0000353184--03-312022Q2false1.51000003531842021-04-012021-09-300000353184us-gaap:CommonStockMember2021-04-012021-09-300000353184airt:CumulativeCapitalSecuritiesMember2021-04-012021-09-30xbrli:shares00003531842021-10-29iso4217:USD0000353184airt:OvernightAirCargoMember2021-07-012021-09-300000353184airt:OvernightAirCargoMember2020-07-012020-09-300000353184airt:OvernightAirCargoMember2021-04-012021-09-300000353184airt:OvernightAirCargoMember2020-04-012020-09-300000353184airt:GroundEquipmentSalesMember2021-07-012021-09-300000353184airt:GroundEquipmentSalesMember2020-07-012020-09-300000353184airt:GroundEquipmentSalesMember2021-04-012021-09-300000353184airt:GroundEquipmentSalesMember2020-04-012020-09-300000353184airt:CommercialJetEnginesInventoryMember2021-07-012021-09-300000353184airt:CommercialJetEnginesInventoryMember2020-07-012020-09-300000353184airt:CommercialJetEnginesInventoryMember2021-04-012021-09-300000353184airt:CommercialJetEnginesInventoryMember2020-04-012020-09-300000353184us-gaap:CorporateAndOtherMember2021-07-012021-09-300000353184us-gaap:CorporateAndOtherMember2020-07-012020-09-300000353184us-gaap:CorporateAndOtherMember2021-04-012021-09-300000353184us-gaap:CorporateAndOtherMember2020-04-012020-09-3000003531842021-07-012021-09-3000003531842020-07-012020-09-3000003531842020-04-012020-09-30iso4217:USDxbrli:shares00003531842021-09-3000003531842021-03-3100003531842020-03-3100003531842020-09-300000353184us-gaap:CommonStockMember2020-03-310000353184us-gaap:TreasuryStockMember2020-03-310000353184us-gaap:AdditionalPaidInCapitalMember2020-03-310000353184us-gaap:RetainedEarningsMember2020-03-310000353184us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310000353184us-gaap:NoncontrollingInterestMember2020-03-310000353184us-gaap:RetainedEarningsMember2020-04-012020-06-300000353184us-gaap:NoncontrollingInterestMember2020-04-012020-06-3000003531842020-04-012020-06-300000353184us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300000353184us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300000353184us-gaap:CommonStockMember2020-06-300000353184us-gaap:TreasuryStockMember2020-06-300000353184us-gaap:AdditionalPaidInCapitalMember2020-06-300000353184us-gaap:RetainedEarningsMember2020-06-300000353184us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300000353184us-gaap:NoncontrollingInterestMember2020-06-3000003531842020-06-300000353184us-gaap:RetainedEarningsMember2020-07-012020-09-300000353184us-gaap:NoncontrollingInterestMember2020-07-012020-09-300000353184us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000353184us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000353184us-gaap:CommonStockMember2020-09-300000353184us-gaap:TreasuryStockMember2020-09-300000353184us-gaap:AdditionalPaidInCapitalMember2020-09-300000353184us-gaap:RetainedEarningsMember2020-09-300000353184us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300000353184us-gaap:NoncontrollingInterestMember2020-09-300000353184us-gaap:CommonStockMember2021-03-310000353184us-gaap:TreasuryStockMember2021-03-310000353184us-gaap:AdditionalPaidInCapitalMember2021-03-310000353184us-gaap:RetainedEarningsMember2021-03-310000353184us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000353184us-gaap:NoncontrollingInterestMember2021-03-310000353184us-gaap:RetainedEarningsMember2021-04-012021-06-300000353184us-gaap:NoncontrollingInterestMember2021-04-012021-06-3000003531842021-04-012021-06-300000353184us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000353184us-gaap:CommonStockMember2021-06-300000353184us-gaap:TreasuryStockMember2021-06-300000353184us-gaap:AdditionalPaidInCapitalMember2021-06-300000353184us-gaap:RetainedEarningsMember2021-06-300000353184us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000353184us-gaap:NoncontrollingInterestMember2021-06-3000003531842021-06-300000353184us-gaap:RetainedEarningsMember2021-07-012021-09-300000353184us-gaap:NoncontrollingInterestMember2021-07-012021-09-300000353184us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000353184us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000353184us-gaap:CommonStockMember2021-09-300000353184us-gaap:TreasuryStockMember2021-09-300000353184us-gaap:AdditionalPaidInCapitalMember2021-09-300000353184us-gaap:RetainedEarningsMember2021-09-300000353184us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300000353184us-gaap:NoncontrollingInterestMember2021-09-300000353184airt:CapitalCommitmentsMemberairt:ContrailAssetManagementLLCMemberairt:ContrailJVIILLCMember2021-05-050000353184airt:CapitalCommitmentsMemberairt:ContrailJVIILLCMember2021-05-050000353184airt:CapitalCommitmentsMemberairt:MillRoadCapitalMemberairt:ContrailJVIILLCMember2021-05-050000353184airt:OvernightAirCargoMemberus-gaap:ProductMember2021-07-012021-09-300000353184airt:OvernightAirCargoMemberus-gaap:ProductMember2020-07-012020-09-300000353184airt:OvernightAirCargoMemberus-gaap:ProductMember2021-04-012021-09-300000353184airt:OvernightAirCargoMemberus-gaap:ProductMember2020-04-012020-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ProductMember2021-07-012021-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ProductMember2020-07-012020-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ProductMember2021-04-012021-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ProductMember2020-04-012020-09-300000353184airt:CommercialJetEnginesInventoryMemberus-gaap:ProductMember2021-07-012021-09-300000353184airt:CommercialJetEnginesInventoryMemberus-gaap:ProductMember2020-07-012020-09-300000353184airt:CommercialJetEnginesInventoryMemberus-gaap:ProductMember2021-04-012021-09-300000353184airt:CommercialJetEnginesInventoryMemberus-gaap:ProductMember2020-04-012020-09-300000353184us-gaap:ProductMemberus-gaap:CorporateAndOtherMember2021-07-012021-09-300000353184us-gaap:ProductMemberus-gaap:CorporateAndOtherMember2020-07-012020-09-300000353184us-gaap:ProductMemberus-gaap:CorporateAndOtherMember2021-04-012021-09-300000353184us-gaap:ProductMemberus-gaap:CorporateAndOtherMember2020-04-012020-09-300000353184airt:OvernightAirCargoMemberus-gaap:ServiceMember2021-07-012021-09-300000353184airt:OvernightAirCargoMemberus-gaap:ServiceMember2020-07-012020-09-300000353184airt:OvernightAirCargoMemberus-gaap:ServiceMember2021-04-012021-09-300000353184airt:OvernightAirCargoMemberus-gaap:ServiceMember2020-04-012020-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ServiceMember2021-07-012021-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ServiceMember2020-07-012020-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ServiceMember2021-04-012021-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ServiceMember2020-04-012020-09-300000353184us-gaap:ServiceMemberairt:CommercialJetEnginesInventoryMember2021-07-012021-09-300000353184us-gaap:ServiceMemberairt:CommercialJetEnginesInventoryMember2020-07-012020-09-300000353184us-gaap:ServiceMemberairt:CommercialJetEnginesInventoryMember2021-04-012021-09-300000353184us-gaap:ServiceMemberairt:CommercialJetEnginesInventoryMember2020-04-012020-09-300000353184us-gaap:ServiceMemberus-gaap:CorporateAndOtherMember2021-07-012021-09-300000353184us-gaap:ServiceMemberus-gaap:CorporateAndOtherMember2020-07-012020-09-300000353184us-gaap:ServiceMemberus-gaap:CorporateAndOtherMember2021-04-012021-09-300000353184us-gaap:ServiceMemberus-gaap:CorporateAndOtherMember2020-04-012020-09-300000353184airt:OvernightAirCargoMemberairt:LeasedAssetsMember2021-07-012021-09-300000353184airt:OvernightAirCargoMemberairt:LeasedAssetsMember2020-07-012020-09-300000353184airt:OvernightAirCargoMemberairt:LeasedAssetsMember2021-04-012021-09-300000353184airt:OvernightAirCargoMemberairt:LeasedAssetsMember2020-04-012020-09-300000353184airt:GroundEquipmentSalesMemberairt:LeasedAssetsMember2021-07-012021-09-300000353184airt:GroundEquipmentSalesMemberairt:LeasedAssetsMember2020-07-012020-09-300000353184airt:GroundEquipmentSalesMemberairt:LeasedAssetsMember2021-04-012021-09-300000353184airt:GroundEquipmentSalesMemberairt:LeasedAssetsMember2020-04-012020-09-300000353184airt:CommercialJetEnginesInventoryMemberairt:LeasedAssetsMember2021-07-012021-09-300000353184airt:CommercialJetEnginesInventoryMemberairt:LeasedAssetsMember2020-07-012020-09-300000353184airt:CommercialJetEnginesInventoryMemberairt:LeasedAssetsMember2021-04-012021-09-300000353184airt:CommercialJetEnginesInventoryMemberairt:LeasedAssetsMember2020-04-012020-09-300000353184airt:LeasedAssetsMemberus-gaap:CorporateAndOtherMember2021-07-012021-09-300000353184airt:LeasedAssetsMemberus-gaap:CorporateAndOtherMember2020-07-012020-09-300000353184airt:LeasedAssetsMemberus-gaap:CorporateAndOtherMember2021-04-012021-09-300000353184airt:LeasedAssetsMemberus-gaap:CorporateAndOtherMember2020-04-012020-09-300000353184airt:OvernightAirCargoMemberus-gaap:ProductAndServiceOtherMember2021-07-012021-09-300000353184airt:OvernightAirCargoMemberus-gaap:ProductAndServiceOtherMember2020-07-012020-09-300000353184airt:OvernightAirCargoMemberus-gaap:ProductAndServiceOtherMember2021-04-012021-09-300000353184airt:OvernightAirCargoMemberus-gaap:ProductAndServiceOtherMember2020-04-012020-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ProductAndServiceOtherMember2021-07-012021-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ProductAndServiceOtherMember2020-07-012020-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ProductAndServiceOtherMember2021-04-012021-09-300000353184airt:GroundEquipmentSalesMemberus-gaap:ProductAndServiceOtherMember2020-04-012020-09-300000353184us-gaap:ProductAndServiceOtherMemberairt:CommercialJetEnginesInventoryMember2021-07-012021-09-300000353184us-gaap:ProductAndServiceOtherMemberairt:CommercialJetEnginesInventoryMember2020-07-012020-09-300000353184us-gaap:ProductAndServiceOtherMemberairt:CommercialJetEnginesInventoryMember2021-04-012021-09-300000353184us-gaap:ProductAndServiceOtherMemberairt:CommercialJetEnginesInventoryMember2020-04-012020-09-300000353184us-gaap:ProductAndServiceOtherMemberus-gaap:CorporateAndOtherMember2021-07-012021-09-300000353184us-gaap:ProductAndServiceOtherMemberus-gaap:CorporateAndOtherMember2020-07-012020-09-300000353184us-gaap:ProductAndServiceOtherMemberus-gaap:CorporateAndOtherMember2021-04-012021-09-300000353184us-gaap:ProductAndServiceOtherMemberus-gaap:CorporateAndOtherMember2020-04-012020-09-30xbrli:pure0000353184us-gaap:SegmentContinuingOperationsMember2021-07-012021-09-300000353184us-gaap:SegmentContinuingOperationsMember2020-07-012020-09-300000353184us-gaap:SegmentContinuingOperationsMember2021-04-012021-09-300000353184us-gaap:SegmentContinuingOperationsMember2020-04-012020-09-300000353184us-gaap:InterestRateSwapMemberus-gaap:UnsecuredDebtMemberairt:TermLoanAMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TermLoanDMembersrt:ParentCompanyMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TermLoanAMembersrt:ParentCompanyMember2021-08-310000353184us-gaap:InterestRateSwapMemberus-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:FairValueInputsLevel2Member2021-09-300000353184us-gaap:InterestRateSwapMemberus-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:FairValueInputsLevel2Member2021-03-310000353184us-gaap:InterestRateSwapMember2021-04-012021-09-300000353184us-gaap:InterestRateSwapMember2021-07-012021-09-300000353184us-gaap:InterestRateSwapMember2020-07-012020-09-300000353184us-gaap:InterestRateSwapMember2020-04-012020-09-300000353184us-gaap:FairValueInputsLevel1Member2021-07-012021-09-300000353184us-gaap:FairValueInputsLevel1Member2021-04