operating Revenues:
Overnight Air Cargo
United States	$	28,455	$	31,137	$	57,701	$	60,680
Foreign	1,469		50		2,812		890
Total Overnight Air Cargo	29,924		31,187		60,513		61,570
Commercial Aircraft, Engines and Parts
United States	11,263		22,695		24,765		41,155
Foreign	9,617		10,231		18,075		18,021
Total Commercial Aircraft, Engines and Parts	20,880		32,926		42,840		59,176
Ground Support Equipment
United States	8,962		13,872		23,655		19,671
Foreign	675		582		1,052		2,138
Total Ground Support Equipment	9,637		14,454		24,707		21,809
Digital Solutions
United States	464		553		955		855
Foreign	1,745		1,283		3,350		2,660
Total Digital Solutions	2,209		1,836		4,305		3,515
Corporate and Other
United States	1,338		730		2,474		1,551
Foreign	162		109		181		33
Total Corporate and Other	1,500		839		2,655		1,584

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

17. Segment Information

Air T's portfolio of businesses are managed on a highly decentralized basis. These businesses are aggregated into operating segments in a manner that reflects how Air T views the business activities. The Company's chief operating decision maker is the Chief Executive Officer. The Chief Executive Officer is ultimately responsible for significant capital allocation decisions and evaluating operating performance. In assessing performance for the Company's businesses, the chief operating decision maker ("CODM") reviews operating income and Adjusted EBITDA. Certain operating segments are aggregated into reportable segments.

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

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

previously classified as part of insignificant business activities. As a result of this change, prior period segment information has been recast to conform to our current presentation in our financial statements.

The Company's four business segments are as follows:


Reportable Segment						Principal Business Activities
Overnight Air Cargo						Overnight Air Cargo primarily operates under its relationship with FedEx spanning over 40 years and represent two of eight companies in the U.S. that have North American feeder airlines under contract with FedEx. MAC and CSA operate and maintain Cessna Caravan, Sky Courier, ATR-42 and ATR-72 aircraft that fly daily small-package cargo routes throughout the eastern United States and upper Midwest, and in the Caribbean.
Commercial Aircraft, Engines and Parts (formerly known as Commercial Jet Engines and Parts)						The Commercial Aircraft, Engines and Parts segment manages and leases aviation assets; supplies surplus and aftermarket commercial jet engine components; provides commercial aircraft disassembly/part-out services; commercial aircraft parts sales; procurement services and overhaul and repair services to airlines.
Ground Support Equipment (formerly known as Ground Support Sales)						Ground Support Equipment manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers.
Digital Solutions						Digital Solutions develops and provides digital aviation and other business services to customers within the aviation industry to generate recurring subscription revenues. Until the fourth quarter of the fiscal year 2025, Digital Solutions had been reported as part of the central corporate function referred to as Corporate and Other.

The information that follows shows data of Air T's reportable segments reconciled to amounts reflected in our Consolidated Financial Statements. Intersegment eliminations are included to reconcile segment totals to consolidated amounts.

The cost and expense information presented below is based on the information regularly provided to the CODM. Further, asset information is not included in the information regularly provided to the CODM as it is not a key determining factor in the performance of the Company's reportable segments.

The Company also has a "Corporate and Other" category which includes unallocated Air T holding company costs that are not directly attributable to the ongoing operating activities of our reportable segments in addition to revenues and expenses for non-reportable operating segments.

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


	Three Months Ended September 30, 2025
	Overnight Air Cargo		Commercial Aircraft, Engines and Parts		Ground Support Equipment		Digital Solutions		Total
Revenue from external customers	$	29,924	$	20,880	$	9,637	$	2,209	$	62,650
Intersegment revenue	1,152		583		—		—		1,735
	31,076		21,463		9,637		2,209		64,385
Reconciliation of revenue
Other revenue 1									1,544
Elimination of intersegment revenue 2									( 1,779 )
Total consolidated revenue									$	64,150
Cost of sales:
Cost of sales from external sources	24,922		14,427		6,539		762
Intersegment operating expense	1,152		517		—		—
	26,074		14,944		6,539		762
Less: 3
General and administrative	3,250		6,742		1,445		1,512		12,949
Gain from sale of aircraft	—		( 7,034 )		—		—		( 7,034 )
Other segment items 4	137		34		34		213		418
Segment profit (loss)	1,615		6,777		1,619		( 278 )		9,733

Reconciliation of profit (loss)
Other revenue 1									1,544
Other cost of sales 1									( 364 )
Other expenses 1									( 1,276 )
Interest expense									( 2,252 )
Income from equity method investments									4,179
Other non-operating expense									( 201 )
Other corporate expenses 5									( 4,271 )
Elimination of intersegment profits									142
Income before income taxes									$	7,234

1 Revenue, cost of sales, and expenses from segments below the quantitative thresholds or that do not constitute a business segment are attributable to an investment advisory business, a laser printer manufacturer, and a commercial property owned by the Company.

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 44.0 thousand for the three months ended September 30, 2025. After eliminations, Other revenue from third parties is $ 1.5 million for the three months ended September 30, 2025.

3 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. Intersegment expenses are included within the amounts shown.

4 Other segment items consist of depreciation and amortization and remeasurement of the earnout liability.

5 Other corporate expenses consist of unallocated expenses that are related to the activities of Corporate and other in support of the overall business. Unallocated expenses include, but are not limited to: shared services that are not allocated, costs associated with the corporate headquarters and, expenses related to identifying and pursuing new corporate business initiatives.


	Three Months Ended September 30, 2024
	Overnight Air Cargo		Commercial Aircraft, Engines and Parts		Ground Support Equipment		Digital Solutions		Total
Revenue from external customers	$	31,187	$	32,926	$	14,454	$	1,836	$	80,403
Intersegment revenue	14		484		—		—		498
	31,201		33,410		14,454		1,836		80,901
Reconciliation of revenue
Other revenue 1									882
Elimination of intersegment revenue 2									( 541 )
Total consolidated revenue									$	81,242
Cost of sales:
Cost of sales from external sources	26,326		22,582		12,395		682
Intersegment operating expense	20		540		—		—
	26,346		23,122		12,395		682
Less: 3
General and administrative	2,942		6,446		1,546		1,163		12,097

Other segment items 4	112		648		95		202		1,057
Segment profit (loss)	1,801		3,194		418		( 211 )		5,202

Reconciliation of profit (loss)
Other revenue 1									882
Other cost of sales 1									( 207 )
Other expenses 1									( 1,110 )
Interest expense									( 2,162 )
Income from equity method investments									2,346
Other non-operating expense									( 505 )
Other corporate expenses 5									( 1,391 )
Elimination of intersegment profits									244
Income before income taxes									$	3,299

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 43.0 thousand for the three months ended September 30, 2024. After eliminations, Other revenue from third parties is $ 0.8 million for the three months ended September 30, 2024.