-012021-09-300000353184airt:InsigniaMember2021-09-300000353184airt:InsigniaMember2021-04-012021-09-300000353184airt:CadillacCastingsIncMember2021-09-300000353184airt:CadillacCastingsIncMember2021-07-012021-09-300000353184airt:CadillacCastingsIncMember2021-04-012021-09-300000353184us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2021-04-012021-06-300000353184us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2020-04-012020-06-300000353184us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2021-01-012021-06-300000353184us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2020-01-012020-06-300000353184airt:GroundEquipmentManufacturingMember2021-09-300000353184airt:GroundEquipmentManufacturingMember2021-03-310000353184airt:PrintingEquipmentAndMaintenanceMember2021-09-300000353184airt:PrintingEquipmentAndMaintenanceMember2021-03-310000353184srt:MinimumMember2021-09-300000353184srt:MaximumMember2021-09-300000353184us-gaap:RealEstateMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:MinnesotaBankAndTrustMemberairt:ThirdAmendedAndRestatedCreditAgreementMember2021-08-310000353184us-gaap:UnsecuredDebtMemberairt:MinnesotaBankAndTrustMemberairt:ThirdAmendedAndRestatedCreditAgreementMember2021-08-312021-08-310000353184us-gaap:UnsecuredDebtMemberairt:MinnesotaBankAndTrustMemberairt:ThirdAmendedAndRestatedCreditAgreementMemberus-gaap:PrimeRateMember2021-08-312021-08-310000353184us-gaap:UnsecuredDebtMemberairt:MinnesotaBankAndTrustMemberairt:TermLoanAMember2021-08-310000353184us-gaap:UnsecuredDebtMemberairt:TermLoanBMemberairt:MinnesotaBankAndTrustMember2021-08-310000353184us-gaap:UnsecuredDebtMemberairt:MinnesotaBankAndTrustMemberairt:TermLoanAMemberairt:DebtInstrumentPrepaymentYearOneMember2021-08-310000353184us-gaap:UnsecuredDebtMemberairt:TermLoanBMemberairt:MinnesotaBankAndTrustMemberairt:DebtInstrumentPrepaymentYearOneMember2021-08-310000353184us-gaap:UnsecuredDebtMemberairt:MinnesotaBankAndTrustMemberairt:DebtInstrumentPrepaymentYearTwoToThreeMemberairt:TermLoanAMember2021-08-310000353184us-gaap:UnsecuredDebtMemberairt:TermLoanBMemberairt:MinnesotaBankAndTrustMemberairt:DebtInstrumentPrepaymentYearTwoToThreeMember2021-08-310000353184us-gaap:UnsecuredDebtMemberairt:TermLoanBMemberairt:MinnesotaBankAndTrustMemberairt:DebtInstrumentPrepaymentAfterYearThreeMember2021-08-310000353184us-gaap:UnsecuredDebtMemberairt:MinnesotaBankAndTrustMemberairt:TermLoanAMemberairt:DebtInstrumentPrepaymentAfterYearThreeMember2021-08-310000353184us-gaap:UnsecuredDebtMemberairt:TermLoanEMemberairt:MinnesotaBankAndTrustMember2021-08-310000353184us-gaap:UnsecuredDebtMemberairt:JetYardMemberairt:MinnesotaBankAndTrustMemberairt:PromissoryNoteMember2021-08-310000353184airt:ContrailAviationIncMember2021-09-020000353184us-gaap:UnsecuredDebtMemberairt:RevolverONBMemberairt:ContrailAviationIncMember2021-09-010000353184us-gaap:UnsecuredDebtMemberairt:RevolverONBMemberairt:ContrailAviationIncMember2021-09-020000353184us-gaap:UnsecuredDebtMemberairt:PriorToMarch312023Memberairt:RevolverONBMemberairt:ContrailAviationIncMember2021-09-022021-09-020000353184us-gaap:UnsecuredDebtMemberairt:RevolverONBMemberairt:ContrailAviationIncMemberairt:FromMarch312023ToMarch302024Member2021-09-022021-09-020000353184airt:OnOrAfterMarch312024Memberus-gaap:UnsecuredDebtMemberairt:RevolverONBMemberairt:ContrailAviationIncMember2021-09-022021-09-020000353184us-gaap:UnsecuredDebtMemberairt:MinnesotaBankAndTrustMemberairt:PaycheckProtectionProgramLoanMBTCARESActMember2020-04-130000353184us-gaap:UnsecuredDebtMemberairt:ThirdAmendedAndRestatedCreditAgreementMembersrt:ParentCompanyMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:ThirdAmendedAndRestatedCreditAgreementMembersrt:ParentCompanyMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:ThirdAmendedAndRestatedCreditAgreementMemberus-gaap:PrimeRateMembersrt:ParentCompanyMember2021-04-012021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TermLoanAMembersrt:ParentCompanyMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TermLoanAMembersrt:ParentCompanyMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:TermLoanBMembersrt:ParentCompanyMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TermLoanBMembersrt:ParentCompanyMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:TermLoanDMembersrt:ParentCompanyMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:A1MonthLIBORMemberairt:TermLoanDMembersrt:ParentCompanyMember2021-04-012021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TermLoanEMembersrt:ParentCompanyMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TermLoanEMembersrt:ParentCompanyMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:TermLoanEMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:ParentCompanyMember2021-04-012021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TrustPreferredSecuritiesMembersrt:ParentCompanyMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TrustPreferredSecuritiesMembersrt:ParentCompanyMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:PaycheckProtectionProgramLoanMBTCARESActMembersrt:ParentCompanyMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:PaycheckProtectionProgramLoanMBTCARESActMembersrt:ParentCompanyMember2021-03-310000353184us-gaap:UnsecuredDebtMembersrt:ParentCompanyMember2021-09-300000353184us-gaap:UnsecuredDebtMembersrt:ParentCompanyMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:TermLoanPSBMemberairt:AircoMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TermLoanPSBMemberairt:AircoMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:A3MonthLIBORMemberairt:TermLoanPSBMemberairt:AircoMember2021-04-012021-09-300000353184us-gaap:UnsecuredDebtMemberairt:AircoMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:AircoMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:JetYardMemberairt:PromissoryNoteMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:JetYardMemberairt:PromissoryNoteMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:JetYardMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:JetYardMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:RevolverONBMemberairt:ContrailAviationIncMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:RevolverONBMemberairt:ContrailAviationIncMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:A1MonthLIBORMemberairt:RevolverONBMemberairt:ContrailAviationIncMember2021-04-012021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TermLoanGONBMemberairt:ContrailAviationIncMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:TermLoanGONBMemberairt:ContrailAviationIncMember2021-03-310000353184us-gaap:UnsecuredDebtMemberairt:A1MonthLIBORMemberairt:TermLoanGONBMemberairt:ContrailAviationIncMember2021-04-012021-09-300000353184us-gaap:UnsecuredDebtMemberairt:ContrailAviationIncMember2021-09-300000353184us-gaap:UnsecuredDebtMemberairt:ContrailAviationIncMember2021-03-310000353184airt:CanadianEmergencyBusinessAccountLoanMemberus-gaap:NotesPayableToBanksMemberairt:DelphaxSolutionsDebtMember2021-09-300000353184airt:CanadianEmergencyBusinessAccountLoanMemberus-gaap:NotesPayableToBanksMemberairt:DelphaxSolutionsDebtMember2021-03-310000353184us-gaap:NotesPayableToBanksMemberairt:DelphaxSolutionsDebtMember2021-09-300000353184us-gaap:NotesPayableToBanksMemberairt:DelphaxSolutionsDebtMember2021-03-3100003531842019-06-102019-06-100000353184airt:TrustPreferredCapitalSecurityMemberairt:AirTFundingMember2019-06-102019-06-100000353184us-gaap:WarrantMemberairt:AirTFundingMember2019-06-102019-06-100000353184airt:TrustPreferredCapitalSecurityMember2020-01-142020-01-140000353184airt:TrustPreferredCapitalSecurityMember2020-01-140000353184airt:TrustPreferredCapitalSecurityMember2021-09-300000353184airt:AtTheMarketOfferingMemberairt:TrustPreferredCapitalSecurityMember2021-05-140000353184airt:AtTheMarketOfferingMemberairt:TrustPreferredCapitalSecurityMember2021-04-012021-09-300000353184airt:AtTheMarketOfferingMemberairt:TrustPreferredCapitalSecurityMember2021-09-3000003531842019-06-042019-06-040000353184country:US2021-09-300000353184country:US2021-03-310000353184us-gaap:NonUsMember2021-09-300000353184us-gaap:NonUsMember2021-03-310000353184country:MX2021-09-300000353184country:MX2021-03-310000353184airt:OtherCountriesMember2021-09-300000353184airt:OtherCountriesMember2021-03-310000353184country:US2021-04-012021-09-300000353184country:US2020-04-012020-09-300000353184us-gaap:NonUsMember2021-04-012021-09-300000353184us-gaap:NonUsMember2020-04-012020-09-30airt:segment0000353184airt:OvernightAirCargoMemberairt:DomesticMember2021-07-012021-09-300000353184airt:OvernightAirCargoMemberairt:DomesticMember2020-07-012020-09-300000353184airt:OvernightAirCargoMemberairt:DomesticMember2021-04-012021-09-300000353184airt:OvernightAirCargoMemberairt:DomesticMember2020-04-012020-09-300000353184airt:OvernightAirCargoMemberairt:InternationalMember2021-07-012021-09-300000353184airt:OvernightAirCargoMemberairt:InternationalMember2020-07-012020-09-300000353184airt:OvernightAirCargoMemberairt:InternationalMember2021-04-012021-09-300000353184airt:OvernightAirCargoMemberairt:InternationalMember2020-04-012020-09-300000353184airt:GroundEquipmentSalesMemberairt:DomesticMember2021-07-012021-09-300000353184airt:GroundEquipmentSalesMemberairt:DomesticMember2020-07-012020-09-300000353184airt:GroundEquipmentSalesMemberairt:DomesticMember2021-04-012021-09-300000353184airt:GroundEquipmentSalesMemberairt:DomesticMember2020-04-012020-09-300000353184airt:GroundEquipmentSalesMemberairt:InternationalMember2021-07-012021-09-300000353184airt:GroundEquipmentSalesMemberairt:InternationalMember2020-07-012020-09-300000353184airt:GroundEquipmentSalesMemberairt:InternationalMember2021-04-012021-09-300000353184airt:GroundEquipmentSalesMemberairt:InternationalMember2020-04-012020-09-300000353184airt:DomesticMemberairt:CommercialJetEnginesInventoryMember2021-07-012021-09-300000353184airt:DomesticMemberairt:CommercialJetEnginesInventoryMember2020-07-012020-09-300000353184airt:DomesticMemberairt:CommercialJetEnginesInventoryMember2021-04-012021-09-300000353184airt:DomesticMemberairt:CommercialJetEnginesInventoryMember2020-04-012020-09-300000353184airt:CommercialJetEnginesInventoryMemberairt:InternationalMember2021-07-012021-09-300000353184airt:CommercialJetEnginesInventoryMemberairt:InternationalMember2020-07-012020-09-300000353184airt:CommercialJetEnginesInventoryMemberairt:InternationalMember2021-04-012021-09-300000353184airt:CommercialJetEnginesInventoryMemberairt:InternationalMember2020-04-012020-09-300000353184airt:DomesticMemberus-gaap:CorporateAndOtherMember2021-07-012021-09-300000353184airt:DomesticMemberus-gaap:CorporateAndOtherMember2020-07-012020-09-300000353184airt:DomesticMemberus-gaap:CorporateAndOtherMember2021-04-012021-09-300000353184airt:DomesticMemberus-gaap:CorporateAndOtherMember2020-04-012020-09-300000353184airt:InternationalMemberus-gaap:CorporateAndOtherMember2021-07-012021-09-300000353184airt:InternationalMemberus-gaap:CorporateAndOtherMember2020-07-012020-09-300000353184airt:InternationalMemberus-gaap:CorporateAndOtherMember2021-04-012021-09-300000353184airt:InternationalMemberus-gaap:CorporateAndOtherMember2020-04-012020-09-3000003531842020-04-012021-03-310000353184airt:CapitalCommitmentsMemberairt:ContrailJVIILLCMember2021-09-300000353184airt:CapitalCommitmentsMemberairt:MillRoadCapitalMemberairt:ContrailJVIILLCMember2021-09-300000353184airt:A2020OmnibusStockAndIncentivePlanMember2020-12-290000353184airt:A2020OmnibusStockAndIncentivePlanMember2021-09-30




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, 2021
☐ 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.)
5930 Balsom Ridge Road, Denver, North Carolina 28037
(Address of principal executive offices, including zip code)
(828) 464 – 8741
(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 Global Market
Alpha Income Preferred Securities (also referred to as 8% Cumulative Capital Securities) (“AIP”) AIRTP NASDAQ Global Market

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 29, 2021 2,881,853






AIR T, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page
PART I
4
5
Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2021 and March 31, 2021
6
7
8
9
25
31
31
32
Item 5.
32
33
34
Exhibit Index
Certifications
Interactive Data Files

3




Item 1.    Financial Statements
AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in thousands, except income (loss) per share number) Three Months Ended
September 30, 		Six Months Ended
September 30,
2021 2020 2021 2020
Operating Revenues:
Overnight air cargo $ 18,847  $ 17,295  $ 37,697  $ 33,466 
Ground equipment sales 9,189  12,060 17,371  27,888
Commercial jet engines and parts 14,916  6,114 24,510  10,808
Corporate and other 286 135 628 414
43,238  35,604 80,206  72,576
Operating Expenses:
Overnight air cargo 16,553  15,234  33,297  29,401 
Ground equipment sales 8,033  9,758  13,562  21,956 
Commercial jet engines and parts 9,010  4,062  15,106  6,776 
General and administrative 8,615  9,088  16,836  16,638 
Depreciation and amortization 323  1,149  703  1,758 
Loss (Gain) on sale of property and equipment —  (3) 3  (4)
42,534  39,288  79,507  76,525 
Operating Income (Loss) from continuing operations 704  (3,684) 699  (3,949)
Non-operating Income (Expense):
Interest expense (1,167) (1,081) (2,105) (2,242)
Gain (Loss) from equity method investments 14  (498) 97  (1,056)
Gain on forgiveness of Paycheck Protection Program (“PPP”) loan 8,331  —  8,331  — 
Other 159  359  1,340  1,086 
7,337  (1,220) 7,663  (2,212)
Income (Loss) from continuing operations before income taxes 8,041  (4,904) 8,362  (6,161)
Income Taxes Expense (Benefit) 38  (1,547) 33  (1,847)
Net Income (Loss) from continuing operations 8,003  (3,357) 8,329  (4,314)
Gain on sale of discontinued operations, net of tax —  4  —  4 
Net Income (Loss) 8,003  (3,353) 8,329  (4,310)
Net (Income) Loss Attributable to Non-controlling Interests $ (448) $ 433  $ (486) $ 549 
Net Income (Loss) Attributable to Air T, Inc. Stockholders $ 7,555  $ (2,920) $ 7,843  $ (3,761)
Income (Loss) from continuing operations per share (Note 5)
Basic $ 2.62  $ (1.01) $ 2.72  $ (1.31)
Diluted $ 2.60  $ (1.01) $ 2.71  $ (1.31)
Income from discontinued operations per share (Note 5)
Basic $ —  $ —  $ —  $ — 
Diluted $ —  $ —  $ —  $ — 
Income (Loss) per share (Note 5)
Basic $ 2.62  $ (1.01) $ 2.72  $ (1.31)
Diluted $ 2.60  $ (1.01) $ 2.71  $ (1.31)
Weighted Average Shares Outstanding:
Basic 2,882  2,882  2,882  2,882 
Diluted 2,901  2,882  2,893  2,882 
See notes to condensed consolidated financial statements.
4




AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

Three Months Ended
September 30, 		Six Months Ended
September 30,
(In Thousands) 2021 2020 2021 2020
Net Income (Loss) $ 8,003  $ (3,353) $ 8,329  $ (4,310)
Foreign currency translation gain (loss) 103  (68) 54  (135)
Unrealized gain on interest rate swaps 46  55  57  29 
Reclassification of interest rate swaps into earnings (2) (16) (3) (16)
Total Other Comprehensive Income (Loss) 147  (29) 108  (122)
Total Comprehensive Income (Loss) 8,150  (3,382) 8,437  (4,432)
Comprehensive (Income) Loss Attributable to Non-controlling Interests (448) 433  (486) 549 
Comprehensive Income (Loss) Attributable to Air T, Inc. Stockholders $ 7,702  $ (2,949) $ 7,951  $ (3,883)
See notes to condensed consolidated financial statements.
5




AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share amounts) September 30, 2021 March 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents $ 2,472  $ 10,996 
Marketable securities 2,703  1,407 
Restricted cash 3,802  4,931 
Restricted investments 849  1,507 
Accounts receivable, net of allowance for doubtful accounts of $1,500 and $1,177
16,819  6,505 
Income tax receivable 4,444  4,389 
Inventories, net 82,589  71,971 
Other current assets 5,337  4,068 
Total Current Assets 119,015  105,774 
Assets on lease or held for lease, net of accumulated depreciation of $597 and $436
1,682  2,131 
Property and equipment, net of accumulated depreciation of $4,866 and $4,510
8,912  8,519 
Right-of-use ("ROU") assets 7,738  7,757 
Equity method investments 5,657  4,475 
Goodwill 4,227  4,227 
Other assets 8,404  7,867 
Total Assets $ 155,635  $ 140,750 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable 11,053  8,344 
Income tax payable —  39 
Accrued expenses and other (Note 3) 8,424  12,787 
Current portion of long-term debt 1,319  5,639 
Short-term lease liability 1,428  1,370 
Total Current Liabilities 22,224  28,179 
Long-term debt 93,363  81,857 
Deferred income tax liabilities, net 606  595 
Long-term lease liability 7,049  7,075 
Other non-current liabilities 2,124  1,732 
Total Liabilities $ 125,366  $ 119,438 
Redeemable non-controlling interest 7,281  6,598 
Commitments and contingencies (Note 13)
Equity:
Air T, Inc. Stockholders' Equity:
Preferred stock, $1.00 par value, 50,000 shares authorized
—  — 
Common stock, $.25 par value; 4,000,000 shares authorized, 3,022,745 shares issued, 2,881,853 shares outstanding
756  756 
Treasury stock, 140,892 shares at $18.58
(2,617) (2,617)
Additional paid-in capital 236  — 
Retained earnings 24,059  16,270 
Accumulated other comprehensive loss (576) (684)
Total Air T, Inc. Stockholders' Equity $ 21,858  $ 13,725 
Non-controlling Interests 1,130  989 
Total Equity 22,988  14,714 
Total Liabilities and Equity $ 155,635  $ 140,750 
See notes to condensed consolidated financial statements.
6