4 Other segment items consist of depreciation and amortization and remeasurement of the earnout liability.


	Six Months Ended September 30, 2025
	Overnight Air Cargo		Commercial Aircraft, Engines and Parts		Ground Support Equipment		Digital Solutions		Total
Revenue from external customers	$	60,513	$	42,840	$	24,707	$	4,305	$	132,365
Intersegment revenue	2,014		1,051		—		—		3,065
	62,527		43,891		24,707		4,305		135,430
Reconciliation of revenue
Other revenue 1									2,743
Elimination of intersegment revenue 2									( 3,153 )
Total consolidated revenue									$	135,020
Cost of sales:
Cost of sales from external sources	50,821		29,084		18,842		1,598
Intersegment operating expense	2,014		953		—		—
	52,835		30,037		18,842		1,598
Less: 3
General and administrative	6,336		12,865		2,838		2,814		24,853
Gain on sale of aircraft	—		( 7,034 )		—		—		( 7,034 )
Other segment items 4	275		389		70		420		1,154
Segment profit (loss)	3,081		7,634		2,957		( 527 )		13,145

Reconciliation of profit (loss)
Other revenue 1									2,743
Other cost of sales 1									( 780 )
Other expenses 1									( 2,394 )
Interest expense									( 4,565 )
Income from equity method investments									4,160
Other non-operating income									478
Other corporate expenses 5									( 6,646 )
Elimination of intersegment profits									286
Income before income taxes									$	6,427

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 88.0 thousand for the six months ended September 30, 2025. After eliminations, Other revenue from third parties is $ 2.7 million for the six months ended September 30, 2025.

4 Other segment items consist of depreciation and amortization and remeasurement of the earnout liability.


	Six Months Ended September 30, 2024
	Overnight Air Cargo		Commercial Aircraft, Engines and Parts		Ground Support Equipment		Digital Solutions		Total
Revenue from external customers	$	61,570	$	59,176	$	21,809	$	3,515	$	146,070
Intersegment revenue	14		848		—		—		862
	61,584		60,024		21,809		3,515		146,932
Reconciliation of revenue
Other revenue 1									1,671
Elimination of intersegment revenue 2									( 949 )
Total consolidated revenue									$	147,654
Cost of sales:
Cost of sales from external sources	52,036		41,493		18,929		1,238
Intersegment operating expense	28		829		—		—
	52,064		42,322		18,929		1,238
Less: 3
General and administrative	5,680		12,413		3,047		2,551		23,691

Other segment items 4	210		819		190		400		1,619
Segment profit (loss)	3,630		4,470		( 357 )		( 674 )		7,069

Reconciliation of profit (loss)
Other revenue 1									1,671
Other cost of sales 1									( 491 )
Other expenses 1									( 2,016 )
Interest expense									( 4,108 )
Income from equity method investments									4,269
Other non-operating income									179
Other corporate expenses 5									( 3,507 )
Elimination of intersegment profits									336
Income before income taxes									$	3,402

2 Elimination of intersegment revenue includes eliminations related to Other revenue in the tables above totaling $ 87.0 thousand for the six months ended September 30, 2024. After eliminations, Other revenue from third parties is $ 1.6 million for the six months ended September 30, 2024.

4 Other segment items consist of depreciation and amortization and remeasurement of the earnout liability.


	Three Months Ended September 30, 2025
	Overnight Air Cargo	Commercial Aircraft, Engines and Parts	Ground Support Equipment	Digital Solutions	Total Reportable segments	Corporate and Other	Total
Depreciation and amortization	137	298	34	213	682	145	827
Capital Expenditures	81	47	15	—	143	33	176


	Three Months Ended September 30, 2024
	Overnight Air Cargo	Commercial Aircraft, Engines and Parts	Ground Support Equipment	Digital Solutions	Total Reportable segments	Corporate and Other	Total
Depreciation and amortization	112	368	95	202	777	172	949
Capital Expenditures	70	14,612	158	—	14,840	—	14,840


	Six Months Ended September 30, 2025
	Overnight Air Cargo	Commercial Aircraft, Engines and Parts	Ground Support Equipment	Digital Solutions	Total Reportable segments	Corporate and Other	Total
Depreciation and amortization	275	1,055	70	420	1,820	291	2,111
Capital Expenditures	146	213	15	—	374	33	407


	Six Months Ended September 30, 2024
	Overnight Air Cargo	Commercial Aircraft, Engines and Parts	Ground Support Equipment	Digital Solutions	Total Reportable segments	Corporate and Other	Total
Depreciation and amortization	210	558	190	400	1,358	351	1,709
Capital Expenditures	261	14,674	212	—	15,147	32	15,179


Reconciliation of operating income (loss) and elimination of intersegment loss was as follows:
	Three Months Ended September 30, 2025
(in thousands)	Overnight Air Cargo		Commercial Aircraft, Engines and Parts		Ground Support Equipment		Digital Solutions		Reportable Segment Total		Corporate and Other		Eliminations		Total
Operating income (loss) from external sources	$	1,615	$	6,838	$	1,619	$	( 278 )	$	9,794	$	( 4,286 )	$	—	$	5,508
Intersegment operating (loss) income	—		( 61 )		—		—		( 61 )		( 81 )		142		—
Operating income (loss)	1,615		6,777		1,619		( 278 )		9,733		( 4,367 )		142		5,508

	Three Months Ended September 30, 2024
	Overnight Air Cargo		Commercial Aircraft, Engines and Parts		Ground Support Equipment		Digital Solutions		Reportable Segment Total		Corporate and Other		Eliminations		Total
Operating income (loss) from external sources	$	1,808	$	3,372	$	418	$	( 211 )	$	5,387	$	( 1,767 )	$	—	$	3,620
Intersegment operating (loss) income	( 7 )		( 178 )		—		—		( 185 )		( 59 )		244		—
Operating income (loss)	1,801		3,194		418		( 211 )		5,202		( 1,826 )		244		3,620

	Six Months Ended September 30, 2025
(in thousands)	Overnight Air Cargo		Commercial Aircraft, Engines and Parts		Ground Support Equipment		Digital Solutions		Reportable Segment Total		Corporate and Other		Eliminations		Total
Operating income (loss) from external sources	$	3,081	$	7,790	$	2,957	$	( 527 )	$	13,301	$	( 6,947 )	$	—	$	6,354
Intersegment operating (loss) income	—		( 156 )		—		—		( 156 )		( 130 )		286		—
Operating income (loss)	3,081		7,634		2,957		( 527 )		13,145		( 7,077 )		286		6,354

	Six Months Ended September 30, 2024
	Overnight Air Cargo		Commercial Aircraft, Engines and Parts		Ground Support Equipment		Digital Solutions		Reportable Segment Total		Corporate and Other		Eliminations		Total
Operating income (loss) from external sources	$	3,644	$	4,696	$	( 357 )	$	( 674 )	$	7,309	$	( 4,247 )	$	—	$	3,062
Intersegment operating (loss) income	( 14 )		( 226 )		—		—		( 240 )		( 96 )		336		—
Operating income (loss)	3,630		4,470		( 357 )		( 674 )		7,069		( 4,343 )		336		3,062

18. 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. The earnout pursuant to the Redemption Agreement is a Level 3 fair value measurement that is valued at $ 0.4 million as of September 30, 2025. For the three and six months ended September 30, 2025, a gain has been recorded due to an increase in fair value of $ 0.3 million and $ 0.7 million, respectively.