AIR T, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(In Thousands) Six Months Ended
September 30,
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) 8,329  (4,310)
Gain on sale of discontinued operations, net of income tax —  (4)
Net Income (Loss) from continuing operations 8,329  (4,314)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 703  1,758 
Gain on forgiveness of PPP loan (8,331) — 
Other (1,169) 1,741 
Change in operating assets and liabilities:
Accounts receivable (10,637) 2,202 
Inventories (10,120) (1,942)
Accounts payable 2,721  (1,730)
Accrued expenses (3,782) (730)
Other (467) (2,611)
Net cash used in operating activities - continued operations (22,753) (5,626)
Net cash provided by operating activities - discontinued operations —  4 
Net cash used in operating activities (22,753) (5,622)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities —  (659)
Investment in unconsolidated entities (1,085) — 
Capital expenditures related to property & equipment (842) (1,708)
Capital expenditures related to assets on lease or held for lease —  (85)
Other (449) 1,837 
Net cash used in investing activities (2,376) (615)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit 36,742  14,130 
Payments on lines of credit (31,892) (22,257)
Proceeds from term loan 4,667  9,479 
Payments on term loan (2,012) (4,875)
Proceeds from PPP loan —  8,215 
Proceeds received from issuance of Trust Preferred Securities ("TruPs") 7,810  — 
Other 110  (1,030)
Net cash provided by financing activities 15,425  3,662 
Effect of foreign currency exchange rates on cash and cash equivalents 51  (127)
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH (9,653) (2,702)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 15,927  15,571 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD 6,274  12,869 
See notes to condensed consolidated financial statements.
7




AIR T, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)

(In Thousands) Common Stock Treasury Stock Additional
Paid-In
Capital 		Retained
Earnings 		Accumulated Other Comprehensive Income (Loss) Non-controlling
Interests 		Total
Equity
Shares Amount Shares Amount
Balance, March 31, 2020 3,023  $ 756  141  $ (2,617) $ 2,636  $ 23,768  $ (537) $ 1,005  $ 25,011 
Net loss* —  —  —  —  —  (841) —  (5) (846)
Unrealized loss on interest rate swaps, net of tax —  —  —  —  —  —  (26) —  (26)
Foreign currency translation loss —  —  —  —  —  —  (67) —  (67)
Adjustment to fair value of redeemable non-controlling interests —  —  —  —  429  —  —  —  429 
Balance, June 30, 2020 3,023  756  141  (2,617) 3,065  22,927  (630) 1,000  24,501 
Net loss* —  —  —  —  —  (2,920) —  (8) (2,928)
Unrealized gain on interest rate swaps, net of tax —  —  —  —  —  —  55  —  55 
Foreign currency translation loss —  —  —  —  —  —  (68) —  (68)
Adjustment to fair value of redeemable non-controlling interests —  —  —  —  (890) —  —  —  (890)
Balance, September 30, 2020 3,023  $ 756  141  $ (2,617) $ 2,175  $ 20,007  $ (643) $ 992  $ 20,670 


(In Thousands) Common Stock Treasury Stock Additional
Paid-In
Capital 		Retained
Earnings 		Accumulated Other Comprehensive Income (Loss) Non-controlling
Interests 		Total
Equity
Shares Amount Shares Amount
Balance, March 31, 2021 3,023  $ 756  141  $ (2,617) $ —  $ 16,270  $ (684) $ 989  $ 14,714 
Net income* —  —  —  —  —  289  —  153  442 
Foreign currency translation loss —  —  —  —  —  —  (49) —  (49)
Adjustment to fair value of redeemable non-controlling interest —  —  —  —  —  (238) —  —  (238)
Unrealized gain on interest rate swaps, net of tax —  —  —  —  —  —  11  —  11 
Reclassification of interest rate swaps into earnings —  —  —  —  —  —  (1) —  (1)
Balance, June 30, 2021 3,023  756  141  (2,617) —  16,321  (723) 1,142  14,879 
Net income/(loss)* —  —  —  —  —  7,555  —  (12) 7,543 
Stock compensation expense —  —  —  —  236  —  —  —  236 
Foreign currency translation gain —  —  —  —  —  —  103  —  103 
Adjustment to fair value of redeemable non-controlling interest —  —  —  —  —  183  —  —  183 
Unrealized gain on interest rate swaps, net of tax —  —  —  —  —  —  46  —  46 
Reclassification of interest rate swaps into earnings —  —  —  —  —  —  (2) —  (2)
Balance, September 30, 2021 3,023  $ 756  141  $ (2,617) $ 236  $ 24,059  $ (576) $ 1,130  $ 22,988 

*Excludes amount attributable to redeemable non-controlling interest in Contrail.
See notes to condensed consolidated financial statements.
8




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, 2021. The results of operations for the period ended September 30, 2021 are not necessarily indicative of the operating results for the full year.

Discontinued Operations

On September 30, 2019, the Company completed the sale of Global Aviation Services, LLC ("GAS"). The results of operations of GAS are reported as discontinued operations in the condensed consolidated statements of operations for the three and six months ended September 30, 2021 and 2020. Unless otherwise indicated, the disclosures accompanying the condensed consolidated financial statements reflect the Company's continuing operations.

Formation of new entities
On May 5, 2021, the Company formed a new aircraft asset management business called Contrail Asset Management, LLC (“CAM”), and a new aircraft capital joint venture called Contrail JV II LLC (“CJVII”). The Company and Mill Road Capital (“MRC”) have agreed to become common members in CAM. CAM will serve two separate and distinct functions: 1) to direct the sourcing, acquisition and management of aircraft assets owned by CJVII (“Asset Management Function”), and 2) to directly invest into CJVII alongside other institutional investment partners (“Investment Function”). For the Asset Management Function, CAM will receive origination fees, management fees, consignment fees (where applicable) and a carried interest. For its Investment Function, CAM has an initial commitment to CJVII of approximately $53.0 million, which is comprised of an $8.0 million initial commitment from the Company and an approximately $45.0 million initial commitment from MRC. Any investment returns will be shared pro-rata between the Company and MRC.

COVID-19 Pandemic
COVID-19 and its impact on the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our financial condition and results of operations. Each of our businesses implemented measures to attempt to limit the impact of COVID-19 but we still experienced a substantial number of disruptions, and we experienced and continue to experience a reduction in demand for commercial aircraft, jet engines and parts compared to historical periods. Many of our businesses may continue to generate reduced operating cash flow and may continue to operate at a loss from time to time during the remainder of fiscal 2022. We expect that the impact of COVID-19 will continue to some extent. The fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions and our businesses in particular, and, as a result, present material uncertainty and risk with respect to us and our results of operations.
Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04- Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this Update provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments are effective for all entities from the beginning of an interim period that includes the issuance date of this ASU. An entity may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of this amendment on our contracts, hedging relationships, and other transactions affected by reference rate reform.

In July 2021, the FASB updated the Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. The amendments in this Update address stakeholders’ concerns by amending the lease classification requirements for lessors to align them with practice under Topic 840. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met:
1.The lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in paragraphs 842-10-25-2 through 25-3.
2.The lessor would have otherwise recognized a day-one loss.
When a lease is classified as operating, the lessor does not recognize a net investment in the lease, does not derecognize the underlying asset, and, therefore, does not recognize a selling profit or loss. The leased asset continues to be subject to the measurement and impairment requirements under other applicable GAAP. The amendments in this Update are effective for fiscal years beginning after December 15, 2021, for all entities, and interim periods within those fiscal years for public business entities. The Company is currently evaluating the impact of this amendment on its consolidated financial statements and disclosures.


9




2.    Revenue Recognition
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:
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.
In addition to the above type of revenues, the Company also has Leasing Revenue, which is in scope under Topic 842 (Leases) and out of scope under Topic 606 and Other Revenues (Freight, Management Fees, etc.) which are immaterial for disclosure under Topic 606.
The following table summarizes disaggregated revenues by type (in thousands):
Three Months Ended September 30, Six Months Ended September 30,
2021 2020 2021 2020
Product Sales
Air Cargo $ 5,615  $ 5,728  $ 12,188  $ 10,043 
Ground equipment sales 8,928  11,833  16,926  27,571 
Commercial jet engines and parts 13,157  4,283  20,449  6,979 
Corporate and other 37  —  114  33 
Support Services
Air Cargo 13,222  11,558  25,494  23,408 
Ground equipment sales 69  67  134  84 
Commercial jet engines and parts 1,554  956  3,656  2,580 
Corporate and other 54  6  117  24 
Leasing Revenue
Air Cargo —  —  —  — 
Ground equipment sales 39  23  78  71 
Commercial jet engines and parts 177  791  343  1,164 
Corporate and other 37  107  76  142 
Other
Air Cargo 10  9  15  15 
Ground equipment sales 153  137  233  162 
Commercial jet engines and parts 28  84  62  85 
Corporate and other 158  22  321  215 
Total $ 43,238  $ 35,604  $ 80,206  $ 72,576 

See Note 11 for the Company's disaggregated revenues by geographic region and Note 12 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 income and advanced customer deposits with respect to product sales. The following table presents outstanding contract liabilities as of April 1, 2021 and September 30, 2021 and the amount of contract liabilities as of April 1, 2021 that were recognized as revenue during the six-month period ended September 30, 2021 (in thousands):

Outstanding contract liabilities Outstanding contract liabilities as of April 1, 2021
Recognized as Revenue
As of September 30, 2021 $ 1,978 
As of April 1, 2021 $ 1,358 
For the six months ended September 30, 2021 $ 638 

10




3.     Accrued Expenses

(in thousands) September 30, 2021 March 31, 2021
Salaries, wages and related items $ 4,217  $ 5,427 
Profit sharing and bonus 371  2,706 
Other Deposits 1,797  1,251 
Other 2,039  3,403 
Total $ 8,424  $ 12,787 

11




4.    Income Taxes

During the three-month period ended September 30, 2021, the Company recorded $38.0 thousand in income tax expense at an effective tax rate ("ETR") of 0.5%. The Company records income taxes using an estimated annual effective tax rate 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, 2021 were the change in valuation allowance related to the Company's subsidiaries in the corporate and other segment, Delphax Solutions, Inc. and Delphax Technologies, Inc. (collectively known as "Delphax"), the estimated benefit for the exclusion of income for the Company's captive insurance company subsidiary ("SAIC") under Section 831(b), the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail, and the exclusion from taxable income of the PPP loan forgiveness income, as directed by the CARES Act enacted in 2020, and any accrued interest forgiven as a part of that Act.

During the three-month period ended September 30, 2020, the Company recorded $1.5 million in income tax benefit at an ETR of 31.5%. 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, 2020 were the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for SAIC under Section 831(b) and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail.

During the six-month period ended September 30, 2021, the Company recorded $33.0 thousand in income tax expense at an effective rate of 0.4%. The Company records income taxes using an estimated annual effective tax rate 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, 2021 were the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for SAIC under Section 831(b), the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail, the exclusion from taxable income of the PPP loan forgiveness income, as directed by the CARES Act enacted in 2020, and any accrued interest forgiven as a part of that Act.

During the six-month period ended September 30, 2020, the Company recorded $1.8 million in income tax benefit which resulted in an effective tax rate of 30.0%. The primary factors contributing to the difference between the federal statutory rate and the Company's effective tax rate for the six-month period ended September 30, 2020 were related to the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for SAIC under Section 831(b), and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail.

12




5.    Net Earnings (Loss) Per Share
Basic earnings per share has been calculated by dividing net income (loss) attributable to Air T, Inc. stockholders by the weighted average number of common shares outstanding during each period. For purposes of calculating diluted earnings (loss) per share, shares issuable under stock options were considered potential common shares and were included in the weighted average common shares unless they were anti-dilutive. 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,
2021 2020 2021 2020
Net income (loss) from continuing operations $ 8,003  $ (3,357) $ 8,329  $ (4,314)
Net (income) loss from continuing operations attributable to non-controlling interests (448) 433  (486) 549 
Net income (loss) from continuing operations attributable to Air T, Inc. Stockholders 7,555  (2,924) 7,843  (3,765)
Income (Loss) from continuing operations per share:
Basic $ 2.62  $ (1.01) $ 2.72  $ (1.31)
Diluted $ 2.60  $ (1.01) $ 2.71  $ (1.31)
Antidilutive shares excluded from computation of income (loss) per share from continuing operations —  5  —  5 
Gain on sale of discontinued operations, net of tax —  4  —  4 
Income from discontinued operation attributable to Air T, Inc. stockholders —  4  —  4 
Income from discontinued operations per share:
Basic —  —  —  — 
Diluted —  —  —  — 
Income (Loss) per share:
Basic $ 2.62  $ (1.01) $ 2.72  $ (1.31)
Diluted $ 2.60  $ (1.01) $ 2.71  $ (1.31)
Antidilutive shares excluded from computation of income (loss) per share —  5  —  5 
Weighted Average Shares Outstanding:
Basic 2,882  2,882  2,882  2,882 
Diluted 2,901  2,882  2,893  2,882 




13




6.    Investments in Securities and Derivative Instruments
As part of the Company’s interest rate risk management strategy, the Company, from time to time, uses derivative instruments to minimize significant unanticipated earnings fluctuations that may arise from rising variable interest rate costs associated with existing borrowings (Air T Term Note A and Term Note D). To meet these objectives, the Company entered into interest rate swaps with notional amounts consistent with the outstanding debt to provide a fixed rate of 4.56% and 5.09%, respectively, on Term Notes A and D. The swaps mature in January 2028.
As mentioned in Note 10, on August 31, 2021, Air T and MBT refinanced Term Note A and fixed its interest rate at 3.42%. As a result of this refinancing, the Company determined that the interest rate swap on Term Note A was no longer an effective hedge. The Company will amortize the fair value of the interest-rate swap contract included in accumulated other comprehensive income associated with Term Note A at the time of de-designation into earnings over the remainder of its term. In addition, any changes in the fair value of Term Note A's swap after August 31, 2021 are recognized directly into earnings.
The remaining swap contract associated with Term Note D is designated as an effective cash flow hedging instrument in accordance with ASC 815. The effective portion of changes in the fair value on this instrument is recorded in other comprehensive income and is reclassified into the condensed consolidated statement of income (loss) as interest expense in the same period in which the underlying hedged transaction affects earnings. This interest rate swap is considered a Level 2 fair value measurement. As of September 30, 2021 and March 31, 2021, the fair value of this interest-rate swap contract was a liability of $0.5 million and $0.6 million, respectively, which is included within other non-current liabilities in the condensed consolidated balance sheets. During the three and six months ended September 30, 2021, the Company recorded a gain of approximately $46.0 thousand and $57.0 thousand, net of tax, respectively, in the condensed consolidated statement of comprehensive income (loss) for changes in the fair value of this instrument.

The Company may, from time to time, employ trading strategies designed to profit from market anomalies and opportunities it identifies. Management uses derivative financial instruments to execute those strategies, which may include options, and futures contracts. These derivative instruments are priced using publicly quoted market prices and are considered Level 1 fair value measurements. During the three and six months ended September 30, 2021, the Company did not record any gain or loss related to these derivative instruments. During the three months ended September 30, 2020, the Company had a gross gain aggregating to $0.4 million and $0.1 million gross loss related to these derivative instruments. During the six months ended September 30, 2020, the Company had a gross gain aggregating to $0.7 million and $0.1 million gross loss related to these derivative instruments.

The Company also invests in exchange-traded marketable securities and accounts for that activity in accordance with ASC 321, Investments- Equity Securities. Marketable equity securities are carried at fair value, with changes in fair market value included in the determination of net income. The fair market value of marketable equity securities is determined based on quoted market prices in active markets. During the three months ended September 30, 2021, the Company had a gross unrealized gain aggregating $0.4 million and a gross unrealized loss aggregating $0.1 million. During the six months ended September 30, 2021, the Company had a gross unrealized gain aggregating $0.8 million and a gross unrealized loss aggregating $0.2 million. During the three months ended September 30, 2020, the Company had a gross unrealized gain aggregating $0.1 million and a gross unrealized loss aggregating $0.3 million. During the six months ended September 30, 2020, the Company had a gross unrealized gain aggregating $0.7 million and a gross unrealized loss aggregating $0.7 million. These unrealized gains and losses are included in Other Income (Loss) on the condensed consolidated statement of income (loss).

The market value of the Company’s equity securities and cash held by the broker are periodically used as collateral against any outstanding margin account borrowings. As of September 30, 2021 and 2020, the Company had outstanding borrowings of $0 and $0.6 million under its margin account, respectively, which is reflected in accrued expenses and other on the condensed consolidated balance sheets. As of September 30, 2021 and 2020, the Company had cash margin balances related to exchange-traded equity securities and securities sold short of $0 and $0.7 million, respectively, which is reflected in other current assets on the condensed consolidated balance sheets.
14




7.    Equity Method Investments
The Company’s investment in Insignia Systems, Inc. (“Insignia”) is accounted for under the equity method of accounting. The Company has elected a three-month lag upon adoption of the equity method. As of September 30, 2021, the number of Insignia's shares owned by the Company was 0.5 million, representing approximately 28% of the outstanding shares. During the fiscal year ended March 31, 2021, due to loss attributions and impairments taken in prior fiscal years, the Company's net investment basis in Insignia was reduced to $0. As such, the Company did not record any additional share of Insignia's net loss as of September 30, 2021. On August 23, 2021, Insignia restated its 10-K for the fiscal year ended December 31, 2020 and its 10-Q for the quarter ended March 31, 2021. The Company evaluated these restatements and determined that they would not result in any additional impact on the Company's condensed consolidated financial statements.
The Company's 18.98% investment in Cadillac Casting, Inc. ("CCI") is accounted for under the equity method of accounting. Due to the differing fiscal year-ends, the Company has elected a three-month lag to record the CCI investment at cost, with a basis difference of $0.3 million. The Company recorded a loss of $0.3 million and $0.5 million as its share of CCI's net loss for the three and six months ended September 30, 2021, along with a basis difference adjustment of $13.0 thousand and $25.0 thousand, respectively. The Company's net investment basis in CCI is $3.2 million as of September 30, 2021.
Summarized unaudited financial information for the Company's equity method investees for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Revenue $ 27,715  $ 12,138  $ 57,988  $ 34,074 
Gross Profit 1,097  1,161  1,904  1,966 
Operating loss (2,110) (1,814) (5,205) (4,192)
Net loss (2,268) (1,925) (4,413) (4,211)
Net loss attributable to Air T, Inc. stockholders $ (273) $ (542) $ (568) $ (1,112)

15




8.    Inventories
Inventories consisted of the following (in thousands):
September 30,
2021 		March 31,
2021
Ground equipment manufacturing:
Raw materials $ 4,722  $ 4,695 
Work in process 9,350  5,820 
Finished goods 6,113  1,691 
Corporate and Other:
Raw materials 488  462 
Finished goods 889  889 
Commercial jet engines and parts 62,894  60,516 
Total inventories $ 84,456  $ 74,073 
Reserves (1,867) (2,102)
Total inventories, net of reserves $ 82,589  $ 71,971 


16




9.     Leases
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, 2021 and 2020 are as follows (in thousands):
Three Months Ended September 30, Six Months Ended September 30,
2021 2020 2021 2020
Operating lease cost $ 420  $ 481  $ 867  $ 1,052 
Short-term lease cost 376  139  658  201 
Variable lease cost 143  216  290  291 
Total lease cost $ 939  $ 836  $ 1,815  $ 1,544 

Amounts reported in the consolidated balance sheets for leases where we are the lessee as of September 30, 2021 and March 31, 2021 were as follows (in thousands):
September 30, 2021 March 31, 2021
Operating leases
Operating lease ROU assets 7,738  7,757 
Operating lease liabilities 8,477  8,445 
Weighted-average remaining lease term
Operating leases 13 years, 4 months 13 years, 9 months
Weighted-average discount rate
Operating leases 4.38  % 4.37  %
Maturities of lease liabilities under non-cancellable leases where we are the lessee as of September 30, 2021 are as follows (in thousands):
Operating Leases
2022 (excluding the six months ended September 30, 2021) $ 895 
2023 1,689 
2024 1,326 
2025 1,023 
2026 725 
2027 596 
Thereafter 5,301 
Total undiscounted lease payments $ 11,555 
Less: Interest (2,572)
Less: Discount (506)
Total lease liabilities $ 8,477 



17




10.    Financing Arrangements
On August 31, 2021, Air T entered into a Third Amended and Restated Credit Agreement with Minnesota Bank & Trust ("MBT"). The terms of the Amended and Restated Credit Agreement were revised to extend the Air T revolver's termination date to August 31, 2023. The maximum amount available under the revolving facility remains at $17 million and interest will be due on the outstanding balance at the rate of 2.5% or the prime rate plus 1%, whichever is greater.

Air T and MBT also revised Term Note A to extend the maturity date to August 30, 2031 and to increase the principal amount to $9 million. The revised note utilizes a fixed 3.42% interest rate. Air T and MBT also revised Term Note B to extend the maturity date to August 30, 2031. The principal balance was set at the then current balance amount of $3.2 million. The interest rate on Term Note B is fixed at 3.42%.

A prepayment penalty provision was added to Term Note A and Term Note B that provides for a 3% premium payment if prepayment occurs in year 1, 1% in years 2-3 and 0% thereafter. 20% of the loan amount can be prepaid without penalty each year and no penalty payment is due for prepayments made to cure a covenant violation.

Term Note E was restated to set the principal amount of the note at the then current balance due amount ($3.7 million), which amount reflects principal payments through August 31, 2021.

The parties also agreed to add the Company’s indirect subsidiary, Jet Yard, LLC ("Jet Yard") as a co-Borrower. Jet Yard entered into a promissory note with MBT in the principal amount of $2 million. The Jet Yard Note matures on August 30, 2031 and has a fixed interest rate of 4.14%. Jet Yard intends to use the proceeds of the note for leasehold improvements at Jet Yard’s facility in Marana, AZ.