In connection with the Redemption Agreement, the parties agreed to certain technical amendments to the First Amended and Restated Operating Agreement of Contrail and entered into a new Put and Call Agreement with respect to the remaining 5 % interest in Contrail held by the Seller. 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 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 greater of fair value on the date of the agreement, adjusted for allocable income and loss, or the redemption value at the end of each reporting period.

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").

The Company has presented the Shanwick 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. As 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 their redemption value. As of September 30, 2025, the balances were comprised of the following (in thousands):


	Shanwick RNCI		Contrail RNCI		Total
Beginning Balance as of April 1, 2025	$	5,176	$	1,878	$	7,054

Distribution to non-controlling members	—		( 377 )		( 377 )
Net income attributable to non-controlling interests	258		392		650
Other comprehensive income attributable to the RNCI	254		—		254
Redemption value adjustments	( 70 )		709		639

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

Crestone Asset Management, LLC and CJVII, LLC

For CAM's Investment Function, as described in Note 9 , 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 September 30, 2025, for its Investment Function, the Company has contributed $ 19.6 million to CAM’s Offshore Series and $ 1.0 million to CAM’s Onshore Series. The Company fulfilled its Investment Function initial commitment to CAM in fiscal year 2023.

In connection with the formation of CAM, MRC has 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 dates. 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.

19. Guarantees

Nonfinancial Guarantees

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 were $ 4.6 million and $ 4.4 million at September 30, 2025 and March 31, 2025, respectively. There were no liabilities recorded related to the nonfinancial guarantees at both September 30, 2025 and March 31, 2025.

20. Subsequent Events

On October 21, 2025, the Company and a wholly-owned, indirect subsidiary of the Company delivered a Sale and Implementation Deed with the Court-Appointed Administrators of Regional Express Holdings Limited (Rex). If creditor, court and other approvals are received, the Company then expects to close the proposed transaction by calendar year end.

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

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS

This section entitled "Management’s Discussion and Analysis of Financial Condition and Results of Operations" (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The MD&A provides a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition during the period from the most recent fiscal year-end, March 31, 2025, to and including September 30, 2025 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

This Quarterly Report on Form 10-Q, including the MD&A, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our current views with respect to future events and financial performance. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” "will," "continue" and similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any and all forecasts and projections in this document are “forward looking statements” and are based on management’s current expectations or beliefs. From time to time, we may also provide oral and written forward-looking statements in other materials we release to the public, such as press releases, presentations to securities analysts or investors, or other communications by us. Any or all of our forward-looking statements in this report and in any public statements we make could be materially different from actual results. Accordingly, we wish to caution investors that any forward-looking statements made by or on behalf of us are subject to uncertainties and other factors that could cause actual results to differ materially from such statements, because of, among other things, potential risks and uncertainties, such as:

• An inability to finance our operations through bank or other financing or through the sale or issuance of debt or equity securities;

• Economic and industry conditions in the Company’s markets;

• The risk that contracts with FedEx Corporation (“FedEx”) could be terminated or adversely modified;

• The risk that the number of aircraft operated for FedEx is reduced;

• The risk that GGS customers will defer or reduce significant orders for deicing equipment;

• The impact of any terrorist activities or armed conflict on United States soil or abroad;

• Changes in U.S. and foreign trade regulations and tariffs;

• The Company’s ability to manage its cost structure for operating expenses, or unanticipated capital requirements, and match them to shifting customer service requirements and production volume levels;

• The Company's ability to meet debt service covenants and to refinance existing debt obligations;

• The risk of injury or other damage arising from accidents involving the Company’s overnight air cargo operations, equipment or parts sold and/or services provided;

• Market acceptance of the Company’s commercial and military equipment and services;

• Competition from other providers of similar equipment and services;

• Changes in government regulation and technology;

• Changes in the value of marketable securities held as investments;

• Mild winter weather conditions reducing the demand for deicing equipment;

• Market acceptance and operational success of the Company’s aircraft asset management business and related aircraft capital joint venture; and

• Despite our current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage.

We also wish to caution investors that other factors might in the future prove to be important in affecting our results of operations. New factors emerge from time to time. It is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (including the information presented therein under Risk Factors), as well other publicly available information.

Overview

Air T, Inc. (the “Company,” “Air T,” “we” or “us”) is a holding company with a portfolio of operating businesses and financial assets. Our goal is to prudently and strategically diversify Air T’s earnings power and compound the growth in its free cash flow per share over time.

We currently operate in four industry segments:

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

• Ground support equipment (formerly known as Ground equipment sales), 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 (formerly known as Commercial jet engines and parts), which manages and leases aviation assets; supplies surplus and after market 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.

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.

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

Additionally, we elected to separately disclose the digital solutions segment to better align our financial statement presentation with a key anticipated long-term growth area for the Company. Digital solutions was previously classified as part of insignificant business activities. As a result of this change, prior period segment information has been recast to conform to our current presentation in our financial statements and related notes.

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.

Results of Operations

Second Quarter Fiscal 2026 Compared to Second Quarter Fiscal 2025

Operating Revenue

Consolidated revenue for the three-month period ended September 30, 2025 decreased by $17.1 million (21.0%) compared to the same quarter in the prior fiscal year.

Following is a table detailing revenue by segment, net of intercompany during the three months ended September 30, 2025 compared to the same quarter in the prior fiscal year (in thousands):


	Three Months Ended September 30,				Change
	2025		2024
Overnight Air Cargo	$	29,924	$	31,187	$	(1,263)	(4)	%
Ground Support Equipment	9,637		14,454		(4,817)		(33)	%
Commercial Aircraft, Engines, and Parts	20,880		32,926		(12,046)		(37)	%
Digital Solutions	2,209		1,836		373		20	%
Segments total	62,650		80,403		(17,753)		(22)	%

Revenues from the overnight air cargo segment for the three-month period ended September 30, 2025 decreased by $1.3 million (4%) compared to the second quarter of the prior fiscal year. The decrease was principally attributable to lower flight admin fees driven by increased soft and hard parked aircraft when compared to the prior year comparable quarter.