On September 2, 2021, Contrail Aviation Support, LLC (“Contrail”), a 79%-owned subsidiary of Air T, Inc. entered into a Fourth Amendment to Supplement #2 to Master Loan Agreement (the “Amendment”) and Third Amended and Restated Promissory Note Revolving Note with Old National Bank ("ONB"). The principal revisions to Contrail’s existing credit facility with ONB as contained in the Amendment and the Restated Promissory Note Revolving Note are summarized below:

a.The termination date of the facility was extended to September 5, 2023;
b.The Revolving Note principal amount was revised from $40 million to $25 million;
c.The net worth covenant was amended and the definition of “net worth” was revised. The net worth covenant now requires that the borrower maintain a net worth of at least: (i) $8 million at all times prior to March 31, 2023; (ii) $10 million at all times during the period beginning March 31, 2023 and ending on March 30, 2024; and (iii) $12 million at all times on or after March 31, 2024.

On April 13, 2020, the Company entered into a loan with MBT with a principal amount of $8.2 million pursuant to the Payroll Protection Program ("PPP Loan"), backed by the Small Business Administration ("SBA"), under the CARES Act. As of September 30, 2021, the Company's PPP Loan was fully forgiven by the SBA. As such, the Company accounted for its then outstanding principal and accrued interest as a gain on extinguishment in accordance with ASC 470.

The following table provides certain information about the current financing arrangements of the Company's and its subsidiaries as of September 30, 2021:
18




(In Thousands) September 30,
2021 		March 31,
2021 		Maturity Date Interest Rate Unused commitments
Air T Debt
  Revolver - MBT $ 4,732  $ —  August 31, 2023
Greater of 2.5% or Prime - 1%
$ 12,268 
  Term Note A - MBT 8,923  6,750  August 31, 2031 3.42%
  Term Note B - MBT 3,148  3,375  August 31, 2031 3.42%
  Term Note D - MBT 1,439  1,472  January 1, 2028
1-month LIBOR + 2%
Term Note E - MBT 3,456  4,706  June 25, 2025
Greater of LIBOR + 1.5% or 2.5%
Debt - Trust Preferred Securities 22,099  14,289  June 7, 2049 8.00%
PPP Loan —  8,215  December 24, 20221 1.00%
Total 43,797  38,807 
AirCo 1 Debt
Term Loan - PSB 6,200  6,200  December 11, 2025
3-month LIBOR + 3.00%
Total 6,200  6,200 
Jet Yard Debt
Term Loan - MBT 1,992  —  August 31, 2031 4.14%
Total 1,992  — 
Contrail Debt
Revolver - ONB 118  —  September 5, 2023
1-month LIBOR + 3.45%
24,882 
Term Loan G - ONB 43,598  43,598  November 24, 2025
1-month LIBOR + 3.00%
Total 43,716  43,598 
Delphax Solutions Debt
Canadian Emergency Business Account Loan 31  32  December 31, 2025 5.00%
Total 31  32 
Total Debt 95,736  88,637 
Less: Unamortized Debt Issuance Costs (1,054) (1,141)
Total Debt, net $ 94,682  $ 87,496 
1 The PPP loan was fully forgiven by the SBA in September 2021.
19




At September 30, 2021, our contractual financing obligations, including payments due by period, are as follows (in thousands):
Due by Amount
September 30, 2022 $ 1,319 
September 30, 2023 5,974 
September 30, 2024 8,752 
September 30, 2025 12,253 
September 30, 2026 36,263 
Thereafter 31,175 
95,736 
Less: Unamortized Debt Issuance Costs (1,054)
$ 94,682 

On June 10, 2019, the Company completed a transaction with all holders of the Company’s Common Stock to receive a special, pro-rata distribution of three securities as enumerated below:

•A dividend of one additional share for every two shares already held (a 50% stock dividend, or the equivalent of a 3-for-2 stock split).
•The Company issued and distributed to existing common stockholders an aggregate of 1.6 million TruPs shares (aggregate $4.0 million stated value) and an aggregate of 8.4 million warrants ("Warrants") (representing warrants to purchase $21.0 million in stated value of TruPs).

On January 14, 2020, Air T effected a one-for-ten reverse split of its TruPs. As a result of the reverse split, the stated value of the TruPs will be $25.00 per share. Further, each Warrant conferred upon its holder the right to purchase one-tenth of a share of TruPs for $2.40, representing a 4% discount to the new stated value of $2.50 for one-tenth of a share. As of September 30, 2021, 5.3 million Warrants have been exercised. The remaining 3.1 million Warrants were not exercised and expired on August 30, 2021.

On May 14, 2021, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with Ascendiant Capital Markets, LLC (the “sales agent” or “Ascendiant”), pursuant to which it may sell and issue its TruPs having an aggregate offering price of up to $8.0 million from time to time. The Company has no obligation to sell any TruPs, and may at any time suspend offers under the ATM Agreement or terminate the ATM Agreement. As of September 30, 2021, the Company has sold 0.2 million shares of TruPs under the ATM agreement for net proceeds of $5.0 million.

The amount outstanding on the Company's Debt - Trust Preferred Securities is $22.1 million as of September 30, 2021.
20




11.    Geographical information
Total tangible long-lived assets, 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, 2021 and March 31, 2021 (in thousands):
September 30, 2021 March 31, 2021
United States $ 8,994  $ 8,632 
Foreign 1,600  2,018 
Total tangible long-lived assets, net $ 10,594  $ 10,650 

The Company's tangible long-lived assets, net of accumulated depreciation, held outside of the United States represent engines and aircraft on lease at September 30, 2021. The net book value located within each individual country at September 30, 2021 and March 31, 2021 is listed below (in thousands):
September 30, 2021 March 31, 2021
Macau $ 1,489  $ 1,896 
Other 111  122 
Total tangible long-lived assets, net $ 1,600  $ 2,018 

Total revenue, in and outside the United States, is summarized in the following table for the six months ended September 30, 2021 and September 30, 2020 (in thousands):
September 30, 2021 September 30, 2020
United States $ 69,225  $ 67,163 
Foreign 10,981  5,413 
Total revenue $ 80,206  $ 72,576 

21




12.    Segment Information
The Company has four business segments: overnight air cargo, ground equipment sales, commercial jet engine and parts segment and corporate and other. We have presented prior periods based on the current presentation. Segment data is summarized as follows (in thousands):
(In Thousands) Three Months Ended
September 30, 		Six Months Ended
September 30,
2021 2020 2021 2020
Operating Revenues by Segment:
Overnight Air Cargo
Domestic $ 18,607  $ 17,295  $ 37,375  $ 33,466 
International 240 —  322 — 
Total Overnight Air Cargo 18,847  17,295  37,697  33,466 
Ground Equipment Sales:
Domestic 8,178  10,996  14,156  26,807 
International 1,011  1,064  3,215  1,081 
Total Ground Equipment Sales 9,189  12,060  17,371  27,888 
Commercial Jet Engines and Parts:
Domestic 10,461  4,155  17,230  6,625 
International 4,455  1,959  7,280  4,183 
Total Commercial Jet Engines and Parts 14,916  6,114  24,510  10,808 
Corporate and other:
Domestic 210  67  464  264 
International 76  68  164  150 
Total Corporate and other 286  135  628  414 
Total $ 43,238  $ 35,604  $ 80,206  $ 72,576 
Operating Income (Loss):
Overnight Air Cargo 857  573  1,589  1,127 
Ground Equipment Sales 43  924  1,465  3,140 
Commercial Jet Engines and Parts 1,902  (2,275) 1,664  (3,177)
Corporate and other (2,098) (2,906) (4,019) (5,039)
Total $ 704  $ (3,684) $ 699  $ (3,949)
Capital Expenditures:
Overnight Air Cargo 44  93  68  144 
Ground Equipment Sales 4  —  17  111 
Commercial Jet Engines and Parts 646  1,054  738  1,510 
Corporate and other 12  —  19  28 
Total $ 706  $ 1,147  $ 842  $ 1,793 
Depreciation and Amortization:
Overnight Air Cargo 14  19  27  35 
Ground Equipment Sales 32  46  64  114 
Commercial Jet Engines and Parts 214  978  479  1,360 
Corporate and other 62  106  133  249 
Total $ 322  $ 1,149  $ 703  $ 1,758 

22




13.    Commitments and Contingencies
Redeemable Non-controlling Interest
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 of Contrail (“Contrail Put/Call Option”). The Contrail Put/Call Option permits the Seller to require Contrail to purchase all of the Seller’s equity membership interests in Contrail commencing on the fifth anniversary of the acquisition, which was on July 18, 2021. 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 redemption value at the end of each reporting period. The fair value of the redeemable non-controlling interest is $7.3 million as of September 30, 2021. The change in the redemption value compared to March 31, 2021 is an increase of $0.7 million. The increase was driven by $0.3 million of contributions made from the non-controlling interest and $0.1 million of the net change in fair value, in addition to $0.3 million of net income attributable to the non-controlling interest during the six months ended September 30, 2021.
As of the date of this filing, neither the Seller nor Air T has indicated an intent to exercise the put and call options. If either side were to exercise the option, the Company anticipates that the price would approximate the fair value of the Contrail RNCI, as determined on the transaction date. The Company currently expects that it would fund any required payment from cash provided by operations.
On May 5, 2021, the Company formed a new aircraft asset management business called CAM, and a new aircraft capital joint venture called CJVII. The new venture will focus on acquiring commercial aircraft and jet engines for leasing, trading and disassembly. CJVII will target investments in current generation narrow-body aircraft and engines, building on Contrail’s origination and asset management expertise. CAM will serve two separate and distinct functions: 1) to direct the sourcing, acquisition and management of aircraft assets owned by CJVII, and 2) to directly invest into CJVII alongside other institutional investment partners. CAM has an initial commitment to CJVII of approximately $53 million, which is comprised of an $8 million initial commitment from the Company and an approximately $45 million initial commitment from MRC. As of September 30, 2021, CAM's unfunded capital commitments are approximately $6.9 million from the Company and $43.9 million from MRC.

2020 Omnibus Stock and Incentive Plan

On December 29, 2020, the Company’s Board of Directors unanimously approved the Omnibus Stock and Incentive Plan (the "Plan"), which was subsequently approved by the Company's stockholders at the August 18, 2021 Annual Meeting of Stockholders. The total number of shares authorized under the Plan is 420,000. Among other instruments, the Plan permits the Company to grant stock option awards. Through September 30, 2021, options to purchase up to 326,000 shares have been granted under the Plan. Vesting of options is based on the grantee meeting specified service conditions. Furthermore, the number vested options that a grantee is able to exercise, if any, is based on the Company’s stock price as of the vesting dates specified in the respective option grant agreements. As of September 30, 2021, total compensation cost recognized under the Plan was $0.2 million.
23





14.     Subsequent Events
Management performs an evaluation of events that occur after the balance sheet date but before condensed consolidated financial statements are issued for potential recognition or disclosure of such events in its condensed consolidated financial statements.


24




Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.
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 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, which manages and leases aviation assets; supplies surplus and aftermarket commercial jet engine components; provides commercial aircraft disassembly/part-out services; commercial aircraft parts sales; procurement services and overhaul and repair services to airlines and,
•Corporate and other, which acts as the capital allocator and resource for other consolidated businesses. Further, Corporate and other also comprises of insignificant businesses that do not pertain to other reportable segments.
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

Outlook

COVID-19 and its impact on the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our financial condition and results of operations. Each of our businesses implemented measures to attempt to limit the impact of COVID-19 but we still experienced a substantial number of disruptions, and we experienced and continue to experience a reduction in demand for commercial aircraft, jet engines and parts compared to historical periods. Many of our businesses may continue to generate reduced operating cash flow and may continue to operate at a loss from time to time during the remainder of fiscal 2022. We expect that the impact of COVID-19 will continue to some extent. The fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions and our businesses in particular, and, as a result, present material uncertainty and risk with respect to us and our results of operations.

Second Quarter Fiscal 2022 Compared to Second Quarter Fiscal 2021
Consolidated revenue for the three-month period ended September 30, 2021 increased by $7.6 million (21%) 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, 2021 compared to the same quarter in the prior fiscal year (in thousands):
Three Months Ended
September 30, 		Change
2021 2020
Overnight Air Cargo $ 18,847  $ 17,295  $ 1,552  9  %
Ground Equipment Sales 9,189  12,060  (2,871) (24) %
Commercial Jet Engines and Parts 14,916  6,114  8,802  144  %
Corporate and Other 286  135  151  112  %
$ 43,238  $ 35,604  $ 7,634  21  %
Revenues from the air cargo segment for the three-month period ended September 30, 2021 increased by $1.6 million (9%) compared to the second quarter of the prior fiscal year. The increase was principally attributable to higher maintenance revenue from customers outside of FedEx.
The ground equipment sales segment contributed approximately $9.2 million and $12.1 million to the Company’s revenues for the three-month periods ended September 30, 2021 and 2020 respectively, representing a $2.9 million (24%) decrease in the current
25




quarter. The decrease was primarily driven by a lower sales volume of ultimate deicers this quarter compared to prior year comparable quarter. At September 30, 2021, the ground equipment sales segment’s order backlog was $10.9 million compared to $36.8 million at September 30, 2020. On October 22, 2021, GGS was awarded a new contract valued at approximately $34.0 million to supply deicing trucks to the United States Air Force ("USAF"). The contract award is for two years with four additional one-year extension options that may be exercised by the USAF.
The commercial jet engines and parts segment contributed $14.9 million of revenues in the quarter ended September 30, 2021 compared to $6.1 million in the comparable prior year quarter, which is an increase of $8.8 million (144%). The increase is primarily attributable to the fact that all the companies within this segment had higher component sales as the aviation industry started to see more activity in the current year quarter as COVID-19 related restrictions continued to loosen.

Following is a table detailing operating income (loss) by segment during the three months ended September 30, 2021 compared to the same quarter in the prior fiscal year (in thousands):

Three Months Ended
September 30, 		Change
2021 2020
Overnight Air Cargo $ 857  $ 573  $ 284 
Ground Equipment Sales 43  924  (881)
Commercial Jet Engines and Parts 1,902  (2,275) 4,177 
Corporate and Other (2,098) (2,906) 808 
$ 704  $ (3,684) $ 4,388 
Consolidated operating income for the quarter ended September 30, 2021 was $0.7 million, compared to an operating loss of $3.7 million in the comparable quarter of the prior year.
The air cargo segment's operating income for the three-month period ended September 30, 2021 increased by $0.3 million compared to the second quarter of the prior fiscal year. The increase was primarily driven by higher maintenance revenue from customers outside of FedEx offset by higher salaries.
The ground equipment sales segment's operating income for the quarter ended September 30, 2021 decreased by $0.9 million from the prior year comparable quarter to $43.0 thousand. This decrease was primarily attributable to the decreased sales noted in the segment revenue discussion above.
The commercial jet engines and parts segment generated an operating income of $1.9 million in the current-year quarter compared to an operating loss of $2.3 million in the prior-year quarter. The change was primarily attributable to the increased component sales at the companies within this segment as explained in the segment revenue discussion above.
The corporate and other segment's operating loss was $0.8 million less this quarter compared to prior year's comparable quarter. The decrease was primarily attributable to lower health insurance claims during the three months ended September 30, 2021 compared to September 30, 2020.
Following is a table detailing non-operating income (loss) during the three months ended September 30, 2021 compared to the same quarter in the prior fiscal year (in thousands):
Three Months Ended
September 30, 		Change
2021 2020
Interest expense (1,167) (1,081) (86)
Gain (Loss) from equity method investments 14  (498) 512 
Gain on forgiveness of Paycheck Protection Program (“PPP”) loan 8,331  —  8,331 
Other 159  359  (200)
$ 7,337  $ (1,220) $ 8,557 
The Company had a net non-operating income of $7.3 million for the quarter ended September 30, 2021, compared to a net non-operating loss of $1.2 million in the prior-year quarter. In the second quarter 2020, the Company recorded $0.5 million of net loss from our equity investments whereas in the current quarter, we recorded $14.0 thousand of net income pick-up. Further, in the current quarter, the Company recorded $8.3 million of gain from the SBA's forgiveness of our PPP loan.
26




During the three-month period ended September 30, 2021, the Company recorded $38.0 thousand in income tax expense at an ETR of 0.5%. The Company records income taxes using an estimated annual effective tax rate 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, 2021 were the change in valuation allowance related to Delphax and other capital losses, the estimated benefit for the exclusion of income for SAIC under Section 831(b), the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail, and the exclusion from taxable income of the PPP loan forgiveness income, as directed by the CARES Act enacted in 2020, and any accrued interest forgiven as a part of that Act.

During the three-month period ended September 30, 2020, the Company recorded $1.5 million in income tax benefit at an ETR of 31.5%. 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, 2020 were the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for SAIC under Section 831(b) and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail.

First Six Months of Fiscal 2021 Compared to First Six Months of Fiscal 2020

Following is a table detailing revenue by segment (in thousands):
Six Months Ended
September 30, 		Change
2021 2020
Overnight Air Cargo $ 37,697  $ 33,466  $ 4,231  13  %
Ground Equipment Sales 17,371  27,888  (10,517) (38) %
Commercial Jet Engines and Parts 24,510  10,808  13,702  127  %
Corporate and Other 628  414  214  52  %
$ 80,206  $ 72,576  $ 7,630  11  %
Revenues from the air cargo segment for the six months ended September 30, 2021 increased by $4.2 million (13%) compared to the six months ended September 30, 2020. The increase was principally attributable to higher pass-through revenue from FedEx as a result of increased business activity versus the prior year quarter as well as higher maintenance revenue from customers outside of FedEx.

The ground equipment sales segment contributed approximately $17.4 million and $27.9 million to the Company’s revenues for the six-month periods ended September 30, 2021 and 2020 respectively, representing a $10.5 million (38)% decrease in the current six-month period. The decrease was primarily driven by a lower sales volume of ultimate deicers and catering trucks in the current year compared to prior year.
The commercial jet engines and parts segment contributed $24.5 million of revenues in the six months ended September 30, 2021 compared to $10.8 million in the comparable prior year six months. The increase is primarily attributable to the fact that all the companies within this segment had higher component sales as the aviation industry started to see more activity in the current year as COVID-19 related restrictions continued to loosen.

Following is a table detailing operating income (loss) by segment during the six months ended September 30, 2021 compared to the same six months in the prior fiscal year (in thousands):
Six Months Ended
September 30, 		Change
2021 2020
Overnight Air Cargo $ 1,589  $ 1,127  $ 462 
Ground Equipment Sales 1,465  3,140  (1,675)
Commercial Jet Engines and Parts 1,664  (3,177) 4,841 
Corporate and Other (4,019) (5,039) 1,020 
$ 699  $ (3,949) $ 4,648 
Consolidated operating income for the six months ended September 30, 2021 was $0.7 million compared to an operating loss of $3.9 million for the comparable six months of the prior year.
Operating income for the air cargo segment for the six months ended September 30, 2021 increased by $0.5 million versus the prior year comparable period primarily due to the revenue increase noted above.
27




The ground equipment sales segment operating income decreased by $1.7 million to $1.5 million in the six-month period ended September 30, 2021 versus the prior year comparable period. This decrease was primarily attributable to the revenue decrease noted above.
The commercial jet engines and parts segment generated an operating income of $1.7 million in the current-year six month period compared to an operating loss of $3.2 million in the prior-year six-month period. The change was primarily attributable to the increased component sales as the aviation industry started to see more activity as explained in the segment revenue discussion above.
Following is a table detailing non-operating income (loss) during the six months ended September 30, 2021 compared to the same six months in the prior fiscal year (in thousands):
Three Months Ended
September 30, 		Change
2021 2020
Interest expense (2,105) (2,242) $ 137 
Gain (Loss) from equity method investments 97  (1,056) 1,153 
Gain on forgiveness of PPP loan 8,331  —  8,331 
Other 1,340  1,086  254 
7,663  (2,212) $ 9,875 
The Company had a net non-operating income of $7.7 million for the six months ended September 30, 2021 compared to a net non-operating loss of $2.2 million in the prior-year six-month period. The increase was primarily attributable to the $8.3 million gain recognized on the SBA's forgiveness of the Company's PPP loan. In addition, in the prior year, the Company recorded $1.1 million of net loss from our equity investments whereas in the current year, we recorded $97.0 thousand of net income from these investments.
During the six-month period ended September 30, 2021, the Company recorded $33.0 thousand in income tax expense at an effective rate of 0.4%. The Company records income taxes using an estimated annual effective tax rate 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, 2021 were the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for SAIC under Section 831(b), the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail, the exclusion from taxable income of the PPP loan forgiveness income, as directed by the CARES Act enacted in 2020, and any accrued interest forgiven as a part of that Act.

During the six-month period ended September 30, 2020, the Company recorded $1.8 million in income tax benefit which resulted in an effective tax rate of 30.0%. The primary factors contributing to the difference between the federal statutory rate and the Company's effective tax rate for the six-month period ended September 30, 2020 were related to the change in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for SAIC under Section 831(b), and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail.