The ground support equipment segment contributed approximately $9.6 million and $14.5 million to the Company’s revenues for the three-month period ended September 30, 2025 and 2024 respectively, representing a $4.8 million (33%) decrease in the current fiscal year quarter. The decrease was primarily driven by a lower number of deicing trucks sold in the current quarter compared to the

comparable quarter from the prior fiscal year as a result of timing on fulfilling annual orders for certain customers. At September 30, 2025, the ground support equipment segment’s order backlog was $12.9 million compared to $6.2 million at September 30, 2024.

The commercial aircraft, engines and parts segment contributed $20.9 million of revenues in the quarter ended September 30, 2025 compared to $32.9 million in the comparable prior year quarter, which is a decrease of $12.0 million (37%). The decrease was largely attributable to a decline in component sales at Contrail, driven by a lower level of component inventory purchases during the preceding twelve-month period.

Digital solutions segment contributed $2.2 million of revenues in the quarter ended September 30, 2025 compared to $1.8 million in the prior year quarter, an increase of $0.4 million (20%). The increase is primarily due to increased software subscriptions represented by monthly recurring revenues of $0.7 million as of September 30, 2025 versus $0.6 million as of September 30, 2024.

Operating Expenses

Consolidated segment operating expenses for the three-month period ended September 30, 2025 decreased by $15.2 million (24%) compared to the same quarter in the prior fiscal year.

Following is a table detailing operating expenses by segment during the three months ended September 30, 2025 compared to the same quarter in the prior fiscal year (in thousands):


	Three Months Ended September 30,						Change
	2025			2024
Overnight Air Cargo:
Operating expense	$	24,922		$	26,326		$	(1,404)
Percentage of segment net sales	83		%	84		%
Ground Support Equipment:
Operating expense	6,539			12,395			(5,856)
Percentage of segment net sales	68		%	86		%
Commercial Aircraft, Engines and Parts:
Operating expense	14,427			22,582			(8,155)
Percentage of segment net sales	69		%	69		%
Digital Solutions:
Operating expense	762			682			80
Percentage of segment net sales	34		%	37		%
Segments total	46,650			61,985			(15,335)

The overnight air cargo segment contributed $24.9 million and $26.3 million to the Company's operating expenses for the three-month period ended September 30, 2025 and 2024, respectively, representing a $1.4 million (5%) decrease in the current quarter. The decrease was primarily attributable to the decrease in revenues noted above.

The ground support equipment segment contributed approximately $6.5 million and $12.4 million to the Company's operating expenses for the three-month period ended September 30, 2025 and 2024, respectively, representing a $5.9 million (47%) decrease in the current quarter. The decrease was primarily driven by lower costs associated with the reduced sales volume discussed in the segment revenue section above. However, the decline in operating expenses as a percentage of net sales was less pronounced than in the prior-year quarter, reflecting higher margins realized on deicing truck sales during the current period.

The commercial aircraft, engines and parts segment contributed $14.4 million and $22.6 million to the Company's operating expenses for the three-month period ended September 30, 2025 and 2024, respectively, representing a $8.2 million (36%) decrease in the current quarter. Lower component sales in the current quarter resulted in the decrease in operating expenses.

The digital solutions segment contributed $0.8 million of operating expenses in the quarter ended September 30, 2025 compared to $0.7 million in the prior year quarter, reflecting a relatively flat year-over-year trend.

General and administrative


	Three Months Ended September 30,						Change
	2025			2024
General and administrative	$	18,099		$	14,202		$	3,897
Percentage of total net sales	28		%	17		%

General and administrative expenses for the three-month period ended September 30, 2025 increased by $3.9 million (27%) compared to the first quarter of the prior fiscal year. The increase was primarily driven by acquisition-related costs incurred during the current year, as well as higher payroll and employee-related expenses.

Non-Operating Income (Expense)

Following is a table detailing non-operating income (expense) during the three months ended September 30, 2025 compared to the same quarter in the prior fiscal year (in thousands):


	Three Months Ended September 30,				Change
	2025		2024
Interest expense	$	(2,252)	$	(2,162)	$	(90)
Income from equity method investments	4,179		2,346		1,833
Other	(201)		(505)		304
	$	1,726	$	(321)	$	2,047

The Company had net non-operating income of $1.7 million during the quarter ended September 30, 2025, compared to net non-operating loss of $0.3 million in the prior year quarter. The non-operating income was driven by a $1.8 million increase in net income allocated to the Company from equity method investments, as detailed in Note 9 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report on Form 10-Q.

Provision for Income Taxes

During the three-month period ended September 30, 2025, the Company recorded $2.2 million in income tax expense at an effective tax rate (“ETR”) of 30.4%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended September 30, 2025 were the valuation allowance related to the Company’s U.S. consolidated group, DTI and DSI, the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, non-deductible acquisition-related costs, and the benefit from the Foreign-Derived Intangible Income (“FDII”) deduction.

During the three-month period ended September 30, 2024, the Company recorded $0.3 million in income tax expense at an ETR of 10.2%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended September 30, 2024 were the valuation allowance related to the Company’s U.S. consolidated group, DTI, LGSS, DSI and BCCM Kenya, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

First Six Months of Fiscal 2026 Compared to First Six Months of Fiscal 2025

Operating Revenue

Consolidated segment revenue for the six-month period ended September 30, 2025 decreased by $12.6 million (9%) compared to the same period in the prior fiscal year.

Following is a table detailing revenue by segment, net of intercompany during the six months ended September 30, 2025 compared to the same period in the prior fiscal year (in thousands):


	Six Months Ended September 30,				Change
	2025		2024
Overnight Air Cargo	$	60,513	$	61,570	$	(1,057)	(2)	%
Ground Support Equipment	24,707		21,809		2,898		13	%
Commercial Aircraft, Engines, and Parts	42,840		59,176		(16,336)		(28)	%
Digital Solutions	4,305		3,515		790		22	%
Segments total	132,365		146,070		(13,705)		(9)	%

Revenues from the overnight air cargo segment for the six months ended September 30, 2025 decreased by $1.1 million (2%) compared to the six months ended September 30, 2024. The decrease was principally attributable to lower flight admin fees driven by increased soft and hard parked aircraft when compared to the prior year comparable period.

The ground support equipment segment's revenue for the six-month period ended September 30, 2025 was $24.7 million compared to $21.8 million in the same period in the prior fiscal year, an increase of $2.9 million (13%). The increase is a result of increased deicer shipments and increase in spare parts sales in the current period. We believe the increase in parts revenue is driven by heightened demand for maintenance and overhaul services preparation for the coming winter season.