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, 2021. 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, 2021.
Seasonality
The ground equipment sales 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.
Liquidity and Capital Resources
28




As of September 30, 2021, the Company held approximately $6.3 million in cash and cash equivalents and restricted cash, $4.1 million of which related to restricted cash collateralized for Air T OZ 1, LLC, Air T OZ 2, LLC, and Air T OZ 3, LLC (the "Opportunity Zone Funds"), each a Minnesota limited liability company and a subsidiary of the Company. The Company also held $0.8 million in restricted investments held as statutory reserve of SAIC. The Company has approximately $2.8 million of marketable securities and an aggregate of $37.2 million in available funds under its lines of credit as of September 30, 2021.
As of September 30, 2021, the Company’s working capital amounted to $96.8 million, an increase of $19.2 million compared to March 31, 2021. 

On August 31, 2021, Air T entered into a Third Amended and Restated Credit Agreement with MBT. The terms of the Amended and Restated Credit Agreement were revised to extend the Air T revolver's termination date to August 31, 2023. The maximum amount available under the revolving facility remains at $17 million and interest will be due on the outstanding balance at the rate of 2.5% or the prime rate plus 1%, whichever is greater. At September 30, 2021, there was $12.3 million available under this revolving credit agreement.

Air T and MBT also revised Term Note A to extend the maturity date to August 30, 2031 and to increase the principal amount to $9 million. The revised note utilizes a fixed 3.42% interest rate. Air T and MBT also revised Term Note B to extend the maturity date to August 30, 2031. The principal balance was set at the then current balance amount of $3.2 million. The interest rate on Term Note B is fixed at 3.42%.

A prepayment penalty provision was added to Term Note A and Term Note B that provides for a 3% premium payment if prepayment occurs in year 1, 1% in years 2-3 and 0% thereafter. 20% of the loan amount can be prepaid without penalty each year and no penalty payment is due for prepayments made to cure a covenant violation.

Term Note E was restated to set the principal amount of the note at the then current balance due amount ($3.7 million), which amount reflects principal payments through August 31, 2021.

The parties also agreed to add the Company’s indirect subsidiary, Jet Yard as a co-Borrower. Jet Yard entered into a promissory note with MBT in the principal amount of $2 million. The Jet Yard Note matures on August 30, 2031, has a fixed interest rate of 4.14% and amortizes over a 15 year period. Jet Yard intends to use the proceeds of the note for leasehold improvements at Jet Yard’s facility in Marana, AZ.

On September 2, 2021, Contrail entered into a Fourth Amendment to Supplement #2 to Master Loan Agreement and Third Amended and Restated Promissory Note Revolving Note with ONB. The principal revisions to Contrail’s existing credit facility with ONB as contained in the Amendment and the Restated Promissory Note Revolving Note are summarized below:

a.The termination date of the facility was extended to September 5, 2023;
b.The Revolving Note principal amount was revised from $40 million to $25 million;
c.The net worth covenant was amended and the definition of “net worth” was revised. The net worth covenant now requires that the borrower maintain a net worth of at least: (i) $8 million at all times prior to March 31, 2023; (ii) $10 million at all times during the period beginning March 31, 2023 and ending on March 30, 2024; and (iii) $12 million at all times on or after March 31, 2024.

At September 30, 2021, there was $24.9 million available under this ONB revolving credit facility.

On April 13, 2020, the Company entered into a loan with MBT with a principal amount of $8.2 million pursuant to the Payroll Protection Program ("PPP Loan"), backed by the Small Business Administration ("SBA"), under the CARES Act. As of September 30, 2021, the Company's PPP Loan was fully forgiven by the SBA. As such, the Company accounted for its then outstanding principal and accrued interest as a gain on extinguishment in accordance with ASC 470.

As mentioned in Note 13 of Notes to condensed Consolidated Financial Statements included under Part I, Item 1 of this report, in 2016, Contrail entered into an Operating Agreement with the Seller providing for the put and call options with regard to the 21% non-controlling interest retained by the Seller. The Seller is the founder of Contrail and its current Chief Executive Officer. The Put/Call Option permits the Seller to require Contrail Aviation to purchase all of the Seller’s equity membership interests in Contrail Aviation commencing on the fifth anniversary of the acquisition, which was on July 18, 2021. As of the date of this filing, neither the Seller nor Air T has indicated an intent to exercise the put and call options. If either side were to exercise the option, the Company anticipates that the price would approximate the fair value of the Contrail RNCI, as determined on the transaction date. The Company currently expects that it would fund any required payment from cash provided by operations.

As mentioned in Note 13 of Notes to condensed Consolidated Financial Statements included under Part I, Item 1 of this report, on May 5, 2021, the Company formed a new aircraft asset management business called CAM and a new aircraft capital joint venture
29




called CJVII. The new venture will focus on acquiring commercial aircraft and jet engines for leasing, trading and disassembly. CJVII will target investments in current generation narrow-body aircraft and engines, building on Contrail Aviation’s origination and asset management expertise. CAM will serve two separate and distinct functions: 1) to direct the sourcing, acquisition and management of aircraft assets owned by CJVII, and 2) to directly invest into CJVII alongside other institutional investment partners. CAM has an initial commitment to CJVII of approximately $53 million, which is comprised of an $8.0 million initial commitment from the Company and an approximately $45.0 million initial commitment from MRC. As of September 30, 2021, CAM's unfunded capital commitments are approximately $6.9 million from the Company and $43.9 million from MRC. CJVII will initially be capitalized with up to $408.0 million of equity from the Company and three institutional investor partners, consisting of $108.0 million in initial commitments and $300.0 million in upsize capacity, contingent on underwriting and transaction appeal. As of the date of this filing, no capital has been deployed to CJVII and the timing of capital deployment is not yet known at this time.

The Company believes it is probable that the cash on hand (including amounts forgiven under the PPP loan and other current financings), net cash provided by operations from its remaining operating segments, together with amounts available under our current revolving lines of credit, as amended, will be sufficient 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 from continuing operations for the six months ended September 30, 2021 and 2020 (in thousands):
Six Months Ended September 30,
2021 2020
Net Cash Used in Operating Activities (22,753) (5,626)
Net Cash Used in Investing Activities (2,376) (615)
Net Cash Provided by Financing Activities 15,425  3,662 
Effect of foreign currency exchange rates on cash and cash equivalents 51  (127)
Net Decrease in Cash and Cash Equivalents and Restricted Cash (9,653) (2,706)
Net cash used in operating activities was $22.8 million for the six-month period ended September 30, 2021 compared to net cash used in operating activities of $5.6 million in the prior year six-month period. The change in net cash used in operating activities was primarily driven by a net change in accounts receivable of $12.8 million, in addition to a net change in inventories of $8.2 million and the gain on forgiveness of PPP loan of $8.3 million, partially offset by $12.6 million of change in net income (loss). In the current period, the Company had a net increase in accounts receivable of $10.6 million compared to a net decrease of $2.2 million in the prior period. In addition, the Company had a net increase in inventories of $10.1 million in the current period and a net increase of $1.9 million in the prior period. Both the increase in accounts receivable and inventories in the current period are attributable to increased sales in the commercial jet engines and parts segment and the air cargo segment as a result of increased activity in the aviation industry due to the loosening of COVID-19 related restrictions.
Net cash used in investing activities for the six-month period ended September 30, 2021 was $2.4 million compared to net cash used in investing activities of $0.6 million in the prior-year period. Cash was used in the current-year period primarily to invest in CAM, the Company's new aircraft asset management business and to make improvements on Jet Yard's ground hardening.
Net cash provided by financing activities for the six-month period ended September 30, 2021 was $15.4 million compared to net cash provided by financing activities of $3.7 million in the prior-year period. The increase was primarily driven by higher net cash proceeds from the Company's lines of credit and issuance of TruPs, partially offset by lower net cash proceeds from the Company's term loans.

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 aircraft engines that are on lease, as the Company believes this expense matches with the corresponding
30




revenue earned on engine leases. Depreciation expense for leased engines totaled $18.3 thousand and $0.8 million for the three months ended September 30, 2021 and 2020, respectively.

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. 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) from continuing operations to Adjusted EBITDA and Adjusted EBITDA by segment for the three and six months ended September 30, 2021 and 2020 (in thousands):

Three months ended Six months ended
9/30/2021 9/30/2020 9/30/2021 9/30/2020
Operating income (loss) from continuing operations $ 704  $ (3,684) $ 699  $ (3,949)
Depreciation and amortization (excluding leased engines depreciation) 304  305  584  658 
Asset impairment, restructuring or impairment charges —  664  —  664 
Loss/(Gains) on disposition of assets —  (3) 3  (4)
Security issuance expenses 60  —  65  — 
Adjusted EBITDA $ 1,068  $ (2,718) $ 1,351  $ (2,631)


Three months ended Six months ended
9/30/2021 9/30/2020 9/30/2021 9/30/2020
Overnight Air Cargo $ 871  $ 596  $ 1,617  $ 1,166 
Ground Equipment Sales 74  970  1,531  3,254 
Commercial Jet Engines and Parts 2,098  (1,614) 2,024  (2,390)
Corporate and Other (1,975) (2,670) (3,821) (4,661)
Adjusted EBITDA $ 1,068  $ (2,718) $ 1,351  $ (2,631)



Item 3.    Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to various risks, including interest rate risk. As interest rates are projected to increase and can be volatile, the Company has designated a risk management policy which permits the use of derivative instruments to provide protection against rising interest rates on variable rate debt.


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, 2021. 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.
31




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, 2021 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
(a)None.
(a)None.
(b)On May 14, 2014, the Company announced that its Board of Directors had authorized a program to repurchase up to 750,000 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 during the quarter ended September 30, 2021.

Item 5.    Other information

(a) Other Information

N/A.

32




Item 6.    Exhibits
(a) Exhibits
No. Description
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
31.1
31.2
32.1
99.1
101
The following financial information from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, 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 the limited liability company exhibit have been omitted for confidential treatment.

33




SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, 2021
/s/ Nick Swenson
Nick Swenson, Chief Executive Officer and Director
/s/ Brian Ochocki
Brian Ochocki, Chief Financial Officer

34

Exhibit 31.1
SECTION 302 CERTIFICATION
I, Nick Swenson, certify that:
1.I have reviewed this Form 10-Q of Air T, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(a)Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 12, 2021
/s/ Nick Swenson
Nick Swenson
Chief Executive Officer



Exhibit 31.2
SECTION 302 CERTIFICATION
I, Brian Ochocki, certify that:
1.I have reviewed this Form 10-Q of Air T, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 12, 2021
/s/ Brian Ochocki
Brian Ochocki
Chief Financial Officer



Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Air T, Inc. (the "Company") Quarterly Report on Form 10-Q for the period ended September 30, 2021 as filed with the United States Securities and Exchange Commission on the date hereof (the "Report"), I, Nick Swenson, Chief Executive Officer, and Brian Ochocki, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: November 12, 2021
/s/ Nick Swenson
Nick Swenson, Chief Executive Officer
(Principal Executive Officer)
/s/ Brian Ochocki
Brian Ochocki, Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)