The commercial aircraft, engines and parts segment contributed $42.8 million of revenues in the six months ended September 30, 2025 compared to $59.2 million in the comparable prior year six months period. The decrease was largely attributable to a decline in component sales at Contrail, driven by a lower level of component inventory purchases during the preceding twelve-month period.

The digital solutions segment contributed $4.3 million of revenues in the six months ended September 30, 2025 compared to $3.5 million in the prior year six month period, an increase of $0.8 million (22%). The increase was primarily due to increased software subscriptions represented by monthly recurring revenues of $0.7 million as of September 30, 2025 versus $0.6 million as of September 30, 2024.

Operating Expenses

Consolidated segment operating expenses for the six-month period ended September 30, 2025 decreased by $13.1 million (11%) compared to the same period in the prior fiscal year.

Following is a table detailing operating expenses by segment during the six months ended September 30, 2025 compared to the same period in the prior fiscal year (in thousands):


	Six Months Ended September 30,						Change
	2025			2024
Overnight Air Cargo:
Operating expense	$	50,821		$	52,036		$	(1,215)
Percentage of segment net sales	84		%	85		%
Ground Support Equipment:
Operating expense	18,842			18,929			(87)
Percentage of segment net sales	76		%	87		%
Commercial Aircraft, Engines and Parts:
Operating expense	29,084			41,493			(12,409)
Percentage of segment net sales	68		%	70		%
Digital Solutions:
Operating expense	1,598			1,238			360
Percentage of segment net sales	37		%	35		%
Segments total	100,345			113,696			(13,351)

The overnight air cargo segment contributed $50.8 million and $52.0 million to the Company's operating expenses for the six-month period ended September 30, 2025 and 2024, respectively, representing a $1.2 million (2%) decrease in the current period. The decrease was primarily attributable to lower costs associated with the decrease in revenues noted above.

Operating expenses from the ground support equipment segment for the six months ended September 30, 2025 was relatively flat compared to the six months ended September 30, 2024 but showed improvements when viewed as a percentage of net sales due to higher margins realized on deicer and part sales in the current year.

The commercial aircraft, engines and parts segment contributed $29.1 million and $41.5 million to the Company's operating expenses for the six months ended September 30, 2025 and 2024, respectively, representing a $12.4 million (30%) decrease in the current period. Lower component sales in the current year resulted in the decrease in operating expenses.

The digital solutions segment contributed $1.6 million of operating expenses in the six months ended September 30, 2025 compared to $1.2 million in the prior year comparable period, reflecting a relatively flat year-over-year trend.

General and Administrative


	Six Months Ended September 30,						Change
	2025			2024
General and administrative	$	33,130		$	28,437		$	4,693
Percentage of total net sales	25		%	19		%

General and administrative expenses for the six month period ended September 30, 2025 increased by $4.7 million (17%) compared to the prior year comparable period. The increase was primarily driven by acquisition-related costs incurred during the current year, as well as higher payroll and employee-related expenses.

Non-Operating Income (Expense)

Following is a table detailing non-operating income (expense) during the six months ended September 30, 2025 compared to the same six months in the prior fiscal year (in thousands):


	Six Months Ended September 30,				Change
	2025		2024
Interest expense	$	(4,565)	$	(4,108)	$	(457)
Income from equity method investments	4,160		4,269		(109)
Other	478		179		299
	$	73	$	340	$	(267)

The Company had a net non-operating income of $0.1 million for the six months ended September 30, 2025 compared to a net non-operating income of $0.3 million in the prior year six-month period. Overall, non-operating results were relatively consistent with the prior-year period.

Provision for Income Taxes

During the six-month period ended September 30, 2025, the Company recorded $2.1 million in income tax expense at an ETR of 32.1%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the six-month period ended September 30, 2025 were the valuation allowance related to the Company’s U.S. consolidated group, DTI and DSI, the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, non-deductible transaction costs, and the benefit from the FDII deduction.

During the six-month period ended September 30, 2024, the Company recorded $0.4 million in income tax expense at an ETR of 12.0%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the six-month period ended September 30, 2024 were the valuation allowance related to the Company’s U.S. consolidated group, DTI, LGSS, DSI and BCCM Kenya, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are fully described in Note 1 to the condensed consolidated financial statements and in the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2025. The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the use of estimates and assumptions to determine certain assets, liabilities, revenues and expenses. Management bases these estimates and assumptions upon the best information available at the time of the estimates or assumptions. The Company’s estimates and assumptions could change materially as conditions within and beyond our control change. Accordingly, actual results could differ materially from estimates. There were no significant changes to the Company’s critical accounting policies and estimates during the three-months ended September 30, 2025.

Seasonality

The ground support equipment segment business has historically been seasonal, with the revenues and operating income typically being lower in the first and fourth fiscal quarters as commercial deicers are typically delivered prior to the winter season. Other segments have typically not experienced material seasonal trends.

Systems and Network Security

Although we have employed significant resources to develop our security measures against breaches, our cybersecurity measures may not detect or prevent all attempts to compromise our systems, including hacking, viruses, malicious software, break-ins, phishing attacks, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in and transmitted by our systems. Breaches of our cybersecurity measures could result in unauthorized access to our systems, misappropriation of information or data, deletion or modification of client information or other interruption to our business operations. As techniques used to obtain unauthorized access to sabotage systems change frequently and may not be known until launched against us or our third-party service providers, we may be unable to anticipate, or implement adequate measures to protect against these attacks. If we are unable to avert these attacks and security breaches in the future, we could be subject to significant legal and financial liability, our reputation would be harmed and we could sustain substantial revenue loss from lost sales and customer dissatisfaction. We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Cyber-attacks may target us or other participants, or the communication infrastructure on which we depend. Actual or anticipated attacks and risks may cause us to incur significantly higher costs, including costs to deploy additional personnel and network protection technologies, train employees, and engage third-party experts and consultants. Cybersecurity breaches would not only harm our reputation and business, but also could materially decrease our revenue and net income.

Inflation

Future economic developments such as inflation and increased interest rates as well as further business issues present uncertainty and risk with respect to our financial condition and results of operations. We expect that issues caused by economic and business issues will continue beyond the current fiscal year. The fluidity of this situation precludes any prediction as to the ultimate adverse impact these issues on economic and market conditions and our businesses in particular, and, as a result, presents material uncertainty and risk with respect to us and our results of operations. 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 September 30, 2025.

Liquidity and Capital Resources

As of September 30, 2025, the Company held approximately $17.5 million in cash and cash equivalents and restricted cash. The Company has an aggregate of approximately $28.4 million in available funds under its lines of credit as of September 30, 2025.

As of September 30, 2025, the Company’s working capital amounted to $49.4 million, an increase of $18.5 million compared to March 31, 2025, primarily driven by a $8.1 million increase in inventory and a $11.5 million increase in cash and cash equivalents.

As mentioned in Note 13 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, in connection with the acquisition of Royal on May 15, 2025, the Alerus Loan Parties under the Revolving Credit Agreement with Alerus entered into Amendment No. 4 to Credit Agreement and Consent and Term Loan C with Alerus in the amount of $1.1 million. The purpose of the Amendment and Term Note was to provide a term loan to finance the full purchase price of the acquisition, to add Royal as a part of the Alerus Loan Parties to the Alerus credit agreement, as amended and to memorialize Alerus’ consent to the Royal acquisition. The new term loan matures May 15, 2030 and bears interest at the greater of five (5%) percent or the CME one-month term SOFR rate plus 2.25%. Monthly payments on Term Note C commenced June 15, 2025 and are equal to $12.5 thousand plus accrued interest. The term loan is secured by the terms of the Security Agreement dated as of August 29, 2024.

As mentioned in Note 13 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on May 30, 2025, the Company, along with AAM 24-1 (the "Issuer"), entered into new transaction documents with the Institutional Investors that replaced the Second NPA transaction documents. Pursuant to the Third NPA with the Institutional Investors, the Issuer agreed to issue and sell a Multiple Advance Senior Secured Note in an aggregate principal amount of up to $100.0 million (the “Multiple Advance Note”). For purposes of clarity and the avoidance of doubt, as of the closing date, the Institutional Investors advanced an additional $10.0 million to the Issuer and have collectively advanced under the Multiple Advance Note to the Issuer the aggregate amount of $40.0 million. Provided no default or event of default of the Issuer exists, and subject to satisfaction of all requirements for any closing as set forth in the Third 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 (in thousands):


September 30, 2025			$10.0 million
January 30, 2026			$10.0 million
May 30, 2026			$10.0 million
September 30, 2026			$10.0 million
January 30, 2027			$10.0 million
May 30, 2027			$10.0 million

The Multiple Advance Note bears annual interest at a rate of 8.5% which is computed on the basis of a 30/360-day year and actual days elapsed and is payable semi-annually in arrears, pursuant to the terms of the Multiple Advance Note. The maturity date of the Multiple Advance Note is May 31, 2035. The Multiple Advance Note contains standard and customary events of default including, but not limited to, failure to make payments when due under the Multiple Advance Note, failure to comply with certain covenants contained in the Multiple Advance Note, or bankruptcy or insolvency of, or certain monetary judgments against the Issuer or the Company. The prior notes were cancelled and replaced by the Multiple Advance Note. Funds advanced under the Multiple Advance Note may be reinvested for a period of six years from the date of closing.

The Issuer may prepay all or a portion of the outstanding principal and accrued but unpaid interest at any time, provided that (i) if the Issuer prepays all or any portion of the Multiple Advance Note within one year from the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to two percent (2.0%) of the amount being prepaid, and (ii) if the Issuer prepays all or any portion of the Multiple Advance Note after the first anniversary of the Issue Date but on or prior to the second anniversary of the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to one percent (1.0%) of the amount being prepaid. If the Issuer elects to prepay a portion of the outstanding principal and accrued but unpaid interest, then in no event can such prepayment be for an amount less than $1.0 million.

The various equity interests that were assigned by the Company to the Issuer on or about the closing date of the original financings continue to serve as collateral for the repayment of the Multiple Advance Note as does 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.

As mentioned in Note 13 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on September 3, 2025, the Alerus Loan Parties under the Revolving Credit Agreement with Alerus entered into Amendment No. 5 to Credit Agreement, the Amended and Restated Revolving Credit Note, and the Amended and Restated Term Note A. Pursuant to Amendment No. 5 to Credit Agreement, the Overline Note provisions and note were eliminated. Pursuant to the Amended and Restated Revolving Credit Note, the revolving credit commitment to make revolving credit loans and to issue letters of credit was increased to an aggregate principal amount not to exceed $20.0 million. The interest rate on the Revolving Credit Note was decreased to the greater of 5.00% or 1-month SOFR plus 1.90%. The maturity date was extended to August 28, 2027. The financial covenants are to be measured semi-annually at December and March of each year and the Alerus Loan Parties are to deliver quarterly financial statements to Alerus. Pursuant to the Amended and Restated Term Note A, Term Note A was amended and restated by the Alerus Loan Parties in the principal amount of $9.2 million. The maturity date remains August 15, 2029. The Term Note A interest rate was revised to 1-month SOFR plus 2.00%.

The Company believes that it has sufficient cash on hand and available liquidity, to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date these financial statements are issued.

Cash Flows

Following is a table of changes in cash flow for the six months ended September 30, 2025 and 2024 (in thousands):


	Six Months Ended September 30,
	2025		2024
Net cash (used in) provided by operating activities	$	(6,504)	$	3,044
Net cash provided by (used in) investing activities	13,936		(14,195)
Net cash provided by financing activities	3,746		12,494
Effect of foreign currency exchange rates on cash and cash equivalents	(147)		(2)
Net Increase in Cash and Cash Equivalents and Restricted Cash	$	11,031	$	1,341

Net cash used in operating activities was $6.5 million for the six-month period ended September 30, 2025 compared to net cash provided by operating activities of $3.0 million in the prior year six-month period, representing a decrease of $9.5 million. The decrease was primarily attributable to a $16.9 million change in cash flow from inventory and a $7.0 million current year period gain on sale of the two Airbus Model A321-111 aircraft. The change in inventory was primarily driven by Contrail purchasing an engine for tear-down in the current year period while the prior year period saw high sales of component inventory that was not replenished. The changes in inventory and gain on sale of aircraft were partially offset by a $13.4 million change in cash flow from accounts receivable. The change in cash flows from accounts receivable in the current year period was due to the decrease in component sales at Contrail.

Net cash provided by investing activities for the six-month period ended September 30, 2025 was $13.9 million compared to net cash used in investing activities of $14.2 million in the prior year period. The cash provided by investing activities in the current six-month period was primarily driven by proceeds of $19.9 million from the sale of the two Airbus Model A321-111 aircraft, partially offset by investments in unconsolidated entities of $6.8 million. Cash used in investing activities in the prior year period was primarily driven by capital expenditures of $14.6 million related to the purchase of the two aircraft that were sold in the current year period.

Net cash provided by financing activities for the six-month period ended September 30, 2025 was $3.7 million compared to net cash provided by financing activities of $12.5 million in the prior year period. The year-over-year decrease in net cash provided by financing activities was primarily due to a $13.4 million and $4.2 million increase on payments made on the Company's revolving lines of credit and term loans, respectively, partially offset by a $11.1 million increase in proceeds from the Company's revolving lines of credit.

Non-GAAP Financial Measures

The Company uses adjusted earnings before taxes, interest, and depreciation and amortization ("Adjusted EBITDA"), a non-GAAP financial measure as defined by the SEC, to evaluate the Company's financial performance. This performance measure is not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures.

Adjusted EBITDA is defined as earnings before taxes, interest, and depreciation and amortization, adjusted for specified items. The Company calculates Adjusted EBITDA by removing the impact of specific items and adding back the amounts of interest expense and depreciation and amortization to earnings before income taxes. When calculating Adjusted EBITDA, the Company does not add back depreciation expense for assets that are on lease, as the Company believes this expense matches with the corresponding revenue earned on leased assets.

Management believes that Adjusted EBITDA is a useful measure of the Company's performance because it provides investors additional information about the Company's operations allowing better evaluation of underlying business performance and better period-to-period comparability. We may periodically review and update our non-GAAP financial measures based on our determination of their relevance to our business which could result in the addition or elimination of select non-GAAP financial measures in the future. Adjusted EBITDA is not intended to replace or be an alternative to operating income (loss), the most directly comparable amounts reported under GAAP.

The tables below provide a reconciliation of operating income (loss) to Adjusted EBITDA for the three and six months ended September 30, 2025 and 2024 (in thousands):


	Three months ended				Six months ended
	9/30/2025		9/30/2024		9/30/2025		9/30/2024
Operating income	$	5,508	$	3,620	$	6,354	$	3,062
Depreciation and amortization (excluding certain leased assets depreciation) 1	730		949		1,432		1,709
Asset impairment, restructuring or impairment charges	198		124		239		503
Loss (gain) on sale of property and equipment	21		(8)		20		(8)
Securities issuance expenses	20		28		49		129
Share-based compensation	41		2		81		18
Severance expenses	—		39		—		218
Earnout remeasurement	(264)		279		(666)		259
Deal-sourcing and acquisition related expenses	1,628		—		1,837		—
Adjusted EBITDA	$	7,882	$	5,033	$	9,346	$	5,890
(1) Leased assets depreciation expense excluded was $0.1 million and $0.7 million during the three and six months ended September 30, 2025, respectively. There were no leased assets depreciation expense excluded for both the three and six months ended September 30, 2024.

The table below provides Adjusted EBITDA by segment for the three and six months ended September 30, 2025 and 2024 (in thousands):


	Three months ended				Six months ended
	9/30/2025		9/30/2024		9/30/2025		9/30/2024
Overnight Air Cargo	$	1,801	$	1,950	$	3,414	$	3,897
Ground Support Equipment	1,653		513		3,027		1
Commercial Aircraft, Engines and Parts	6,943		4,141		7,697		5,806
Digital Solutions	(208)		(80)		(294)		(393)
Segments total	$	10,189	$	6,524	$	13,844	$	9,311
Corporate and Other	(2,307)		(1,491)		(4,498)		(3,421)
Adjusted EBITDA	$	7,882	$	5,033	$	9,346	$	5,890

Issuer and guarantor subsidiary summarized information

Air T Funding is a statutory business trust formed under Delaware law in September 2018. Air T Funding exists for the exclusive purposes of (i) issuing and selling its Alpha Income Trust Preferred Securities (also referred to as the 8.0% Cumulative Securities, Capital Securities or “Trust Preferred Securities” or "TruPs"), par value $25.00 per share, (ii) using the proceeds from the sale of the Trust Preferred Securities to acquire Junior Subordinated Debentures issued by the Company, and (iii) engaging in only those other activities necessary, advisable or incidental thereto (such as registering the transfer of the Trust Preferred Securities). Accordingly, the Junior Subordinated Debentures are the sole assets of Air T Funding, and payments by the Company under the Junior Subordinated Debentures and a related expense agreement are the sole revenues of Air T Funding. Air T Funding’s business and affairs are conducted by a Property Trustee, a Delaware Trustee and two individual Administrative Trustees who are officers of Air T.

Distributions on the Trust Preferred Securities are payable to record holders at the annual rate of 8% of the stated $25.00 liquidation amount, payable quarterly in arrears on the 15th day of February, May, August, and November in each year. The Trust Preferred Securities issued by the Trust are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by Air T. Air T guarantees the payment of distributions by Air T Funding and payments on liquidation of or redemption of the Trust Preferred Securities (subordinate to the right to payment of senior and subordinated debt of Air T, as defined in Note 13 of Notes to condensed Consolidated Financial Statements included under Part I, Item 1 of this report). If Air T Funding has insufficient funds to pay distributions on the Trust Preferred Securities (i.e., if Air T has failed to make required payments under the Junior Subordinated Debentures), a holder of the Trust Preferred Securities would have the right to institute a legal proceeding directly against Air T to enforce payment of such distributions.

All of the Common Securities of Air T Funding are owned by Air T. The Common Securities rank pari passu, and payments will be made thereon pro rata, with the Trust Preferred Securities, except that upon the occurrence and during the continuance of an event of default under the Trust Agreement, as amended resulting from an event of default under the indenture, the rights of the Company as

holder of the common securities to payment in respect of distributions and payments upon liquidation, redemption or otherwise would be subordinated to the rights of the holders of the Trust Preferred Securities.

The Trust Preferred Securities are subject to mandatory redemption at any time on or after June 7, 2024. Upon the repayment or redemption at any time, in whole or in part, of any Junior Subordinated Debentures, the proceeds from such repayment or redemption would be applied to redeem a like amount of the Trust Preferred Securities, at the liquidation amount plus any accumulated and unpaid distributions. If less than all of the Junior Subordinated Debentures are to be repaid or redeemed on a redemption date, then the proceeds from such repayment or redemption would be allocated to the redemption of the Trust Preferred Securities pro rata.

The Company also has an optional right to redeem the Junior Subordinated Debentures (i) on or after June 7, 2024, in whole at any time or in part from time to time at a redemption price equal to the accrued and unpaid interest on the Junior Subordinated Debentures so redeemed to the date fixed for redemption, plus 100% of the principal amount thereof, or (ii) at any time, in whole (but not in part), upon the occurrence of a Tax Event, an Investment Company Event or a Capital Treatment Event (each as defined in the indenture) at a redemption price equal to the accrued and unpaid interest on the Junior Subordinated Debentures so redeemed to the date fixed for redemption, plus 100% of the principal amount thereof. In the event a Tax Event, an Investment Company Event or Capital Treatment Event has occurred and is continuing and the Company does not elect to redeem the Junior Subordinated Debentures and thereby cause a mandatory redemption of the Trust Preferred Securities or to liquidate Air T Funding and cause the Junior Subordinated Debentures to be distributed to holders of the Trust Securities in liquidation of Air T Funding, such Trust Preferred Securities will remain outstanding and additional sums may be payable on the Junior Subordinated Debentures.

So long as no Debenture event of default has occurred and is continuing, at any time on or after June 7, 2024, the Company has the right under the indenture to defer the payment of interest on the Junior Subordinated Debentures at any time or from time to time for a period not exceeding 20 consecutive quarters with respect to each such period (each, an “Extension Period”), provided that no Extension Period may extend beyond the stated maturity of the Junior Subordinated Debentures on June 7, 2049. As a consequence of any such election, quarterly distributions on the Trust Preferred Securities will be deferred by Air T Funding during any such Extension Period. Distributions to which holders of Trust Preferred Securities are entitled will accumulate additional amounts thereon at the rate per annum of 8% thereof, compounded quarterly from the relevant Distribution Date, to the extent permitted under applicable law. During any such Extension Period, the Company may not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company’s capital stock (which includes common and preferred stock) or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu with or junior in interest to the Junior Subordinated Debentures or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to the Junior Subordinated Debentures (other than (a) dividends or distributions in common stock of the Company, (b) any declaration of a dividend in connection with the implementation of a stockholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the guarantee and (d) purchases of common stock for issuance under any of the Company’s benefit plans for its directors, officers or employees). Prior to the termination of any such Extension Period, the Company may further extend such Extension Period, provided that such extension does not cause such Extension Period to exceed 20 consecutive quarters or extend beyond the stated maturity. Upon the termination of any such Extension Period and the payment of all amounts then due, and subject to the foregoing limitations, the Company may elect to begin a new Extension Period. Subject to the foregoing, there is no limitation on the number of times that the Company may elect to begin an Extension Period. The Company has no current intention of exercising its right to defer payments of interest by extending the interest payment period on the Junior Subordinated Debentures.

Air T Funding has a term of 30 years, but may terminate earlier as provided in the Trust Agreement, as amended. The Trust Agreement was most recently amended on March 3, 2021 and on January 28, 2022 and currently allows for the issuance of up to $100.0 million of Trust Preferred Securities. As of September 30, 2025, there are $48.5 million in Trust Preferred Securities outstanding ($13.0 million held by the wholly-owned subsidiaries of the Company).

The Trust is a “finance subsidiary” of Air T within the meaning of Rule 3‑10 of Regulation S‑X under the Securities Act of 1933, as amended, and as a result the Air T Funding does not file periodic reports with the SEC under the Securities Exchange Act of 1934, as amended.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk, see Item 7A “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the year ended March 31, 2025. Our exposures to market risk have not changed materially since March 31, 2025.

Item 4. Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, referred to collectively herein as the Certifying Officers, are responsible for establishing and maintaining our disclosure controls and procedures. The Certifying Officers have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of September 30, 2025. Based on that review and evaluation, which included inquiries made to certain other employees of the Company, the Certifying Officers have concluded that the Company’s current disclosure controls and procedures, as designed and implemented, are effective in ensuring that information relating to the Company required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving the stated goals under all potential future conditions, regardless of how remote.

There has not been any change in the Company’s internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II -- OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) 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 in June 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. As of September 30, 2025, 752,228 shares may be repurchased pursuant to this program.

No shares were repurchased during the quarter ended September 30, 2025.

Item 5. Other information

During the quarter ended September 30, 2025, none of our directors or officers (as defined in Section 16 of the Exchange Act), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (each as defined in Item 408 of Regulation S-K).

Item 6. Exhibits

(a) Exhibits


No.			Description

10.1			Amended and Restated Revolving Credit Note of the Borrowers in the amount of $20,000,000 to Alerus Financial, National Association dated as of September 3, 2025, incorporates by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed September 5, 2025 (Commission File No. 001-35476).

10.2			Amendment No. 5 to Credit Agreement by and among 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, Air T, Inc. and Alerus Financial, National Association effective as of September 3, 2025, incorporated by reference to Exhibit 10.2 of the Company's Current Report on From 8-K filed September 5, 2025 (Commission File No. 001-35476).

10.3			Amended and Restated Term Note A in the amount of $9,188,571.40 to Alerus Financial, National Association dated as of September 3, 2025, incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed September 5, 2025 (Commission File No. 001-35476).

10.4			Acknowledgment and Agreement of Air T, Inc. as to Amendment No. 5 to Credit Agreement dated September 3, 2025, incorporates by reference to Exhibit 10.4 of the Company's Current Report on Form 8-k filed September 5, 2025 (Commission File No 001-35476).

10.5			Unlimited Continuing Guaranty (Swap Transaction) of Air T, Inc. to and for the benefit of Alerus Financial, National Association entered into as of September 3, 2025, incorporate by reference to Exhibit 10.5 of the Company's Current Report on Form 8-K filed September 5, 2025 (Commission File No. 001-35476).

22.1			List of Issuers and Guarantors

31.1			Section 302 Certification of Chief Executive Officer and President

31.2			Section 302 Certification of Chief Financial Officer

32.1			Section 1350 Certifications

101			The following financial information from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Stockholders Equity, and (v) the Notes to the Condensed Consolidated Financial Statements.

* Portions of this exhibit have been omitted for confidential treatment.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			AIR T, INC.


Date: November 12, 2025

			/s/ Tracy Kennedy
			Tracy Kennedy, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

TABLE OF CONTENTS

Item 1. Financial Statements Item 2. Management's Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II -- Other Information Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 5. Other Information Item 6. Exhibits

Exhibits

10.1 Amended and Restated Revolving Credit Note of the Borrowers in the amount of $20,000,000 to Alerus Financial, National Association dated as of September 3, 2025, incorporates by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed September 5, 2025 (Commission File No. 001-35476). 10.2 Amendment No. 5 to Credit Agreement by and among AirZona 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, Air T, Inc. and Alerus Financial, National Association effective as of September 3, 2025, incorporated by reference to Exhibit 10.2 of the Company's Current Report on From 8-K filed September 5, 2025 (Commission File No. 001-35476). 10.3 Amended and Restated Term Note A in the amount of $9,188,571.40 to Alerus Financial, National Association dated as of September 3, 2025, incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed September 5, 2025 (Commission File No. 001-35476). 10.4 Acknowledgment and Agreement of Air T, Inc. as to Amendment No. 5 to Credit Agreement dated September 3, 2025, incorporates by reference to Exhibit 10.4 of the Company's Current Report on Form 8-k filed September 5, 2025 (Commission File No 001-35476). 10.5 Unlimited Continuing Guaranty (Swap Transaction) of Air T, Inc. to and for the benefit of Alerus Financial, National Association entered into as of September 3, 2025, incorporate by reference to Exhibit 10.5 of the Company's Current Report on Form 8-K filedSeptember5, 2025 (Commission File No. 001-35476). 22.1 List of Issuers and Guarantors 31.1 Section 302 Certification of Chief Executive Officer and President 31.2 Section 302 Certification of Chief Financial Officer 32.1 Section 1350 Certifications

AIRT 10-Q Quarter ended Sept. 30, 2025

Exhibits